Personal Blogs

Congratulations to Laura Kuenssberg at the BBC for a powerful report on how Premier Foods treats its small suppliers: effectively making them pay protection money if they want to carry on working with them. This is important stuff, and deserves to be widely known about.

None of this comes as a surprise to me. Until recently I used to have a small business of my own, which I'd run for 15 years. It went bust this summer. There are many reasons for that of course, and one of them is no doubt that I wasn't very good at running a business, but another is definitely the attitude to small businesses that I'd found from some of our larger customers. We didn't come across anything quite so blatant as the Premier Foods example, but we did nonetheless find many of our larger customers insisting that we reduce our prices substantially if we wanted to work with them.

We couldn't afford to reduce our prices as much as was being demanded, so we lost the business. Eventually, I lost the whole business. There goes my retirement plan. Mind you, at least I found another job fairly quickly. I'd sleep a lot easier at night if everyone who used to work for me had also been so lucky.

Some may argue that what Premier Foods is doing is simply competition at work, and it benefits the consumer. They may argue that the businesses that can't compete on these terms will be the less efficient ones, and the ones that survive will be the good ones, so everyone wins.

I really don't think it's as simple as that.

Competition is a healthy thing in principle, but the problem is that when suppliers are under such relentless price pressure, it's going to be the quality that suffers. We've already seen what happens when people prioritise price over quality in the food industry: you end up with horse meat in your lasagne. So the businesses that survive may be the efficient ones, or they may just be the really dodgy ones that are prepared to cut a few corners to keep their costs down.

My own business was not in the food industry: we were in clinical research. Parts of the clinical research industry are very highly regulated, and our business held up pretty well in those parts. Clients can't afford to cut corners on quality, as they would fall foul of the regulators if they did, so mainly they were willing to pay a fair price to get the job done properly.

However, there is one large part of clinical research, which used to be a big part of my business, which is largely unregulated, namely the publication of clinical trial results in the medical literature. We took a huge battering there as clients took their business to cheaper companies in places like India. No doubt the quality was dreadful, but if it's unregulated, who cares? This stuff matters: doctors rely on the medical literature to make decisions about how to treat patients, and if research has been badly reported, maybe those decisions won't be the best ones. I don't know of any direct evidence that that is actually happening yet, though it seems plausible. I do, however, know of evidence which shows that clinical research published in low income countries is more likely to be fraudulent.

I'm not suggesting that tighter regulation is necessarily the answer. There are good reasons why clinical research is highly regulated, but those reasons don't apply to every industry. Regulation brings its own costs and inefficiencies.

It has been suggested that big businesses charging small businesses an "investment" (aka protection money) to do business with them should be outlawed. I don't think that's workable. Big businesses will simply find another way to screw small businesses, for example by demanding ever larger discounts. Unless you want to go down the road of full-blown communism, there's nothing you can do about that with legislation.

So what can we do about it?

Situations like we see with Premier Foods can arise, I think, for 2 reasons. First, there is a huge imbalance in economic power between big businesses and small businesses. I'm not sure how that can be fixed, but it really needs to be. Exempting small businesses from many of the taxes that large businesses have to pay (national insurance, business rates, corporation tax etc) would be something that government could very easily do, and I expect it would help. Though I doubt it would be enough.

The second reason is that we as consumers have become too fixated on price. If we demand the cheapest goods, then prices will come down, but we will get crap. I'm quite sure there is nothing government can do about that. It is up to consumers to think a bit more about whether they really want the cheapest things they can buy.

In the meantime, we will see good small businesses go bust, as mine did. The ones that survive may do so because they are more efficient, but I suspect that in many cases they will be the ones that are prepared to take a chance on passing off horse meat as beef, or whatever the equivalent of that is in other industries.

Is that really what we want?

While listening to the radio this morning, I heard a debate in Parliament that filled me with despair. I don't think I can remember ever hearing anything that has made me think worse of the politicians who run this country, and that's saying something. Regular readers of this blog will be aware that I don't hold our politicians in high regard, and that in general I consider them to be a useless bunch of shits who are only interested in their own pockets and power bases.

The debate was about a terrorist suspect, Mohammed Ahmed Mohamed, who had recently escaped from the security services. Apparently, he is suspected of being a terrorist, though he has never been convicted of any terrorist offence.

The debate was almost entirely focused on how terrible it was that Mohamed had escaped and what the government was going to do to make sure he was caught. Almost no-one picked up on the fact that this is a man who has not been convicted of any offence, so the government has absolutely no business restricting his movements in the first place.

An honourable mention must go to Julian Huppert and Jeremy Corbyn, the only 2 MPs who spoke in the debate who expressed concern about restricting the liberty of an innocent man. The remaining MPs came up with riduculous authoritarian nonsense such as suggesting that the solution to the problem was to ban wearing burkas or to repeal the Human Rights Act.

But still, he's called Mohammed, and he's brown, so he's bound to be a terrorist, right? I find it really depressing that it seemed to be taken for granted that he was a terrorist, just because he's "not one of us". I can't help thinking that if he were a middle-class white guy, a few more MPs might haved questioned the wisdom of doing away with all that pesky "fair trial" malarkey and just going straight for the punishment.

Presumably the security services had slightly more to go on than simply that he was brown and called Mohammed. Perhaps they had some intelligence that he was involved in terrorism. Yeah, well the security services had intelligence that Jean Charles de Menezes was a terrorist as well. There's a good reason why a civilised society puts people on trial before punishing them.

For all I know, maybe Mohamed is a dangerous terrorist. If he is, then he should be put on trial. You know, one of those things where you have a judge and a jury, and a chance to defend yourself. If he were tried and found guilty of terrorist offences, then sure, lock him up and throw away the key.

But it's a really important principle that we are all innocent until proven guilty. The fact that only 2 of our MPs appear to understand that is something I find deeply scary.

In all the reminiscing about Margaret Thatcher that we've heard lately, it seems that many people believe that one of her greatest achievements was curbing the power of union bosses. Now, to be fair, the power of union bosses was a genuine problem in the 1970s. Their democratic legitimacy was questionable, and the damage they did to the economy with repeated strikes was very real.

It was clear that "something must be done": the classic politician's syllogism. Politicians faced with the challenge that "something must be done" tend to focus more on doing "something", rather than on whether that something is the right something.

In Thatcher's case, it certainly wasn't. She took power from union bosses, but she gave even greater power to multinational corporations, particularly in the financial sector. Anyone who has followed what's happened to the economy since 2008 will know that that didn't end well.

Fast forward to the current Conservative government. One of the big problems they have decided to tackle is the benefits system. And yes, again, we do have a genuine problem. About a third of all government spending goes on benefits. That's clearly unhealthy and unsustainable.

Something must be done.

In this case, that "something" appears to be shafting some of the most vulnerable people in our society. Radical changes to the benefit system are only now starting to take effect, so it's too early to be sure what the results will be, but I fear it is likely that many vulnerable people will be left in misery and destitution.

So to me, Thatcher's legacy is that the Conservative party feel free use the excuse of solving one problem to further their ideological agenda while creating even bigger problems.

Yesterday, the government announced that the new Governer of the Bank of England is to be Mark Carney, a Canadian citizen.

I must confess I don't know much about Mark Carney. Everyone seems to say he's a very capable chap, and I have no reason to doubt that. I wish him well in what is certain to be an extremely difficult job.

But what strikes me about this appointment is that it's yet another example of the "one rule for us, one rule for them" culture that's so prevalent in British politics. The government love to make up enormous quantities of rules and regulations that the rest of us (the "plebs", as they would describe us) must follow, but aren't so keen to follow the rules themselves.

Carney's nationality has caused some comment in the media. The government have responded by pointing out that the important thing is that he's the best person for the job, so it makes perfect sense to offer it to him.

This is, of course, a perfectly reasonable argument. It just happens to be one that's not open to the plebs.

There are no doubt many thousands of small businesses up and down the country who have vacancies to fill, and some of those will find that the best person for the job is a foreign national. So, applying the government's logic, they would want all those small businesses to appoint the best person for the job, irrespective of nationality, right?

Wrong.

It seems that the concept of appointing the best person for the job is an option only available to the political elite. If a small business wants to employ a non-EU national, they must first wade through ridiculous quantities of red tape. Even if they have paid all the relevant fees and filled in all the forms (and in practice, this requirement alone is enough to make employing non-EU nationals simply too complex to be practicable for the majority of small businesses), it is still illegal to appoint a non-EU employee if it is possible to find a resident worker who could do the job (but not necessarily do it as well).

No doubt big businesses suffer from these regulations as well to some extent, although they would at least have the resources to comply with all the onerous requirements of employing non-EU nationals, which would be impossible for most small businesses.

(BTW, does anyone remember our Prime Minister talking about cutting the burden of red tape for businesses? Wonder whatever happened to that plan?)

It is pretty clear that, even if Carney was the best person for the job, there were British candidates who could have done it. So the government are failing to comply with the spirit of the law that they impose on the plebs (although I dare say there will be some loophole that will mean they are still acting within the letter of the law).

I am not suggesting that the appointment of Carney was motivated by anything other than a desire to find the best person for the job. But nonetheless, this does come across as yet another example of the government showing that they themselves are not willing to follow the rules that they impose on the plebs.

One rule for us, one rule for them.

There's a wonderful scene in The Life of Brian in which the People's Front of Judea sit around endlessly discussing the need to take action, rather than actually taking any. If you haven't seen it for a while and your memory needs refreshing, here it is.

This is exactly how our political leaders are dealing with the recent revelations of rampant corruption within the banking sector. It is clear that action is required. But instead, our political leaders are sitting around talking about it.

So what action is required? It's pretty simple really. There is excellent prima facie evidence that fraud has happened on a massive scale, and those responsible need to be prosecuted.

When I say those responsible, I mean not only the traders who were actually perpetrating the fraud, but also the entire board of directors of Barclays, and indeed any other banks found to have been joining in. Traders would not be breaking the rules on this kind of scale if the directors of the company had set a culture of honesty, rather than one of greed.

I am not a lawyer, so I'm not sure which specific offences may have been committed, but it seems obvious that if the allegations we've heard in the media have any basis whatsoever, then any half decent prosecutor ought to be able make a pretty good case under either the Fraud Act 2006, the Financial Services and Markets Act 2000, or (particularly in the case of the directors) the Companies Act 2006.

Prosecutions, with meaningful penalties (ie imprisonment) for those found guilty, would send an important message that this kind of thing is not acceptable. Directors of other banks would act pretty sharpish to clean up their corporate cultures if they thought that they could be held personally liable for any wrongdoing that happened on their watch. Fining the bank just doesn't cut it: what that actually means is that ordinary people saving for their pensions are the ones who get hurt, as I've written before. I honestly believe that going after the directors in this way would solve a lot of problems.

But that doesn't seem to be what our politicians are doing about it. On the one side, the People's Front of Judea Conservative Party are arguing that there needs to be an inquiry led by a senior politician. But the Judean People's Front Labour Party disagree, and insist that the ludicrous and transparent ploy to kick this issue into the long grass inquiry must be led by a judge. This kind of petty squabbling suits the political parties nicely, as they love to be seen to disagree, to keep up the narrative that there is somehow an important difference between them.

In reality, however, both political parties are united against the common enemy, the Romans ordinary British people. Setting up inquiries, or even better, arguing about how to set up an inquiry, is simply a way of avoiding taking any action.

Let's face it, politicians and bankers have a lot in common. It's not that long since MPs were perpetrating fraud on a massive scale in the form of claiming expenses to which they were not entitled. With the exception of a token number of politicians that you could count on the fingers of one hand who did actually get prosecuted, they got away with it. We already have a couple of token resignations from the board of directors at Barclays, but the bankers will probably get away with it too.

MPs and bankers are both dishonest elites who consider themselves above the law. Is it surprising that when the chips are down, they look out for each other?

I was struck by the juxtaposition of 2 stories I heard on the radio this morning: the problems that some benefit claimants are facing because of delays by the medical assessment company, Atos, and a debate in Parliament about the terrorist suspect Abu Qatada. I think it says something quite worrying about the state of our society.

Atos first. If you didn't know, Atos is a private company which is contracted by the Department of Work and Pensions to assess claimants for certain disability-related benefits, such as Employment and Support Allowance (ESA), to make sure that claimants genuinely have a level of disability that entitles them to whatever benefits they are claiming.

The rules for ESA require that an assessment be done within 13 weeks of claiming. Benefits are initially paid at a reduced rate, but the rate is increased after the assessment is done, assuming that it finds the claimed level of disability is genuine (whether the assessments are done fairly is a whole other story, but one I'm not going to get into here).

But there is a problem.

Although Atos are required to do the assessments within 13 weeks, they are not doing so. There is a huge backlog. This means that many claimants are still on the initial reduced rate even after 13 weeks. The reason for this is simple: Atos are crap. Oh sure, I dare say they have their excuses: it was the wrong kind of snow, it was the Royal Wedding, etc etc, but the simple fact is that they're crap.

So what happens when an important organisation providing a vital service to government doesn't fulfil its obligations because they're crap? Does it lose the contract? Are the directors fined? Are the people in government who chose Atos in the first place sent to jail for gross incompetence?

Er, none of the above. Nothing happens.

The second story is that of Abu Qatada. The British government would like to deport him to Jordan to face trial for terrorism charges, but the European Court of Human Rights have ruled that they can't, because he would not face a fair trial. The court found that the case that would be brought against him in Jordan was based in part on evidence obtained by torture.

Now, the British government clearly doesn't have a problem with torture as they would be quite happy to send Abu Qatada to Jordan despite their use of torture if they were allowed to do so, but torture has no place in a civilised society. Not only is torture itself reprehensible, but evidence obtained by torture is completely unreliable — when you're having your fingernails pull out you're probably going to tell your interrogator whatever it is you think he wants to hear, whether it's remotely true or not — so no civilised justice system should use it.

Thankfully, however, the we have the European Court of Human Rights to remind us that torture is bad.

This didn't seem to be good enough for some MPs. I felt a sense of utter dispair listening to the debate about Abu Qatada in Parliament yesterday. One MP, Jason McCartney, suggested that the British government simply ignore the court's ruling and pay the fine, and offered to chip in £50 out of his own pocket (presumably to be claimed back on expenses). Another, Peter Bone, similarly asked the Home Secretary to ignore the court's ruling and send Abu Qatada to Jordan anyway.

I find it a matter of great concern that MPs consider themselves to be above the law in this way, and that they are making perfectly serious suggestions (which, to her credit, Thereas May resisted) that we should simply ignore the law when we don't like it. That's not how laws work. They need to be obeyed by everyone, even MPs.

I think we have a serious problem in this country with the accountability of government to its citizens. Government should be accountable to the law in the same way that everyone else is. If Atos, acting on behalf of the government, is required to assess benefit claimants within 13 weeks and they don't, then there really need to be some serious consequences. Any benefit claimants who didn't comply with the rules of the benefits system would be likely to find themselves in prison: why don't the same rules apply to those running the system?

MPs also seem to think they are above the law, no doubt heartened by how few of them faced any meaningful sanctions after more than 300 of them had fraudulently claimed expenses. Most of those who did simply offered to pay back what they had claimed fraudulently, and that was the end of the matter. Do you think the same thing would happen to someone making a fraudulent claim for disability benefit?

In a democracy, government should not be above the law. We should all be worried when our lawmakers believe that they are.