Adam Vaughan in The Guardian
A wave of new publicly owned companies is taking on the big six energy suppliers, as local authorities search out new revenue and seek to restore faith in public services and tackle fuel poverty.
Islington council last week launched a not-for-profit energy firm, London’s first municipal operator in more than a century, while Doncaster’s energy company will start early next month.
Portsmouth is also on the verge of becoming the first Conservative-controlled council to launch one, to bring down residents’ bills as well as bringing investment to the city.
The first and best-known publicly owned energy companies, Robin Hood Energy in Nottingham and Bristol Energy, started two years ago. But the growing trend came to the fore this month when Nicola Sturgeon promised to create a Scottish public energy company by 2021.
“No shareholders to worry about. No corporate bonuses to consider. It would give people – particularly those on low incomes – more choice and the option of a supplier whose only job is to secure the lowest price for consumers,” Scotland’s first minister said, in an echo of the marketing used by the councils who have already started their own energy companies.
Sturgeon’s firm will be entering an increasingly crowded space: publicly owned firms include Liverpool’s Leccy, Derby’s Ram, and Leeds’ White Rose. Councils in Sussex are clubbing together to launch Your Energy Sussex latter this year.
The driving forces for these councils stepping into the complex, heavily regulated energy space are largely twofold. One is the need to create a new revenue stream in a time of austerity, as well as rebuilding the public sphere – councils are perhaps most visible to residents when they close libraries and cut other services.
But there is also a political project afoot as well, as Labour-controlled councils such as Nottingham push an agenda that has since been picked up by Jeremy Corbyn during the last election.
There is also genuine concern over fuel poverty, and a hope that local authorities will be more trusted than the usual energy suppliers, that even Theresa May says have ripped customers off.
“It’s about councils trying to provide a trusted and better service for people to switch. We want a challenger model to the big six,” said Labour MP Caroline Flint, whose Doncaster constituency will see the launch of publicly owned Great Northern Energy on 7 November.
The flurry of such firms showed Labour’s manifesto pledge of a publicly owned energy supplier in each region was happening regardless of the party’s failure to win power in June’s snap general election, Flint said.
Tackling the growing amount of households in fuel poverty, which number 2.5 million in England and Wales, is another big motivation.
Steve Battlemuch, chair of the board of Robin Hood Energy and a Labour councillor, said: “Nottingham has a lot of fuel poverty, lot of people on prepayment meters [which people in energy debt are often moved on to]. That was what drove us: coming into the market and driving down prices for the customer.”
Like other public firms, part of his sales pitch is that there are no corporate masters to pay.
“There’s no shareholder bonuses, because there’s no shareholder apart from Nottingham city council. There’s no director bonuses. I had a cupcake on our first anniversary,” he said.
Peter Haigh, managing director of Bristol Energy, said his organisation was more inclusive than private companies, and its physical presence in the city was a big attraction.
“Customers can and do walk in, sign up and pay a bill. That often attracts customers who have never switched, people who can pop in face to face,” he said.
Part of the reason councils are getting into energy is the barriers to market are not as great as they once were.
Mark Coyle, strategy director of Utiligroup, which has provided services to most of the publicly owned energy companies, said: “We’ve been able to lower the barriers for them, without lowering compliance.”
But while the sector appears to be burgeoning, combined these companies are a minnow compared with the blue whales that are the big six firms, which between them account for 80% share of the market.
Bristol Energy is biggest publicly owned energy supplier, with about 110,000 customers; Robin Hood has just over 100,000. Both have created more than 100 jobs locally, but neither has yet recovered their start-up costs.
Moreover, while such firms appear to be proliferating, most are simply rebranding off Robin Hood rather than setting up as fully licensed suppliers which can buy energy on the wholesale market. The approach has its critics.
“Islington are doing a good thing but it’s a shame that they’ve had to go to Nottingham to buy the energy,” said Caroline Russell, a Green party London assembly member.
Sadiq Khan, London’s mayor, has promised to create an energy company for Londoners, but has been slow to deliver.
Last month he was advised by experts to piggyback off an existing supplier, rather than create his own licensed company. While cheaper and quicker to do, it would also mean he had less power and flexibility to offer something genuinely new and different compared with the 50-plus private firms already in the market.
Nigel Cornwall, founder of energy analysts Cornwall Insight, said that while he was supportive of publicly owned energy companies, it was revealing that many councils were opting to ride on Robin Hood’s coat-tails rather than set up their own licensed firm.
“This is high-risk stuff. The sector is complicated. You [the council] probably don’t have the resources. You’ve probably underestimated the costs. And that’s with costs of entry falling dramatically,” he said.
Cornwall said he was also sceptical as to whether the companies would be sustainable and would become a permanent fixture in the market – but that would not stop them trying.
Battlemuch said: “What we need to do is break through into the mass market. That’s what we’re trying to do.”
Showing posts with label ownership. Show all posts
Showing posts with label ownership. Show all posts
Friday 27 October 2017
Thursday 12 January 2017
Indian sport’s Forever Men
Nirmal Shekar in The Hindu
Many of the sports administrative bodies are besmirched by feudal attitudes where the top guys have reigned for long and appear to claim ownership rights over their ‘property’
The best thing that has happened to sports in India in a long, long time — longer perhaps than many of us have existed on this planet — is the laudably idealistic yet remarkably pragmatic intervention of the Supreme Court into Wild West territory — the landscape of cricket administration.
So much of what the well-meaning lay people have expected of the men who control sports has been trampled under mercilessly and maliciously, that a good majority of sports-lovers in the country have found refuge in nihilism and come to believe that nothing will change in the state of affairs.
When you think that something has been transformed for the better, very soon you realise it is nothing more than chimerical and it might be foolish and useless to bravely make your way through the haze.
If sports politics is even more Machiavellian than Indian politics in general, then that should come as no surprise. For we resign ourselves to the fact that sport is not a matter quite as important as electing the country’s Prime Minister.
Sliver of hope
But just when we thought that it is a tunnel without an end, the Supreme Court, headed by its upstanding, noble Chief Justice Mr. T.S. Thakur (who retired recently) has offered us a sliver of hope here or there — in fact much, much more than what we may have come to expect 70 years after the country’s Independence.
A popular, veteran Indian sportsperson, who tried to get into the administration of his sport not long ago, put it succinctly the other day when I asked him what was wrong with sports administration in the country at a time when the nation’s richest, and perhaps one of the world’s wealthiest sports bodies, the Board of Control for Cricket in India (BCCI), was making front-page news for all the wrong reasons every day.
“You tell me what is right with it. It stinks. I shudder to think that such mismanagement, corruption, nepotism and chaos can exist in 2017,” he said.
Most well-meaning people in the world of sports, when asked the same question, not surprisingly come up with the same answer: “a total lack of professionalism.’’
Reasons for lagging
This is an over-arching judgement that seems to ignore the nuts and bolts of everyday affairs in major sports in the country. From experts down to lay fans, almost everybody has an opinion on why such a huge nation should not be among the leading performers in the world of sport. Infrastructure, money, attitude, culture…you can think of dozens of reasons why India does not stand tall in the world of sport.
Says Joaquim Carvalho, Olympian and hockey administrator “Sports governance in India lacks transparency and accountability. Most officials are not passionate about sports at all. They use this platform to keep themselves in the news and also indulge in corruption.
“I have a poor impression of sports governance because I have seen these officials as a player and later I as someone connected with the conduct of the game. They have vested interest and development of sport is never a priority for them. Basically, it helps them stay in the news, build connections and enjoy junkets. Sports governance in India is absolutely unprofessional.”
While it will be unfair to make a sweeping generalisation — there are a few sports that benefit from modern management where the administration is totally transparent in its business. But most are besmirched by feudal attitudes where the top guys have been the same since the days of your childhood, and they appear to claim ownership rights over their ‘property.’
‘Honorary’ positions are not ones manned by individuals with perfectly altruistic intentions. To even expect it is ridiculous. Even saints do what they do to get into the good books of the big, all-knowing, all-powerful man up there.
On an upward swing
There is a flip side to all this. Adille Sumariwala, IAAF executive council member and president, Athletics Federation of India, says, “Sports is on the upward swing in India. Television and the leagues in virtually all sports have increased the fan following. Children know the names of kabaddi players, not only cricketers. Television has brought sports to people, there is more awareness. It’s a matter of time before sports emerges much stronger. There are opportunities to make sport a career in life. And so sports is on the upswing’’.
But here is the catch. Do we have honest officials with a long-term goals in mind? It is indeed boom-time in Indian sports. But the launching pads, corporate support and fans’ enthusiasm may quickly evaporate if the quality of administration remains the same.
How many of our present sports administrators come in with a clear mandate and then move forward stridently to carry it out? Do they go through the same strict annual evaluation process as do brilliant business school graduates?
Success as sports administrators demands a few basic skills in areas such as communication, organisation, decision making, value system and team building.
“Indian sports administrators are special. I must admit that. They are in a category of their own,” said the late Peter Roebuck, my best friend among foreign journalists visiting India frequently, during one of our post dinner conversations.
What Roebuck referred to was mainly cricket but he was curious enough to want to know more and more about other sports. Leadership skills can be either cultivated or learned but the men and women who run our sports are keen on only one thing — staying where they are with a great love for being in the spotlight.
How many times have we seen sports bosses appearing prominently in photographs of athletes who return after world-beating success at airports across the country?
Long ago, a top Indian sportsman returning after winning the world championship told me something that was shocking. I asked him who the gentleman who was hugging him in the front page of a leading Indian English language paper? “I swear, I have never seen the guy before,” he said of a man who was a senior administrator in the sport.
Of course, the nameless one is part of the Forever Men club.
The best thing that has happened to sports in India in a long, long time — longer perhaps than many of us have existed on this planet — is the laudably idealistic yet remarkably pragmatic intervention of the Supreme Court into Wild West territory — the landscape of cricket administration.
So much of what the well-meaning lay people have expected of the men who control sports has been trampled under mercilessly and maliciously, that a good majority of sports-lovers in the country have found refuge in nihilism and come to believe that nothing will change in the state of affairs.
When you think that something has been transformed for the better, very soon you realise it is nothing more than chimerical and it might be foolish and useless to bravely make your way through the haze.
If sports politics is even more Machiavellian than Indian politics in general, then that should come as no surprise. For we resign ourselves to the fact that sport is not a matter quite as important as electing the country’s Prime Minister.
Sliver of hope
But just when we thought that it is a tunnel without an end, the Supreme Court, headed by its upstanding, noble Chief Justice Mr. T.S. Thakur (who retired recently) has offered us a sliver of hope here or there — in fact much, much more than what we may have come to expect 70 years after the country’s Independence.
A popular, veteran Indian sportsperson, who tried to get into the administration of his sport not long ago, put it succinctly the other day when I asked him what was wrong with sports administration in the country at a time when the nation’s richest, and perhaps one of the world’s wealthiest sports bodies, the Board of Control for Cricket in India (BCCI), was making front-page news for all the wrong reasons every day.
“You tell me what is right with it. It stinks. I shudder to think that such mismanagement, corruption, nepotism and chaos can exist in 2017,” he said.
Most well-meaning people in the world of sports, when asked the same question, not surprisingly come up with the same answer: “a total lack of professionalism.’’
Reasons for lagging
This is an over-arching judgement that seems to ignore the nuts and bolts of everyday affairs in major sports in the country. From experts down to lay fans, almost everybody has an opinion on why such a huge nation should not be among the leading performers in the world of sport. Infrastructure, money, attitude, culture…you can think of dozens of reasons why India does not stand tall in the world of sport.
Says Joaquim Carvalho, Olympian and hockey administrator “Sports governance in India lacks transparency and accountability. Most officials are not passionate about sports at all. They use this platform to keep themselves in the news and also indulge in corruption.
“I have a poor impression of sports governance because I have seen these officials as a player and later I as someone connected with the conduct of the game. They have vested interest and development of sport is never a priority for them. Basically, it helps them stay in the news, build connections and enjoy junkets. Sports governance in India is absolutely unprofessional.”
While it will be unfair to make a sweeping generalisation — there are a few sports that benefit from modern management where the administration is totally transparent in its business. But most are besmirched by feudal attitudes where the top guys have been the same since the days of your childhood, and they appear to claim ownership rights over their ‘property.’
‘Honorary’ positions are not ones manned by individuals with perfectly altruistic intentions. To even expect it is ridiculous. Even saints do what they do to get into the good books of the big, all-knowing, all-powerful man up there.
On an upward swing
There is a flip side to all this. Adille Sumariwala, IAAF executive council member and president, Athletics Federation of India, says, “Sports is on the upward swing in India. Television and the leagues in virtually all sports have increased the fan following. Children know the names of kabaddi players, not only cricketers. Television has brought sports to people, there is more awareness. It’s a matter of time before sports emerges much stronger. There are opportunities to make sport a career in life. And so sports is on the upswing’’.
But here is the catch. Do we have honest officials with a long-term goals in mind? It is indeed boom-time in Indian sports. But the launching pads, corporate support and fans’ enthusiasm may quickly evaporate if the quality of administration remains the same.
How many of our present sports administrators come in with a clear mandate and then move forward stridently to carry it out? Do they go through the same strict annual evaluation process as do brilliant business school graduates?
Success as sports administrators demands a few basic skills in areas such as communication, organisation, decision making, value system and team building.
“Indian sports administrators are special. I must admit that. They are in a category of their own,” said the late Peter Roebuck, my best friend among foreign journalists visiting India frequently, during one of our post dinner conversations.
What Roebuck referred to was mainly cricket but he was curious enough to want to know more and more about other sports. Leadership skills can be either cultivated or learned but the men and women who run our sports are keen on only one thing — staying where they are with a great love for being in the spotlight.
How many times have we seen sports bosses appearing prominently in photographs of athletes who return after world-beating success at airports across the country?
Long ago, a top Indian sportsman returning after winning the world championship told me something that was shocking. I asked him who the gentleman who was hugging him in the front page of a leading Indian English language paper? “I swear, I have never seen the guy before,” he said of a man who was a senior administrator in the sport.
Of course, the nameless one is part of the Forever Men club.
Tuesday 16 February 2016
The housing crisis is creating sharp-elbowed husband hunters
Grace Dent in The Independent
“It is a truth universally acknowledged,” wrote Jane Austen, foretelling the British housing situation in 2016, “that a single man in possession of a good fortune must be in need of a wife.” Oh how I struggled, as a sixth-former in the Nineties, with the opening lines of Pride and Prejudice.
How hideous, I thought, that a time existed when a woman would marry a man for a house. Cut forward some two decades to the era of the £80,000 mortgage deposit. How odd that marrying bricks and mortar – with an added spouse as a bonus – seems pragmatic, rather than mercenary, today.
I very much enjoyed a recent column by the writer Esther Walker, in which she admits spying her then-boyfriend Giles Coren’s slightly neglected five-bedroom London townhouse, seven years ago, and being instantly smitten. With the house, that is. Coren, as alluring as he is, came second in the equation. First, Walker says, she saw the chipped front door, the replaceable carpets and all that lovely space. Here was a home in which she could live, nest, and raise children.
It is fascinating to me that, five short years ago, a confession as gloriously candid as Walker’s would have provoked feminists into bringing down the internet. I would have been among them, perhaps. Today, I greet the same news with a relaxed shrug of acceptance.
Just five short years ago, I remained convinced that if a young woman – or a young man, for that matter – dreamed audaciously and worked very, very hard, they need not be dependent on anyone for a home. I bought my own house through sheer slog and bloody-mindedness; why couldn’t Generation Buzzfeed do the same?
But little by little, I’ve watched the rise of single men and women trapped in later-life house-shares. I’ve seen how grown-up children are reduced to squatting like cuckoos in their parents’ back bedrooms until well after it is polite. Eventually, I was writing about the rise of strangers in London sharing bunkbeds (out of grim necessity, I should point out, not as a niche hobby).
The future seemed rather infantalising. And for women, feminism may well have flourished, but owning the house you live in, like Beyoncé sang about in “Independent Women” has fallen on its arse somewhat.
The facts are sobering: recent research by the Resolution Foundation on inter-generational fairness shows that in 1998, more than half of those earning 10 to 50 per cent of the average national income had a mortgage. This figure dropped to one in four by 2015. Within a decade, if things continue as they are, one in 10 will have a mortgage. In the late 1990s, when I was a strident youthful thing, it took determined people like me three years to save up for a deposit. Today it would take 22 years. That’s a long time to share a bunk bed, even if it’s in HMP Holloway.
This is particularly bleak in the light of new research on the rise of the “crowd worker” – people paid through online platforms such as Uber, Upwork and TaskRabbit. Here, instead of fairly paid, pensionable work which impresses mortgage vendors, there is a generation tied to their phones waiting to accept or decline piecemeal “tasks”.
Crowdworkers tend to work without benefits such as sick pay, holiday pay, pension contributions or minimum wage guarantees. There must – I suspect, as I’ve never worked like this myself – be a feeling for crowdworkers of being tremendously busy and usefully employed. But meanwhile, financially at least, they are treading water. I’m not sure how you conduct a family life or a relationship around crowdwork, although I’m pretty sure the people who profit from it will say that it’s this versatility that is the unique selling point.
One thing I do know is that Walker’s confession unveils an unpalatable truth about the modern British relationship. We are, increasingly, a nation of clandestine Austen heroines in search of those “in possession of a good fortune”. Be you feminist or fervent bachelor, gay, straight, male, cis or genderfluid; for the average person, marrying into property will be your best shot at “owning it” these days. And if you can charm your name on to the mortgage deeds, well, even better. The housing crisis will make sharp-elbowed, radar-eyed Chelsea husband-hunters of all of us.
In another five years, I predict that Tinder will be outmoded by a simple database of single millennials who were lucky enough to inherit – or afford – a three-bedroom house with space for a homeworking office and a nursery. Or an app which lists unwedded people with sickly parents about to cark it who, in the meantime, happen to be sitting selfishly on a five-bedroom pile in Surrey. In the future, these property owners – not the slinky, the booby or the muscular – will be the sex gods of society.
These gods will woo you with their seductive talk of land registry documents, convertable attic space and the downsides of a 20-metre back garden. You will be powerless in the face of their Farrow & Ball catalogue and hopelessly impressed that their bed is on one level and not accessed via a ladder. You will swipe right for a place to call home. Sure, deep, real love will keep you warm in bed at night. But when the place is yours, you can stick in underfloor heating and a reliable combi-boiler.
“It is a truth universally acknowledged,” wrote Jane Austen, foretelling the British housing situation in 2016, “that a single man in possession of a good fortune must be in need of a wife.” Oh how I struggled, as a sixth-former in the Nineties, with the opening lines of Pride and Prejudice.
How hideous, I thought, that a time existed when a woman would marry a man for a house. Cut forward some two decades to the era of the £80,000 mortgage deposit. How odd that marrying bricks and mortar – with an added spouse as a bonus – seems pragmatic, rather than mercenary, today.
I very much enjoyed a recent column by the writer Esther Walker, in which she admits spying her then-boyfriend Giles Coren’s slightly neglected five-bedroom London townhouse, seven years ago, and being instantly smitten. With the house, that is. Coren, as alluring as he is, came second in the equation. First, Walker says, she saw the chipped front door, the replaceable carpets and all that lovely space. Here was a home in which she could live, nest, and raise children.
It is fascinating to me that, five short years ago, a confession as gloriously candid as Walker’s would have provoked feminists into bringing down the internet. I would have been among them, perhaps. Today, I greet the same news with a relaxed shrug of acceptance.
Just five short years ago, I remained convinced that if a young woman – or a young man, for that matter – dreamed audaciously and worked very, very hard, they need not be dependent on anyone for a home. I bought my own house through sheer slog and bloody-mindedness; why couldn’t Generation Buzzfeed do the same?
But little by little, I’ve watched the rise of single men and women trapped in later-life house-shares. I’ve seen how grown-up children are reduced to squatting like cuckoos in their parents’ back bedrooms until well after it is polite. Eventually, I was writing about the rise of strangers in London sharing bunkbeds (out of grim necessity, I should point out, not as a niche hobby).
The future seemed rather infantalising. And for women, feminism may well have flourished, but owning the house you live in, like Beyoncé sang about in “Independent Women” has fallen on its arse somewhat.
The facts are sobering: recent research by the Resolution Foundation on inter-generational fairness shows that in 1998, more than half of those earning 10 to 50 per cent of the average national income had a mortgage. This figure dropped to one in four by 2015. Within a decade, if things continue as they are, one in 10 will have a mortgage. In the late 1990s, when I was a strident youthful thing, it took determined people like me three years to save up for a deposit. Today it would take 22 years. That’s a long time to share a bunk bed, even if it’s in HMP Holloway.
This is particularly bleak in the light of new research on the rise of the “crowd worker” – people paid through online platforms such as Uber, Upwork and TaskRabbit. Here, instead of fairly paid, pensionable work which impresses mortgage vendors, there is a generation tied to their phones waiting to accept or decline piecemeal “tasks”.
Crowdworkers tend to work without benefits such as sick pay, holiday pay, pension contributions or minimum wage guarantees. There must – I suspect, as I’ve never worked like this myself – be a feeling for crowdworkers of being tremendously busy and usefully employed. But meanwhile, financially at least, they are treading water. I’m not sure how you conduct a family life or a relationship around crowdwork, although I’m pretty sure the people who profit from it will say that it’s this versatility that is the unique selling point.
One thing I do know is that Walker’s confession unveils an unpalatable truth about the modern British relationship. We are, increasingly, a nation of clandestine Austen heroines in search of those “in possession of a good fortune”. Be you feminist or fervent bachelor, gay, straight, male, cis or genderfluid; for the average person, marrying into property will be your best shot at “owning it” these days. And if you can charm your name on to the mortgage deeds, well, even better. The housing crisis will make sharp-elbowed, radar-eyed Chelsea husband-hunters of all of us.
In another five years, I predict that Tinder will be outmoded by a simple database of single millennials who were lucky enough to inherit – or afford – a three-bedroom house with space for a homeworking office and a nursery. Or an app which lists unwedded people with sickly parents about to cark it who, in the meantime, happen to be sitting selfishly on a five-bedroom pile in Surrey. In the future, these property owners – not the slinky, the booby or the muscular – will be the sex gods of society.
These gods will woo you with their seductive talk of land registry documents, convertable attic space and the downsides of a 20-metre back garden. You will be powerless in the face of their Farrow & Ball catalogue and hopelessly impressed that their bed is on one level and not accessed via a ladder. You will swipe right for a place to call home. Sure, deep, real love will keep you warm in bed at night. But when the place is yours, you can stick in underfloor heating and a reliable combi-boiler.
Tuesday 20 May 2014
I'd vote yes to rid Scotland of its feudal landowners
The scoured, scorched Highlands could be brought to life – maybe an independent nation will have the courage to act
‘It is astonishing, in the 21st century, that people are still allowed to burn mountainsides for any purpose, let alone blasting highland chickens out of the air.' Photograph: Christopher Furlong/Getty
Power's ability to resist change: this is the story of our times. Morally bankrupt, discredited, widely loathed? No problem: whether it's neoliberal economics, tax avoidance, coal burning, farm subsidies or the House of Lords, somehow the crooked system creeps along.
Legally, feudalism in Scotland ended in 2004. In itself, this is an arresting fact. But almost nothing has changed. After 15 years of devolution the nation with the rich world's greatest concentration of land ownership remains as inequitable as ever.
The culture of deference that afflicts the British countryside is nowhere stronger than in the Highlands. Hardly anyone dares challenge the aristocrats, oligarchs, bankers and sheikhs who own so much of this nation, for fear of consequences real or imagined. The Scottish government makes grand statements about land reform, then kisses the baronial boot. The huge estates remain untaxed and scarcely regulated.
You begin to grasp the problem when you try to discover who owns them. Fifty per cent of the private land in Scotland is in the hands of 432 people – but who are they? Many large estates are registered in the names of made-up companies in the Caribbean. When the Scottish minister Fergus Ewing was challenged on this issue, he claimed that obliging landowners to register their estates in countries that aren't tax havens would risk "a negative effect on investment". William Wallace rides again.
Scotland's deer-stalking estates and grouse moors, though they are not agricultural land, benefit from the outrageous advantages that farmers enjoy. They are exempt from capital gains tax, inheritance tax and business rates. Landowners seek to justify their grip on the UK by rebranding themselves as business owners. The Country Landowners' Association has renamed itself the Country Land and Business Association. So why do they not pay business rates on their land? As Andy Wightman, author of The Poor Had No Lawyers, argues, these tax exemptions inflate the cost of land, making it impossible for communities to buy.
Though the estates pay next to nothing to the exchequer, and though they practise little that resembles farming, they receive millions in farm subsidies. The new basic payments system the Scottish government is introducing could worsen this injustice. Wightman calculates that the ruler of Dubai could receive £439,000 for the estate in Wester Ross he owns; the Duke of Westminster could find himself enriched by £764,000 a year; and the Duke of Roxburgh by £950,000.
With the help of legislators and taxpayers, the owners of the big estates are ripping apart the fabric of the nation. The hills in many parts look as if they have been camouflaged against military attack, as they have been burned in patches for grouse shooting. It is astonishing, in the 21st century, that people are still allowed to burn mountainsides – destroying their vegetation, roasting their wildlife, vaporising their carbon, creating a telluric eczema of sepia and grey blotches – for any purpose, let alone blasting highland chickens out of the air. Where the hills aren't burnt for grouse they are grazed to the roots by overstocked deer, maintained at vast densities to give the bankers waddling over the moors in tweed pantaloons a chance of shooting one.
Hanging over the nation is the shadow of Balmoral, whose extreme and destructive management – clearing, burning, overgrazing – overseen by Prince Philip, president emeritus of the World Wide Fund for Nature, is mimicked by the other landowners. Little has changed there since Victoria and Albert adopted an ersatz version of the clothes and customs of the people who had just been cleared from the land. This balmorality is equivalent to Marie Antoinette dressing up as a milkmaid while the people of France starved; but such is Britain's culture of deference that we fail to see it. Today they mix the tartans with the fancy dress of Edwardian squires, harking back to the last time Britain was this unequal.
But despite this lockdown, there is, if not quite a Highland spring, the beginnings of something different: on one side of me, here in Boat of Garten, is the bare, black misery of the Monadhliath mountains; on the other, the great rewilding that is quickly but quietly spreading through the north-west of the Cairngorms national park. Across 100,000 hectares, the RSPB, the Forestry Commission, the National Trust and Wildland Ltd (owned by the Danish textiles billionaire Anders Holch Povlsen) are seeking to reverse the destruction, reduce the deer to reasonable numbers, and get trees back on the braes. On Povlson's estates the area of woodland has doubled (to 1,400 hectares, or 3,450 acres) since 2006, solely through the control of deer. It's not land reform, but it's the best that can be done with the current, dire model of Scottish ownership.
The forests at the moment are bright with birdsong. In some places, looking down on lochans surrounded by marshes and regenerating pines, you almost expect to see a moose emerging from the trees. Trees are racing up the denuded hillsides: in Glenmore I've come across young pines, birch and rowan growing at 800 metres. Already people are talking about reintroducing lynx here within 20 years.
As the return of the ospreys to the lakes and forests in this part of the park shows, the potential for ecotourism, which spreads income and employment through the economy, is vast. The contrast with the scorched and scoured grouse moors of the east side of the national park, which employ hardly anyone, concentrate wealth in tax havens and are unmysteriously devoid of most birds of prey, could not be greater.
It doesn't reverse the other injustices, but it begins to undo the centuries of physical destruction. I would vote yes in September if I lived here, on the grounds that it presents an opportunity to do something new, and I furiously hope, despite the evidence, that an independent Scottish government will take it.
It should list all the beneficial owners of the land; impose the taxes Westminster refuses to levy; ensure that only farmers get subsidies and cap them at £30,000 a head; ban burning; control deer numbers; and turn Scotland into a land where you can actually see green shoots of recovery. On Friday the Land Reform Review Group, set up by the government at Holyrood, will publish its report, and it's likely to be devastating. Will Scotland get off its knees at last?
Wednesday 30 April 2014
Thomas Piketty's bestselling post-crisis manifesto is horrendously flawed
Allister Heath in The Telegraph
Given that today’s fashionable economic ideas tend to become tomorrow’s government policies, it’s not looking good for the future of free-market capitalism. Consider the current bestselling book in America, Capital in the Twenty-First Century, a hugely important work that has already become the defining post-crisis manifesto. Its ground-breaking research on historic patterns of wealth ownership is second to none, but its conclusions are horrendously flawed.
Its author, the French economist Thomas Piketty, advocates an 80pc income tax rate for those earning more than £300,000 a year. For good measure, he also floats a range of other even worse ideas, including an internationally coordinated progressive wealth tax, hitting anybody with at least £165,000 in assets and peaking at a crippling 10pc a year on billionaires, a windfall tax on private capital, a dose of inflation and a war on inherited wealth. It’s the kind of hardcore message to warm the hearts of your average British socialist, circa 1976 – and yet it is being embraced as the latest, cutting-edge thinking.
Even more fantastically, this assault on private property and wages would supposedly have no meaningful negative side-effects. Piketty writes that “the evidence suggests that a rate [of tax] of the order of 80pc on incomes over $500,000 or $1m a year would not reduce the growth of the US economy but would, in fact, distribute the fruits of growth more widely while imposing reasonable limits on economically useless behaviour”. Instead of being laughed out of town, Piketty is being treated with the sort of adulation usually reserved for a rock star.
At this point, I could cite some of the many peer-reviewed studies that show — unlike the author’s own research — how high marginal tax rates reduce work and effort, remind readers that eating capital is the best way to impoverish a nation, reduce productivity growth and keep wages down, or point out that societies where the most successful entrepreneurs are rewarded by the state seizing their assets don’t prosper.
Instead, let me consider Piketty’s big idea, which he believes justifies his policies of “confiscatory” taxation – to him, a positive term. He believes that in a peacetime free-market economy, the returns on capital — dividends, interest, rents and capital gains — inevitably grow faster than the overall economy. The owners of capital will therefore end up grabbing an ever-greater slice of the pie, leaving workers with less and less.
I buy neither the prediction nor the proposed solution. For a start, João Paulo Pessoa and John Van Reenen from the LSE have shown that the share of UK income going to labour is largely the same now as it was 40 years ago, unlike in America. And if the returns to capital do go up, more money will eventually be invested to reap the rewards — and that, in turn, will increase productivity and hence wages, and keep down capital’s share of GDP.
There are other problems. Try telling pensioners that “rentiers” always end up ahead. The rate of interest on many bank accounts is close to zero, and therefore negative after inflation, and returns on gilts have been awful over the past couple of years. Of course, share prices have shot up — but risky assets come with a premium, and total returns on UK equity markets haven’t exactly been stellar over the past 15 years.
Capital is an amorphous concept; it keeps changing, as does its ownership. Entire industries are being decimated by technological progress; the whole point of capitalism is creative destruction, which means that old capital becomes obsolete, wiping out its owners, and is replaced by new capital, enriching its creators. It is also easy to destroy assets by consuming them — and that is what happens, in most cases, when money is passed down generations.
The fact that Piketty’s book is selling so well busts several myths.
The first is about American intellectual exceptionalism: the idea that US Left and Right differ only marginally in their support of capitalism, unlike in Europe. That certainly isn’t the case today. Parts of the US intelligentsia now advocate the same ideas that are to be found on Europe’s Left-wing fringes; Piketty and his adoring fans would go much further even than Ed Miliband.
The second incorrect idea is that the recent episode of banker-bashing from Occupy Wall Street et al was merely a reaction to the bail-outs, or to the financial sector’s role in the crisis. It was perfectly possible, we were told, to slam bankers but to embrace entrepreneurs. It was a case of Wall Street bad, Silicon Valley good; money accrued through finance was supposedly “undeserved” and that accrued by building a business wasn’t.
The truth, as I long suspected and as the almost delirious reception that this book has received confirms, is altogether different. Envy is back, disguised as a concern about “inequality”, and the bail-outs and QE were merely a convenient excuse to bash the rich. It is shocking how many intelligent people now support seizing most of the wealth created by entrepreneurs, including the founders of the great software companies (which is what a 10pc annual tax on the assets of billionaires would soon achieve).
The third myth is that there is such a thing as the “1pc”. This was always nonsense: someone earning £150,000 a year (the threshold at which a UK income taxpayer joins the club) has nothing in common with a billionaire. The Left now has another enemy, the top 0.1pc or even 0.01pc, which is just as well given that plenty of those waxing lyrical about Piketty are in the lower reaches of the top 1pc themselves. It is a case of the rich waging war on the extremely rich.
One reason why many believe Piketty’s claim that returns to capital will continue to outpace GDP is the experience of the past three to four years. Share prices have bounced back, and house prices have outperformed; meanwhile, wages are down in real terms. Yet that doesn’t mean this will continue indefinitely.
Regardless of whether Piketty’s key prediction is true — and I’m sure it isn’t — a much better solution is to encourage an ownership society so all can enjoy returns from capital. In the UK, auto-enrolment means that nearly everybody will begin to accumulate financial assets in pension pots.
Housing policy needs to change. In London, New York and San Francisco, house prices have rocketed because of planning rules that limit supply growth, pricing many out of the market. The best way to refute Piketty’s law in this area is to make it much easier to build new homes.
We also need a normalised monetary policy, not one designed to keep the price of capital assets as high as possible, thus artificially (but temporarily) boosting the wealthy.
Last but not least, supporters of capitalism need to get their act together. They are being slaughtered on the intellectual battlefield by opponents who are finding sexy new justifications for their old arguments. We need more and better defences of the free enterprise system, and we need them now.
Sunday 14 July 2013
This privatisation of the Royal Mail would be a national disaster
The Royal Mail must remain in British ownership and remodelled like Germany's Deutsche Post
A great British institution: the Royal Mail. Photograph: Tim Graham/Getty Images
Britain is 159th in the world league table that ranks investment as a share of GDP. This is not new. Owners of British companies have long been permitted a feckless lack of responsibility. Smart countries, from the US to Germany, make sure that they insulate their companies as far as they can from the myopia and short-term greed of stock markets. Instead, the British approach to ownership exposes our companies to stock market thinking: shrivelling investment, cutting back on innovation, minimising training and hoarding cash to please their irresponsible, transactional owners.
It is a national disaster that another great British organisation, the Royal Mail, is to be cast into this maelstrom. (As I explain later, a more imaginative "protected" private model could work.) The directors of the Royal Mail will be under the same relentless hammer as those in every other British plc. They will put up prices as much as the regulator will allow, cut into universal provision and relentlessly contract out as much of the delivery to the lowest paid, least protected workers; none of this will be enough to satisfy their owners.
Eventually, the directors, vastly enriched with share options, incentive plans and 200% bonuses, will run up the white flag. Within a decade, the Royal Mail will be sold overseas, probably to another state-owned postal service, if not to a private equity fund based in a tax haven. Who knows? It could even be the Chinese communist party that ends up owning this great British institution.
You don't need to be a great seer to predict this future. It is exactly what has happened with our privatised water and energy companies. Economists will say the mail service is more efficient, rather as they discussed the way financial deregulation promoted banking efficiency up to the financial crash of 2008 without ever anticipating the costs of the crash that overwhelmed those gains. By one yardstick, this "efficiency" is guaranteed: the Royal Mail's 150,000 workforce will shrink.
But economists' definition of efficiency is pathetically narrow. It will take no account of the lost tax revenues when the Royal Mail is owned offshore, nor the cost of the state guarantees that will be necessary to support crucial investment. (See the demands from the privatised Thames Water and BT are seeking for their investment in, respectively, the super sewer and national broadband.) Neither will it measure the social impact of a diminished, expensive and fractured postal service, part of the glue that holds the country together, nor the need for state support if some unexpected event threatens. In short, any efficiency gains from privatisation have to be qualified by large costs, some of which only become obvious over decades.
Thus, although all the big six energy companies are more efficient in the sense they produce more power, with fewer employees, than they did a generation ago, any calculus of gains and losses must include the price guarantees the government offers to secure the investment Britain needs in renewable energy and nuclear. Centrica, withdrawing from its partnership with EDF Energy over building nuclear power stations, acknowledged its shareholders wanted higher returns over a shorter period than any deal the government might offer.
If energy provision in Britain were only to be delivered by British privately owned plcs pleasing their tourist stock market owners, they would all build gas-fired power stations, an energy mono-culture that would make the country reliant on one energy source. It would also be environmentally disastrous. The state cannot stand back.
We know all this, but somehow there is a political and cultural incapacity to face the reality. State ownership is seen as cumbersome, socialist, bureaucratic and hidebound. Private ownership is seen as none of those things and little mention is made of the acute depredations wreaked in the private sector. Try getting Ukip to promise that it would oppose the Royal Mail being owned by a Cayman Islands private equity fund, an Arab sovereign wealth fund or some plutocrat. There is silence. Ownership does not matter.
The Department for Business website talks loftily of ensuring that the Royal Mail has the necessary access to investment through privatisation, "untying its hands", as business minister Michael Fallon puts it. But this is the same Department for Business that was so concerned that privately owned plcs were short-termist and anti-investment that it commissioned John Kay to investigate. Even if his report shrank from any meaningful action, it at least dramatised the problem.
The model of privately owned postal companies competing in a regulated market is not a priori wrong: it seems to work in Germany with the privatised Deutsche Post. It is just that British private ownership structures maximise every adverse possibility and outcome. We are about to experience a boom in parcel deliveries as online shopping explodes. Universal parcel delivery is going to become an indispensable utility. Any government that consigns this crucial service to British-style private ownership – for a mere £3bn with 10% of shares given free to workers as a blatant bribe – is as short-termist as the stock market.
Instead, with ownership configured more imaginatively, the Royal Mail could become a de facto trust, a British postal and logistics group ready to exploit the coming boom. A creative government would transform it into a private trust with its own supervisory board on top of the management board, modelled along the lines of Deutsche Post that pro-privatisers like to cite but without ever doing any homework on the detail. For this model would be charged with ensuring managers protect and improve Britain's universal postal and parcel service, as well as seeking other commercial opportunities. The board would have public interest directors along with directors elected by the workers, enfranchised by the collective ownership of, say, a quarter of the shares in an employee ownership scheme. External investors could thus only buy into an organisation whose constitution, purpose and ownership were permanently shaped to deliver public good.
No such template has been floated. It is an opportunity Labour should seize as the embodiment of responsible capitalism. If Ed Miliband and Chuka Umunna were suitably adept, they could even create a parliamentary majority, with dissident Lib Dems and Tories, for it. Apart from ideologues, no one thinks privatisation as it has been practised works and everyone knows that in a decade the Royal Mail will probably be foreign owned. On this, the Communications Workers union and the Labour party are right. But supporting the status quo is insufficient to win the argument. What they need is an alternative prospectus. There is nothing to lose and everything to gain.
Monday 3 December 2012
Borussia Dortmund boss attacks Premier League's oligarch owners
• Chief executive says English game is losing its soul
• Germany's cheap tickets and standing areas show the way
• Germany's cheap tickets and standing areas show the way
Borussia Dortmund's chief executive, Hans-Joachim Watzke, says that links between fans and clubs in Germany are now stronger than they are in England. Photograph: Gary Calton for the Guardian
The chief executive of Borussia Dortmund, who play Manchester City in the Champions League on Tuesday, has launched a passionate defence of German football principles and attacked English clubs' ownership by rich men from overseas.
Hans-Joachim Watzke described German football as "romantic" for retaining its "50% plus one" rule, which requires Bundesliga clubs to be owned by their members. He questioned the ethos and sustainability of Premier League clubs' ownership, including City being owned and funded by Sheikh Mansour of Abu Dhabi.
Of City, a club he visited for last month's 1-1 draw in the first match between the two, Watzke said: "I am a little bit romantic, and that is not romantic. In England people seem not to be interested in this – at Liverpool they are fine for the club to belong to an American. But the German is romantic: when there is a club, he wants to have the feeling it is my club, not the club of Qatar or Abu Dhabi."
Watzke was a prominent supporter of the 50% plus one rule when it was challenged last year by Martin Kind, the president of Hannover. Dortmund are floated on the stock market, but the members elect the president and four members of the club's supervisory board – and also vote to decide major issues of club policy.
"I was the biggest opponent of changing the rule," Watzke said in an interview with the Guardian at Dortmund's Signal Iduna stadium in the build-up to the City match. "Germans want to have that sense of belonging. When you give [the supporters] the feeling that they are your customers, you have lost. In Germany, we want everybody to feel it is their club, and that is really important."
All 36 Bundesliga clubs are owned or controlled by their members, except the historic exceptions of Wolfsburg, owned by Volkswagen, Bayer Leverkeusen, owned by the pharmacy giant Bayer, and Hoffenheim, which is now funded by a single very wealthy entrepreneur, Dietmar Hopp.
Apart from those three and Kind's Hannover, the remaining 32 voted to keep the 50% plus one rule, which was introduced in 2001 when the Bundesliga clubs broke away to run the league competition independently from the German Football Association, the DFB.
"In former times in England I think the relationship between the club and supporters was very strong," Watzke argued. "Our people come to the stadium like they are going to their family. Here, the supporters say: it's ours, it's my club."
Watzke, himself a lifelong supporter of Dortmund, who drew 1-1 with runaway Bundesliga leaders Bayern Munich on Saturday, linked the system of member-ownership and control to the maintenance of affordable tickets and standing areas at top flight German football.
At Dortmund, the 25,000 fans who form the famous "Yellow Wall" standing area in the Signal Iduna stadium's south stand pay just €190 (£154) for a season ticket for the 17 home Bundesliga matches. Season tickets that also include entry to the first three Champions League group games cost slightly more at €220, working out at exactly €11 for each match.
"Here, it is our way to have cheap tickets, so young people can come," Watzke said. "We would make €5m more a season if we had seats, but there was no question to do it, because it is our culture. In England it is a lot more expensive. Football is more than a business."
Watzke argued that Dortmund, who top the group of City, Real Madrid and Ajax while the English champions cannot qualify for the knockout stages, have been able to compete with such clubs thanks to sensible management, coaching and player recruitment, despite not having the resources of a rich individual such as Sheikh Mansour backing the club.
"Everybody told me you cannot play in the Champions League against clubs like Manchester, they have more money. But we are trying to do it ourselves, in our way.
"There are a lot of ways to Rome," he said. "Chelsea have won the Champions League. But Chelsea's question is: what happens after [Roman] Abramovich?"
Hans-Joachim Watzke described German football as "romantic" for retaining its "50% plus one" rule, which requires Bundesliga clubs to be owned by their members. He questioned the ethos and sustainability of Premier League clubs' ownership, including City being owned and funded by Sheikh Mansour of Abu Dhabi.
Of City, a club he visited for last month's 1-1 draw in the first match between the two, Watzke said: "I am a little bit romantic, and that is not romantic. In England people seem not to be interested in this – at Liverpool they are fine for the club to belong to an American. But the German is romantic: when there is a club, he wants to have the feeling it is my club, not the club of Qatar or Abu Dhabi."
Watzke was a prominent supporter of the 50% plus one rule when it was challenged last year by Martin Kind, the president of Hannover. Dortmund are floated on the stock market, but the members elect the president and four members of the club's supervisory board – and also vote to decide major issues of club policy.
"I was the biggest opponent of changing the rule," Watzke said in an interview with the Guardian at Dortmund's Signal Iduna stadium in the build-up to the City match. "Germans want to have that sense of belonging. When you give [the supporters] the feeling that they are your customers, you have lost. In Germany, we want everybody to feel it is their club, and that is really important."
All 36 Bundesliga clubs are owned or controlled by their members, except the historic exceptions of Wolfsburg, owned by Volkswagen, Bayer Leverkeusen, owned by the pharmacy giant Bayer, and Hoffenheim, which is now funded by a single very wealthy entrepreneur, Dietmar Hopp.
Apart from those three and Kind's Hannover, the remaining 32 voted to keep the 50% plus one rule, which was introduced in 2001 when the Bundesliga clubs broke away to run the league competition independently from the German Football Association, the DFB.
"In former times in England I think the relationship between the club and supporters was very strong," Watzke argued. "Our people come to the stadium like they are going to their family. Here, the supporters say: it's ours, it's my club."
Watzke, himself a lifelong supporter of Dortmund, who drew 1-1 with runaway Bundesliga leaders Bayern Munich on Saturday, linked the system of member-ownership and control to the maintenance of affordable tickets and standing areas at top flight German football.
At Dortmund, the 25,000 fans who form the famous "Yellow Wall" standing area in the Signal Iduna stadium's south stand pay just €190 (£154) for a season ticket for the 17 home Bundesliga matches. Season tickets that also include entry to the first three Champions League group games cost slightly more at €220, working out at exactly €11 for each match.
"Here, it is our way to have cheap tickets, so young people can come," Watzke said. "We would make €5m more a season if we had seats, but there was no question to do it, because it is our culture. In England it is a lot more expensive. Football is more than a business."
Watzke argued that Dortmund, who top the group of City, Real Madrid and Ajax while the English champions cannot qualify for the knockout stages, have been able to compete with such clubs thanks to sensible management, coaching and player recruitment, despite not having the resources of a rich individual such as Sheikh Mansour backing the club.
"Everybody told me you cannot play in the Champions League against clubs like Manchester, they have more money. But we are trying to do it ourselves, in our way.
"There are a lot of ways to Rome," he said. "Chelsea have won the Champions League. But Chelsea's question is: what happens after [Roman] Abramovich?"
Sunday 30 September 2012
We need a revolution in how our companies are owned and run
The second of this series on a new capitalism calls for a culture dedicated to long-term, ethical goals
Rolls Royce: almost our last remaining great industrial company. Photograph: Simon Stuart-Miller/guardian.co.uk
Twenty years ago, Britain's greatest industrial companies were ICI and GEC. A third, Rolls-Royce, secured from hostile takeover by a government golden share, had a board that was boringly committed to research and development and to investing in its business. ICI and GEC, under colossal pressure from footloose shareholders to deliver high short-term profits, tried to wheel and deal their way to success. Neither now exists. Rolls Royce, free from concerns about hourly movements in its share price, has gone on to be almost our last remaining great industrial company.
Britain, as the Kay review on the equity markets reported, has far too few Rolls-Royces. Instead the report identified a lengthening list of companies – Marks and Spencer, Royal Bank of Scotland, BP, GlaxoSmithKline, Lloyds and now BAE – which have made grave strategic errors, taken ethical short cuts or launched ill-judged takeovers, hoping to benefit their uncommitted tourist shareholders. Their competitors in other countries, with different ownership structures and incentives, have survived and prospered.
It is an unreported crisis of ownership that goes to the heart of our current ills. Over the last decade, a fifth of quoted companies have evaporated from the London Stock Exchange, the largest cull in our history. Virtually no new risk capital is sought from the stock market or being offered across the spectrum of companies. A share is now held for an average of seven months. Britain has no indigenous quoted company in the fields of car, chemical or building materials. They are all owned overseas, with design and research and development travelling abroad as well.
The stock market has descended into a casino, served by a vast industry of intermediaries – agents, trustees, investment managers, registrars and advisers of all sorts – who have grown fat from opaque fees. It has become a transmission mechanism for highly short-term expectations of profit driven into the boardroom. Directors' pay has been linked to share price performance, offering them the prospect of stunning fortunes. As a result, R&D is consistently undervalued.
British companies are now hoarding some £800bn in cash, cash they would rather use buying back their own shares than committing to investment. We have allowed a madhouse to develop. An important reason why Britain is at the bottom of the league table for investment and innovation is the way our companies are owned or, rather, notowned.
It is a crisis of commitment. Too few shareholders are committed to the companies they allegedly "own". They consider their shares either casino chips to be traded in the immediate future or as no more than a contract offering the opportunity of dividends in certain industries and countries; this requires no engagement in how those profits and dividends are generated. British law and corporate governance rules demand the narrowest interpretation of investors' and directors' duties: to maximise short-term profits while having minimal associated responsibilities.
The company is conceived as nothing more than a network of short-term contracts. Any shareholder – from a transient day trader to a long-term investor – has the same standing in law. American directors' ability to defend their company from hostile takeover or German directors having to live – horrors – with trade union representatives on their supervisory boards are seen as obstacles to enterprise that Britain must not go near. But companies and wealth generation, as Professor Colin Mayer argues in his important forthcoming book Firm Commitment, are about co-creation, sharing risk and long-term trust relationships: Britain's refusal to embrace these core truths is toxic. Companies were originally invented as legal structures to enable groups of investors to come together, committing to share risk around a shared goal and so make profit for themselves, but delivering wider economic and social benefits in the process. Incorporation was understood to be associated with obligations: a company had to declare its purpose before earning a licence to trade. There existed a mutual deal between society and company.
No game-changing improvement in British investment and innovation is possible without a return to engagement, stewardship and commitment. Limited liability should not be a charter to do what you like. It must be conditional on a core business purpose, along with the creation of trustees to guard it. Directors' obligations should be legally redefined to deliver on this purpose. What's more, every shareholder should be required to vote, with voting strength, as Mayer argues, increasing for the number of years the share is held.
To solve the problem that individual shareholders – even savings institutions – do not have sufficient muscle nor sufficient incentive to engage with managements, voting rights could be aggregated and given to new mutuals. These would support directors in delivering their corporate purpose, a proposal made by the Ownership Commission I chaired. Companies would become trust companies, with a stewardship code. The priority in takeovers would be the best future for the business, not the ambition to please the last hedge fund to take a short-term position.
Stakeholders should also have a voice in how the company is run. In Germany, a company's bankers and its employee representatives have seats on the supervisory board. Why not copy success rather than continue with our failed system? The Kay review's proposals to stop quarterly profit reporting, while a useful first step, do not address the core of the problem. The company has become a dysfunctional organisational construct that needs root-and-branch reform.
As part of the reform, Britain also needs more co-operatives, more employee-owned companies and more family-owned firms. It needs to be more attentive to which foreign companies own our assets and for what purpose. It is an ownership revolution to match the revolution in finance proposed last week. Together with an innovation revolution – see next week – the British economy could at last begin to deliver its promise.
Tuesday 7 August 2012
Putting a price on the rivers and rain diminishes us all
Payments for 'ecosystem services' look like the prelude to the greatest privatisation since enclosure
Our rivers and natural resources are to be valued and commodified, a move that will benefit only the rich, argues George Monbiot. Photograph: Alamy
'The first man who, having enclosed a piece of ground, bethought himself of saying 'This is mine', and found people simple enough to believe him, was the real founder of civil society. From how many crimes, wars and murders, from how many horrors and misfortunes might not anyone have saved mankind, by pulling up the stakes, or filling up the ditch, and crying to his fellows, 'Beware of listening to this impostor; you are undone if you once forget that the fruits of the earth belong to us all, and the earth itself to nobody'."
Jean Jacques Rousseau would recognise this moment. Now it is not the land his impostors are enclosing, but the rest of the natural world. In many countries, especially the United Kingdom, nature is being valued and commodified so that it can be exchanged for cash.
The effort began in earnest under the last government. At a cost of £100,000, it commissioned a research company to produce a total annual price for England's ecosystems. After taking the money, the company reported – with a certain understatement – that this exercise was "theoretically challenging to complete, and considered by some not to be a theoretically sound endeavour". Some of the services provided by England's ecosystems, it pointed out, "may in fact be infinite in value".
This rare flash of common sense did nothing to discourage the current government from seeking first to put a price on nature, then to create a market in its disposal. The UK now has a natural capital committee, an Ecosystem Markets Task Force and an inspiring new lexicon. We don't call it nature any more: now the proper term is "natural capital". Natural processes have become "ecosystem services", as they exist only to serve us. Hills, forests and river catchments are now "green infrastructure", while biodiversity and habitats are "asset classes" within an "ecosystem market". All of them will be assigned a price, all of them will become exchangeable.
The argument in favour of this approach is coherent and plausible. Business currently treats the natural world as if it is worth nothing. Pricing nature and incorporating that price into the cost of goods and services creates an economic incentive for its protection. It certainly appeals to both business and the self-hating state. The Ecosystem Markets Task Force speaks of "substantial potential growth in nature-related markets – in the order of billions of pounds globally".
Commodification, economic growth, financial abstractions, corporate power: aren't these the processes driving the world's environmental crisis? Now we are told that to save the biosphere we need more of them.
Payments for ecosystem services look to me like the prelude to the greatest privatisation since Rousseau's encloser first made an exclusive claim to the land. The government has already begun describing land owners as the "providers" of ecosystem services, as if they had created the rain and the hills and the rivers and the wildlife that inhabits them. They are to be paid for these services, either by the government or by "users". It sounds like the plan for the NHS.
Land ownership since the time of the first impostor has involved the gradual accumulation of exclusive rights, which were seized from commoners. Payments for ecosystem services extend this encroachment by appointing the landlord as the owner and instigator of the wildlife, the water flow, the carbon cycle, the natural processes that were previously deemed to belong to everyone and no one.
But it doesn't end there. Once a resource has been commodified, speculators and traders step in. The Ecosystem Markets Task Force now talks of "harnessing City financial expertise to assess the ways that these blended revenue streams and securitisations enhance the ROI [return on investment] of an environmental bond". This gives you an idea of how far this process has gone – and of the gobbledegook it has begun to generate.
Already the government is developing the market for trading wildlife, by experimenting with what it calls biodiversity offsets. If a quarry company wants to destroy a rare meadow, for example, it can buy absolution by paying someone to create another somewhere else. The government warns that these offsets should be used only to compensate for "genuinely unavoidable damage" and "must not become a licence to destroy". But once the principle is established and the market is functioning, for how long do you reckon that line will hold? Nature, under this system, will become as fungible as everything else.
Like other aspects of neoliberalism, the commodification of nature forestalls democratic choice. No longer will we be able to argue that an ecosystem or a landscape should be protected because it affords us wonder and delight; we'll be told that its intrinsic value has already been calculated and, doubtless, that it turns out to be worth less than the other uses to which the land could be put. The market has spoken: end of debate.
All those messy, subjective matters, the motivating forces of democracy, will be resolved in a column of figures. Governments won't need to regulate; the market will make the decisions that politicians have ducked. But trade is a fickle master, and unresponsive to anyone except those with the money. The costing and sale of nature represents another transfer of power to corporations and the very rich.
It diminishes us, it diminishes nature. By turning the natural world into a subsidiary of the corporate economy, it reasserts the biblical doctrine of dominion. It slices the biosphere into component commodities: already the government's task force is talking of "unbundling" ecosystem services, a term borrowed from previous privatisations. This might make financial sense; it makes no ecological sense. The more we learn about the natural world, the more we discover that its functions cannot be safely disaggregated.
Rarely will the money to be made by protecting nature match the money to be made by destroying it. Nature offers low rates of return by comparison to other investments. If we allow the discussion to shift from values to value – from love to greed – we cede the natural world to the forces wrecking it. Pull up the stakes, fill in the ditch, we're being conned again.
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