Chart of the day: textbook austerity

Alex Hern — Wed, 16 May 2012 17:01:56 +0000

One of the countries in the chart above was running a budget surplus before the financial crisis, and another one of them has reduced their government deficit to almost nothing after it. These adherents to austerity should surely be doing fantastically, no?

Russian steel tycoon and Arsenal shareholder's $6bn Facebook payout

Alex Hern — Wed, 16 May 2012 16:53:23 +0000

Alisher Usmanov set to win big at Facebook IPO.

The New York Times reports on the winning bet made by Russian steel tycoon Alisher Usmanov on Facebook. After the IPO later this week his stake, bought for $900m in 2009, is set to be worth around $6bn.

The magnate bought into Facebook significantly later than most investors who stand to substantially profit from the IPO, but the NYT reports how:

Mr. Zuckerberg turned to the Russian investors in 2009 at a meeting quietly brokered by Goldman Sachs. Other sources of financing had slowed because of the crisis. And, because of the popularity of online social games in Russia, investors here had a keen sense of the value of social networking sites and were willing to pay more than others for a stake in Facebook.

The Russians were also willing to accept another condition important to Mr. Zuckerberg. Despite owning 10 percent of Facebook, they would get no voting rights or seat on the board. They would also have no say in the site’s policies on privacy or political organizing — preserving independence that has become especially important as Facebook has played a major role in domestic politics in Russia.

Usmanov is better known in Britain as the minority shareholder of Arsenal FC. He owns almost 30 per cent of the club, including 16 shares historically held by Rangers FC, but his seeming attempt to become the majority owner was thwarted in 2011 when American businessman Stan Kroenke increased his holding to 63 per cent.

Land Securities annual pre-tax profit down 58 per cent

New Statesman — Wed, 16 May 2012 16:17:16 +0000

Strengthens asset management portfolio.

The British commercial property company Land Securities Group has reported a pre-tax profit of £515.7m for the fiscal year ended 31 March 2012, a decrease of 58 per cent compared to £1.23bn for the same period last year.

Basic earnings per share were 67.5p (2011: 162.3p), while valuation surplus was £190.9m (2011: £908.8m).

Revenue profit including share of joint ventures grew 9 per cent to £299.4m (2011: £274.7m).

The company’s rental values grew 1.2 per cent across total like-for-like portfolio since March 2011. Property disposals were £905.7m at an average of 4.3 per cent above last year valuation.

Since 2010, the company created 47,700 sq m of new space for Primark, the John Lewis Partnership and Sainsbury’s. Investment lettings in the year were £39.1m.

The group has on site at 111,180 sq m of development schemes in London, with a further 175,370 sq m of future developments with planning consents obtained or planning applications submitted. It also has on site at 102,200 sq m of development schemes in retail.

During the year the company sold 110 Cannon Street, EC4 and Arundel Great Court as well as residential apartments at Wellington House.

Group LTV ratio including share of joint ventures was 38 per cent (2011: 39 per cent). The group recommended increase in final dividend to 7.4p from 7.2p.

Robert Noel, chief executive of Land Securities, said:

We have a clear strategy allied to a clear plan based on a realistic outlook. Despite economic uncertainty impacting the second half of the year, we have maintained our focus, building on our strength and our proposition.

We have a deep knowledge of our core markets and an expert, focused team. The outlook remains uncertain but we will continue to use the competitive advantage offered by our financial resources to deliver on our plans and exploit opportunities as they arise.

Fraud levels in contracted employment programmes are low, says NAO

New Statesman — Wed, 16 May 2012 16:12:15 +0000

New report finds that DWP’s past assessment of the risk of fraud at A4e missed vital evidence.

Fraud levels in contracted employment programmes are relatively low compared with the benefits system and the losses from staff fraud and irregularities, according to a report by the National Audit Office (NAO) that examined arrangements at the Department for Work and Pensions (DWP) for detecting and preventing fraud and improper practices in employment programmes.

However, the report finds that some risk still remains because not every control applies to every programme, particularly to smaller ones.

The DWP spends around £900m a year on employment and support programmes that assist unemployed people to find and keep work.

In 2011 alone, government spending on employment programmes was £829m. Over half of reported fraud in employment programmes since 2006 relates to the New Deal programmes that ended in 2011.

The current Work Programme, which started in June 2011, will cost £3bn to £5bn over the next five years depending on performance.

In particular, the report finds that the department’s past assessment of the risk of fraud at A4e missed vital evidence. The department does not currently obtain all relevant copies of providers’ internal audit reports and did not receive the paper sent to the chair of the Public Accounts Committee. This included evidence of nine possible cases of fraud and seven of improper practice by A4e’s staff and highlighted a possible systematic failure to mitigate the risk of fraudulent and irregular activity at both an office and regional level.

There have been 126 reported cases of potential fraud investigated by the DWP since 2006-07. According to the report, the total value of cases of reported fraud investigated since 2006 is £773,000. More than half of fraud allegations since 2006 have been in respect of New Deal programmes which ended in 2011. The department knew of the fraud risks inherent in such programmes but did not do enough to quantify and address them. Compensating controls, for example, checks at employers to verify claims that people had actually been placed in work, were not introduced.

In its report, NAO said that the department did not do enough to quantify and address the fraud risks in the design of New Deal and other legacy programmes. However, NAO said that the Department has now significantly improved the controls.

Schemes such as the Flexible New Deal and the Work Programme that replaced the New Deal have been designed with measurable and verifiable outcomes to minimize the risk of fraud. For example, the DWP now checks the records of HM Revenue and Customs to test whether claimants are actually working. But, notably, in the case of the £8m programme providing mandatory work activity, there are still no independent checks with employers that unemployed people said to have been placed with them for work activity have been.

The NAO recommends that the department should make the most of the fraud risk knowledge it possesses and share it more effectively; and that users’ complaints be used to assess the quality of service providers.

Amyas Morse, head of the NAO, said:

The department has improved its range of controls on the Work Programme, in particular, compared with previous schemes. However, it missed a number of opportunities to detect potential problems at A4e and it needs to tighten controls on its smaller programmes.

PMQs sketch: Angela Merkel's bazookas

Peter McHugh — Wed, 16 May 2012 15:58:39 +0000

After a month without, PMQs returns with LOLs, nurses and ... the economy

It was when Sir Bufton Tufton rose and asked about Angela Merkel and her bazookas that you wondered if the future of the country really was in safe hands.

Some may point out that Sir B is a fictional character but that only makes it even harder to explain away Sir Peter Hannay Bailey Tapsell, Conservative MP for Louth and Horncastle.

Sir Peter, who doubles as Father of the House of Commons, is not apparently fictional but makes a good stab at it at every opportunity he gets.

And one such opportunity came earlier today when he found himself at Prime Ministers Questions with a bit of spare time on his hands.

PMQs returned to the parliamentary timetable today after an absence of almost a month to give MPs a bit of a break after they had a bit of a break for Easter six weeks ago and before they go off for a bit of a break for Whitsun in eight day's time.

Since they last got together the government has re-launched itself at least two more times, growth forecasts have again been down-graded, Tories and Lib Dems massacred in local elections and some of the Prime Minister's best mates sent up in front of the Leveson Inquiry.

With Dave himself due in the same dock soon, Labour with a double-digit lead in the polls and even Ed Miliband less nerdy than ever, the stage was set for a scintillating - if one-side - return to the fray.

Indeed the PM displayed a sickly pallor, if such a thing is possible beneath the expensive tan of someone who travels abroad as often as possible, as he arrived for the contest. His nervous demeanour was only matched by that of his Chancellor George Osborne, who clearly expected a kicking himself; but neither could match the appearance of Deputy Prime Minister Nick Clegg who looked as if tears were but one further slight snub away.

Time off usually imbues PMQs with that back-to-school excitement so beloved of many MPs but a few days of debates on the Queen's Speech seemed to have taken their toll and even the usual suspects took time to open their insults bags.

Having been roundly drubbed by Ed M at all appearances at the Despatch Box in recent months, Dave has been told by his advisors that he must get a grip on his temper and his tantrums.

And arriving with welcome news on the unemployment front he seemed in control as he batted away the Labour leader's early insults which themselves appeared to have been on holiday. But breeding will out and after a few fumbles Ed managed to re-locate the button which turns Dave into his alter-ego Harry Flashman and normal service was resumed.

Having dropped in references to Leveson and last week's exposure of his LOL texting tendencies by Rebekah Brooks (which Dave was at least prepared for), Ed turned the screw.

Energetically aided and abetted by his own in-house bruiser Ed Balls, he moved on to the economy, dropped in the nurses, asked what the Prime Minister was on, and told him to calm down.

To be fair, Dave tried his best but you could see he will need a few more hours on the couch. Snacking on the PM has been a regular hors d'oeuvres on the Commons lunch menu for Labour in recent months. But it's also been a hidden pleasure for his Cabinet Ministers as well; happy to see him getting a slice of what he serves up to them regularly.

But most of the infamous faces were notable by their absence today - although reports were coming in of Home Secretary Theresa May taking serious abuse from the Police Federation, and Communities Secretary Eric Pickles had only managed to make his way to the end of the Front Bench.

With a re-shuffle now apparently imminent could it be that out-of-sight, out-of-mind may be the approach being taken by those on whose feet, if not careers, the Prime Minister has to trod as he makes his usually baleful exit from the Chamber.

All of which brings us untidily back to Sir Bufton. Or at least his presence on earth, Sir Peter, and his question about the German Chancellor and her bazookas.

Sir Peter, who has not been bothered by the the demands of high political office in his fifty-plus years as an MP, often makes interventions which soar above the heads of most of those present, and his latest was no exception.

The Prime Minister, noting the appearance of Angela Merkel amongst the words, chose to answer a question about Greece . . .

ECB stops monetary policy operations to some Greek banks

Alex Hern — Wed, 16 May 2012 15:44:51 +0000

EFSF will step up with €18bn to be disbursed through the Greek Central Bank

The European Central Bank has stopped monetary policy operations to some Greek banks, following continuous low-level capital flight fom the country.

On Monday alone, some €700m was withdrawn from banks by Greek depositors, with around another €100m of German bunds being bought by the banks (Update: The BBC reports the €700m figure as the week ending Monday, rather than Monday alone). The Wall Street Journal reports that:

In the past two years, deposit outflows have generally averaged between €2 billion and €3 billion a month, though in January they topped €5 billion.

All this money exiting the Greek banks has left them with serious liquidity issues, which the ECB had been stepping in to correct. As of the end of January, the banks had received €73 billion in liquidity support from the ECB. Now, however, Zerohedge is reporting that:

ECB STOPS MONETARY POLICY OPERATIONS TO SOME GREEK BANKS AS RECAPITALISATION NOT IN PLACE -CENBANK SOURCES

The EFSF is expected to step up in the ECB's stead, and provide €18bn in recapitalisation funds. The banks which have been cut off from the firehose will now have to go to the Greek central bank to access the funds instead.

The news sent the euro down against the pound and dollar:

Update: Reuters reports that:

The ECB only conducts its refinancing operations with solvent banks. With no access to ECB funds, the banks concerned must go to the Bank of Greece for emergency liquidity assistance (ELA).

It was unclear exactly how many banks were affected.

One person familiar with the matter said four Greek banks' capital was so depleted they were operating with negative equity capital. According to its own rules, the ECB cannot provide liquidity to banks in such a situation.

Europe’s endgame

Rafael Behr — Wed, 16 May 2012 15:10:11 +0000

Within a decade, Britain will hold a referendum on membership of the European Union – and the Yes campaign will find its arguments enfeebled by lack of exercise. Will anyone dare make the pro-EU case?

It is getting harder to make the case for Britain’s membership of the European Union for the practical reason that the alliance is changing faster than arguments in favour of it can be devised. The crisis in the eurozone will result in either a messy unravelling of the single currency or its renewal through deeper economic and political integration. Either way, the EU will be transformed and new rules of engagement between Britain and the rest of the continent will have to be set. The pressure to offer that revised arrangement to the public in a referendum will be irresistible.

Most Conservative MPs now fully expect their party’s next manifesto to include the pledge of a vote on EU membership. Labour and the Liberal Democrats doubt they can avoid making the same offer, although they tend to be less enthusiastic about the idea.

The plebiscite is a demand usually made by opponents of Britain’s EU membership. Supporters have always feared the potency of the sceptics’ rhetoric of national liberation. They mistrust the campaigning efficacy of arguments based on trade advantage and fear of diplomatic isolation.

The pro-Europeans’ reluctance to popularise their cause and their readiness to denounce their opponents as cranks and xenophobes has confirmed a small but vocal minority in the conviction that Brussels is an elite conspiracy against the common citizen.

Pro-Europeanism in Britain is as much a habit of government as an ideological position. Successive administrations inherit the legal and bureaucratic edifice of Continental entanglement and decide, on advice from civil servants, that acquiescence is the easiest path. That is as true of David Cameron’s government as it was of Gordon Brown’s and Tony Blair’s. The difference is that Cameron has no permission from his party to make compromises for Europe’s sake. Cameron is also unlucky to be in power during the biggest crisis in the history of the EU. The misfortune is compounded by the lack of attention he paid to Brussels before he entered Downing Street.

The Conservative leader has tended to view his party’s hatred of the EU as a dangerous obsession – an old marching tune from the party’s days parading up and down the unelectable fringe. Euroscepticism was to be placated internally but never advertised to the country.

In opposition, Cameron pulled the Tories out of the moderate European People’s Party (EPP) grouping in the European Parliament. In government, he has legislated for a “referendum lock” to prevent any future transfer of powers to Brussels being smuggled past the electorate.

Neither of those measures was meant to have any practical significance. Because Cameron found the European Parliament uninteresting, he presumed it was irrelevant. When the bill containing the referendum lock was drafted in the autumn of 2010, the Prime Minister thought Brussels had finished making treaties for a generation. He was wrong on both counts. Withdrawal from the EPP cut off diplomatic channels to a clique of powerful bosses of sister conservative parties on the Continent: Chancellor Angela Merkel of Germany, the former French president Nicolas Sarkozy, the European Council president, Herman Van Rompuy, and the president of the European Commission, José Manuel Barroso. Alienation from that club diminished Cameron’s ability to influence negotiations on a treaty to stabilise the single currency at the end of last year. Those discussions then produced a treaty that Cameron could
not sign for fear of provoking a ferocious rebellion in his party.

The subsequent decision to veto a pan-European deal, leaving most EU members to press ahead without Britain, was a watershed moment. It showed that the opposition culture of righteous anger is stronger in the Conservative Party than the governing tradition of diplomatic pragmatism. That places Britain’s ruling party outside the European mainstream, which further diminishes Cameron’s ability to shape events. The sceptics’ prophecy is thus self-fulfilling: the tighter the Prime Minister’s hands are tied at home, the harder it is to exert influence abroad – and the likelier it becomes that the EU will evolve in a direction that really does look like a conspiracy against UK interests. And so on, towards the exit.

The overwhelming majority of Tory MPs want a substantial renegotiation of the terms of Britain’s EU membership, characterised by “repatriation” of powers from Brussels. Most envisage a loose trade partnership that barely resembles membership on present terms. Only a minority agitates for divorce, but few would be distressed by the idea. “Where there are differences, it is largely a question of speed, not direction,” says one moderate Eurosceptic.

Tory pro-Europeanism is moribund. No candidate will get past a constituency selection committee without meeting a high standard of anti-Brussels bluster. Veteran cheerleaders for the European project, such as Ken Clarke and Michael Heseltine, are dismissed as relics of another era, when integration was still a moral imperative to dissolve the Continent’s historically murderous nationalisms. The fading of that memory is a significant factor in the decline of support for the whole project. “It was a postwar ‘Never Again’ attitude that drove the pro-Europeanism of Clarke and Heseltine,” says a prominent Tory MP from the 2010 parliamentary intake. “Our generation dismisses that argument out of hand.”

There is more residual respect for Europe’s founding vision on the Labour side, but even there it is waning. The euro crisis has made it harder to shrug off the lack of democracy as a secondary blemish on an otherwise noble record of promoting peace and prosperity. European institutions have repeatedly failed to organise a rescue for their flagship currency project. They have forced Greece, the euro’s frailest member, on to an austerity diet that threatens to kill the state before it cures the economy. The fiscal union treaty, designed to satisfy German fixation on long-term budgetary discipline, is an act of forced atonement for reckless spending in the past. It contains nothing to foster confidence in the future.

Sceptics on the right have always seen the EU as a malign force but largely for abstract reasons. Nominal concessions of constitutional sovereignty did not intrude on most voters’ lives, which made it easy for the liberal left to dismiss the outrage they provoked as parochial misanthropy. Mishandling the euro crisis is of a different order of offence. It is plunging Europe into turmoil, making it harder to sustain the myth that Brussels governance is benign.

It has also been easy in the past for Labour and Liberal Democrats to adopt a position of nonchalant pro-Europeanism as the alternative to obsessive Tory scepticism – a badge of moderation to contrast Conservative monomania. Now the Tories feel vindicated in their fixation on the folly of the single currency, while advocates of British entry into the euro shift uncomfortably in their seats. No wonder Ed Balls reminds anyone who will listen that his machinations at the Treasury were instrumental in preserving the pound.

As for Ed Miliband, his attitudes towards Europe are, like so much of his creed, discernible only in vague outline. His ambition is to tap in to voters’ sense of disempowerment at the hands of global economic forces. That could lead him to defend the EU as the only regulatory force with sufficient scale to tame international finance. Alternatively, there is a thread that leads from job insecurity and resentment about low wages to reaction against the EU’s free-flowing labour market. Miliband’s past flirtation with the Blue Labour analysis of market failure and the impact of globalisation on working-class communities contains ample potential for a revival of populist-left Euroscepticism.

Friends of the Labour leader say his instincts prohibit a move in that direction. As the son of Jewish wartime refugees (and the product of a metropolitan intelligentsia), he is attached to the ideal of a post-nationalist Europe. One senior ally in the shadow cabinet describes him as “probably the most pro-European leader Labour has ever had”.

That does not preclude the offer of a referendum on membership. There is a good pro-EU case for asking the nation’s permission to stay in the Union, rehearsed in a recent lecture by Peter Mandelson. Recognising the certainty that Britain’s relationship with Brussels was in transition, the New Labour grandee lamented the way discussion of a referendum has been monopolised by the most sceptical forces in British politics. “The European mandate that the Heath government secured in the 1970s belongs to a different era and a different generation,” Mandelson said. That is obviously true. Since then, the arguments in favour of keeping Britain in Europe have turned pale and atrophied for want of exercise and fresh air.

Some of Miliband’s closest advisers support the idea of a referendum. Balls cautiously acknowledges that a national vote on the subject is probably inevitable, but is in no hurry to demand one. The whole debate is clouded by uncertainty about what kind of union Britain would be invited to embrace or quit.

The likeliest outcome from the eurozone crisis is the emergence of a super-integrated core of single-currency survivors and an outer ring of satellite states. Cameron has explicitly endorsed that two-tier model and, on the face of it, such a loose configuration would probably appeal to the moderate-sceptic mainstream of British opinion. Yet that model clearly contains a risk of British influence being diluted and the terms of trade becoming ever less favourable. Eurozone members might be disinclined to preserve the UK’s privileges, especially when London’s response to the crisis has been marked by arrogant Schadenfreude, financial niggardliness and diplomatic obstruction.

If the new terms of association seem ungenerous, the conversation will quickly turn to separation. There is no appetite in Downing Street for such a drastic gamble at the moment, but nor is there any sentimental attachment to EU membership. The calculation, says a senior adviser to the Prime Minister, rests on a blunt cost-benefit analysis: “The test is whether the interests of growth are better served in or out. At the moment it’s in.” However, there is sympathy in senior Tory circles for the notion, much touted by ultra-sceptic MPs, that Britain could make a better living for itself unshackled from Europe, striking bilateral trade deals with the emerging economic powerhouses – China, India, Brazil.

Keen attention is also being paid to the harrying of Tory MPs by the UK Independence Party. Nigel Farage cannot muster enough serious candidates to mount a sustained electoral threat to the Tories, but his peculiar style of attack – the paradox of blood-curdling bonhomie – appeals to enough traditional Tories to put some marginal seats at risk. It is certainly sufficient to raise the prospect of Ukip humiliating the Tories in European parliamentary elections in June 2014, less than a year before a general election is due. George Osborne, in his capacity as Conservative election strategist, is said to be obsessed with the threat from Ukip. He is also mindful of the spike in opinion-poll ratings that followed Cameron’s wielding of the Brussels veto last December. The appeal of some noisy Eurosceptic spectacle is obvious. The promise of a referendum is the bare minimum that would be required in order to preserve unity on the Tory benches.

Generally the Lib Dems see themselves as the brake on the Tories neuralgic hostility to Europe, yet the party is in no hurry to flaunt its credentials as Britain’s most consistently Brussels-friendly party. The concern among senior figures close to Nick Clegg is that the party is not well enough associated in the public eye with popular policies to start lashing itself to causes that are famously unpopular. It is worth noting also that the Lib Dems’ 2010 manifesto contained a commitment to an in/out referendum on EU membership “the next time the British government signs up for a fundamental change in the relationship between the UK and the EU”.

That change is certain. There is no outcome from the current turmoil that does not substantially alter the balance of power in the EU. The rapidly forming consensus in Westminster is that, within a decade, the public will be invited to ratify any new arrangement that emerges. The uncertainty is whether that deal will lend itself more easily to portrayal as a service to the national interest or a betrayal. The voices of rejection will be amplified by decades of frustration, carried by prevailing winds of hostility to political and financial elites. The voices in favour will be weak and untrained after the long years spent only whispering apologies for Europe.

Web Only: the best of the blogs

New Statesman — Wed, 16 May 2012 15:05:40 +0000

The five must-read posts from today, including David Cameron's troublesome backbenchers.

1. Cameron gives way on Scottish referendum date

The PM is preparing to admit defeat, says Kiran Stacey at FT Westminster.

2. Unemployment: a river not a pool

Stumbling and Mumbling's Chris Dillow says that today's figures fail to capture high levels of job insecurity.

3. David Cameron braced for setbacks in elections to 1922 committee

Senior Tories say prime minister needs to rethink relations with Conservative backbenchers, according to Nicholas Watt.

4. Is Ed Miliband paving the way for an EU referendum?

Mary Riddell writes that Labour's top command is increasingly receptive to the idea.

5. IDS facing defeat at the next election

Liberal Conspiracy's Don Paskini notes that if the boundary changes go through, the Work and Pensions Secretary will face a battle to remain an MP.

Look east for accounting’s next big thing

Arvind Hickman — Wed, 16 May 2012 14:54:24 +0000

The Anglo-dominated accounting industry could soon have a Chinese flavour.

The emergence of Chinese banks is well documented but soon it will be the country’s accounting firms that rise to global prominence.

China’s accounting firms are being forced to localise in a move designed to end foreign control. This will largely affect what is known in the industry as the ‘Big Four’ – PwC, Deloitte, Ernst & Young and KPMG – who are led and largely controlled by expatriates and foreign partners.

The Ministry of Finance (MoF) has just released rules requiring all accounting firms to localise by August. This means they must be led by local citizens and ensure the proportion of foreign partners does not exceed 40 per cent. By 2017, this drops to 20 per cent.

The rules are designed to place control of the largest firms into the hands of Chinese and ensure voting rights are dominated by locally-qualified accountants.

The ‘localisation’ of the Big Four has been widely anticipated and the timeline provided is more generous than many experts predicted.

It’s an important step in the rise of China’s accounting industry because the Big Four are the last great bastion of foreign-managed firms, with market-leader PwC approximately 3.5 times the size of China’s largest domestic firm.

Number Two

This year, China will eclipse the UK as the second largest accounting industry by headcount. In 2007, the UK’s leading 40 firms had 30,000 more accountants than China but in 2011 the difference was only 5,400, according to the International Accounting Bulletin, a publication that analyses accounting markets.

And, China’s workforce has grown by 166 per cent in the past five years compared with 113 per cent in the UK.

The Big Four and Grant Thornton are still bigger in the UK but their Chinese counterparts are catching up quickly. BDO, RSM International, Baker Tilly International, PKF International and Nexia International already have larger Chinese workforces.

Chinese ‘super firms’

The government’s plan for its accounting industry is to produce Chinese ‘super firms’ that can compete head-on with the PwCs and Deloittes of this world. These firms are to become ‘homegrown’ global advisers to Chinese companies expanding abroad.

To do this, the MoF has ‘encouraged’ large Chinese firms to aggressively grow via M&A with like-minded firms, which has led to a flurry of consolidation in the past three years.

The MoF is encouraging Chinese firms to partner with global ‘mid-tier’ accounting networks outside of the Big Four, such as BDO, Grant Thornton and RSM. The aim is that these global networks will help Chinese firms develop audit methodologies and international skills in accounting and auditing. In return, the networks gain a strong Chinese firm for the referral of work in and out of one of the most important economies.

This has led to China becoming one of the least concentrated accounting markets. If you take the largest 40 firms in China, the Big Four earn 59 per cent of market revenue. In the US, the Big Four earns 81 per cent and globally their share is 70 per cent.

It is conceivable that the next 10-20 years, the global accounting industry could revert back to a Big Five or Big Six, with a couple of Chinese-backed players.

The traditionally Anglo-dominated accounting industry could soon have a Chinese flavour.

Arvind Hickman is the editor of the International Accounting Bulletin.

It's a good thing Moody's don't run Italy

Alex Hern — Wed, 16 May 2012 14:39:00 +0000

Consistency: not the CRA's strong point.

We missed this yesterday:

4 October 2011, Moody's downgrades Italy to A2, saying "the fragile market sentiment that continues to surround euro area sovereigns with high levels of debt implies materially increased financing costs and funding risks for Italy". Berlusconi promises to cut spending and debt, saying "the Italian government is working with the maximum commitment to achieve its budget objectives."

14 May 2012, Moody's downgrades 26 Italian banks. The ratings agency gives three reasons for doing so, the first of which is:

Increasingly adverse operating conditions, with Italy's economy back in recession and government austerity reducing near-term economic demand.

S&P did the same thing in April, downgrading Spain for too much austerity. It's a good thing these organisations aren't hugely important worldwide financial actors, or anything, because "they don't know what they're talking about".

Authentic leadership is about knowing when to go

Caroline Lucas — Wed, 16 May 2012 14:30:52 +0000

Caroline Lucas on why she is standing aside as Green party leader

When members of the Green Party of England and Wales voted to create a formal leadership team back in 2007, it was a pivotal moment in our move away from the margins of British political life.

Some members had felt sceptical about establishing a conventional leader in the traditional mould – mindful of the risks that such a role could bring.

But leadership is also a powerful tool that can draw people in and inspire them. Our decision to elect a leader was in recognition that it is a privilege to lead, not a right – and that inspirational, moral and persuasive leadership was crucial if we were to effectively communicate our vision for a greener, fairer future to the wider public.

Authentic leadership is also about sharing out responsibilities to others – a refreshing alternative to the more traditional model of leaders hanging onto power at all costs, and only finally being dragged away, their finger nails still embedded in the office furniture.

In September, I’ll reach the end of my second term as the first national leader of the Green party of England and Wales, and I’ve decided not to see re-election for another 2 year term in order to let new talent come to the fore.

As a member of the party for over 20 years, I’ve been hugely honoured to serve in this role. We’ve seen Green politics come of age in recent years, with the party becoming the most influential it has ever been.
Significant breakthroughs in Brighton & Hove – our first seat at Westminster and our first ever local council – have been accompanied by successes across the country.

In the 2012 local elections, we saw more Greens elected to new councils, as well as establishing ourselves as the third party, ahead of the Liberal Democrats, in the elections for London Mayor and the London Assembly.

People are increasingly responding to the Green message, and recognising that we are the credible alternative, with particular interest from former Libdem voters feeling deeply let down by their party leadership’s complicity in the Government’s job-destroying austerity.

In the last few weeks alone, there have been defections from long serving Liberal Democrat councillors in Solihull and Worthing, choosing to support their local Green parties instead.

As the party looks ahead to a positive future, building on the outstanding work of elected Greens and party campaigners in every region, I believe that now is the time to make space for a new Green leader to build their profile – and that of the party.

Having stepped back from this national position, I’ll be able to invest even more of my time and energy in representing the people of Brighton Pavilion, speaking out in parliament on behalf of my constituents, doing all I can to defend them against the government’s disastrous economic policies, and putting the Green case for change in all circles of national political debate.

Why would the Greeks leave the euro? No one can make them

Kitty Ussher — Wed, 16 May 2012 13:31:03 +0000

The apparent beauty of the way the euro was designed was that there was no way out written into the legislation. Its founders believed, rightly, that having an exit sign would make it more likely to be used; they preferred to keep this uncharted territory.

This was one of the crucial ways in which the euro differed from its predecessor, the European Exchange Rate Mechanism (ERM). The latter could be bet against, as Britain saw to its detriment in 1992. The euro itself can be sold – as has happened aggressively this past week – and so can the euro-denominated debt of its constituent nations, but the currencies themselves cannot be separated by the markets.

This suits Greece. The lack of emergency exit signs will increase the negotiating clout of the anti-austerity government that most likely will be elected following fresh elections in June. The Greeks have no desire to leave the euro and the current legal basis of the EU means that nobody can force them to do so, even if they do end up defaulting on their debt.

This point is largely being missed in the hysteria that surrounds reporting the Greek debt crisis. There is a world of difference between defaulting on debt and the currency in which debt is denominated. If you lent me a tenner and I didn’t pay you back, it would be understandable if you decided never to lend to me again – but would I really have to leave sterling? Similarly, if a listed company or a local authority decided not to meet the interest payments on its bonds, it would also be unable to borrow privately for the foreseeable future. But would it have to abandon the pound as well?

Bath runs out

Greece makes up less than 2 per cent of the EU economy. The present uncertainty is hugely destabilising to the markets, but in economic terms if it refused to honour its current debts the long-term economic effects on the EU wouldn’t be much different from the effect in the UK if one of our smaller cities – say Carlisle or Bath – hit financing woes.

That doesn’t mean countries can’t decide to leave the euro of their own volition. After all, despite what the Eurosceptic voices in Britain may assert, they are still sovereign, even if, as part of that, they have decided to cede some powers elsewhere. Nobody would send in the army if the country concerned passed a law to revoke the relevant section of the EU Treaty within its borders and make the euro illegal tender. There may be a risk of legislative uncertainty around the operation of the EU treaties for a period but given the continuing benefits to all parties of being part of the same single market, there are easy ways to resolve them once diplomatic tempers have cooled.

There is no legal basis for a country to be kicked out against its will, though. Forcing a country out would require a change to the EU treaties, which by definition would need to be agreed by all EU members, giving the country in question a veto.

This is why the anti-bailout parties in Greece are on to something. They can refuse to continue with the austerity programme in its present form, safe in the knowledge that their desired position in the euro is safe. And what’s more they know that when push comes to shove, their creditors can be flexible – following the debt restructuring deal that took place earlier in the year, they consist primarily of the same international institutions that have an interest in things remaining orderly.

If a Syriza-dominated Greek government could not persuade the EU, IMF and ECB troika to suspend their demands for austerity and reschedule once more the debt-servicing payments, they could simply refuse to honour the debts of their predecessor governments and pursue an independent economic policy designed to stimulate the economy in the short term. The hope would be that, by redeploying the fifth of their national budget that has been historically spent on debt repayments, they could stimulate economic growth and so rebuild their tax base.

Naturally, if they failed, pressure might grow to be able to print more money to pay wages, which would then and only then require leaving the eurozone (and cause a devaluation-inflation spiral in the process), but that is not an inevitable outcome of the rejection of the austerity package. For now, the anti-austerity politicians are simply prepared to free-ride within the single currency.

Eurogeddon

The consequences for the rest of the global financial system are well understood. It would drive a spear into the heart of the Washington consensus that support for countries in financial trouble is contingent on austerity. It would give succour to the attempts of François Hollande to persuade Angela Merkel of the need to shift emphasis from austerity on to growth. But most importantly it would shine a spotlight on the weakness at the heart of the euro project: that because its constituent nations are sovereign, the temptation for the fringes to free-ride is hard to eliminate – however intricately any “fiscal compact” or “stability and growth pact” is designed.

Until these matters are resolved there will be huge instability, with markets punishing other, weaker economies in and out of the eurozone for the perceived errors of the Greeks. All institutions – British included – will be polishing their contingency plans for a variety of Eurogeddon scenarios as we speak, and the negative effects on consumer and business confidence will only entrench recession further.

Up to now, I had been a lone voice arguing that the difficulties experienced in the periphery eurozone nations were an example of the euro doing what it was supposed to do. Before the discipline of needing to remain in the euro, it had been too easy for a weak political class to devalue and inflate its way out of difficulties, rather than pursing essential, if unpopular, structural reforms.

Now I am beginning to shift my view. Perhaps the beauty of the current crisis is that it will force Europe’s leaders to sort out the faults in the way the euro was initially designed.

Kitty Ussher is an economist and former Treasury minister who now works as a research fellow at the Smith Institute

New Statesman cover | 21 May

New Statesman — Wed, 16 May 2012 13:23:33 +0000

A sneak preview of tomorrow's cover.

New appointments and web expansion

New Statesman — Wed, 16 May 2012 13:22:07 +0000

Changes at the New Statesman.

New Appointments

Helen Lewis was today named Deputy Editor of the New Statesman, succeeding Jon Bernstein who is set to become Digital Director of Progressive Media International, the publisher of the New Statesman. The changes will take effect from 21 May 2012.

In a further move, Caroline Crampton will join the team as Web Editor early next month. Crampton is currently at Total Politics and was instrumental in that publication’s successful online relaunch last year.

Lewis joined the New Statesman as an Assistant Editor in 2010 from the Daily Mail, where she had worked on the features commissioning desk. In her new role, she will work across the magazine and the relaunched website.

Bernstein was appointed Deputy Editor in November 2009, splitting his role between the magazine and online and oversaw a period of significant traffic growth. During his spell, the Staggers rolling blog was launched and an array of emerging writers and bloggers joined the team. These included Laurie Penny, David Allen Green and Rowenna Davis. Last November, Bernstein was named Website Editor of the Year by the British Society of Magazine Editors (BSME).

Jason Cowley, editor of the New Statesman, said:

These changes follow a period of excellent progress for newstatesman.com. Jon, who will continue to be a valued colleague, leaves behind a redesigned and reinvigorated web operation, and I’m sure Helen, for whom I have the highest regard, will build on his success. Caroline was with us as an intern and I have monitored her progress at Total Politics. It’s great to have her back on the staff.

Newstatesman.com traffic growth

Traffic to the New Statesman’s recently relaunched website has reached a new record high. In the first quarter of 2012, monthly unique visitors to newstatesman.com topped 800,000, an increase of 231 per cent since the fourth quarter of 2009, when the site was previously relaunched. For comparison, the Spectator reported 380,000 unique users a month in 2011.

The site's growth has been aided by a series of exclusives, including Hugh Grant's exposure of phone-hacking, a newly discovered poem by Ted Hughes, the Archbishop of Canterbury's attack on the coalition government, Christopher Hitchens's final interview (conducted by Richard Dawkins) and David Miliband's recent essay on “Reassurance” Labour.

Source: Google Analytics

Where are Ed Miliband’s outriders?

Mehdi Hasan — Wed, 16 May 2012 13:17:57 +0000

Despite recent successes, the Labour leader lacks cheerleaders in the party, in parliament, and in the press.

Aides in the office of the leader of the opposition have a definite spring in their step. The Labour Party has a double-digit lead in the polls, having gained more than 800 council seats and 30 councils in the local elections. Ed Miliband is now less unpopular than David Cameron, according to the latest polls, and his positions on austerity and phone-hacking have been vindicated by events, dear boy, events.

So, where are the Ed-ites? Where are the cheerleaders for Miliband in the party, in parliament, in the press? As even his closest advisers reluctantly acknowledge, he continues to lack outriders.

The ideal outrider for the Labour leader, of course, would be his big brother, David. The elder Miliband, however, continues to rule out a return to the shadow cabinet, saying he prefers life “on the front line, not the front bench”. It is an odd position. Why not do both?

Then again, if, as James Macintyre and I reported in our 2011 biography of the younger Miliband, David hasn’t fully forgiven Ed for daring to stand against him for the Labour leadership, the former’s decision to stay on the back benches makes some sense.

But blood relations notwithstanding, the wider point still applies. Ed lacks loyalists, people who would die in a ditch for him. Consider the Labour high command’s reaction to the serialisation of our biography in the Mail on Sunday last June. It was left to Charles Falconer, the former lord chancellor, card-carrying Blairite (and former flatmate of the ex-prime minister!) and high-profile supporter of David Miliband’s leadership bid, to take to the airwaves in defence of the Labour leader.

Alone in the dark

Falconer is a serious political figure and a strong media performer but he can’t, by any stretch of the imagination, be considered an Ed-ite. So where were the Ed-ites? Where was the Labour front bench?

“The responsibility lies with the shadow cabinet,” a former Labour cabinet minister told me at the time. “If I were Ed, my eyes would be swivelling to Douglas Alexander, Yvette Cooper and Caroline Flint. Why haven’t they come out to defend him?”

Little has changed over the past year. Despite the abolition of shadow cabinet elections, just eight out of the 24 MPs in Miliband’s current shadow cabinet gave him their first preference in the party leadership election in 2010. None of the big jobs – deputy leader, shadow chancellor, home affairs, foreign affairs, health, education – is held by an Ed-ite.

What about the party’s elder statesmen? The younger Miliband’s “big beasts” are, basically, Neil Kinnock and Roy Hattersley, both of whom are eloquent, passionate and principled politicians but are also indelibly associated in voters’ minds with the 1992 election defeat.

Most members of the last Labour cabinet, after all, threw their weight behind the elder, not the younger, Miliband, including Alistair Darling, Jack Straw, Tessa Jowell, Alan Johnson and Andrew Adonis (who has just been appointed by the Labour leader as an adviser on industrial strategy). Just four members of Gordon Brown’s cabinet backed Ed over David: Peter Hain, Hilary Benn, John Denham and Sadiq Khan. Two years on, Denham and Hain have quit the shadow cabinet, while Benn and Khan are said to be “brassed off” at their leader’s failure to empower or promote them.

Aides of the Labour leader like to draw an analogy with Margaret Thatcher’s spell in opposition in the late 1970s: an inexperienced, underrated leader trying to smash the political and economic consensus and take her party back to government in the space of a single term.

But if Miliband wants to be Thatcher, where is his Keith Joseph? His Airey Neave? Which think tanks can he call on for ideological support? The Tory leader had Ralph Harris’s Institute of Economic Affairs, Madsen Pirie’s Adam Smith Institute and, most important of all, Alfred Sherman’s Centre for Policy Studies.

It is not as if the Labour leader is unaware of this particular, and pressing, problem. Miliband has been heard wistfully telling friends: “I guess I am my own outrider.”

A close ally of his offers the following defence: “The challenge we had from the start was keeping everyone together, because we’d won by such a small margin. It would have been inappropriate to try to create a vanguard within the party,” he says.

Peace of the graveyard

Miliband sees himself as a unifier, as a leader who transcends factions, gangs and groupuscules. “You could say that Ed is ‘faction-blind’,” says an irritated shadow cabinet minister. He doesn’t mean it as a compliment. In politics as in the playground, factions matter.

There is a reason why Thatcher had her Thatcherites, Blair had his Blairites and Cameron has his Cameroons. That John Major could never really call on “Majorites” for support may help explain his failure to silence his army of backbench rebels. Even Brown had his Brownites; in his darkest days in Downing Street, he could always call on the two Eds to go out to bat for him.

Miliband was wise to promote Rachel Reeves and Chuka Umunna to the shadow cabinet in October: they are young, talented MPs who backed him for leader in 2010 and understand his desire for a “new settlement”. But he needs to go much further and faster. In his next big reshuffle, he should consider bringing even more of the newbies who backed him, such as Chi Onwurah, Emma Reynolds and Lisa Nandy, into the shadow cabinet.

Remember, in politics, there is no point having political capital if you don’t spend it. “You can have peace in the party by staying quiet and avoiding confrontation,” says a frustrated front-bench ally of the Labour leader. “But that’s the peace of the graveyard. Ed needs to assert his leadership and promote his own people even if it upsets others in the party.” He adds: “Now is the time to be bold and strike out.”
Miliband can’t afford to relax. Politics works in cycles and he will come under sustained fire again soon enough. He can’t be his own outrider for too much longer.

Mehdi Hasan is co-author of “Ed: the Milibands and the Making of a Labour Leader” (Biteback, £9.99)

Orange Prize competition

Wed, 16 May 2012 13:08:29 +0000

Enjoy a summer of reading with the best of this year’s women’s fiction.

We’ve teamed up with Orange to offer you the chance to win six must-read books from the 2012 Orange Prize for Fiction shortlist.

The lucky winner will receive a complete set of the six shortlisted books plus a bottle of Taittinger Brut Réserve NV. The 2012 shortlist is:

Esi Edugyan’s Half Blood Blues

Anne Enright’s The Forgotten Waltz

Georgina Harding’s Painter of Silence

Madeline Miller’s The Song of Achilles

Cynthia Ozick’s Foreign Bodies

Ann Patchett’s State of Wonder

The Orange Prize for Fiction is the UK’s only annual book award for women’s writing and celebrates excellence, originality and accessibility. Previous winners include Téa Obreht, Zadie Smith, Lionel Shriver, Rose Tremain and Andrea Levy. The winner of this year's prize will be announced on the 30 May 2012

Visit www.orangeprize.co.uk for all the latest news and offers.

For your chance to win, simply email: alice.gribbin@newstatesman.co.uk

We will pick a winner on 28 May.

Business coaching: how to make it stick

Matt Somers — Wed, 16 May 2012 12:48:32 +0000

A few pointers.

How do you make coaching stick? This is a question I get asked a lot and whilst there's a lot I would need to know about your particular organisation before I could give specific advice, I thought the following pointers might be helpful:

Follow up initial training

Whilst a typical one or two day coaching skills training course will equip managers with the basic tools and techniques it will only address a change in behaviour. Where behavioural change is not accompanied by a similar change in thinking and attitude it will not stick. A series of follow ups to any initial training is useful particularly where the participants are required to be coached on an ongoing work issue and to regularly report back on their progress.

Include a coaching module on all 'people skills' training

In order to move away from coaching as 'task' to coaching as 'style' it must be seen as part of the overall approach to managing people. It is therefore useful to reflect this need on all people skills training and not just specific coaching workshops.

Get the support of the most senior person you can

Where coaching is seen as merely a skill to learn the involvement of the training department is all that is required. However where coaching is seen – as it should be – as part of organisational and cultural change, it becomes a policy decision that requires the full support of the senior team. However, it is not necessary to get the whole team on board from the start, target the most obvious champion and work from there.

Coach the senior team so that they get the benefits

Many of my coaching skills training projects had their seed in a senior executive being bowled over by the benefits of being coached and wanting that experience to permeate throughout the organisation.

Make sure high performers are coached too

Too often coaching is seen as remedial and people understandably shy away from being seen as needing “special lessons”. We can overcome this through coaching by stealth, i.e. by not labelling it as such – but this seems counter-productive if we are really trying to increase the take up of coaching. An alternative is to very deliberately coach already high-performers. They are highly likely to welcome the initiative and become strong advocates for the approach.

Share coaching success stories loudly and visibly

As above, the positive aspects of coaching should be shouted from the rooftops as much as possible.

Publish the results so that the Executive's greed outweighs their conservatism

We can tie ourselves in knots in trying to evaluate coaching with a degree of precision an academic would admire. However, simpler means are available which nevertheless highlight the sheer irrefutable logic and power of the coaching approach. Some raw statistical evidence backed up with stories and anecdotes of meaningful performance will often be enough to convince even the hardened skeptics.

Include a coaching related KPI in managers' performance reviews

“What gets measured gets done” so the saying goes so if we really want managers to give as much energy and attention to people and well as task matters we should measure their results with equal seriousness

Deal with excuses:

I don't have time...	..yes you do, just differing priorities
The culture works against coaching...	...which is exactly why you need to adopt coaching
My boss doesn't coach me...	...but that is no reason not to coach your people. You may wait a long time for your boss to change but you can change today
I already manage my people this way...	...not according to them you don't

Matt Somers trains managers helping them to become ‘coaches’. He is the author of several books, and his title Successful Coaching in a Week, £6.99 is published by Hodder Education: www.hoddereducation.co.uk

Was race a factor in Rochdale?

New Statesman — Wed, 16 May 2012 12:46:48 +0000

Simon Danczuk, the town's MP, and Myriam Francois-Cerrah discuss the relevance of race and religion to the grooming case.

On 9 May, nine men were jailed for their role in a child sex abuse ring in Rochdale, Greater Manchester. Eight were of Pakistani origin and one was from Afghanistan. Their victims – teenage girls from local care homes – were white. Far-right groups have tried to exploit the issue while debate rages over whether race or religion played a role in the crimes. Here, we present two perspectives on the case.

We can’t ignore it

Simon Danczuk, Labour MP for Rochdale

This month, Labour experienced some of its best ever local election results. Turnout, however, was worrying, falling as low as 13 per cent in parts of Greater Manchester. For me, one of the abiding memories in Rochdale was the exhilaration of new councillors as they won their seats; but I also recall walking up to a group of youths fixing a motorbike outside a house on a council estate in the Littleborough area on polling day. “Will you be voting?” I asked. They shifted uncomfortably, looked askance and mumbled, “No, but we would if the BNP were standing.”

A few weeks earlier I had sat facing a distraught mother in one of my weekly surgeries, watching her shake with fear and anger as she described how an Asian man had raped her daughter.

If politics is to mean more than bureaucratic white noise to people, it has to give a voice to the voiceless. When mothers tell me their daughters are being hounded by groups of Pakistani men, I will not leave it to the likes of the BNP to address their concerns.

Economic anxieties, high unemployment and uncertainty about the future blight the country, but in working-class Pennine seats like mine in the north-west of England, a host of other complicated issues follows in their slipstream.

I thought long and hard before telling the media this past week that race was indeed a factor in the grooming scandal that has brought shame on our town, and that a small Asian subculture has to be confronted. Anti-racist vigilance is the default position of many politicians like me who remember the deeply entrenched societal racism of the 1980s, but this should never blind us to uncomfortable truths in some sections of the Asian community – or any other, for that matter.

For a while now, I’ve had concerns about disturbing attitudes towards women shown by some of Rochdale’s Asian residents. It goes way beyond casual chauvinism to something far worse. In the two years I have been an MP, I’ve had to throw people out of my surgery because of their violent views on women.

I have been asked to write letters of support for rapists and, in one case, for a man who had attacked a woman with a hammer. Research by Professor Roger Penn of Lancaster University shows that a good proportion of young white women in Rochdale have been subjected to verbal abuse by young Asian men.

It sickens me that law-abiding Asians in our town might be stigmatised because of the actions of a minority of warped individuals. But I believe that neither the police and social services nor community leaders can afford to duck this issue any longer. If even Asian councillors were writing letters of support for people now found guilty of horrific sex crimes, it is clear we have a culture of denial.

Since I spoke to the media, other MPs have told me privately that they agree with what I said. Asian campaigners who have spoken out against predatory Pakistani men say that white people have thanked them for saying what they could not say themselves. This is a sorry state of affairs.

It is time we abandoned the shibboleths that leave the political classes isolated from the realities debated on buses, in pubs and on the factory floor. Compare this position to the inspiring bravery shown by the young girls who stood up to evil predators in a court in Liverpool. They were doubly let down, because their background led some within the police and social services to think it was a lifestyle choice that had driven them into the arms of abusers. Vulnerable people need help and support, so we must have the courage to face up to these problems.

As I write, I hear the English Defence League is planning another march in Rochdale. Such racist thugs will not be welcomed in our town and neither will the BNP. But we will not resist them simply by denial. We need to take this debate out into the open and make sure it is led by reasonable voices that want to build a strong and cohesive community – not by siren calls of hatred from those who want to divide it.

Race is a distraction

Myriam Francois-Cerrah

“We need to talk about race,” pleaded one guest on Question Time – and the Rochdale case has certainly thrust the issue back into the spotlight. Yet the focus across a wide range of media on race as an explanation for sex grooming misses why Asian men are over-represented in poorer areas where street grooming occurs and why white girls are over-represented among vulnerable groups in such areas. About 95 per cent of the men on Greater Manchester Police’s sex offenders register are white. Most sex gangs are not Asian. The criminologists Ella Cockbain and Helen Brayley warn: “If on-street grooming continues to be reduced to the big Asian networks alone, a whole host of other offenders will get overlooked.” Asians are not over-represented in the sex-slave trade or among paedophiles.

What’s more, to link sexually predatory behaviour with race is reminiscent of the racist terminology that was used to refer to black gangs in the 1980s. Take Jack Straw’s comment in January 2011 relating to a separate case in Derby: “These young men are in a western society – in any event, they act like any other young men, they’re fizzing and popping with testosterone, they want some outlet for that.” Straw both singled out the men as “foreign” and reduced their behaviour to physical urges, ignoring the dimension of power inherent in rape, which is primarily a crime of violence, not sex.

Confusing matters further has been the tendency of some writers, such as Yasmin Alibhai-Brown, to conflate race with religion. “The rapists are all probably in one sense ‘good’ Muslims, praying and fasting
in the daytime, then prowling and preying at night,” she wrote in the Independent on 9 May.

This overlooked how, as Cockbain and Brayley pointed out, “the defendants in question are at most nominally Muslim”. Practising Muslims certainly aren’t supposed to rape children.

Other writers, such as David Aaronovitch, have presented the common view of some women as worthless and thus open to abuse as somehow inherent to Islam. Aaronovitch wrote in the Times on 10 May that grooming is the “cousin of honour killing”. Surely if this were the case the main victims would be Muslim girls.

Furthermore, such assertions ignore the inequities of power based on gender at every level of society, and expressed through a wide range of social and cultural idioms. The terminology expresses a shared disdain for women, even if it is inflected with culturally specific justifications – “slut”, “ho”, “skank”. Sexism is not an “Asian/Muslim problem”, though it does affect Asians and Muslims, too.

The focus on the race or religion of the perpetrator conveniently obscures the failures by the police, Crown Prosecution Service and social workers in bringing these men in Rochdale to trial sooner. What’s more, it makes us look past our own rape culture, in which victims’ claims are dismissed and where one in three rape allegations involves alcohol. The methods used by the Rochdale criminals are common to many white British sex offenders.

Those who seek to locate these crimes within some inherently Asian or Muslim characteristic fail to acknowledge that the vast majority of such men are law-abiding. They also choose to overlook the sheer diversity of Asian cultures – and that the chief prosecutor who reopened the case, Nazir Afzal, is an Asian Muslim.

To express these concerns is not a mark of political correctness; it is about avoiding the stigmatisation of an entire community based on the crimes of a group of men who happen to be Asian. The more important question is why some people have been so keen to attribute a racial dimension to this crime and what that says about our assumptions of Asian men.

Historically, it was black men who were viewed as the antithesis of white femininity, or as sexually predatory on white innocence and beauty. We would be naive not to notice how the same rhetoric is playing out now about men who are Asian and Muslim.

Eurocrisis, 1998

Alex Hern — Wed, 16 May 2012 11:58:29 +0000

Ten months before the euro was introduced, Paul de Grauwe described the present crisis.

It may look like Citi were prescient in coining the word Grexit – and assigning a 50 per cent probability of it happening – back in February, but Gavyn Davies of the Financial Times points out some really impressive foresight. In 1998, before the euro had even been formed, Paul de Grauwe described a possible European financial crisis with remarkable similarities to the present one:

Suppose a country, which we arbitrarily call Spain, experiences a boom which is stronger than in the rest of the euro-area. As a result of the boom, output and prices grow faster in Spain than in the other euro-countries. This also leads to a real estate boom and a general asset inflation in Spain. Since the ECB looks at euro-wide data, it cannot do anything to restrain the booming conditions in Spain. In fact the existence of a monetary union is likely to intensify the asset inflation in Spain. Unhindered by exchange risk vast amounts of capital are attracted from the rest of the euro-area. Spanish banks that still dominate the Spanish markets, are pulled into the game and increase their lending. They are driven by the high rates of return produced by ever increasing Spanish asset prices, and by the fact that in a monetary union, they can borrow funds at the same interest rate as banks in Germany, France etc. After the boom comes the bust. Asset prices collapse, creating a crisis in the Spanish banking system.

Even de Grauwe couldn't have predicted the extent to which the Greek crisis would contribute to eurogeddon, though. The falsification of Greek accounts didn't come to light until 2004, and it is that, arguably, which set everything that followed in motion.

PMQs review: The battle for economic credibility rolls on

Samira Shackle — Wed, 16 May 2012 11:58:19 +0000

Miliband lands some blows on Cameron in a somewhat rambling PMQs.

At the best of times, PMQs can feel like little more than a sparring match, and there was nothing to disprove that today.

It has been a bad few weeks for David Cameron, and Ed Miliband was able to land a few easy blows.
He led on growth in Europe, using the opportunity to mock Cameron for “LOL-gate”. Talking about the Prime Minister’s relationship with Francois Hollande, Miliband said: “It’s a shame you didn’t see the French president 3 months ago when he was in the UK. I’m sure text messages and LOL will go down just as well”. It was inevitable that this embarrassing revelation from last week's Leveson inquiry would come up and Cameron had a somewhat bizarre pre-prepared comeback aimed at Gordon Brown - “At least I know how to use a mobile phone rather than throw it at the people who work for me”. In amongst the bickering, perhaps the most significant moment was Cameron saying that the eurozone should “make up or break up”.

Phone jokes aside, Miliband went hard on cuts to frontline services – the number of police officers and nurses – while Cameron accused him of weakness and dishonesty on the economy. The Labour leader shouted statistics about cuts to the frontline, Cameron responded by stressing backroom cuts. Essentially, it was all very familiar ground, albeit with a few snappy lines. “They cut taxes for millionaires, and services for everyone else,” said Miliband. The cut to the 50p tax rate is the gift that keeps on giving for the opposition. The after-effects of George Osborne's noxious Budget will be felt for some time yet.

The polls this week have indicated that the public may be beginning to lose faith in the government’s handling of the economy, and Miliband capitalised on this. Perhaps his strongest line today was: “We’re in double dip recession, a recession made in Downing Street, made by the two of them”. If he can tackle the Tory narrative that they are simply clearing up the mess left for them by Labour – which is less convincing as time passes – he will go a significant way towards improving his party’s chances at the next election.

Cameron drew applause from his benches – and outrage on Twitter – when he implied that being left-wing was a problem in and of itself (“Is he weak or left-wing? The problem is, he’s both”). Despite mocking his predecessor’s rage, Cameron’s temper was on show (“I’m very calm,” he joked at one point). Miliband highlighted this in a slightly forced - yet close to the bone - joke: “I know he’s going to have intensive training before he goes before Leveson. I think that should involve anger management”.

All in all, a marginal win for Miliband, but a rather inconclusive and unedifying contest all round.

Who's to blame for "Grexit"?

Alex Hern — Wed, 16 May 2012 11:04:29 +0000

Not the phenomenon; the word.

"Grexit" has gone from being a word that no-one had heard, to one that people couldn't quite believe they had heard, to one that people can't stop hearing, in a very short space of time.

Google Insights shows the search volume for the word over the last twelve months (the scale is searches, normalised so that the highest month is equal to 100):

As you can see, it was first heard in February, has a local maximum in March, and then rocketed up this month (it is likely to rise even higher in the last third of May). So where did it come from? Who do we have to blame?

It's all Citigroup's fault. On 7 February, Willem Buiter and Ebrahim Rahbari at Citi released a briefing note that read:

We raise our estimate of the likelihood of Greek exit from the eurozone (or ‘Grexit’) to 50 per cent over the next 18 months from earlier estimates of ours which put it at 25-30 per cent.

For the record, on 7 May Citi cranked up its odds of a Grexit to 50-75 per cent. If they are better at making medium-term predictions than they are at coining words that don't sound like an antidepressant, there is still time to short the Euro.

Don't mess with Delpy

Ryan Gilbey — Wed, 16 May 2012 11:02:26 +0000

The French actress is brave and brilliant - if only her latest film lived up to her talents

The tardy sequel, so late in arriving that it has less in common with the Supermans and Lethal Weapons of this world than with the 7 Up series (which was back on our television screens this week), has as its current public ambassador Julie Delpy. She is the star and co-writer of the most delicious example of this species of storytelling—Richard Linklater’s brace of Before films (Before Sunrise and Before Sunset; a third is currently in the works). Or at least that’s the case now that Truffaut isn’t around to make any more Antoine Doinel films.

But Delpy has also made her own independent contribution to this genre, which we will label temporarily “sequels-to-movies-that-you-never-knew-needed-sequels-in-the-first-place.” In 2007, she wrote, directed, produced, edited, starred in and scored the abrasive romantic comedy 2 Days in Paris. Such extensive creative input must mean that the film represents her authentic voice. (It also means that the end credits were significantly shorter than in other movies.) And what a voice! She had already provided some vital prickliness and scepticism amongst the lovely gap-year wish-fulfilment of Before Sunrise, but nothing to prepare audiences for the emotionally and sexually forceful, taxi-driver-berating, self-righteous livewire and provocateur that she played in her own film.

2 Days in Paris focused on Marion (Delpy), who takes her uptight New Yorker boyfriend Jack (the glorious Adam Goldberg) to meet her parents. The culture-clash theme was amplified, with wit and originality, in Jack’s paranoia about Marion’s sexual history. Everywhere he turns in Paris, he finds apparent traces of her lively past. What is meant to be a relaxing break becomes a battlefield in which the white, male, American ego and the French self-image suffer the severest injuries.

The prickly punchline of the movie is that it isn’t paranoia at all: his fears are entirely justified. (“He knew Paris was for lovers,” runs the poster’s on-the-money tagline. “He just didn’t think they were all hers.”) It wasn’t exactly that the serious material was made palatable by the humour—the comedy itself was barbed, so that the darkness and lightness in the script often became inseparable. And Delpy demonstrated an expert command of her material, using the romcom format to make some important points about the cultural and emotional barriers that have to be vaulted in a relationship. “What really inspired me was Jaws,” Delpy said. “But instead of the shark, the threat to Jack comes from all these virile French guys. He’s under attack.”

Five years on, Delpy returns as Marion in 2 Days in New York (which she again wrote, directed, produced… well, you get the gist). Marion has now separated from Jack, though they have a young son who lives with her in the Brooklyn apartment she shares with her new partner, Mingus (Chris Rock). This time the situation is reversed, with Marion’s family descending on her—her insatiable, rambunctious father (played by the actor’s real-life parent Albert Delpy), her antagonistic sister Rose (Alexia Landeau) and Rose’s feckless boyfriend Manu (Alex Nahon). (Landeau and Nahon, who both appeared in the first film, also helped Delpy with the new movie’s story.)

Anyone who admired 2 Days in Paris will probably be asking the same question: “What, no Jack?” Adam Goldberg’s neurotic energy was so central to the earlier film, and he was such a perfect match for Delpy, that there can’t help but be a slight sag when we realise his name is absent from the cast list. “I knew I couldn’t do a sequel with the same guy,” Delpy explains in the press notes, “because that would be too much like Before Sunrise and Before Sunset. Out of respect for Richard [Linklater] and Ethan [Hawke, her co-star], I knew I couldn’t do that.”

It should be said that Rock is quite a revelation as the tender but increasingly harried Mingus, who has to contend with Marion’s mounting volatility, Rose’s advances and Manu’s casual racism (he is perturbed to discover that Mingus, as an African-American, doesn’t like Salt’N’Pepa or dope). Underplaying throughout, Rock displays an appealing dryness that hasn’t always come through in his own star vehicles.

The problem is the movie itself. Much of the familiar furniture is in place: the difficult family, the probing camerawork, the return of key cast members (including Daniel Brühl, who reprises his role as a fairy). But the film has no centre. New York doesn’t figure as a character or a force, malevolent or otherwise, as Paris did previously. Without the sexual paranoia that held together the original, the sequel is a loosely connected series of skits, observations and arguments in search of a script editor. There are several strong scenes, not least Marion’s encounter with a cantankerous neighbour, but none of the tantalising blend of weight and dottiness that distinguished its predecessor.

Nonetheless, I still think there’s something to celebrate. Or rather, someone. Delpy has long been unafraid to speak out on the subject of the movie industry’s sexism, and it’s refreshing to find that she is prepared to show herself in an unflattering or aggressive role on screen. “I hate being a male fantasy,” she told me when I interviewed her in 2007. “So many times I’ve been in a room pitching some movie to the financiers, and they’re blatantly just staring at my legs…The response I got whenever I pitched something was, ‘Why don’t you write something sweet?’” Nor was that restricted to stereotypical cigar-chomping Hollywood suits. In the early 1990s, she auditioned for the dual lead roles in Krzysztof Kieślowski’s The Double Life of Veronique:

“[Kieślowski] asked me to do a sexy gesture. That really bothered me. So I did this [sticks tongue out and pulls on earlobes]. I knew by the look on his face that I hadn’t got the part. But I was really mad with him. All that younger-woman bullshit you get. That fucking pervert. That ... man!”

She did end up working with Kieślowski several years later on Three Colours White, and grew to love and admire him, but the point is well made: no one messes with Delpy, regardless of whether they live for art or opening-weekend grosses. At least Marion is allowed to be a fallible, messy and ribald human being without either of the films passing judgement on her. Let’s prize Delpy for that, and hope that the next film she makes marshals more successfully her rampant intelligence.

2 Days in New York opens on Friday.

Profits rise for major UK energy supplier

Harriet Williams — Wed, 16 May 2012 11:01:00 +0000

SSE says they are dealing with exceptional challenges

Profits have risen 2 per cent at SSE, one of the UK's biggest energy suppliers. Growth in the power division offset a fall in the retail division.

It took a pre-tax profit of £1.3bn despite challenging economic circumstances and upheaval in the global energy market. These figures were adjusted to take account of exceptional circumstances to reflect the underlying performance of the business.

Operating profit at the Perth-based company's wholesale business unit was up 6.4 per cent to £607.9m. This includes the production, storage and generation of energy, and was boosted by a higher output of renewable energy.

However, operating profit in the retail division, fell 20 per cent to £321.6m. The retail division supplies electricity and gas to households and businesses. Without the profit adjustment, pre-tax profits fell from £2.1bn to £268.5m.

Chairman Lord Smith of Kelvin said

Higher wholesale gas prices, falling demand for energy and a succession of winter storms presented major challenges for the wholesale, retail and networks parts of SSE. Despite this, SSE has again delivered increases in the full-year dividend and in adjusted profit before tax

SSE raised energy prices in September 2011, raising gas by 18 per cent and electricity by 11 per cent before cutting gas prices again by 4 per cent in March this year.

In a statement, SSE said that the economic outlook for Britain remains uncertain.

No lurch to the left

Rafael Behr — Wed, 16 May 2012 10:51:39 +0000

The Tories would be unwise to believe their own spin about Jon Cruddas's appointment to head Labour's policy review.

It was hardly a shuffle, more like a shimmy. Ed Miliband has made some changes to his top team in response to the departure of Peter Hain from the office of shadow Secretary of State for Wales. His replacement is Owen Smith, a generally well-rated MP from the 2010 intake who seems to have made a wide range of friends and few enemies in his short time in parliament.

But the move that has generated the most attention is the handing of responsibility for the party’s policy review to Jon Cruddas. The Dagenham MP has a high profile in the party and has been pestered by various people to take a front line ever since his unsuccessful but much admired (in Labour circles; unnoticed anywhere else) campaign for the deputy leadership in 2007.

The appointment has been vacuously branded by Conservatives a “lurch to the left”. This is presumably a half-hearted attempt to re-animate the spectre of “Red Ed” as a kind of default jibe in the absence of more imaginative ways to insult the Labour leader. Anyone who knows Cruddas, has followed his career or listened to his arguments will know he is plainly not a reactionary big state union-hugging lefty from central casting. He was an advisor to Tony Blair and a supporter of David Miliband’s leadership bid in 2010. He was a critic of big state models of welfare spending as ineffective in dealing with stubborn social problems back in the days when budget constraints were not even part of the discussion.

He has dedicated considerable thought to an acute dilemma in modern British politics: how to address the insecurity, disorientation and disempowerment that many feel in response to globalised economic forces without indulging in illiberal strains of protectionism and atavistic nationalism. One criticism sometimes heard of Cruddas is that he is long on elegant analysis of a problem, short on solution.

By contrast, that allegation is never made against Lord Andrew Adonis, Gordon Brown’s transport secretary and architect of the Academy Schools programme under Tony Blair. He has been recruited to feed thoughts on industrial strategy into the policy review. That is being interpreted in some quarters as a symbolic hire to indicate that Blairish ideas are tolerated in Miliband’s Labour party. There was certainly appetite for such a gesture since Liam Byrne, the shadow work and pensions secretary who has been kicked off the policy review, is considered a fanatical Blairite by the kind of people who still care about such labels. (That is, most of the media and a large but diminishing section of the parliamentary Labour party.)

If Adonis is going to be empowered to take serious decisions about the direction of Labour policy on reforming the economy, infrastructure and strategic investment, he and Cruddas will make a formidable pairing. Indeed, it is hard to believe that the Tories seriously believe their own spin about a sudden surge of Trotskyism at the Labour top table. Surely they are not so crude in their analysis or so ignorant of Labour thinking. Miliband must be hoping they are and that his enemies, not for the first time, are busy underestimating him.

Update: In Prime Minister's Questions today David Cameron used the appointment of Jon Cruddas as a device to attack Ed Miliband for apparent cosiness with trade unions and for revealing his supposedly sinister leftist impulses. It was a desperate lunge suggesting that the Tories do indeed know nothing about Cruddas other than what they must have hastily found on Wikipedia this morning. If they want a more nuanced view they should start with Gaby Hinsliff's profile for the Guardian here and, of course, some of the pieces he has written for the Statesman here.

Jeremy Hunt, Adam Smith, Frédéric Michel to appear at Leveson

Harriet Williams — Wed, 16 May 2012 10:29:38 +0000

Lord Leveson confirms their appearance by the "end of May".

Culture secretary Jeremy Hunt, along with his former special advisor and News Corp lobbyist Frédéric Michel will all give evidence at the Leveson inquiry before the end of May.

Lord Leveson made the announcement yesterday, while calling on Parliament not to demand publication of witness statements relating to Michel's controversial emails, which first prompted calls for Hunt to resign.

Michel's emails imply that Jeremy Hunt's office was biassed towards Rupert Murdoch's News International in the matter of the BSkyB takeover bid.

Lord Leveson has insisted that he will not give a judgement on whether or not the House of Commons had been mislead by Jeremy Hunt, arguing that it is up to the Prime Minister and MPs to make that judgement. He said it was important crucial evidence was not released to Parliament in advance of the inquiry, as the witnesses would then be answering questions against a political backdrop.

The speaker John Bercow can force the release of witness statements with a Speaker's order, but Leveson said he hoped this would not happen, as it would interrupt the inquiry.

Hunt faces pressure from the House of Commons to resign, after a point of order was raised by Harriet Harman MP in the Commons on Monday. She asked the Speaker to confirm

Whether it is in order for the Secretary of State to say that he won’t answer questions from Honourable Members in this House because instead he's going to tell Lord Justice Leveson; and whether it is in order for the Secretary of State to say he won’t place documents in the Library because he's giving them to Leveson. Will you confirm that the Secretary of State's refusal to answer questions is not because he is prevented from doing so by the Leveson Inquiry - but because he doesn't want to.

The Speaker responded that the accountability of a minister to the House of Commons was not affected by external inquiries, and that as a courtesy, written documents submitted to inquiries should also be submitted to the house.

So far this week, Leveson has heard testimony from Alastair Campbell, leading civil servant Gus O'Donnell and Sky journalist Adam Boulton.

Greggs attacks the pasty tax

New Statesman — Wed, 16 May 2012 10:18:38 +0000

2012 sales to date up 4.3 per cent as baker lambasts government.

Greggs the baker has hit back at the government's proposed "pasty tax" in its interim management report today, calling the proposed changes "unworkable" and warning it would "give rise to many new anomalies and further uncertainties."

The statement reads:

We have always charged VAT on products in this category, such as hot sandwiches, soup and hot drinks. What we cannot support is the government’s current proposal to extend the standard rate of VAT to freshly baked food where there is no attempt to keep it hot and which is not designed to be kept hot. The proposed changes are in our opinion unworkable and would give rise to many new anomalies and further uncertainties.

While we understand the government’s need to increase revenue, we fear the current proposal will have a disproportionate impact on the specialist bakery sector, resulting in further unemployment, high street closures and reduced investment. In our submission we will also highlight our concern that the estimate of the extra VAT revenue generated makes insufficient allowance for the income tax, NI contributions and corporate tax that would be lost, as well as the cost of extra unemployment pay.

We believe there is an alternative to the government’s proposal which will remove any anomalies and make the tax much simpler for both the government and the consumer. We believe the solution is to see VAT charged on all food kept hot for sale in a heated environment after cooking, all food re-heated to order and all food supplied in heat-retaining packaging. This will very clearly differentiate between fresh bakery food and food that is being sold intentionally hot.

Savoury sales are more than a third of our turnover, and the outcome of the consultation process could have a material impact on our sales and profits. This week, we will be responding formally to the consultation on the proposed changes and hope that the government will listen to the logic of our alternative approach. In addition, we are looking as a matter of urgency at how best we would respond to a number of possible outcomes on behalf of our shareholders, customers and staff.

The company believes that consumer sentiment could benefit in the months ahead from major national events including the Diamond Jubilee celebrations, the Olympics and the Euro 2012 football championship.

Driven by its new shop opening programme and the development of new channels to market, Greggs has improved its total sales by 4.3 per cent for the 19-week period ended 12 May 2012.

During the period, like-for-like sales were down by 1.8 per cent. The company had six disappointing weeks of trading as a result of the exceptionally wet weather in April and early May.

The company, which is planning to add a net 90 new shops by the end of 2012, has opened 25 new shops during the period, making a net addition of 20 after five closures. In line with its plan to refit a total of 100-120 shops during 2012, Greggs completed 42 shop refurbishments during the period.

5 CEOs who should already have been fired

Martha Gill — Wed, 16 May 2012 10:05:26 +0000

Forbes compiles a wish list.

Amid the CEOcalyspe that has been happening for the last few weeks, with Scott Thompson resigning, and Jamie “a billion here, a billion there" Dillon in hot water, Forbes have compiled a wish list of CEOS they think deserve to get fired:

1. Steve Ballmer, Microsoft

"Without a doubt, Mr. Ballmer is the worst CEO of a large publicly traded American company today. Not only has he singlehandedly steered Microsoft out of some of the fastest growing and most lucrative tech markets (mobile music, handsets and tablets) but in the process he has sacrificed the growth and profits of not only his company but “ecosystem” companies such as Dell, Hewlett Packard and even Nokia."

2. Edward Lampert, Sears Holdings

"Hope springs eternal in the micro-managing Mr. Lampert. Everyone knows of his personal fortune (#367 on Forbes list of billionaires.) But Mr. Lampert has destroyed Sears. The company may already be so far gone as to be unsavable."

3. Mike Duke, WalMart.

"We now know Mr. Duke’s business unit saw no problems with bribing foreign officials to grow its business. Just on the basis of knowing about illegal activity, not doing anything about it (and probably condoning and recommending more,) and then trying to change U.S. law to diminish the legal repercussions, Mr. Duke should have long ago been fired."

4. Jeffrey Immelt, General Electric

"What has Mr. Immelt, in his decade at the top of GE, done to keep GE as one of the world’s most innovative, high growth companies? He has steered the ship away from trouble, but it’s only gone in circles as it’s used up fuel."

5. John Chambers, Cisco Systems

"Mr. Chambers has reorganized the company 3 times – but it has been much like rearranging the deck chairs on the Titanic. Lots of confusion, but no improvement in results."

Unemployment drops second month running

Alex Hern — Wed, 16 May 2012 10:00:55 +0000

Underemployment carries on rising

This month's labour market figures show a drop in the unemployment rate for a second month in a row. The news contrasts with the release of the growth figures earlier in the month, which put the economy back in recession.

The headline indicators are undoubtedly good news. The employment rate was 70.5 per cent, up 0.2, or 105,000 people, in the three months to March. The unemployment rate has fallen 0.2 points in the quarter, and now stands at 8.2 per cent. There are now 2.63 million unemployed people, 45,000 fewer than in December.

Digging deeper, the same worrying trends that we saw last month are still there. The fall in unemployment was entirely due to a rise in part-time work. Full-time employment actually fell by 13,000 people, caused by a massive fall in employees working full time being offset by a slight rise in full-time self employment. Meanwhile, the total number of people working part time rose by 118,000 people.

The stats also break down the reasons why people are working part-time, and again shows a quarter-on-quarter increase in the number of people doing so because they can't find full-time work; 1.4 million people are in this situtation, up 5 per cent and 73,000 people from December.

The temporary employment stats showed the same trend. 15,000 more people were employed temporarily in the three months leading to March, a 1.0 per cent increase. As with last month, there was a quarter-on-quarter increase on the number doing so because they could not find a permanent job: 14,000 extra people, a 2.4 per cent rise. Unlike part-time employment, however, this appears to be slowing down.

As we wrote last month, these increases are good; it is better to be employed, even temporarily, than not at all. But the unemployment crisis being replaced by an underemployment crisis is a very minor improvement indeed.

The value of the NHS and the BBC is immeasurable

George Chesterton — Wed, 16 May 2012 09:55:50 +0000

Attempts to denigrate these public institutions must be resisted

It has never been easy to justify making people pay for something they don't use. That is often how disgruntled Britons now see the NHS and BBC, despite the fact that often those who complain about their high taxes or the licence fee conveniently forget their recent trip to their GP, the maternity ward or the hours they spend enjoying commercial-free TV and radio. But the greatest value of these last major publicly owned institutions is not even quantifiable and it is the consistent failure to make this most difficult of cases for the defence that leaves them so vulnerable.

There is a lot to moan about at the moment. We can gripe about crime and bad schools or the Olympics bringing London to standstill or corrupt and elitist politicians – a dog even won Britain's Got Talent. But there are still a few things that make me relatively pleased to live here. Two things, in fact. The poor raggedy old NHS and the bloated, sometimes crappy but often wonderful BBC. The reasons for lumping these two behemoths together is simple: they both contribute to something well beyond their material value and they are both under dire threat.

Sometimes it seems as if the forces of free-market conservatism are out to get the NHS and BBC precisely because their true worth cannot be expressed on a balance sheet. They are the unfinished business of Thatcherite reform. It's as if it is not just that the government wants to dismantle the NHS for the benefit of profiteering healthcare firms and the BBC for their media-mogul friends, but that it simply can't stand the idea of people contributing to a communal pot for the benefit of everyone. It must really get up the noses of Boris Johnson, who called for a Tory director general this week, and Andrew Lansley, who has fewer friends in public health than the MRSA superbug, to see people “wasting” their money on obscure radio stations and someone else's heart op.

What the NHS and BBC embody and promote is that most slippery and seemingly useless political trope - the public good. This makes it even easier for their opponents. That the mayor of London, not exactly unencumbered by friends in the media, thinks he has the right to meddle in the affairs of the BBC shows the danger it is in. That, after labelling nurses and doctors as communists, the health secretary can this week effectively accuse the Royal College of Nursing of lying over job cuts again demonstrates the way opposition to NHS privitisation is portrayed as wrong economically and ideologically. So in both cases, the fight to save the head and heart of the nation should not only employ facts and figures, but the abstract. Sharing, redistribution, pluralism, protecting the less able and serving the less resourced - these are not worthless because they cannot be rendered statistically. The issue goes far beyond ratings for Eastenders and Radio 3 or cancer recovery rates and waiting times for hip replacements.

It is logical for me to pay for a local radio station that I don't listen to because it serves a community in a way a commercial one never could - or a national network I don't like because it enriches our culture in a way a profit-seeking company would never have the freedom to. I don't need to benefit directly or even “see” the benefit in others, because I am already benefiting by living in a society where such things exist. In the health service the advantages are even more blatant. By contributing to the cost of healthcare for the poorest in society, the wealthiest are helping to reduce suffering in others and by extension for everyone. The social benefits of better universal health, more workers and less crime for example, are obvious, but an explanation involves the kind of conceptual thinking politicians do not trust themselves to present to the public.

The enormous cost of the NHS and the BBC and the way the funds are collected from the public are being used as a hammer to provoke the basest reflexes of self-interest and insularity, Preying on the short-termism and anxiety of recession, the enemies of public ownership are seeking to create an environment in which such ideals are seen as redundant and archaic. It doesn't help that the BBC is guilty of grandiloquent and budget busting projects, yet turns to cutting local and specialist radio – perhaps the greatest expression of its public service – to save money. Despite the faults and weaknesses of both institutions, the forces against them should be resisted. The NHS and BBC, flawed as they are, are not merely worth protecting, they are just about the only two things left that preserve any sense of national community and cohesion.

The mere act of public funding has value. It is not selfless charity or waste; providing our hard-earned wages for something not solely for our own good contributes to our own good because the world we live is a kinder, better, less dumb, less rapacious place for it. In other words, if you think Britain is a divided, violent, parochial and unenlightened country to live in now, without the NHS and the BBC it would be immeasurably worse. There's the rub: the NHS and the BBC make Britain a better place to live - immeasurably.

George Chesterton blogs on politics and culture for the Huffington Post UK

The value of the NHS and the BBC is immeasurable

George Chesterton — Wed, 16 May 2012 09:51:19 +0000

Attempts to

George Chesterton blogs on politics and culture for the Huffington Post UK

AFP to send 180 journalists to cover Olympics

Andrew Pugh — Wed, 16 May 2012 09:34:02 +0000

French news agency aims to provide 1,000 videos in different languages

French news agency Agence French Presse has revealed its sending 180 journalists to the UK to cover the London Olympics in July.

The agency plans to send at least 12 teams of video reporters to the capital to cover the build-up to the Olympics from 2 July, with the aim of providing more than 1,000 videos in six languages.

The team includes 70 AFP photographers from 24 countries around the world, which are expected to provide up to 2,000 photos a day.

Read more at Press Gazette

Info chief blasts Govt over veto on release of NHS report

Press Gazette — Wed, 16 May 2012 09:24:24 +0000

Decision to veto the released of the NHS risk register draws criticism

Information Commissioner Christopher Graham has locked horns with the Government over its decision to veto publication of a report detailing the risks associated with controversial reforms of the NHS.

Health Secretary Andrew Lansley deployed his veto to block an Information Tribunal ruling that he should meet Labour demands to disclose the document.

The November 2010 Transition Risk Register set out internal Government assessments of the risks posed by the reforms in the Health and Social Care Act, which became law in March.

Read more at Press Gazette

Ricky Gervais's 'Derek': the reality of a life of otherness

Nicky Clark — Wed, 16 May 2012 09:21:32 +0000

Previously sceptical of his work, a disability rights campaigner speaks with the comedian about controversy and compassion.

So, Ricky Gervais has got the green light to turn Derek – a bittersweet tale of a vulnerable care home worker - into a full series for Channel 4.

Although the show was popular with viewers – gaining 3.2 million – the response was not universally positive. Some of its critics had watched it. Some hadn’t. To my mind, the predicted “cruelty” didn’t manifest – I found the show warm and funny, and at times poignant.

Why was the response to Derek so hostile? Perhaps because in October 2011 Gervais used the word “mong” on Twitter. He was trying to make a point about the evolution of language, but it quickly became a story about how the comedian was “mocking children with Down’s syndrome”.

As a disability rights campaigner, and someone with personal experience of caring for those with disabilities, I was one of Gervais’s critics over Mong-gate, as it inevitably came to be known. But with Derek, the assumptions by some that the show would be predicated on cruelty proved to be unfounded.

Add to this the fact that Gervais has been responsible for providing more acting opportunities for disabled people, in positive roles, than any other writer I can think of. Perhaps people may have him confused with Frankie Boyle - who ultimately recognises which side his “hate dressed up as satire” bread is buttered.

To be Frank, or rather to be Ricky, a multi millionaire global star really doesn't need to reduce himself to shock tactics to sell a show. They sell themselves. Nor does he need to contact me to apologise for any harm that his thoughtless tweeting generated. The fact that he did says much more about the man behind the myth than a perceived desire to be seen as the king of controversy.

We’re not friends but since we spoke initially I’ve challenged him privately and repeatedly in a friendly way. For a man often publicly perceived as arrogant and intractable, he is politely receptive to challenge – while remaining resolute that above all, he wants his work to speak for itself.

A few months ago, Gervais sent me the pilot episode of Derek and asked me to tell him what I thought. I was worried that this would be the watershed of my opinion of Ricky Gervais, because I actively campaign against people “playing disabled”.

Since he sent it to me I’ve watched it several times and each time I’ve laughed and cried. I haven’t seen cruelty, I haven’t seen Gervais “playing disabled”, but I have seen reality in the subject matter, having spent a lot of the last seven years in and out of my mum’s nursing home until she died in December from Alzheimer’s.

Instead of it being a mocking disintegration of a learning-disabled man paraded for the amusement of comfortable unaffected people, it’s a story that really needs to be told at the moment.

It’s the story of a socially isolated, gentle, vulnerable man surrounded by other people who society wants to forget, but told with humour, heart and real warmth. It’s a comedy which shows the reality of a life of otherness.

Derek is not bright, he’s good. He’s not sophisticated, he’s kind. He’s not beautiful, he’s compassionate.

Gervais as David Brent saw a documentary film crew as a ticket to becoming an entertainer, Gervais as Derek hopes the film crew are from “Secret Millionaire” because he’s looking for a champion and protector for himself and his friends.

The show deals with themes of loneliness, love, vulnerability and hope, told with humour and told from the perspective of people who as a society, we seem keener to laugh at than with.

I think that whatever criticisms are levelled at Ricky Gervais , despite how far he’s travelled from Reading, or how far up the entertainment ladder he’s climbed, “Derek” shows us that his view from the top is of the stories that matter told with warmth, humour and truth.

Reproduced below are the questions I asked Ricky Gervais before the screening of the pilot of Derek.

1. You’ve often spoken about how offence is “taken and not given” but does criticism or controversy ever cause you to question artistic decisions?

I see offence as the collateral damage of free speech. I hate the thought of a person's ideas being modified or even hushed up because someone somewhere might not like to hear them.

Outside actually breaking the law or causing someone physical harm "hurting someone’s feelings" is almost impossible to objectively quantify.

What some people might find offensive, others will not. Such is life. Offence is rarely about right and wrong but rather about feelings. Feelings are personal. Trying to have a consensus about what is objectively offensive is rather like arranging books in a library in order of merit. We'd all have a completely different order in mind.

We can't go round not saying what we want to say in case it offends someone somewhere. It will. Some people are offended by equality. Mixed marriage. Being gay. So you're offended? So fucking what?

Recently the New York City Departmentt of Education banned 50 terms from being used in tests administered to students for fear that they could offend. One of these words was "dinosaurs".

2. Derek Noakes, as a character, first surfaced in 2001. Irrespective of your assertions that he isn’t learning disabled, why do you feel this belief still persists?

Well firstly there is no argument. Derek is a fictional character and is defined by his creator. Me. If I say I don't mean him to be disabled then that’s it. A fictional doctor can't come along and prove me wrong.

He's different. But then so are a lot of people. He's not the smartest tool in the box but he's cleverer than Father Dougal, and not as different as Mr. Bean. He's based on those people you meet who are on the margins of society. Nerds, loners, under achievers.

If he had any specific and defined disability I would either get an actor with that disability to play the role or I would make sure I was an expert in that disability and the best person for the job. There are of course times when it is necessary for an able bodied actor to play a disabled role. Born on the 4th of July for example needed an actor to play both a disabled character and an able bodied character. It was naturally easier for Tom Cruise to sit in a wheelchair for half the movie than for a paraplegic to run around for half the movie. But I think it's a good rule of thumb (no offence if you don't have thumbs) to use actors with the disability of the character they are portraying.

3. Derek is gentle and compassionate and the way you present his world is too. How important is compassion towards difference, in your worldview and in your writing?

I think compassion in creating fiction is important on two levels. Firstly, as an actor it's important to have compassion for the characters you are portraying because at some level comedy and drama relies on empathy. Secondly, and on a more personal level I like to consider the members of society that portrayal affects. But I actually think in some ways that equality is even more important than compassion towards difference.

Some people were offended by Life's Too Short because a character with dwarfism was an asshole. He was an asshole. But he was an asshole because of all the things he did and said. Not because of his height. Being an asshole is a staple of comedy. Are disabled performers banned from having a meaty villain role because they should always shown to be perfect? No.

Him being an asshole was nothing to do with his disability. Some people are assholes. Some assholes are disabled. David Brent was an able bodied asshole. (Fat, with crooked teeth is not a disability.)

Derek is not an asshole. He's better than me. He's better than most people. He's kind, loving, funny, sweet, honest, open minded, hard working and most of all resilient to everything a harsh selfish brutal world can throw at him.

4. You’re regularly described as controversial and seemingly have a love/hate relationship with the press, which seems to inform the pre-publicity of some of your projects. Is this a price worth paying creatively speaking?

It doesn't affect me really. As long as they don't influence the creative process I don't really care that much. Luckily, people make up their own minds about things. As you get more and more successful you get more and more people with an opinion about you. The less anodyne and homogenized your work is, the greater the connection and reaction. I wouldn't have it any other way. I'm flattered that people care enough to either rush out and buy a ticket or a DVD, or sit at home angrily blogging about how many idiots rushed out and bought a ticket or a DVD. Vive la difference.

5. As you know I campaign against disability hate crime. Studies have shown hate crime always begins with verbal abuse, which has risen by 70 per cent on the streets of the UK in the last 12 months. What are your feelings on the comedy of cruelty and do you feel it can be linked?

In comedy, particularly satire, the problem comes when people mistake the subject of a joke with the actual target. This happens to me all the time, as I tend to explore contentious and taboo subjects. Everyone has their own particular taboo, of course, and as I've already said, there is no real consensus on what is acceptable. Personally, I think no harm can come from exploring taboos, and fear of them is their very propagation. I often deal with these subjects because I like to take the audience to places it hasn't gone before. Comedy is about surprise, and I think the job of a comedian is not just to make people laugh but also to make them think.

I don't like gratuitous cruelty because it fails on a comedic level. I don't like racist jokes, not because they offend me but because they are based on a falsehood. Comedy is an intellectual pursuit, not an emotional one. As soon as you stray away from truth you veer into rallying and it's harder to find that funny. I'm not sure that you can ever hold "jokes" responsible for bullying. It's like holding weapons responsible for killing. As we've already discussed, some people are just assholes.

6. Karl Pilkington gives an amazing performance as Dougie in Derek. He is famously interested in “freaks” which has led to criticism of him mocking people with facial disfigurement and impairments. How would you answer these comments?

I can't speak for Karl obviously, but I can tell you that he hasn't got a malicious bone in his body. I have never heard him "mock" people with disfigurement, facial or otherwise, but I have heard him talk about them in a fascinated and naive way. He is rather like a 5 year old child in a supermarket who points and says "Mummy why has that man got a weird shaped head" The mother is often mortified but she knows the child wasn't being nasty. Just inquisitive.

Karl is fascinated by difference. But he will get on with anyone. He has no pretensions and no filter. He says what he thinks and this can sometimes come across as harsh if you don't know him. He treats everyone equally and gives everyone the respect they give him. People have to remember, this is a man who thought that Anne Frank was just avoiding paying rent. He believes that Dinosaurs co-existed with cave men, and that a seal is a cross between a fish and a dog.

Nicky Clark is a writer and disability rights campaigner. A version of this interview appears on her blog, at nickyclark.blogspot.co.uk

Brooks raises 'grave doubts' over chance of a fair trial

Andrew Pugh — Wed, 16 May 2012 09:11:46 +0000

After Brooks was formally charged yesterday, she hit back at the CPS

Rebekah Brooks and her husband Charlie have raised “grave doubts” over their chances of a fair trial after they were charged with conspiracy to pervert the course of justice yesterday.

Yesterday evening the couple both released statements condemning the decision by the Crown Prosecution Service. Brooks is facing three conspiracy charges over allegations she concealed information, documents and computers from the Met Police investigation into the phone-hacking scandal.

Five other people, including her husband and News International head of security Mark Hanna, are facing similar conspiracy charges.

Read more at Press Gazette

Video: Barack Obama ribs David Beckham

New Statesman — Wed, 16 May 2012 09:03:03 +0000

"It is a rare man who can be that tough on the field and also have his own line of underwear."

Footballer David Beckham was the butt of Barack Obama's jokes last night. The US president was welcoming the Los Angeles Galaxy, the football team that Beckham plays for, to the White House to celebrate their 2011 Major League Soccer cup victory. Obama joked that the former England was ageing better than him, and joked about Beckham's recent H&M underwear campaign.

Here is the clip:

Opinionomics | 16 May 2012

Alex Hern — Wed, 16 May 2012 08:54:43 +0000

Must-read comment and analysis. Grexit! Grexit! Grexit!

1. Economic update – May 2012: Osborne’s austerity strangles Britain (Left Foot Forward)

Tony Dolphin presents his comprehensive monthly assessment of the economic situation.

2. An equality multiplier? (Stumbling and Mumbling)

Chris Dillow looks at the possibility that equality breeds equality, and asks what this means for social policy.

3. Is Germany bluffing on Greece? (Bruegel)

Philine Schuseil rounds up the German-language press response to the possibility of Grexit.

4. How Keynes would solve the eurozone crisis (Financial Times)

Marcus Miller and Robert Skidelsky write that for a country in such desperate straits as Greece, orderly exit from the euro to regain competitiveness looks to be the best option.

5. German voters must break the Merkel mindset that got them into this (Guardian)

Greece's euro membership was as much the German elite's fault as anyone's. Can it find the leadership to resolve the crisis, asks Robin Wells

Cameron considers a further £25bn in welfare cuts

Samira Shackle — Wed, 16 May 2012 08:09:30 +0000

Such a move would be unfair and unsustainable.

David Cameron barely makes a speech without referring to hardworking people who “do the right thing” and don’t claim benefits. This language implies that claimants are, by default, doing the wrong thing – a convenient position given unprecedented cuts to the welfare budget.

While the government has already indicated an £18bn reduction in welfare spending by 2014, it is being reported that the Prime Minister is looking at plans that would see a further £25bn in cuts.

The proposals have been drawn up in a policy paper for David Cameron and are understood to have come from Steve Hilton, No 10’s outgoing policy chief. Hilton, who has just departed Downing Street to take up an academic post at an American university, has suggested that a further £25bn can be cut. The Work and Pensions Secretary Iain Duncan Smith – who told the Times last month that the government had a duty “to support people in difficulty” – reportedly thinks that this level of extra savings is unfeasible.

Where exactly would these extra savings come from? The suggestions on the table are even further cuts to housing benefit and a tougher system for the universal credit to push people into full-time rather than part-time work.

Let’s take these one by one. The housing benefit cap is already having a devastating effect, in what Boris Johnson termed “social cleansing”. The BBC reported last month that Newham council was trying to evict 500 families to Stoke – 135 miles north – as it could no longer afford to house them in private accommodation. As rents rise unfettered but wages are frozen across the board, 93 per cent of new housing benefit claimants are in employment - doing Cameron’s feted “right thing”. There is no denying that housing benefit has ballooned and rents are too high, and that this is in part due to successive governments choosing to subsidise private landlords rather than build more social housing. But slashing housing benefit without attempting to provide alternatives unfairly penalises tenants. The Chartered Institute of Housing has estimated that 800,000 homes will already be put out of the reach of poor families, and that many may be forced to move to areas where there is less employment (ie. out of big cities), thus compounding the problem. The housing issue is already one of the most radical and inhumane of the governments’ policies; it is difficult to see how further cuts could be sustained or justified.

Secondly, it is all very well to encourage people into full time work, but only if there are full time jobs for people to do. A system which helps people to end benefit dependency is a good thing – but it is disingenuous to pretend that unemployment is a choice. There are 5.7 people for every job vacancy in the UK. You do not need to be a mathematician to understand that you cannot squeeze five people into one job. Most people are unemployed or working part-time because that is their only option.

The fact remains that cuts to welfare are popular with the public. The British Social Attitudes survey in December showed that half of Britons believe that unemployment benefits are too high and discourage people from finding work. The benefit cap – for all its cruelty in practice – was broadly supported. With Liberal Democrats saying there is no way they would support these £25bn extra cuts, and Duncan Smith saying that this level of saving is “absolute nonsense”, let’s hope that Cameron “does the right thing” and throws these plans out.

Image of the day: Aaron Sorkin

Martha Gill — Wed, 16 May 2012 07:48:18 +0000

The screenwriter will pen Steve Jobs biopic.

The Business End has been eagerly and indiscriminately passing on trivia about the new Steve Jobs biopic. Here's some more. Aaron Sorkin, writer so extraordinaire that real politicians plagarise from his political movies (see video below), has been recruited to write the script.

In a statement picked up by The Hollywood Reporter, Sony co-chairman Amy Pascal said:

"Steve Jobs’ story is unique: he was one of the most revolutionary and influential men not just of our time but of all time. There is no writer working in Hollywood today who is more capable of capturing such an extraordinary life for the screen than Aaron Sorkin; in his hands, we’re confident that the film will be everything that Jobs himself was: captivating, entertaining and polarizing."

Euro at four month low

Martha Gill — Wed, 16 May 2012 07:34:00 +0000

Worries about a Greek exit spread outside the Eurozone.

The euro has fallen to $1.27, its lowest point in four months against the dollar as speculation surrounding a Greek exit mounted.

Greek elections will be held again next month after a week of negotiations in which no progress was made. Leaders of France and Germany agreed Greece should remain in the eurozone while taking measures to revive economic growth.

This did not stall uncertainty in the markets however, which has now spread outside the eurozone.

Asian stocks were pushed lower, with the FTSE Asia-Pacific index down 2.6 per cent. China and Australia were also affected.

Oil prices also fell, US light crude dropped $1.60 to $92.38, while the London Brent fell by $1.25 a barrel to $111.

Other people's business, Wednesday 16 May.

Martha Gill — Wed, 16 May 2012 07:03:53 +0000

Give Facebook the tiara.

1. One word of advice for new college grads — CASH, (Washington Post)

The “C’’ in CASH stands for credit, writes Michelle Singletary.

2. Oracle suit gives Google a chance not to be evil (Reuters)

An Oracle lawsuit is giving Google a golden opportunity to regain its non-evil image, writes Reynolds Holding.

3. Hollande and Merkel dance around the Greece Lightening (Faisal Islam).

An election rerun in Greece, and lightning striking Francois Hollande’s plane. The omens are not great, writes Faisal Islam.

4. Facebook winning Keynesian beauty contest (Reuters)

Give Facebook the tiara. The social network may be worth more than $100 billion on its debut, writes Jeffrey Goldfarb.

5. An enlightening mistake (Schumpeter)

A rare slip-up by lawyers has helped to shed some rather interesting light on a high-profile legal battle, the details of which some of the largest Wall Street firms have been fighting to keep under wraps, writes Schumpeter.

Ron Paul is done, almost

John Stoehr — Wed, 16 May 2012 07:00:59 +0000

The idea of liberty with a capital "L" is animating young Americans in a way not seen since Obama's historic election.

Ron Paul isn't really quitting the race for the Republican Party's presidential nomination, but he isn't really campaigning for it anymore either.

That's the kind of hairsplitting you have to do when you run out of campaign cash but you have enormous support among young libertarians seeking political alternatives to partisanship-as-usual. So much, in fact, that the Ron Paul Revolution could end up barrelling on to the party's national convention in August even without its popular septuagenarian namesake.

Then again, maybe this isn't hairsplitting at all. Maybe Paul's announcement this week that he won't be campaigning in states that haven't held primaries yet is yet another kind of decoy. We've seen this before and it was scary!

While everyone else last month turned his attention to the general election after Mitt Romney's closest rivals dropped out, news broke that Paulites (or Paulbots, depending on one's point of view) were securing state and national delegates in caucus states. This terrified mainstream Republicans, who fear most the appearance of a unified front at the convention that's kind of squishy in the unified department.

Indeed, before making his partially-quitting-partially-not announcement on Monday, Paulites in Oklahoma heckled Romney surrogate and former Minnesota Governor Tim Pawlenty. They failed to place delegates but not before a Paul backer reported being struck in the back of the head by a Romney backer. Paulites had been shouting complaints that the convention wasn't following the convention's rules. And in Arizona, they booed Romney's son, Josh, off the stage during that state's convention. Paulites had reportedly said that his dad was just "a white Obama."

This is the sort of chaos the Republican Party hopes to avoid at the convention and that's probably why Paul spokesman Jesse Benton urged supporters to show decorum and respect in Tampa. Benton even said Romney is probably going to the nominee. "We recognize that Gov. Romney has what is very likely to be an insurmountable delegate lead," he said. He also said Paul is unlikely to endorse Romney and that Paulites would continue to bird-dog delegates in the run-up to the national convention.

So if Paul isn't campaigning (as much) and if he concedes that Romney is the party's de facto nominee, what are all the Paulites shouting so much about? And why are they bothering to stack up delegates. The math suggests there's no way he can win. The math also suggests Paulites are a relatively small contingent. Loud but small. Even if Paul were to force a floor vote at the convention, it would be soundly crushed. If Romney wins in November, Paul would be 84 by the time he had a chance to run for president again. What is the revolution's practical value?

Maybe I'm asking the wrong question (as are many others scratching their heads over the Ron Paul Question). Maybe there is no practical value. Not yet anyway. Ron Paul is, after all, more idea than man. That idea is liberty with an capital "L" (which is Paulian code for hardcore state's rights libertarianism.) And that idea is animating young Americans in ways not seen since Barack Obama's historic election.

I've said before that maybe Paul hopes to force a floor vote to create a backlash that would push him into a third-party position to take on Romney and the president. But that seems almost too myopic for a visionary like Paul. He's not running for president as much as he is running for the way he believes the US should be. Americans love winners but they love losers, too, when their loss is really a lost cause.

Facebook raises share price

Martha Gill — Wed, 16 May 2012 06:59:32 +0000

Value increases as GM pulls out of advertising.

Facebook will increase the price range for shares from $28 - $35 to $34 - $38, which will potentially put its value above $100bn.

The company said the narrower, higher range was a result of strong investor demand. The news came as General Motors said it planned to pull out of advertising on Facebook, citing worries about revenue growth.

Facebook has 900m users, and made a $1bn profit last year. The new valuation would allow it to overtake Disney, Ford, and Kraft Foods.

The company is facing regulatory delays over its purchase of Instagram, after the Federal Trade Commision launched an investigation into the takeover. Facebook since ammended its expectations about when the deal would be closed, saying it predicted the acquisition by the end of the year.

Facebook will begin trading on Friday, under the ticker symbol FB.

Morning Call: pick of the papers

New Statesman — Wed, 16 May 2012 06:44:35 +0000

The ten must-read comment pieces from this morning's papers.

1. How Keynes would solve the eurozone crisis (Financial Times)

An orderly exit from the euro is the best option for Greece, write Marcus Miller and Robert Skidelsky.

2. Starting Over (Times) (£)

With fresh Greek elections now a certainty, Germany and France must work together. This leading article says that both must change their positions.

3. A French President less radical than he seems (Independent)

Differences between Francois Hollande and Angela Merkel are more of style than of substance, says this leading article.

4. If there were global justice, Nato would be in the dock over Libya (Guardian)

Liberia's Charles Taylor has been convicted of war crimes, says Seumas Milne -- so why not the western leaders who escalated Libya's killing?

5. No 10 is taking on the ‘opposition in residence’ (Times) (£)

Ministers say it’s easier dealing with union bosses than permanent secretaries. The Civil Service love affair is over,s ays Alice Thomson.

6. Era of a diminished superpower (Financial Times)

Whatever happens inside the US, its influence will be smaller in the 21st century than it was in the 20th, says Martin Wolf.

7. Minimum alcohol pricing? Blame those vomiting girls (Guardian)

Minimum alcohol pricing results from moral panic, says Tanya Gold. It won't affect David Cameron's problem drinkers.

8. Iran’s leader must choose between enmity and economy (Financial Times)

Despite the limitations of the diplomatic process, there is still much the west can do, writes Ray Takeyh.

Israel needs a one-state solution – with Iran (Times) (£)

Put the Palestinian issue aside, says Amir Taheri. There are more important neighbours to confront.

9. Secret courts would be a licence to cover up (Guardian)

David Davis writes that the British government's argument for secret courts is flawed in both moral and practical terms – and should be resisted.

Chart of the day: Greek coalition talks fail

Alex Hern — Tue, 15 May 2012 17:52:45 +0000

The final round of talks to form a coalition government in Greece fell apart today, causing large falls in a matter of seconds on the Athens Stock Exchange.

With no stable coalition possible, talks now turn to forming a caretaker government until fresh elections are held, most likely on June 17. It is widely expected that the radical left-wing coalition Syriza will take first place in these elections, which would give it fifty bonus seats under a Greek electoral law designed to ensure that the largest party always forms a coalition.

Syriza's strong anti-austerity stance will spark confrontation with European authorities, and could lead to a Greek exit from the Euro – or even an end to the Euro altogether.

IFS recommends making a switch from motoring taxes to road pricing

New Statesman — Tue, 15 May 2012 15:35:58 +0000

New report finds that motoring-related taxes are already shrinking as a proportion of total receipts.

In a new report funded by the RAC Foundation, the Institute for Fiscal Studies (IFS) recommends a move to a more sustainable way of road pricing from motoring taxes.

The institute writes:

Such a move would generate substantial economic efficiency gains from reduced congestion, reduce the tax levied on the majority of miles driven, leave many [particularly rural] motorists better off, and provide a stable long-term footing for motoring taxes without necessarily raising net additional revenue from drivers.

Existing motoring taxes, particularly taxes on vehicle fuel, are completely incapable of being deployed in a manner that effectively accounts for the costs of congestion, since they do not vary according to where and when people drive; however, where and when people drive is the key determinant of congestion costs.

According to the IFS, the main reason why governments should intervene in motoring decisions is that motoring generates external costs which lead to an inefficiently high private demand for road use. These external costs are overwhelmingly dominated by the costs of congestion.

In 2011-12, total receipts from the major motoring-related taxes are expected to be £38.3bn. The Department for Transport forecasts that road use will continue to grow as total road traffic in England predicted to be 43 per cent higher by 2035 than it was in 2003.

Motoring taxes are already shrinking as a proportion of total receipts, and are expected to amount to just 6 per cent of revenues by 2016-17.

Is David Cameron's luck finally running out?

Samira Shackle — Tue, 15 May 2012 15:33:08 +0000

The Prime Minister's personal poll ratings are falling, indicating that voters have stopped giving him the benefit of the doubt.

Back in February, a New Statesman cover story asked: how long can David Cameron keep getting away with it?

My colleague Rafael Behr discussed how the Prime Minister is “uncannily immune from blame”, saying:To Labour's frustration, on most issues Cameron's ear tends to be pretty well tuned. He performs the role of Prime Minister with a breezy aplomb that looks enough like competence for voters to give him the benefit of the doubt. That leeway is something Labour knows will shrink over time, just as the party awaits the moment when Cameron and Osborne will start getting the blame for economic malaise. As one shadow cabinet minister puts it: "People haven't yet realised that the government is failing."

Has the time now come when voters have stopped giving Cameron the benefit of the doubt? It looks like it, if today’s Evening Standard/Ipsos Mori poll is to be believed.

The number of people dissatisfied with Cameron’s performance has risen to 60 per cent, the highest since he became Conservative leader in 2005.
It appears that this is linked to a loss of confidence in the coalition’s handling of the economy, as our cover story suggested. Despite mounting evidence against the Conservative austerity package, this is an area in which Labour has consistently failed to gain ground. As Behr’s article argued:

He and Osborne have controlled the terms of debate so that the dominant question in people's minds is who should be permitted to clean up Labour's mess, which naturally invites the answer "not Labour".

The UK’s dip back into recession and the broadly negative response to George Osborne’s latest Budget perhaps made it inevitable that the tide would turn (indeed, it may be more surprising that it took so long). In the Ipsos poll, 31 per cent of voters said that they thought the Tories had the best policies on the economy – but Labour nearly matched this with 30 per cent. This is notable, given that this is the one area where the Conservatives have consistently outstripped the opposition. Just a month ago, they had a clear 10 point lead.

Confidence also fell, with 44 per cent believing that the economy will get worse over the next year, compared with 21 per cent who think it will improve. This gives on overall “optimism” score of minus 23, five points worse than last month.

Nor is this poll the only sign that the tide may be turning against Cameron and his government’s austerity package. As my colleague Jon Bernstein noted over the weekend, a Sunday Times/YouGov poll showed a personal ratings swing towards the Labour leader Ed Miliband and away from Cameron. The scores were hardly cause for celebration for either leader – Miliband was on minus 23 while Cameron was on minus 29 – but it is a significant that the Prime Minister’s personal ratings are falling, given that he has always out-polled his party. It looks like Lucky Dave’s luck is running out.

Circulation figures: Express up, Guardian down.

Martha Gill — Tue, 15 May 2012 14:54:27 +0000

Year on year, all newspaper sales fall.

Although year on year newspaper circulation figures continue to fall across the board, over the last month the Daily Mail and Daily Express had a bit of a surge, both up about 2 per cent, as the Guardian continued to plummet. For the first time I Newspaper sales started to falter, with an 0.8 per cent dip. The Independent maintained its streak as the fastest falling broadsheet.

Are social tools used by optimists, or do they make optimists?

Alex Hern — Tue, 15 May 2012 13:56:19 +0000

A new report from Google reveals how social media is used in the workplace.

There's a strong correlation between business and personal optimism, and use of social tools in the workplace, according to a new report from Google and Millward Brown.

After interviewing 2,700 professionals from the UK, France, Germany, Italy, the Netherlands, Spain and Sweden, the researchers found that frequent users of social tools at work are:

Happier in their jobs. 38 per cent are very satisfied with their jobs, compared to 18 per cent of non-users
More successful. 86 per cent have recently been promoted, compared to 61 per cent of non-users
In faster growing companies. Frequent users of social tools are more than twice as likely to be working in high growth companies compared to non-users.
More optimistic about their future growth. 59 per cent expect the performance of their company to improve over the next year, compared to 38 per cent of non-users.

Sadly, Google and Millward Brown don't unpick the most interesting part of these findings, which is the direction of causality involved. Clearly the internet services giant has a vested interest in pushing the idea that using social tools will make you happier, more successful, and more productive; but it would be an equally interesting finding if it were the case that people who are optimistic, both about their own prospects and their businesses.

Similarly, Google will want to emphasise the idea that social tools may help your company grow faster, but an alternative causal story may be that fast growing companies have more freedom to experiment with new technologies and work styles than those which are struggling to stay afloat.

Thomas Davies, the head of Google Enterprise in the UK, argued that adoption of social tools in the workplace wasn't an if, so much as a when, and that as such, what is important for Google and other purveyors of such tools is to understand the where and the why of social adoption. He added:

It won't be long before sharing online is as natural in our business lives as it is in our personal ones. . . Having the ability to find the people and information you want faster speeds up the decision-making process allowing businesses to be more agile and competitive.

Also present at the report's launch was Matt Knight, Ocado's marketing chief. Discussing the online supermarket's social strategy, he described how the company, which now has 5000 employees spread over 10 sites, deliberately attempts to retain the manoeuvrability it had as a smaller company. They had great success with an internal wiki, and 18 months ago, switched their company to Google's enterprise tools. Knight also spoke about the company's consumer facing social media strategy, which, frankly, seemed a lot more barebones.

Ocado, like so many companies, seems to know it ought to be using social media to interact with customers, but doesn't really know why. Ten per cent of Ocado's customers follow them on Facebook, and Knight envisaged a situation where a customer could "like" an individual product, but there was little vocalisation of what this would bring the supermarket. Whether social media is publicity, marketing, sales or something else entirely, it seems clear that internal tools are used in a far more result-driven manner than external ones.

One correlation which Google weren't so keen to highlight: The two countries in the study which are the most enthusiastic users of social tools? Spain and Italy, with 74 per cent of respondents eager to use them. Meanwhile, the least enthusiastic was Germany, where just 53 per cent. Linking those figures up with the macroeconomic state of those countries doesn't paint quite such a rosy view.

Banks and the high street

Douglas Blakey — Tue, 15 May 2012 12:28:12 +0000

As our banking behaviour heads online, major job losses will follow

So when was the last time you visited a bank branch? Now, be honest. The chances are that you are popping into your bank branch a lot less frequently than, say, three years ago, let alone 10 years ago.

Need to check your balance? Easy: go online. Pay a bill: ditto. Transfer cash between accounts, set up a direct debit - the answer is the same.

For many customers, the majority of everyday banking transactions can be conducted online or with a call centre or increasingly via smartphones and tablet devices such as the iPad.

This change in consumer behaviour is not yet apparent on the majority of UK High Streets but give it time.

Bank branch closures have been galloping along at a fair rate of knots in the past decade but until now have largely focused on small towns and rural communities.

Almost one-in-five UK bank branches have closed since 2000 with Barclays’ branch network for example down from 2,129 to 1,700; HSBC is down from 1,670 to 1,300 during the same period.

In the next decade, the High Streets of our larger towns will witness a major change in the number of bank branches and in branch design.

A relatively small number of flagship bank branches, vaguely along the lines of Apple Stores, will spring up in the larger cities.

But for the vast majority of us, the typical bank branch will be much smaller in scale, largely self-service with all cash held in ATMs as banks cotton on to a greater use of self-service terminals.

From a design standpoint, the branch will become more like a retail store.

Have you been in a newish branch of HSBC or Barclays recently-you get the picture?

Major job losses to come

Since the banking crisis really gathered pace post Lehman in 2008, job losses have tended to focus in the back office; investment banking roles have also been scaled back.

Staff performing IT and other support roles have been particularly badly hit in the past three years or so at the high street lenders.

Last year alone, HSBC announced plans to axe 30,000 positions around the world.

Lloyds said that it would eliminate 16,800 positions, about 1 in 6 of its total workforce.

Elsewhere, Barclays is dispensing with 3,000 roles and counting and it is the same story at major banks across Europe.

Last year, banking job cuts across Europe topped 70,000.

But job losses at the High street branch level have barely started.

Take RBS. It is one of the most enthusiastic cost cutters in the High Street – all of course part of its masterplan to “rebuild the bank”.

Last year, it managed to lose a mere 500 branch staff, reducing retail banking total employment from 28,200 to 27,700.

There is far worse to come.

If the bank branch is to prosper, the customer experience will have to change.

Virgin Money’s lounge vision, providing a comfortable space for customers to have a coffee, relax, check emails or charge mobile phones, demonstrates how a banking brand can attempt to restore trust, deliver something different and attract customers.

Another high street strategy entirely is being pursued Lloyds TSB, where a new branch design is designed to enhance the role of the bank within the local community.

In a number of its markets – but not yet in the UK - Santander has rolled out Santander Select outlets, upmarket branches providing a level of comfort not normally associated with a humble bank branch.

Nationwide Building Society is also investing with plans to refurbish its entire retail network of 700 outlets over the next two years.

That is about it for good news.

France: Hollande is sworn in as President

Harriet Williams — Tue, 15 May 2012 11:56:18 +0000

He is the first Socialist to hold the role in twenty years.

Francois Hollande was sworn in today, making him the first Socialist President of France in twenty years.

It was a low key ceremony, ahead of crisis talks with Angela Merkel in Germany later today. He is expected to press the German Chancellor to temper the austerity drive that has so far been the policy of the two countries. The latest figures suggest that the French economy did not grow in the last quarter, prompting concerns that it may slide into recession.

The ceremony took place in the Elysee courtyard, with only 30 or so private guests to accompany the public officials at the event. He shook hand with Nicholas Sarkozy, the outgoing President, and was presented with the chain of office, a gold collar engraved with the names of France's Fifth Republic Presidents. After the ceremony, he retired with Sarkozy for a traditional private meeting, where nuclear codes are handed over.

It was a deliberate marked contrast to the style that saw Sarkozy nicknamed “President Bling Bling”. At his ceremony marking the beginning of his term five years ago Sarkozy chose to put his wife and children centre stage, something that drew criticism from commentators, who objected to the blurring of public and private life.

In his first speech as President, Hollande promised a term of justice and fairness. He called for a united France, a response to the growth of extreme right wing groups in the first round of the Presidential elections.

Dubbed “Mr. Normal”, Hollande will now visit the Tomb of the Unknown Soldier before a lunch with former Socialist prime ministers. Later on today he will name his prime minister. The favourite is Jean-Marc Ayrault, head of the Socialist group in parliament, mayor of Nantes, and a German expert.