Tuesday, 25 November 2008

The pre-budget report.

Today Alistair Darling stood up in the House of Commons and gave what is widely seen as being the most important budget announcement for a generation. Except, of course, it was not a budget; it was a pre-budget report. In reality this distinction was moot, and in all but name it was a budget.

Others have written about the effects of the various measures; the reduction in VAT from 17.5% tp 15%, or the new 45% tax rate on earnings over £150,000 (to be imposed from 2011). Instead, I will concentrate on some other things that piqued my interest about the announcements.

The BBC has some interesting graphs at http://news.bbc.co.uk/1/hi/business/7734971.stm. The top one is particularly interesting; from figures released today, the projected recession and subsequent recovery appears to mirror that of the 1990-1993 recession, with only one year spent in negative growth, and a recovery in 2010. Is this a coincidence? Unfortunately, Alistair Darling appears to be the only one who believes that the recession will only last for a short period.

Let's take a look at the other recessions shown in that graph. The one of the early '80s has been blamed on Thatcher. Whilst it did happen on her watch, it started right at the beginning of her premiership, and was rooted well within the policies of the previous Labour Government. It often takes two or three years for the effects of economic policies to become clear. In the same way, the current woes are based on decisions taken (or not taken) several years ago.

As another example, in his autobiography (p.106) John Major blames the recession of the early 1990s on inaccurate growth forecasts made by the treasury (when he was Chief Secretary to the Treasury) in the 1987-1988 period. The treasury underestimated growth, which meant that for a couple of years growth accelerated, and interest rates (*) had to be increased to cope with it. Now we are in the opposite situation, with the treasury appearing to massively overestimate growth.

The second graph is also telling; the increase in the budget deficit over the estimates made just eight months ago. This was a real 'wtf!' graph for me. (I also wonder how much PFI is included within this - some people claim that the Government has been nudging the magic 40% barrier for some time if you include all the off-books debt). Has the situation really deteriorated fast enough to cause the projections to be that far off?

I really cannot see anything other than some serious tax rises in future years, whichever Government may be in power. I can only hope that the situation does not deteriorate further.

(*) There were other things that they could have done, but this was seen as being the quickest and most politically acceptable thing to do; putting up taxes would also have worked, but may have taken longer to trickle though and been political dynamite.

Wednesday, 12 November 2008

Pro-Labour bias in the BBC?

There was an interesting slot on BBC Breakfast News this morning, discussing the economy. They had two guests; a Liberal Democrat politician, and a man called Simon Woodroffe, the founder of the Yo Sushi! and Yotel brands.

I would link to the program, but the BBC iPlayer does not appear to have it in its list.

The latter was presented as an impartial observer (no political links were mentioned), and basically claimed that the outlook for the Economy was good. His line was suspiciously near to that of the Labour Party.

The name rung a bell, so after the interview was over I went upstairs to check. It turns out that Mr Woodroffe is far from impartial.

From the Independent, dated 16th July 2006:
Meanwhile one of Labour's leading business supporters claimed it was only "human" that donors should give in expectation of honours and that Mr Blair should reward his friends. In an extraordinary intervention, Simon Woodroffe, the businessman behind Yo Sushi! told the IoS that he was sure Lord Levy had not sold honours.

"That said," he added, "would it have crossed the minds of a donor that a possible outcome could be an award at some point? We are but human beings with all our pride and ambition and dreams. Would the Prime Minister as he looked through the shortlist of candidates not have warmed to one who had helped him? Of course he would."

So this man, who says that Labour is managing the economy well, is a leading Labour business supporter, and also spoke in favour of them in the cash-for-honours scandalette.

From Wikipedia :
Woodroffe received an OBE on 17 June 2006
He therefore made the comments above a month *after* having been awarded an OBE.

Why did the BBC not make it clear that this man was far from impartial!

Actually, further investigation shows this to be more complex. Was Simon Woodroffe actually a Labour donor? I find links on the Internet saying that he was and was not a Labour donor:

A blog entry on the Guardian's website states:

Even more amusing than Woodroffe's pronouncements over the weekend was his admission, on Five Live Drive last week, that despite his name appearing on the "proud to fund Labour" poster, he hasn't actually given them any money.

From the Daily Telegraph:
On Tuesday night, I hear, Labour Party chairman Hazel Blears held a discreet meeting of 15 high-level supporters to discuss rebuilding the party's finances. In typical New Labour style, there were plenty of stuffed wallets and fawning luvvies. Chinese gambling tycoon Johnny Hon and sushi king Simon Woodroffe rubbed shoulders with media Lords Alli and Bragg while the most vocal, apparently, was John Reid, Sir Elton John's former manager and boyfriend.

but from the Times : August 13, 2006
More recently, after receiving an OBE, he has appeared in political ads, saying he was “proud to fund the Labour party” (he gave £1,000). He is not a shrinking violet.
Another quote from the same article:
He has also been involved with the Labour party recently. “Not particularly because I am a Labourite but because I think the long term of politics is about management, and UK plc needs to be managed by people with business sense.” He is booked as an after-dinner speaker at the Labour party conference this autumn.
From: The Guardian , Sunday August 19 2007
He is often spoken of as a Labour party donor, but only ever gave £1,000 - though he says he is considering giving more. As a former public school drop-out, he concedes that he does not come from the Labour heartlands but is enamoured of this government. 'Labour are a pretty good management team and I'm scared to change to another management team.'
From The Post.ie., 7th Actober 2007
He has also appeared in political ads telling people he was ‘‘proud to fund the Labour Party’’.

So, from the above there is indicative evidence that he was a donor, albeit for a small amount of money, and also that he is Labour-leaning, (he appeared in an advert for them).

If the above is true, then why did the BBC not mention this when he appeared? Someone cannot have the history detailed above and be presented as a neutral observer.

This is not the first time similar things have happened. The BBC should make it clear if any of their guests discussing political or economic issues have links with political parties, especially when they make party-political statements. Failure to do so will lead to accusations of political bias, something that the BBC cannot afford.

The BBC is in a position of trust. It is rapidly losing that trust.

Tuesday, 11 November 2008

Boeing 787 troubles

A week ago Boeing announced the fourth delay to the first flight of their new Boeing 787 'Dreamliner' plane. This promises to be a revolutionary plane, and has gained over 900 firm orders before its first flight. It could well be one of the most successful plane types ever launched.

There are perhaps two major differences between this and any other plane Boeing has made. Firstly, the fuselage barrel is made out of carbon-fibre, the first time this has been done for a plane of this size. Secondly, Boeing has distributed construction between many different firms in many different countries (something that Airbus has done for years).

Unfortunately, the combination of these two factors has been, at best, an embarrassment for Boeing and, at worst, a disaster. Construction of the plane has been hampered by a number of issues; a lack of fasteners, software delays, and strikes. It now looks as though the first deliveries to customers will be two years late.

On the 8th July 2007 (7/8/7 on the American date system) Boeing rolled out the first airframe to a massive publicity fan fair. The airframe looked stunningly beautiful in its blue and white livery, and everything seemed a-okay with the project. Unfortunately, and rather mendaciously, it was all an illusion. As soon as the press had gone, the plane was rolled back into a hanger and disassembled. Many of the fasteners that held the fuselage barrels together were temporary. and the whole plane was taken to pieces to enable new ones to be fitted. The cause was a shortage of aerospace-grade fasteners, and this shortage caused the first of the delays.

Boeing had desperately wanted to reach the 7/8/7 roll-out date, but were going to miss it due to the shortage. They therefore cobbled the airframe together temporarily. There are several things that seem wrong to me about this decision. Firstly it is untruthful (the media get an illusion that the plane is at a more advanced stage of construction that it really is). Secondly, the delays in having to take the plane apart and refit proper fasteners was considerable, especially if parts get damaged in the process. Thirdly, when it was discovered what they had done (which was inevitable), it makes it appear that they put publicity over engineering.

More delays occurred, which were blamed on various factors; delays with the software, incomplete documentation from third parties, and further shortage of fasteners. Finally, a strike by workers of the IAM union stopped most work for a month.

The problem is, I do not get the impression that Boeing are being in the last bit truthful about the delays. The latest delay was announced at the end of the IAM strike, and appeared to put most of the emphasis for the new delay on the strike. However, it also mentioned that 3% of all the fasteners in all of the airframes completed so far are incorrect sizes. These are not in one place in any one airframe, but scattered all over multiple planes. These will have to all be replaced before there can be any flights. After the problems with the fasteners last year, this seems to be an almost incredible lapse. The news was also released on the same day as the US election, which makes it appear that they are burying bad news.

Of course, all this is reminiscent of the delays that the Airbus super-jumbo A380 suffered (about 18 months late into service, and a much-reduced ramp-up of production). However, there are some important differences.

Firstly, unlike the A380 delays, which mostly occurred after the first flight had occurred, the 787 delays are occurring before it flies. This is important for several reasons; as the A380 problems did not affect the aircraft's flying, they could do many flight tests whilst they sorted out the chaos.

Secondly, the A380 delays were caused by one problem; an incompatibility in design software between German, French and British plants. The Boeing 787 issues, however, have multiple and varied causes, from delayed software to parts supply, from strikes to incorrect assembly. All of these could - and should - have been avoided. For more details on the latest problems, see the excellent FlightBlogger.

Whilst Boeing did not publicly make too much out of Airbus' delays with the A380, many of their supporters on Internet forums appeared to take a perverse glee out of the delays. Now the shoe is on the other foot, and they are being remarkable quieter.

The Boeing 787 delays are good news for Airbus in another way. Their competitor to the 787, the A350, was due in service many years after the Boeing plane. This was due for a number of reasons, but mostly was down to Airbus totally misjudging the market with their original design. They were forced to go back to the drawing board, and the A350 is the result. The delays with the 787 will mean that the in-service dates will be much closer, and should allow Airbus to gain more orders.

However, the A350 is still in the design stage, and therefore Being still have a substantial lead. Also, it is not unlikely that Airbus will suffer similar problems with the A350 to those Boeing has suffered with the 787. This latest generation of aeroplanes are far more complex than previous generations, and there are bound to be problems during the development and initial construction phases. Airbus and Boeing are learning this to their cost.

On a related matter, Airbus is working on a new military transport plane, the A400M. This is also suffering major delays, although this is mainly due to the new Europrop TP400-D6 turboprop engine design.

All of which shows that engineering is difficult, expensive and fraught with difficulties. As the complexities of the aircraft increase, so will the risk. For instance, the Airbus A380 problems were caused by the 330-miles of cabling that had to be put into the cabin. Much of this was required for the In-Flight Entertainment system.

Fortunately this does not mean that such planes will automatically be a failure - Boeing had big problems with the development of the 747 Jumbo in the late 1960s, and that aircraft was hardly a failure. I wish both Airbus and Boeing the best of luck.

Monday, 10 November 2008

The Glenrothes by-election

So, Labour won the Glenrothes by-election. This has been a strange affair; compared to the Crewe and Nantwich by-election in May, which the Tories won from Labour with a 17.6% swing, and Glasgow East in July, where the SNP snatched the seat from Labour with a 26.1% swing, the run-up to the election was virtually unreported in the media.

There have been good reasons for this. Firstly, a slightly more important election race has been ongoing in the US. And secondly, Labour was widely expected to lose. I find it strange that the BBC website relegated news of the by-election off the main front page to the 'UK Politics' section for much of Thursday, then, on Friday morning after Labour had won, the story gets headline status for most of the day. Is this another assumed example of BBC bias, or proper reporting of a story?

Labour won, and it was a victory that appeared to surprise everyone, including the Labour Party itself. Their majority in the by-election, a seemingly healthy 6,700, is actually a decrease of a smidgen under 4,000 from the 2005 election. The SNP have increased their share of the vote, but not nearly by enough to win the seat.

As usual after a by-election all the candidates have been claiming some form of victory; the SNP have been saying that they reduced the Labour majority (which is true), and Labour are claiming that a win in Glenrothes is a vote of confidence in the government's handling of the economic crisis (and particularly on Brown's leadership - his constituency neighbours Glenrothes).

The latter claim is particularly hard to fathom. How can a vote in one constituency, where you had a reduced majority, be seen as a positive judgement from the whole country? Particularly when that constituency is in Scotland, where the Tories have, for the last couple of decades, fared extremely badly.

What is not surprising, to me at least, is that the SNP did so poorly. firstly, let my lay my cards on the table. I love Scotland. The scenery and the people are all amazing. But I am also firmly convinced that the future of Scotland lies within the United Kingdom. Earlier this year Alex Salmond, the leader of the SNP, stated in speeches that Scotland should become a small state with high-wealth industries, such as... Iceland.

Yes, the economy of the country that he wanted to emulate has just gone totally down the tubes. The other examples in his "arc of prosperity", Ireland and Norway - both small countries - are also not faring too well at the moment. For that reason, if I were a fiercely independent-minded Scotsman, I would have found it hard to vote for the SNP yesterday. It's the economy, stupid. Whilst Labour may have helped to muck up the economy, the the SNP's recipe would be even more disastrous for Scotland. I bet Alex Salmond is ruing the whole 'arc of prosperity' claims.

What does this all mean? Does this mark a new beginning for Labour under Gordon Brown? Or is the reduction of the majority a sign that Labour will be out at the next election? The truth is, it is too early to say. Brown and Labour have, for the moment, a breathing space that thy can use to try and turn around their fortunes. They must use it well. Whereas before Thursday the next general election was Cameron's to lose, he must now work hard to try, not just to win, but also to get a workable majority. He should not be measuring up the carpets for Number Ten just yet.

Interestingly (and rather surprisingly, to me at least) the by-election win has apparently led a number of Labour MPs to call for an early general election. This sounds strange; they are still at least thirteen percentage points behind in the polls, and would probably lose the next election unless the situation changed radically. So why do they want one? Perhaps they believe that this recent bounce and improvement in the polls will not last, and want to get the election out of the way before things get worse for them. Certainly they should remember that Brown's misfortunes started last year, when it looked likely he was going to call a general election, then did not.

Sunday, 9 November 2008

Initial ramblings from Southampton

I found it hard to find a title for this blog: After hearing about Labour's win in the Glenrothes by-election, I came up with 'reduced expectations'. But no, it had gone. 'lessened expectations' was available, as was 'few expectations', but neither were really right. For one thing, 'lessened' is a harder word to type and spell than 'reduced'.

I wanted something that would sum up my attitude to life, and as I am in a rather negative viewpoint this morning, 'reduced expectations' seemed to fit the bill.

However my partner, the ever-lovely ┼×encan, said that I need to be more positive. The only problem being that, this morning at least, I feel far from positive. So, after much thought, I decided on 'A Walker's Ramblings'. Why? Well first of all, I am a long-distance walker (14,000 miles walked in ten years). Secondly, this blog will contain my assorted ramblings, whether they be on walking, politics, writing, technology, space, or anything else that catches my fancy.

This will not be a themed blog, although a theme may appear over time. I fear that not having a theme may lead to a lack of readers; someone may like a posting on (say) walking, then get turned off by one on politics. If so, then I apologise. I will, however, attempt to use labels to help readers find relevant posts.

Most of all, I hope that you enjoy reading my general musings.