Memo to Dave re Roads

Oops! Thinking out loud again by you and George has set the hares running. Perhaps that is what you wanted so that a watered down version of the plan to allow private business to tax us even more for travelling would not seem so bad when it is announced.

Yet again though the pronouncements miss the point and the fine words about having a strategy and taking a long term view are not matched by the ideas. I do agree that 20 years is a long time, but committing the taxpayer to pay private companies to build and run roads for four terms of government is not a strategy, it is a straightjacket.

The Unofficial Green Paper (www.bigsocietygreenpaper.org) proposes a national system of social enterprise and the roads could be a perfect test case for such a body. Why not create a national company, owned by the state pension fund but run by business people and give it the entire roads network as an asset? Give it the income from road tax as an income, targets for measurable outcomes and allow it to do the rest? It's all very simple and such a business would be hugely successful provided that its investment in new roads is properly measured for all outcomes, not just based on immediate financial return.

The new business could partner with private enterprise where appropriate but could also over time spawn hundreds, perhaps thousands of new social enterprises and new small British-owned businesses to provide the services that it would need.

This is all very simple and could be set up and announced within a few weeks. As always I am happy to help if needed!

Memo to Dave re Business Lending

The 'new' Loan Guarantee Scheme which is supposed to free up business lending is of course more PR than AU (actually useful). I haven't been able to find precise details of the scheme but a similar one has been in  existence for 20 years or more, when I was a lending banker actually trying to lend the things. The supposed 1% discount is a nonsense.

The traditional scheme has several weaknesses for business:

• It requires repayment over a relatively short term, 2-5 years, making it unsuitable for many large investments
• Banks can still require security for any unguaranteed portion of a loan
• Interest rates can be flexible, providing longer term risk to affordability
• The Loan Guarantee Premium is passed on to the customer adding further cost to the loan

There is insufficient detail of the new scheme to see what if anything is improved but the trumpted 1% saving on interest cost over a normal loan is simply not real. Banks will credit profile a customer through his application and come up with whatever rate they want to earn the profit they choose from that piece of business. It is pointless saying that if they would have lent at 7% they will now lend at 6%. Banks are far more devious than that.

And all of this slightly misses the point. Short term loans may help some businesses, but not that many. If I want to buy a piece of machinery to last 20 years I am unlikely to be able to afford to buy it over three years. Another flaw in the scheme is that the taxpayer now takes the risk on the banker's decision but gets none of the reward when it goes well. What is needed is a national investment scheme, preferably targeted at social enterprise but able to help all small and medium business which returns a share of any resulting profit to a central pot. This is proposed in the Unofficial Big Society Green Paper (www.bigsocietygreenpaper.org) and would really help business to create jobs whilst potentially helping to solve other problems.

Memo to Dave

On your return from the USA you will find that not much has changed. The unloved and scary NHS Bill mysteriously continues to win votes whilst alienating people. Social Enterprise continues to peck for crumbs around the capitalist feeding table that is public expenditure and the vast majority of people continue to look at all your 'reform' and 'change' and wonder why. Not why as in 'why are you doing it?', they're all reasonably convinced that you're doing it for your capitalist mates, but why as in 'where is the plan?'. They're wanting to know if it all fits together and if so, in what. Is it really an attempt at improving lives or is it fiddling while their Rome burns but someone else's Mammon is further gilded?

This is a valid question as it is becoming increasingly accepted that the current incarnation of capitalism has failed and yet you continue to prop it up. In a situation where your actions appear illogical people will naturally suspect impure motives. We have a short window of opportunity to produce a new world-class economic system from the rubble of 20th century capitalism. As Adam Smith might have said, the next system is unlikely to perfect, but with hindsight we should at least be able to make it better than the last one.

The Unofficial Big Society Green Paper (www.bigsocietygreenpaper.org) argued that social enterprise should be at the forefront of any new system. It contends that we should not try to change capitalism but force it to change itself, or die. We can very easily do this by the creation of a new social enterprise trading structure which measures social value and social return as part of the criteria for the award of any state contract. Christopher White's recent 'social value' bill goes half way to addressing this, but there remains a big gap and we allow too much capital to flow out of our system before it has reached all parts.

In addition, social enterprise is often a poor cousin to business, relying on handouts, grants and specialist funding to gain a foothold next to 'real' business. This is wrong and whilst there are many worthy attempts at improving access to funding and real contracts, these are always coming from the view that social enterprise needs a leg up because it is worthy or trendy. It's a bit big society, but apparently not interesting enough to be part of any formal policy. That needs to stop. Capitalism has become anti-social. It is anti-social enterprise and social enterprise needs to be seen as the purest form of Adam Smith's capitalism that currently remains. It needs to have pride of place in the pecking order before it is too late.

The next thing we need therefore is a social return bill, to go alongside the social value bill. An act that enshrines in law the obligation for any public body to measure the return of profit to a community from a social enterprise. This needs a very careful piece of legislation which defines social enterprise, gives it a structure within which to operate and ensures that all of its returns are key parts in the award of any contract. This will make anti-social enterprises think much more closely about how they operate and how they bid for business. It is not red tape, or an attack on capitalism, it is levelling the playing field between social and anti-social enterprise.

We have come some way towards it but have much further to go. The Green Paper also discusses ways that these returns can be co-ordinated to a much greater good, but more of that another day. I have just spent 5 years of my life battling against small p politics in a local setting, so I know how Steve Hilton feels, but don't give up on the Big Society if you really want one, just support it with a big plan. Soon.

Memo to the BMA

The headlines read: 'Doctors to ballot for pensions strike action'.

As with local authority and NHS or even Civil Service pensions, there is no way the country can sustain a scheme which does not take enough in contributions to meet the cost of the benefits. That said, current contributions are meeting the cost of those already retired, and are not in any way related to the cost of providing benefits to the contributor. That is what is wrong with the current system and arguing over who pays what today is fiddling while Rome burns.

I support the BMA'S approach to the Government's NHS reforms but on this you are out of step. The government has made an unreasonable set of proposals to try and prop up the system for a few more more years and you have tried to persuade them to water it down. This is another way of saying 'subsidise doctors pensions'.

None of this should be up for discussion. There should be no subsidy of anyone's pensions, and ideally everyone would have a good enough pension that the state pension would be nothing more than a safety net. This would save a fortune and help to rebalance the books of our country. It is one of the key recommendations of the Unofficial Big Society Green Paper (www.bigsocietygreenpaper.org)

It would be very good therefore if the BMA, and any other similarly-threatened bodies, could alter their opposition to changes to a more strategic stance. Let's not have a stand off over who chips in how much to the black hole, let's have an open discussion about how we ring-fence and the fund that black hole, and what better system we create going forwards. That would be something worth striking over and in that it would improve pensions for everyone it would gain widespread popular support. It could also galvanise a group of similar representative bodies and unions which might just be enough to get Dave to take notice. I am happy to help with the detail if you wish.

Memo to Dave

The City of London and assorted cronies are now about to evict Occupy LSX. I am not as wild about the OLSX movement's choice of location as some but I follow David Allen Green (http://www.newstatesman.com/blogs/david-allen-green/2012/02/city-cathedral-camp-occupy) in his thoughts that they have performed a valuable service in exposing the fragility of both capitalism and law.

The laws and legal argument that has been used for the eviction are tenuous to say the least, and as always one ends with the suspicion that the outcome was inevitable and the argument irrelevant. Chasing Occupy LSX from St Paul's will not end their movement however, nor will it make capitalism any stronger or better. The Occupy movement is just one of a growing number of voices who point out that capitalism has gone too far, has been too successful, and now drives capital too quickly to too few participants. Whilst Occupy have been peaceful, unlike last year's riots, they are both singing different verses of the same hymn. Discontent is rising, too few of us are paying in to the system and in our old age we will feel even more cheated as there will be less to take out.

The Unofficial Big Society Green Paper (www.bigsocietygreenpaper.org) suggested ways to get ahead of the curve on this and deliver a fair and sustainable society for all of us. The alternative is more occupations, more riots and more discontent generally. As more and more people see less point in contributing to society, whether through taxation or practical help, the burden on those who are trying to save it rises inexorably. The rapid decline and then death of national and even continental civilisations historically comes very quickly after they peak. Unless you take bold action it is quite possible that we will peak in the next 10-25 years, taking a 1000 year view. Please do not think of the removal of Occupy as a victory, think of it as an opportunity to do the right thing without overtly giving in to them and before the next, possibly louder, wave of discontent breaks on our shores.

Memo to Al Gore

There is a lot of sense in proposals that seek to encourage long term investment and share ownership, as in your latest crusade: http://www.economist.com/blogs/schumpeter/2012/02/sustainable-capitalism?fsrc=scn%2Ftw%2Fte%2Fbl%2Fbloodgoreandcapitalism This is a potentially useful tool in moderating the worst excesses of capitalism, but I sense that it will be of only temporary use. That is for two reasons. Firstly, capitalism has a history of reinventing itself. It can move jurisdiction if need me to avoid rules that it does not like and it can punish those that try to do the right thing by taking its capital elsewhere.

For these reasons we would need to exercise great caution in trying to introduce any type of ownership control. In the Unofficial Big Society Green Paper (www.bigsocietygreenpaper.org) it is suggested that what is needed is not control to slow capitalism but social and community competition to make it try harder, and to give it an imperative to willingly submit to rules such as those in your manifesto. I think we agree on many things but essentially our approaches are very different. I have no confidence that capitalism can be controlled by law or re-trained by coercion. My instinct is that the only thing that will change it is a pure commercial imperative. Do this to compete or lose the battle is the thrust of my approach. It is a 'ground up' system which restores flows of capital across society and deliberately leaves capitalism to work out its response, rather than any type of legislative attack on the capitalist system.

This I think has a much better chance of success and a much greater potential to establish a truly sustainable economy, which is fair to all participants.

Memo to Andrew Lansley - How to save the Health Bill without changing it

The response to mounting opposition to the NHS Bill is not yet meeting the required standard. The concerns are far deeper than either political manoeuvring or self-preservation by empire-builders, although there are obviously elements of both. Before doing anything further if you stop and analyse the resistance you will find a common thread. It is that no-one understands how the reforms will actually get the NHS to a better place, and it is therefore causing fear rather than excitement. In effect it appears to be the fiddling while Rome burns. I have spoken to several GPs involved in new clinical commissioning groups who can see the logic in some of the arrangements but fear the funding will not support the needs of their patients and alongside that existing NHS commissioners are saying that the changes will do nothing to re-position the service to cope in 10 or more years time, that will need hard cash.

The Unofficial Big Society Green Paper (www.bigsocietygreenpaper.org) has a full chapter on the NHS because of it's importance to us and your reforms may well drive efficiency but they have two glaring omissions. Firstly, they do not show how they are compatible with the future financial strains which demographics alone will place on healthcare and the funding of it. This leads GPs especially to be wary of being the gatekeepers of insufficient funding and as a result being the ones to tell patients that they will be left to die. Secondly, the reforms fail to demonstrate how they will protect the NHS against lowest common denominator services which will result from a totally free any willing provider system.

What is needed therefore is a sub-bill which enshrines the role of community-led social enterprise in the NHS and does so within a framework which ensures open competition whilst supporting the funding model through reinvestment of profit. Secondly, you need to address the whole system that funds health, pensions and social care from current day taxation. This system frightens the life out of me and will break at some point, leaving us like Greece. No amount of reform or doing more for less can save a system in which twice as many people need help as those paying for it and that is where we are headed.

The Green Paper talks at length about this issue but in a nutshell you can save the bill by two relatively simple actions, which it will be easy and beneficial for the coalition to support:

1. Commit to a system of competition in which all outputs are measured, not just the financial, and in which the state seeks a return of profit from providers. This will ensure that social enterprise becomes the main delivery vehicle for our healthcare and avoid the danger of back door privatisation.

2. Commit to a new system of funding, on a whole of life basis, which will guarantee that a standard set of treatments and social/pension benefits are available nationally to all those eligible. 

This will not only help financially, it will help voters to believe in your full support for the NHS and also help those inside it to believe that the reforms will not simply be used to squeeze the NHS to save cash. These are not nice to have bolt ons, they will save your Bill. They will underpin the modernisation of the NHS as well as transform the financial position of the country.