The forty-eight percent

The forty-eight percent in the UK have sufficient common cause that they could galvanize behind one political party in the forthcoming election. If that were to happen, the first-past-the-post system would not be kind to the two major parties.

Brits who opposed Brexit, who are reticent about it, or want a ‘soft’ brexit are now being asked to galvanise around a national platform. Their demand that the next government gets and takes the best deal for Britain is very attractive, and very hard to argue with.

Brexit is a story of disaffection. 52 percent of British voters are fundamentally unhappy with their lives or how they are governed. There are important reasons why this is the case.

But for now, these disaffected people are the people the government is depending on for support. This is obviously new territory for the Tory party. It is more familiar territory for Labour and Jeremy Corbyn in particular, but he has never had to compete with the Tories for these votes. I think this will get very scrappy. The traditional parties will show a very dark side of themselves. And can you really build a national consensus on the basis of disaffection alone?

And make no mistake, this is an election about Brexit and disaffection. There is no other issue on the table. Theresa May has said as much. It doesn’t really matter who the next prime minister is. What matters is what Britain’s new relationship with Europe will be, and how it will bring its own people in from the cold.

We can’t wait any longer: get homebuilding going in Ireland

Things are pretty bad. Two public servants are moving to Abu Dhabi, so they can afford to buy a home in Dublin. We spend tens of thousands of euros to educate and train people, then they have to go to a tax haven to be able to afford to even live in our country.

We have to provide housing, and quite a lot of it, and fast. We are not building anywhere near enough. The basic problem we face is that when all costs are taken into account, new homes are too expensive to provide without government support. It is cheaper to buy a house (even at high current prices) than to build a house. There are a number of reasons for this and we need to address them for sure.

But we also need to get homes built, starting now. We need to be thinking in terms of hundreds of thousands of new homes over the next few years.

On the sidelines, there is an ideological war going on about house-building. Should the houses be built by the private sector, or by the state? The problem is that nobody at all is building houses at the moment at any scale. It is unaffordable for everybody.

There is one good thing however: the country is awash with young people ready and willing to buy a house, and with a strong economy, many of them are creditworthy and have deposits ready.

Here is what I would do:

Firstly, a straight incentive – €15,000 for every bedroom in a new build completed in accordance with building regulations and occupied by 31 December 2019 in the case of a house and 31 December 2020 in the case of an apartment. (There would also have to be conditions to avoid subsidising houses already underway). The figure would go up to €20,000 where more than 100 units are provided on the same site.

Why €15,000? Well, because for a three-bed semi, that’s enough to cover the shortfall between the price of an existing house and a new house in Dublin. The cost overall for 25,000 homes would be over a billion euros, sure, but all of that would be recovered through VAT and PAYE from the increased economic activity.

Every year after 2019, the amount of the incentive could be reduced if it is no longer required.

Secondly a finance structure is needed. Prospective home purchasers should be encouraged to put down a deposit, now, on their future home. Rather than putting the deposit with the builder, they should place it with a government scheme which would provide a guarantee for the prospective purchaser that their deposit was safe. The government could then loan the value of the deposit to the developer, secured on the land.

The government would also guarantee to purchase the property if the original purchaser ‘fell through’ and didn’t go ahead with the purchase, and if a replacement purchaser couldn’t be found. If it did exercise this option, the government would get a small discount (say 7.5 percent).

But if the economy keeps storming on, that is unlikely to happen. And even if the economy weakens and the government has to buy the houses, the country is still going to need these new homes for the long-term. These will be modern, high-quality houses. The government can rent them for the short term, and rent them later on.

Now the builder has a rock-solid, guaranteed purchaser, rain, hail or shine. With this guarantee, the builder can go to the bank and borrow the money they need to actually build the complex.

This scheme is really designed with private housing built by private developers in mind. But it can work for local authorities too. They can use this funding mechanism to build social housing, or they can use it to build houses for resale.

It can also potentially be used by people who want to buy property to let it, though the structure would need to be tailored to avoid abuse.

Is this the full solution? No. We also need to address the problem of land costs. And to do that, we may ultimately need to replan our transport networks to open up new land. We may need more flexibility in the planning laws. But it provides for immediate action and will mobilise the talent and capital we have available already.

Combined with a plan to utilise vacant housing in the most sought after areas of the country, and perhaps some form of site value tax to incentivise use of vacant or underused land, this would put us well on the way to building hundreds of thousands of homes for our growing population.

Where soft power comes from.

The question came up in a discussion with RP Eddy on Facebook, why does Donald Trump, a master of brand and marketing if there ever was one, is so against building the international brand of the US, through ‘soft power’ of diplomacy and international relations.

The answer, I think, is that Donald Trump believes that America’s ‘soft power’ (its influence and ability to get things done where others can’t) derives from its latent ‘hard power’ (the fact that America keeps a powerful military on alert, worldwide). In fact, this is not true, and the reason for America’s influence is that the US is basically trustworthy in its international dealings and follows through on things it says it will do (it is far from completely trustworthy, but maybe 60 or 70 percent of the time, it carries through which is still a lot better than the international batting average. This is not because of moral superiority, by the way, but that the US has many resources to draw on, and considers its options and its actions quite carefully.)

If Trump, as president, believes American soft power mainly derives from military power, then as a new president, he has to demonstrate that power somewhere to prove that he is ready to use it.

Emotion Trumps (sometimes)

RP Eddy pointed me at this article about emotional intelligence not always being a good thing. It made me think about Donald Trump. The interesting thing about America’s forty-fifth president is that he has proven to have an awareness of and insight into the emotional life of American voters that others (certainly not the Clinton campaign) simply do not possess.

But his big weakness is also that he is so emotionally sensitive. Look at his demeanour at the press event with Angela Merkel. Did the usually sober Frau Dr Merkel hide in a cupboard and shout ‘boo’ at him, or make ‘comrade’ jokes? Something had deeply upset him. The same week, Enda Kenny, the Irish prime minister called out Trump’s immigration policies to his face (though in a nice friendly way) and he wasn’t fazed at all.

This week, the Telegraph reports that “According to US officials Mr Trump acted from his gut after seeing horrific pictures of child victims in Idlib.” And further: “The signal was unmistakable – if he finds something unacceptable, anywhere in the world, he will not hesitate to use force.”

No one doubts the horrors in Syria. But if you are putting America First, and American interests are not directly at stake, then why get involved? It is an emotional decision, not a rational one. The signs are that the consequences have not really been thought through.

Buns, parking and the modern acute hospital

I feel for the people who run hospitals. Hospitals are mainly judged by trifling aspects of their outward presentation rather than how fundamentally good they are as hospitals. In a recent Facebook discussion I witnessed, participants got very angry about the cost of a bun in the cafe. The issue of car parking also caused consternation. Continue reading

Why water meters were a bad decision (still)

Lots of spin going on today about why water meters are a good idea and how many leaks they are finding. Apparently, Irish Water has already identified 20 houses that were using loads and loads of water. But this is only one million litres a day of water.

That is obviously great, but greater savings, and a lot less aggravation could have been had by taking much simpler and less expensive measures in relation to finding leaks, and by using the 600 million euros to replace water pipes. The 539 million euros being spent on this metering program is enough to replace thousands of kilometres of water mains (and incidentally, meter boxes could be inexpensively fitted at the same time as doing this work).

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The political price of complexity.

When will politicians learn the political price of complexity?

Look at Irish Water.

First things first. Establishing a national utility out of a local authority patchwork of pipes and personnel is complicated to begin with. There are a lot of people to satisfy, a lot of metaphorical buried bodies, and a whole load of politics.

But layering on even more components makes the project even more complex. Look at how Irish Water has made a complicated assignment into a labyrinthine project.

Firstly, there’s the accelerated meter installation program. The plan was to have a large proportion of the two million remotely readable domestic meters installed by the beginning of this month. That didn’t happen. Installing and commissioning one of these meters requires many steps and a lot of things can and do go wrong. Dodgy pipes, bad workmanship and shared water supplies are just some of the obstacles. At the wider system level, these remotely readable meters are a new technology in Ireland and there is relatively little expertise in making them work. There are no statistics that I know of on how far Irish Water has gotten with its meter project, but it looks like they are less than half-way there.

There was really no need to install such complex meters on the first go out. A simpler in-home non-digital meter which water users could opt into having installed would have been cheaper and faster. The fancy meters could have been rolled out over a number of years, as the mains got upgraded.

Secondly, there is an ultra-complex system of charging, based on a structure of allowances and estimated assessments of water use (these assessments are critical because the meter program is so far behind schedule). The official description of the charging structure is some 31 pages long.

The simple alternative to this charging system and was described by Richard Tol in 2011. With this system, meters would be opt-in. The same allowances for children and usage could have been provided through increases in social welfare and through adjusting tax credits to put more money in people’s pockets to pay the charge.

Finally, the two factors above have converged to create a requirement for an extremely complex IT system. The requirement to collect personal information to assign allowances to individuals means that there are extremely complex issues around privacy, which Irish Water does not seem to have fully grasped.

This complexity has also resulted in a pretty odd website, a disastrous PR campaign based on some pretty dodgy conceptual work described in this fascinating PowerPoint presentation. There are ‘tribute’ sites inspired by and devoted to the topic of Irish Water and which give (un-useful) tips on what to do if Irish Water should happen to try to install one of their new fangled gadgets outside your house. The long term comedic value of the Irish Water ‘ecosystem’ should not be underestimated.

The end result of this is that Irish Water is wasting a lot of money on effort on a metering system that doesn’t really do anything to help it achieve its goal. Instead of focusing on driving down the cost of water, encouraging water saving and fixing the leaks in our rather dodgy national water network, Irish Water has gotten itself bogged down in an expensive, unpopular and ultimately unnecessary project which is going to deliver a lot of problems and very few benefits. But it isn’t Irish Water who will have to bear the cost. It will be citizens, and their elected politicians, who will pay the price.

Charging for Postcodes and the Legendary Ryanair Toilet Levy

Yesterday we got some information about how open the Irish postcode system will be funded. Essentially the idea is to pay for its setup and operating costs out of a charge to end-users for the database – charging for access to the ‘facility’, if you like. This ‘licence fee’ is a rather humdrum traditional idea about charging for things to do with computers and information.

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