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Bad decisions by government 37 – third runway at Heathrow

 

UK aviation policy is primarily predicated on the requirements of airport operators, major airlines and the Treasury – the needs of passengers come last says Steve Beauchampé in The Birmingham Press. 

The governments long-awaited – and unsurprising – decision to proceed with construction of a third runway at London Heathrow is fundamentally flawed, supported with redundant arguments and highly questionable financial assessments. If the UK had a comprehensive and comprehensible national aviation strategy Heathrow would not be operating at anything like 95% of capacity.

That it does so is the result of a system that essentially forces millions of UK passengers per annum to travel long distances, often in arduous and stressful conditions, to use both Heathrow and London’s two other main airports (Gatwick and Stansted) at great cost both to themselves and the environment. rather than utilising their local airports, many of which are working to a fraction of their capability.

Birmingham International Airport handled 12.9m passengers in 2017 but could cope with around double that number. Meanwhile, Nottingham East Midlands welcomed a paltry 4.88m whilst major population centres such as in the North East, South West, South Wales and along the south coast are all but bereft of decent flight choices. This is not only down to the London-centric approach which blights so many activities in the UK, but the failure of successive governments to challenge and take on the vested interests of London airports and the major airlines.

Two key arguments put forward in favour of a third runway at Heathrow are particularly fallacious

The first is that Heathrow must continue developing as a ‘hub’ airport, competing for passengers not with Birmingham, Manchester or even Gatwick, Stansted and Luton, but with Amsterdam, Frankfurt and Dublin and increasingly Dubai!

So a third (and later probably fourth and fifth) runway at Heathrow is essentially required to allow the airport’s operator Heathrow Airport Holdings to attract passengers who will never leave the airport environs but whose visit is solely to transfer from one aeroplane to another, Great news for HAH, who enjoy increased landing fees as a result, and good news for the Treasury, who collect airport tax each time that a passenger takes a flight.

But it is hardly good news for UK travellers who are not being provided with flights from their local airports to the locations that they want and at a time when they want to fly. Indeed the hub strategy encourages those in the north of England, Northern Island and Scotland to take domestic flights to Heathrow and then transfer planes to reach their ultimate destination.

Yet hub airports may soon be an outdated concept, with technological improvements meaning that modern aeroplanes will be able to fly further (and faster) without the need to refuel (its already possible to fly non-stop from London to Sydney). Point-to-point flying seems more likely to be the way ahead. 

The second argument in favour of Heathrow runway expansion is that many airlines do not want to fly out of the UK’s ‘regional’ airports (with the possible exception of Manchester, which handled 27.7m passengers in 2017) and would be unwilling to give up valuable landing slots at Heathrow.

But this argument is unacceptable. We would not tolerate train operators refusing to serve smaller stations nor bus companies running services only on main routes. To combat this attitude the number of slots available at Heathrow needs to be limited rather than endlessly expanded, whilst the national airport strategy that Conservative MP and anti-Heathrow Runway 3 campaigner Justine Greening called for earlier this week should focus on ways to create an environment which encourages airlines to relocate services outside of London and the South East.

This is particularly apposite given that both Birmingham and Manchester airports will be stops on the HS2 network by 2030. And whilst there is a real risk that limiting slots at Heathrow will result in some airlines pulling routes and services out of the UK altogether, the country is a large enough aviation market to offer sufficient paths to profit that most such withdrawals will likely be less than crucial and, in some cases, perhaps temporary.

In agreeing to support Heathrow’s third runway the government have committed to paying £2.6bn in compensation to those communities near to the airport that will be destroyed or significantly affected by the project. To which can be added an estimated £10bn in public funding for the new infrastructure and environmental measures required to support the expansion.

How much better to invest this money throughout the UK to create a national airport infrastructure to meet the needs of the travelling public, and one befitting the worlds fifth largest economy.

 

 

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Focus on cuts 6: JAM families suffer as bus fares rise

 

 

In 2016, though the price of oil was low, average bus fares rose three times faster than the consumer prices index. The statistics report presented by government for 2015/6 was precise: “Between March 2011 and March 2016, the average annual percentage change in bus fares was 3.8% higher than the average annual rate of inflation (2.3%)”. Families who can’t afford a car can find travelling by bus costs more than taking a taxi.

Theresa May: “We will do everything we can to give you more control over your lives” (first speech as leader)

But reduced central funding means that as many bus services have been ‘axed’ people actually have less control:

  • Without accessible or affordable transport, adults in ‘just about managing’ [JAM] families will be less able to travel to work or to medical and other appointments.
  • Some feel compelled to go into debt to buy cars they wouldn’t need if bus services were reliable and affordable..

Due to government funding cuts, town hall chiefs have announced that councils have been forced to reduce bus services by more than 12% in the past year.

They  are calling on the Government to fully fund the Concessionary Fares scheme, and for the devolution of the £250m Bus Service Operators Grant scheme that refunds some of the fuel duty incurred by operators of registered local bus services. The grant was kept at 81% until April 2012, when it was reduced by 20%. The current payment rate is the lowest ever percentage since the rebate’s inception in the 1960s.

Theresa May: “When it comes to opportunity, we won’t entrench the advantages of the fortunate few, we will do everything we can to help anybody”.

But government actions belied these fine words; her chancellor announced a fuel duty freeze whichhe saidwill cost taxpayers a predicted £850m in the first year alone and really help the ‘fortunate few’ running the largest cars, not the JAM families.

 

 

 

 

 

Professor Sikka: politicians seek to serve corporations rather than ensuring that corporations serve the people

prem sikka 3A recent article in the Scottish Independent by Professor Prem Sikka (Accountancy, University of Essex) is summarised here. For his more strongly expressed denunciation of the status quo and to follow a large number of links giving information about the organisations and scandals to which he refers, click on the link to the article.

Predatory capitalism eats away at society as people lose faith in any sense of justice, fairness and democracy.

A story that deserves much greater scrutiny:

HSBC, a major global corporation which boasts ethics committees, audit committees, non-executive directors and a major accountancy firm as its auditor, helped 106,000 clients to avoid taxes; all of these collected mega rewards but deny any responsibility for malpractice.

Predatory practices are deeply embedded in company boardrooms. This is the inevitable outcome of a political ideology that promotes faith in unbridled markets and light-touch regulation.

The UK financial sector has sold abusive pensions, endowment mortgages, payment protection insurance and other products. Banks have been engaged in money laundering, interest rate fixing and manipulation of foreign exchange rates. Payday lenders have been charging sky-high rates for lending small amounts of money to the needy and then sending fake legal letters to pressure them into paying.

A brief glimpse of other predatory practices which have also become institutionalised

  • 92% of the UK energy market is controlled by just six global corporations and last year alone they overcharged customers up to £234 a year.
  • Despite subsidies of £4-5bn year to privatised train companies, UK passengers face one of highest train fares in the world.
  • Water and telephone are not far behind.
  • Price comparison websites collude with sellers to conceal the cheapest deals.
  • Supermarkets engage in fake sales to entice customers. They have developed techniques that result in filling chicken with water and selling it as meat. They squeeze concessions out of suppliers, especially small ones, with the threat that unless they acquiesce the high street giants will not stock their products.
  • Big DIY stores use ‘yo-yo’ pricing to fool customers into thinking they are getting a bargain kitchen and other household items. In case, anyone wants to complain, chances are it will be a premium line telephone number which will keep you waiting.
  • Too many doctors have been incentivised by healthcare companies to refer patients to selected private hospitals.
  • Pharmaceutical companies exploit the National Health Service by charging vast amounts for drugs that cost pennies to produce. The price of some medicines has been inflated by as much as 2000% and taxpayer has been fleeced of tens of millions of pounds.

There are two broad reasons for the advance of predatory capitalism

Firstly, major companies are under relentless pressure from stock markets to meet profit forecasts. The markets don’t care if the targets are met through predatory practices.

Secondly, executive remuneration is linked to profits. Personal enrichment, at almost any price, seems to have become a dominant practice. The shame no longer resides to planning or executing anti-social practices, but in possible public exposure.

Instead of strengthening UK corporate laws, successive governments have favoured soft or voluntary rules for the corporate sector.

Executives are allowed to draw up their own rules. The corporate governance code is one such example. Compliance with it is voluntary. It does not give the long suffering public any rights and there are no penalties on corporations or their executives for predatory practices.

Governments are adept at covering up the stench of predatory capitalism.

For example, in July 1991 the Bank of England closed the fraud-ridden Bank of Credit and Commerce International (BCCI). It was the site of the biggest banking fraud of the twentieth-century and some 1.4 million savers lost some part of their savings. However, to this day, the closure has not been followed by an independent investigation. Successive governments concealed the identities of wrongdoers and claimed that it was not in the public interest to reveal them. All this is done to protect weapons exports to dubious regimes in the Middle East.

Prime Minister Tony Blair personally intervened to stop an investigation into allegations of bribery by BAE to secure contracts for the sale of arms. Naturally, BAE professed its innocence and Tony Blair claimed that dropping this investigation was apparently in the national interest. However, the US administration pursued BAE and the company pleaded guilty to making false statements and paid a fine of $400 million for its criminal conduct.

A major shift in law, regulation and political ideology is needed to curb predatory practices, but the inertia and connivance of UK institutions does not inspire confidence. There is little sign that predatory capitalism will be checked for the foreseeable future as politicians seek to serve corporations rather than ensuring that corporations serve the people.

CBI in the construction driving seat? “Balfour Beatty must be rubbing their hands”.

katja hall cbiFollowing news of Katja Hall (left), the CBI’s deputy director-general, lobbying for more executive house building so that members’ employees can easily be relocated round the country, a reader has sent a link to a report about David Cameron’s new promise to the CBI’s annual conference.

The government is planning to spend £15bn to deal with more than 100 of the notorious problem hotspots on England’s roads by the end of the decade. David Cameron will announce on Monday that hundreds of extra lane miles will be created on motorways and trunk roads to speed up journey times.

john cridland cbiPlans to build a tunnel under Stonehenge, widely advocated by John Cridland, Director-General of the CBI (on its ‘wish list’), are said to have been ‘looked at’ by the government to help ease congestion on the A303, a key arterial route from the south-west to London which is among those set to benefit from the proposed funding. Other details may be read here.

Our reader asks: how many remember the Barber Boom?

Thanks to the internet we can explore the background to his question. Quentin Letts’ tirade clarifies: “Dr Beeching’s plan to cut 100,000 jobs and close 2,000 railway stations, along with 5,000 miles of rail track was one of the most anti-progressive steps of the past 50 years. To this day, there are traffic jams and bottlenecks which can be traced to Beeching. Pollution is higher than it need be, thanks to Beeching. Suburban sprawl is bigger, the highlands of Wales and Scotland more deprived, and hundreds of thousands of commuters unhappier than they should be – thanks to bloody Beeching”.

Dr John Newson reminds us that the transport minister at the time was Ernest Marples, who had private interests in the road building industry.

His 1,000-mile national motorway-building programme, was complete by 1971 – by which time another 2,000 miles had been announced. Our reader continues:

“Anthony Barber, Chancellor of the Exchequer between 1970 and 1974, pumped millions into the economy to build roads which was followed by massive inflation.

”Road building is popular with governments as it doesn’t require too much importing of raw materials and does boost employment – albeit temporarily.

”Funny how this is going to run alongside HS2 – which will involve importing materials and skills”.

britains economy 2014On 29th September it was reported that Balfour Beatty ‘s shares had closed 15.3% lower – following several months’ gradual decline.  The company also said there would be a further shortfall of £75m this year in its UK construction services division, following two earlier profits warnings this year.

So hearing David Cameron’s promise – as our reader said – Balfour Beatty must be rubbing their hands” and should ardently support his re-election.