Sleepwalking into tomorrow’s state

IFS director Paul Johnson reckons the June spending review is going to be bloody. George Osborne will have to tell us where the next round of spending cuts will fall. That’s the cuts on top of the cuts he’s already made.

These will come on top of substantial cuts to departmental spending over the period of this parliament. And, at 2.8 per cent, the cut pencilled in for 2015-16 is greater than the average annual cut over this parliament.

What looks unavoidable, given these constraints, is that by the end of 2015-16 a group of departments—the home office, ministry of justice and local government, among others—will have seen budget cuts of as much as 30 per cent since the beginning of this parliament.

Not only is public service spending as a whole falling further than at any time in living memory, but its composition is changing. There is a major redistribution within that spending pot towards health and away from pretty much everything else.

There’s more:

But that is not the whole public spending story. So far we have been looking only at public service spending, which is falling. But total public spending is not. What’s the difference? The difference is what is known in government as Annually Managed Expenditure (AME), made up largely of spending on social security, pensions and debt interest.

This component of total spending continues to rise. Indeed it looks as if AME spending will, for the first time, form a majority of government spending after 2015. Roughly speaking, for every pound saved on departmental spending, an extra pound is being spent in AME. Why is that? Well obviously as debt levels rise the amount the government has to spend on debt interest rises. Spending on benefits, especially on pensioner benefits, also continues to rise, as does spending on public service pensions.

As fast as the government cuts departmental spending (DEL), Annually Managed Expenditure (AME) rises. Total public spending therefore remains roughly the same.

AME is made up of the less predictable elements of public spending. It is being driven up by welfare payments – to the unemployed, to pensioners and to those employed in the UK’s precarious low-wage economy.

Having risen during the recession, the welfare bill is expected to fall from next year as the economy improves, though the level of in-work benefits remains stubbornly high.

Does that mean things will get easier for the chancellor? Not really because debt interest, the other big component of AME is set to rise, hence the purple AME line on the graph keeps on going up.

Using government figures, the Social Market Foundation (SMF) calculates that the slight fall in working-age benefit costs will be more than offset by the increase in pension and debt interest payments:

Is there much the government can do about this? The SMF thinks not, because so much of the welfare bill is structural, due to an ageing society and rising housing costs, rather than cyclical, due to the poor state of the labour market.

7 Percentages indicate proportion of welfare accounted for by different benefits; * indicates biggest contributors to recent rises in AME 

Given that the government has pledged to protect education, overseas aid and health, any spending cuts will therefore fall disproportionately on departmental spending, plus any bits of welfare that the chancellor thinks he can get away with cutting.

Coming on top of the current squeeze, the next round of cuts could well see the end of some public services. A 30 percent cut in the space of six years means that some parts of government, especially local authorities, will struggle.

Not that things will be great for the so-called protected departments. NHS costs rise faster than inflation and an ageing population will make increasing demands. Even with ring-fenced spending, some A&E units are already close to collapse and, according to emails seen by the HSJ, is about to be bailed out with emergency funding. It is unlikely that this will be the last time.

What about efficiency savings? Well we already know that the savings needed are way beyond what could reasonably be expected to come from efficiency measures. And in any case, says Johnson, in local government, much of it has already been done:

Additional cuts in some areas of government spending will bite very hard. To the extent that there was low hanging fruit to pluck in local government, the police and other services, it is likely to be gone by 2015. The consequences for both the real quality of public services and the way in which they are organised are likely to be considerable.

Is this likely to get any better if Labour win the next election? Don’t hold your breath. The combined costs of healthcare, pensions, welfare and debt interest are eating into departmental spending. The only way to prevent further cuts would be to reduce welfare spending, which is difficult, if not impossible, or raise taxes. This IFS graph neatly illustrates the dilemma.

The IFS reckons that the next government will have to increase income tax by 3p in the pound just to avoid further cuts. That’s not to reverse this government’s cuts and put things back to how they were, it’s simply to avoid having to cut any more. (Its other options would be to borrow more or print money, both of which would be controversial, to say the least, and come with risks that I don’t have space to go into here.)

What the IFS and a few others have spotted, but which politicians and the media don’t seem to be talking about, is that this amounts to a de-facto reconfiguration of the state. We are about to pass the point at which spending on welfare and debt interest exceeds spending on public services. Furthermore, an ever-increasing amounts of the depleted spending on public services is being directed towards health.

The focus of government spending is shifting towards healthcare and welfare (mostly pensions) and away from just about everything else. This is only to be expected in a country with an ageing population. But there has been very little discussion about what we might have to give up as a result. Sports centres? Libraries? Street lighting?

Last week, based on the projected funding cuts, the Local Government Association produced a model budget for a typical unitary authority towards the end of this decade.

This sees the closure of leisure centres and museums and cuts to bus services. The removal of funding for the voluntary sector could be significant too. No-one can be sure what the impact of this might be but if charities stop working with alcoholics and drug addicts, many of them are likely to end up in A&E as a last resort, stretching the system even further.

The logical conclusion of all this that there are some things the state will have to stop doing because it just won’t have the capacity. This is something that will affect almost all of us yet there has been little public debate about it. Politicians and the media work themselves and the public up into a frenzy about all sorts of things that don’t really have that much impact on most people’s lives, while the reconfiguration of the state is likely to take place all around us without most of us realising what is going on. Until suddenly we notice that the sports centre has closed, the road hasn’t been fixed this winter, the buses have stopped running and the side streets are all dark. Maybe then we will wonder why we spent the 2010s arguing about immigration, gay marriage and the EU.

Hat Tip: Michael Carty for pointing me to Paul Johnson’s Prospect article.

Update 21 May

Paul Johnson was in the FT yesterday.

Because national income has taken such a bashing, public spending this year will, at 44 per cent, be higher as a proportion of national income than in any pre-recession year since the mid-1980s. Even in plans as set out, it will still in 2018 take up the same share of national income as it did in 2003-04, halfway through the last government’s second term.

That is an important point to grasp. The cuts being faced across the public services are real and they are deep. Yet they will serve only to return the size of the state to something like its long-run average. They are doing something else as well though. They are changing the shape of the state.

The choices that are being made mean that while the public sector will take the same share of national income in 2018 as it did a decade and a half earlier, it will be much more focused on health and pensions – and of course debt interest.

He’s right. It is an important point. As I’ve said before, the government’s ‘state-shrinking’ plans simply return us to the normal (as in non-recession) public spending level of around 39 percent of GDP. The trouble is, thanks to increased spending on pensions, healthcare and debt interest, 39 percent of GDP won’t leave as much for public services as it did in the mid-2000s.

This is an important difference between the Shrink-The-State argument and what I (thanks to Adil Abrar) call the Peak State argument. Cuts to spending on public services will be necessary even without the state shrinking below its long-term average. Either that or spending will have to rise to a new normal which means higher taxes.

Whatever happens, Paul Johnson is right to say that we face tough choices and that we need a broader debate about all this. It’s not happening though. Apparently, our politicians have more important things to worry about.

Fixing A&E

Scene: A plush riverside office.

[Sound of irritating iPhone ring.]

“Hello. Joseph Bloggs.”

“Hi Joe. It’s Jeremy.”

“….Minister! Good to hear from you. Er…how’s things?”

“Bit fraught actually Joe. This A&E thing is a right mess.”

“Yes, I saw the Twitter storm about it. Bad business.”

“Look Joe, I’ll cut to the chase. I’m giving regional managers until the end of May to sort this out.”

“Regional mangers, Minister?”

“YES! It’s about time you lot were held accountable for this chaos.”

“But Minister, I don’t work for you any more. You sacked all the regional managers at the end of March, remember?”

“Bugger! Oh crap….er…look…can you come back for a while?”

“Of course Minister. I work for PoshblokeSmythe Consulting now. We’ll come and see you and get a proposal to you by the end of next week.”

“It’s a bit more urgent than that Joe. Can’t you just send me a quick email and get started? We’ll sort the details out later.”

“No problem. My fee rate is £4,000 a day.”

“Blimey! That’s a lot more than we used to pay you.”

“Yes but top talent and cutting edge management development don’t come cheap, you know.”

“(Groan) OK, we’ll just have to go with it for now.”

“Just one question, Minister. Wasn’t the whole point of the reforms to leave all this to the market? Weren’t the weak hospitals supposed to go to the wall and the strong ones pick up the slack, thereby making the system more efficient? Wasn’t the government supposed to butt out and let market forces drive up standards?”

“Yes but we don’t have time for all that now. There’s an election in two years time and the last thing we need is an A&E meltdown just before it. If I don’t get this sorted PDQ, Dave will have my plums on a skewer.”

“OK. Better get to work then. I’ll get my team ready.”

“Team?”

“Yes, this will need a few of us. Normally I’d bring them all round and introduce them but we’re pushed for time and, in any case, you know most of them already, as they used to work for you.”

“Er…oh, right….good. Anyway, we’re setting up Urgent Care Boards to co-ordinate things regionally across the country. I’d like you to help get them going.”

“Doesn’t ‘Boards’ sound a bit 1970s centralised welfare state?”

“Yes, I suppose it does. Do you have a better suggestion?”

“How about ‘Strategic Health Authorities’?”

“Yes, that sounds….oh, hang on….”

“Ha ha. Just my little joke, Minister.”

“(Hollow laugh) Yes of course….now I’d like you to start in the North East.”

“Fine. I’ll get my team up to Newcastle on the first flight next week.”

“Flight? Can’t you just jump in the car?”

“Don’t do that any more Minister. Strictly business class only these days.”

“Business cla….Oh alright then!”

“And I’ll need you to sign off some expenses before we go. We usually stay in the Malmaison when we’re up there.”

“Fu…… OK, just do it.”

“Right we’ll get started then. I assume you have plenty of budget for this.”

“Budget…yes (cough) of course…er… budget is, er,  no problem.”

“See you next week then. Have a great weekend Minister.”

“Er, yes, and you Joe. Bye.”

[Click]

How to reduce your gender pay gap

Sometimes you come across counterintuitive facts that make you step back and wonder if everything you thought you knew was wrong, like America spending more per capita on healthcare than Britain or Stephanie Flanders not being head girl at school or Italy being the first country to eliminate its full-time gender pay gap.

Yes, that’s right, Italy. Not Finland, not Denmark, not some other bastion of female friendly social democracy but Italy.

Gender pay gap by working profile, %, 2011

At least, that’s what the latest EuroStat data says.

For full-time workers pay gaps varied widely in the EU, by 20 percentage points, between the highest ones observed in Slovakia and Germany (20 %) and the lowest pay gap, actually no pay gap at all, in Italy (0 %).

So mind-blowing was this that I decided to check out the OECD’s figures for a second opinion. These show Italy having a slight gender pay gap for full-time workers but it is still the lowest in the group.

It gets even better. We know that the gender pay gap increases when women get to their 30s and leave work to have children. This is the case, to varying degrees, across Europe. But according to a recent OECD survey, Italy is the country where motherhood has the least impact on pay levels.

Not only is Italy’s gender pay gap relatively low but having children seems to make very little difference to women’s pay.

It all looks impressive. Last month, the Huffington post listed Italy as one of the countries putting the USA to shame on gender equality.

So how has Italy done it? Has it brought in strict laws on equal pay and strengthened maternity rights? Are employers in Italy complying with both the letter and the spirit of equality legislation in a way that happens nowhere else in Europe? Unlikely isn’t it?

Italy is 80th in the WEF’s Global Gender Gap Index. The countries at the top are the ones you’d expect to see: Iceland, Finland, Norway, Sweden. It’s the same story whichever gender equality index you look at. The Scandinavian countries are near the top and you have to scroll down quite a way to find Italy.

If it’s not due to equality legislation, then, what is the secret of Italy’s low gender pay gap?

The figures on employment rates give us a clue.

Italy has one of the lowest rates of female employment in Europe. Furthermore, the inactivity rate among women in the 25-54 age group is also one of the highest in Europe – around 35 percent compared to 12 percent in Sweden and Denmark.

Italy has a low gender pay gap and a low impact of motherhood on pay not because of its female-friendly policies but because many Italian women simply leave the labour force. As the Bank of Italy’s Roberta Zizza says, Italy’s low gender pay gap is due to positive sample selection:

When the cross-country comparison deals with the gender wage gap, Italy stands as one of the countries where the gap is lower. This is mainly due to a positive selection: in Italy the women who work are those whose characteristics are better rewarded by the labour market (for example, the more educated).

The high flyers who can hold their own in a male dominated labour force go back to work while many other women withdraw from the labour market.

A 2008 study by Claudia Olivetti and Barbara Petrongolo found a correlation between low female labour force participation and low gender pay gaps. When they corrected for the rates of labour force participation, the gender pay gaps in southern European countries looked less impressive.

Gender wage gaps in the United States and the United Kingdom are much higher than in other European countries, and especially so with respect to France and southern Europe. Although at first glance this fact may suggest evidence of a more equal pay treatment across genders in the latter group of countries, appearances can be deceptive.

[W]e note that gender wage gaps across countries are negatively correlated with gender employment gaps and we illustrate the importance of nonrandom selection into work in understanding the observed international variation in gender wage gaps.

This goes some way to explaining the paradox that the countries with the most female friendly laws and working practices have relatively high gender pay gaps, in some cases above the OECD average, while those of the more ‘traditional’ countries are low or even non-existent.

Even in enlightened Scandinavia, women still do most of the childcare so, as in the UK, they go back to work part-time or get lower paid jobs locally to be on hand for the school run. Encouraging women back into the workforce, then, has the paradoxical effect of raising a country’s gender pay gap. Countries like Italy, by contrast, take more women of child-bearing age out of the workforce completely, which removes them from the calculations and lowers the gender pay gap.

Now before you get shirty with me, I’m not actually suggesting this as a policy, though doubtless the removal of mothers from the workforce would find favour in some quarters. These nuances in the gender pay gap calculations are important for a couple of reasons though. Firstly, it shows just how far social norms and conventions impact on pay levels. The gender pay gaps in different parts Europe arise from varying assumptions about the role of women. Secondly, it shows how important it is to dig deeper when presented with what looks like solid statistical data. If something on a graph or report looks wrong it’s always worth looking a little closer. Italy’s gender pay gap isn’t really embarrassing America or any other country. It might look that way on a graph but, as so often, the truth is a little more complicated.

Thatcherite zeal? Or just a re-enactment?

Boris Johnson and some Conservative backbenchers called for ‘Thatcherite zeal’ against the trade unions, as they renewed demands for tougher strike laws.

I’ve already had a go at Boris about this in a previous post but let’s just recap on what the current law on industrial disputes says:

• No-one can be forced to go on strike;
• No-one can be forced to be a member of a trade union;
• Unions can’t discipline people for refusing to go on strike;
• Pickets are restricted to six people so it is impossible to physically prevent people from going to work and there are criminal sanctions against threatening or intimidating behaviour;
• Those wanting to strike can’t do so without a ballot and they need to get a majority of those voting to agree with them; but
• (And this last one is really important) An apathetic majority can’t stop a committed minority from going on strike.

Now that, to me, all sounds very reasonable. If you want to go on strike, you can, if you can make a case to enough of those who give enough of a damn to vote. If you don’t want to strike, you don’t have to and no-one can force you to do so or discipline you afterwards. The old excesses of trade unionism – the closed shop, the mass pickets, the show-of-hands in the car park – have all gone.

This position is, by and large, the result of measures taken by the Thatcher and Major governments. The grandees of that period have advised the current government against changing any of it.

What Boris and the self-styled new right seem to have missed (perhaps deliberately) is that this is a battle that was won by their predecessors. Industrial disputes are a minor problem now and strikes with poor support will have little impact anyway.

Chart via FullFact using ONS data.

I wonder, though, if this is another symptom of the half-remembered Thatcher mythology that led to the ridiculous shares for rights legislation. Those of us that were at university during the Thatcher years, a cohort which includes many in the government, tend to have a stylised view about Margaret Thatcher. Whatever our views, we remember her government as being more ideologically driven than it actually was. It is only with the benefit of hindsight and the insights of older and wiser heads, that we realise the 1980s Tories were, in may ways, old-fashioned pragmatists.

As the Spectator’s Isabel Hardman says, the Conservatives have been gripped by
‘What Would Thatcher Do?‘ fever without really understanding the subtleties of the Thatcher years. She quotes the venerable T. E. Utley:

When talking to her friends or addressing a party conference, she is the philosopher queen, although the impression, as far as her public oratory goes, springs rather from the manner of its delivery than from its actual content; listen hard enough and you will always hear the qualifying clauses, often uttered rapidly and with an almost palpable physical revulsion. Then something happens in the real world — the need to bring the Rhodesian crisis to an end, the need to avoid a miners’ strike before the government is ready to cope with it, the need to placate a divided Cabinet over trade union reform — and Mrs Thatcher yields to necessity, often swiftly.

Much of the ‘Thatcherite zeal’ was in the rhetoric. What her governments did was usually more pragmatic.

Worse still, though, in their attempt to recapture this mythical Thatcherite zeal, today’s Conservatives haven’t even found anything new to which they can apply it. They seem to want to fight the same old battles on the labour market and trade union reform, even though trade union laws work and our employment regulation is among the lightest in the developed world.

This is rather like re-enacting a battle or watching a football match from the days when your team were good. It’s great; you can enjoy a good fight and you know that you get to win at the end of it. But, fun though it may be, it wins no prizes. For that, you have to  fight real battles and play real matches in today’s world.

That so many in our governing party want to go over old ground and re-fight old battles makes them look pretty desperate. Are they really so short of ideas that they have to summon up the ghosts of their enemies from the past? Is the ‘What Would Thatcher Do’ malaise just the sign of a party that really has no idea what to do next?

Who lost the 20th century?

In the end, after a lively debate, the New Statesman’s audience decided that the left won the 20th century. That still seems slightly odd to me, given that the left has suffered considerable reverses on the economic front since the 1970s. (See previous post.) I wonder if the vote would have gone the same way if they had held the debate in Barnsley.

I’ve finally found the source of that quote about who won what; it was from the very end of the 20th century. In 1999 Professor Alan Wolfe declared, “The right won the economic war, the left won the cultural war…” or, as David Goodhart put it, the two liberalisms dominated politics for a generation, the social liberalism of the left and the economic liberalism of the right.

I have no data for this but observation says both these strands of thought tend to be more dominant among party activists in London. In the Conservative Party, its members in the shires are more socially conservative, while its liberal Economist reading tendency is concentrated in London. The Labour Party’s activists in its northern heartlands tend to be more interested in the economics – jobs and trade union rights. For for its metropolitan supporters, though, the social agenda is more important. That’s why, at the New Statesman debate, they declared that they had won the 20th century. In terms of what is most important to them, they did.

David Goodhart noticed something similar:

The two liberalisms have reflected too closely the interests of the mobile, secular, graduate elite that dominates Britain, both politically and culturally. It usually favours loose, wide commitments and has generally embraced globalisation.

So if the two liberalisms won, it therefore follows that the losers of the 20th century, or at least, of its last few decades, were the socially conservative right and the socialist/trade unionist left. The fact that we tend to apply the prefix ‘old’ or ‘traditional’ to both just serves to emphasise their defeat.

Outside London (mostly), there are a number of Labour supporters wondering why their party was in power for thirteen years, yet their neighbourhoods are decaying, their incomes are falling and their employment is increasingly precarious. Likewise, there are Conservatives who wonder why, after eighteen years of Tory rule, political correctness took root, progressive education triumphed in schools and we ended up being drawn ever deeper into Europe. Their party is in power again but it doesn’t seem to be that keen on resolving any of these issues, preferring instead to ‘mess about with things like gay marriage‘. And now their incomes are falling too.

After the Eastleigh by-election, which UKIP came close to winning, the Guardian’s John Harris wrote, “No mainstream party in England truly understands conservatism.”

As he explains:

Serial defeats for the Labour party eventually led to the arrival of the cult of the so-called modernisers, pledged to force their party to swallow the fact that Thatcher had changed the country for keeps…..the unions – and, by extension, millions of voters – were decried as hopeless throwbacks.

Then, it was the Tories’ turn to be taken over by modernisers, passionately in thrall to Blair and his disciples’ example. David Cameron’s early stabs at offending Tory traditionalists – hugging huskies and hoodies, the contemptible W10 wind turbine – were barely serious, but their effect still lingers, and the same approach was seen when he picked a fight over same-sex marriage.

His remains a politics rooted in upscale capital postcodes rather than the shires and suburbs.

As he also notes, many UKIP voters, while opposed to immigration, were also supportive of the NHS and in favour of re-nationalising the railways – in other words, they were very much at odds with the prevailing political climate. The right may have won the economic war and the left the culture war but there are a lot of people who wish it had been the other way around or, at least, that the victories hadn’t been quite so complete. There is a constituency that is to the right of David Cameron on social issues and to the left of Tony Blair on economic ones. Mix up some anti-immigration rhetoric with some banker-bashing and vague talk of getting things back to how they were and you’ll get an audience.

And that is pretty much what UKIP has done, as Max Wind-Cowie put it yesterday:

Bringing together the dissatisfied of Tunbridge Wells and the downtrodden of Merseyside is a remarkable feat, and it stems from UKIP’s empathy for those who have been left behind by the relentless march of globalisation and glib liberalism.

But if they looked closely enough, many of its voters might not agree with UKIP’s policies. Its founders were economic libertarians whose main gripe was regulation. I suspect that many of the UKIP old guard would be happy to see large numbers of unskilled immigrants, provided they could put them to work in unregulated sweatshops. Many of UKIP’s voters, on the other hand, seem to want more government, not less. This is the root of UKIP’s policy incoherence – it is trying to be all things to all men.

At the moment, though, few people are looking that closely. UKIP’s leaders are happy for people to project their frustrations onto their party and believe what they like. For this reason, UKIP is set to take votes from both major parties.

This wonderful story from Andrew Rawnsley explains what happened when a Labour strategist ran a focus group to try to find out why:

One senior party strategist says he listened in some wonderment as his focus group of Ukip voters spent an entire 90-minute session wailing and gnashing their teeth about the state of Britain. Not a good word did they have to say about the country today. At the end of the session, he thanked them for their time, and said he had one more question. Was there anything about Britain that made them feel proud? There was a silence. Then one man leant forward and said: “The past.” The rest of the group nodded in agreement.

A Ukip vote is not mainly, if at all, about making a choice based on an assessment of policy. More than anything, it is about expressing an emotion – usually a feeling of intense rage about how Britain has changed and how they are served by the established political parties. It is a howl against the modern world, a scream against the establishment. There’s no arguing with that. Or, if there is a way of dealing with it, none of the main parties has yet discovered what it is.

None of this is to say that all the anger against politicians is justified. At least some of what people don’t like about the modern world can be put down simply to the way things have changed – everywhere. To an extent, immigration, economic decline and even rising inequality are the results of globalisation. The extent to which politicians can solve them, without resorting to draconian policies with unforseen consequences, is limited. This, though, is an argument for another blog post.

There are two reasons why a viable party of the populist right, like those in some other European countries, has not appeared in Britain. Firstly, our electoral system is less favourable to small parties. Secondly, until now, our populist right-wing parties have been thuggish, utterly incompetent and tainted with fascism. UKIP, whatever else you might think about it, is none of these things.

Many people feel that they are on the losing side of politics. Maybe this is simply frustration about the modern world but it is no less potent for that. A political party has now appeared that can exploit that howl of rage – to the extent that it can do serious damage to the major parties. Similar political movements have appeared elsewhere in Europe. The real surprise is that it has taken so long to happen here.

Lambic and geuze – a success story with a sour taste!

Last weekend, I was over in Belgium for the biennial Toer De Geuze, when the brewers of geuze and lambic beers open their doors to the public to show off their beers.

Geuze and lambic beers are, to say the least, an acquired taste. I worked in Brussels for over a year and never touched the stuff. I thought it was horrible. It was only ten years later that I finally learned to appreciate it.

Lambic and its derivatives, geuze and kriek, are brewed using the wild yeast Brettanomyces Bruxellensis that comes from the marshes of the River Senne, to the south-west of Brussels. Rather than using cultivated yeasts, the brewers expose their wort to the open air and let it get infected. It is then left to ferment for a year. The result is a sour but very refreshing beer. Geuze is a blend of one, two and three-year-old lambic, making it one of the most complex beers you’ll ever taste.

Here is Tim Webb, author of the Good Beer Guide to Belgium:

Your first encounter can be astonishingly awful. It may make you want to send it back immediately, but then persuades you to hold on for another mouthful. Having solidiered through the bottle and awarded yourself a gold rosette for adding painfully to your knowledge of brewing history, it should make you vow never to try it again. Then you order another just in case you got it wrong.

And then another and another.

As you can guess, I’m a convert and I heartily recommend the stuff to anyone who loves good booze.

Geuze and lambic are more than just great beers though. They represent a great success story for a few people who had the vision and the passion (in the true sense, not the “I’m 120% passionate, Sirallan” sense) to revive a brewing tradition that was nearly dead.

For, by the 1970s, lambic and geuze were dying. Many of the Belgians we spoke to last week blamed the Germans: firstly for literal imperialism – nicking all Belgium’s brewing equipment and shipping it back to Germany during the war – and secondly for cultural imperialism – flooding the country with pilsner. Others blamed hygiene laws for sterilising breweries to such an extent that the wild yeasts wouldn’t grow, or the EU for saying that the lambic brewing process was a health hazard and attempting to ban it.

Whatever the reason, the brewing of wild yeast beers was a dying art by the 1970s. Received wisdom said that, by the end of the century, all the small brewers in Belgium would be gone.

It all sounds very familiar doesn’t it? As does what happened next. A small group of committed people revived the tradition and took the industry from near death in the 1970s, to one that now exports beer all over the world. One of those who helped to save Lambic beer was a young man called Frank Boon.

Here’s Tim Webb again:

When Frank Boon took over the De Vits lambic brewery in 1975, he was considered either an idealistic amateur or a crank, who had not realised lambic was dying.

Last Saturday, that idealistic amateur (or crank) saw his spanking new brewery opened by Herman van Rompuy. One in the eye for all those who said lambic was doomed.

In a movement that has parallels with real-ale and craft-brewing in Britain and the US, a new generation revived the brewing of wild-yeast beers and revitalised an industry that seemed to be heading inexorably towards consolidation and standardisation.

Sometimes it was new brewers buying old breweries, in other cases, a new generation took over an old family brewer. Three decades on and lambic beers are thriving. It’s newest producer, Tilquin, was started just two years ago by a 37 year-old bioengineer.

Many of the beers are now exported and there is growing interest in them in the US. Once the Americans discovered that beer didn’t have to be yellow and tasteless, it seems they couldn’t get enough of…well, anything that was different. I loved this blog post Where to Drink Sour Beer in Chicago. Something like this would have been unthinkable twenty years ago.

OK, it’s still a niche product and it is unlikely to make anyone a millionaire but at least the future of this rare and wonderful beer and of the people who make it, now looks secure.

I could draw this post to a conclusion by making some glib comments about following your passion and not believing pundits when they tell you something has had its day but all that should be obvious from the story. Instead, I suggest you just try the stuff and see if you like it. You probably won’t at first but have another one and just see what happens….

Shares For Rights – Government quietly revives one of its stupidest ideas

Remember the government’s ‘shares for employment rights’ idea? It was rejected by almost every business surveyed during the consultation, many coming to the same conclusions as I did when it was first announced.

The House of Lords thought it was a daft idea too and threw it out.

Then, on Tuesday, while everyone was busy talking about Margaret Thatcher’s funeral, the government quietly re-introduced the proposal. As far as I can tell, only Personnel Today and XpertHR noticed.

It’s a low bar, I know, but this is one of the Coalition’s stupidest pieces of legislation. Almost no-one wants it and there is absolutely no evidence whatsoever that it will make a scrap of difference to the economy. So why are they pursuing it?

Michael wonders if it is a continuation of Margaret Thatcher’s legacy.

Can the employee-shareholder contract proposals be considered a part of Thatcher’s legacy to UK employment law?

In a superb piece on the impact of Margaret Thatcher’s Government on the workplace(XpertHR subscription required) Darren Newman looks at the “step-by-step approach to reform” adopted by Thatcher’s government, and at the “chipping away” at laws on trade unions that took place.

Newman notes that “the step-by-step approach to employment law continues [today], so there are always employment law changes on the horizon.”

He also argues that “one important legacy of the changes made in the 1980s has been the shift in the focus from trade unions and industrial action to individual rights.”

The employee-shareholder contract proposals are focused on nothing if not on individual rights.

Economist David Blanchflower put forward an interesting theory as to Margaret Thatcher’s economic legacy in a piece for the Independent earlier this week. Blanchflower noted that “the UK labour market is highly flexible, which may well be Mrs Thatcher’s most significant economic legacy. Strikes are largely a thing of the past.”

Could it not be argued that the employee-shareholder contract proposals, should they come into effect, might further increase the flexibility of the UK labour market?

I’m not so sure this measure is a Thatcherite legacy. I’m not even convinced that it will increase labour market flexibility. Any gain from being able to hire and fire after 2 years employment, without risk of a tribunal claim, will surely be outweighed by the additional administrative overhead and potential legal arguments over values of shares. The post-employment disputes may simply shift from one court to another.

But the other thing many people forget about Thatcher, Tebbit and most of the 80s Tories is that they were pragmatists. One of the reasons they didn’t mess too much with employment protection was that they wanted to encourage people to pursue their disputes through the courts and not through industrial action. They raised the unfair dismissal threshold to 2 years and left the rest of the system intact. As I’ve said before, the Conservative Party was quite keen on employment law, and with good reason.

As Darren says in the article linked to above:

One important legacy of the changes made in the 1980s has been the shift in the focus from trade unions and industrial action to individual rights. In 1979, if you were sacked by your employer you could go to the union and, if it backed you, the workplace could be brought to an immediate standstill until you were reinstated. Nowadays, battles over the treatment of individuals are fought in the employment tribunal rather than on a picket line. Today’s employers – which may complain that their ability to manage is impaired by complicated and legalistic employment law – would be envied by their counterparts in 1979.

In many ways, today’s employment environment is easier for employers than it was in the 1970s and, compared to that of most other developed countries, fairly light touch. Most employers seem to think shares for rights would complicate matters. Surely a pragmatist like Thatcher or Tebbit would leave well alone.

My hypothesis is slightly different from Michael’s. Shares-for-rights is not an extension of Thatcherism but of the current Conservatives’ idea of Thatcherism. It is labour market reform viewed through the prism of ideology – a half-baked ideology based on a distorted memory of the 1980s. The great woman won the day with free-market ideas and labour law reform so we must do more of that too.

The result is pointless legislation which few employers support and which the Thatcherites of the 80s would surely have canned as soon as their supporters in business told them what a crap idea it was.

Update: HR Bullets noticed too and notes the Government’s target implementation date of September this year.

John Band reckons it will be killed off before then:

@flipchartrick I’m told by People In The Know that it’ll be junked again in Lords and then lost rather than subject to Parliament Act.

— John B (@johnb78) April 18, 2013

Let’s hope he’s right.