REF, QR funding and the science budget

I guess we should all be reasonably pleased that the science budget has remained ring-fenced. The reality, of course, is that this just means that it is ring-fenced in a flat-cash sense, not in an inflation adjusted sense. As scientists, maybe we should make sure they define the term more specifically in future. It does appear that the current definition would allow the government to claim that something has been ring-fenced, despite the spending power tending to zero. Logically, you mighty expect it to be defined in terms of spending power rather than pounds, but that would require deciding between RPI and CPI, and that is clearly for too difficult.

Anyway, enough cynicism. In truth, we should probably be grateful that the outcome hasn’t been worse. It certainly has been for some and I do feel that the current government has got its basic economic policies completely wrong. It seems like it’s time that someone explained to George Osborne that it’s not necessarily the size of the debt and deficit that matters. What matters is their size relative to the size of our economy. The way its going now it seems like he’s getting it wrong on both counts.

What is maybe more concerning, from a science funding perspective, is the possibility that the government may choose to axe the QR funding. This is the funding stream that comes from the Higher Education Funding Councils and how it is distributed is determined via the outcome of the Research Excellence Framework (REF) exercise. Now, it may well be part of the ring fence and it may well be safe, but I wouldn’t know whether to laugh or cry if it were cut. If you’ve read some of my earlier posts, you’ll know that I’ve been very critical of REF. This is both due to the manner in which it is implemented and due to the shenanigans taking place at UK universities; the potentially risking hiring, the morally/legally questionable redundancies, and the time and effort spent preparing for what is – in my opinion – a completely flawed exercise.

So, if it were to be cut, part of me would feel like saying “serves us right for taking something so silly so seriously, and for playing the kind of games that have not and will not benefit our fundamental role as teachers and researchers”. On the other hand, it is a lot of money (£1.5 billion I believe) and I certainly have no desire to see this money leave the Higher Education sector. As far as I can tell, some may struggle to survive as they are, even if there are no cuts to the QR funding. Well, I certainly hope that it isn’t cut but I also hope that in future, universities will find the backbone to tell the government that playing these kind of games is silly and that they should find a simpler and more effective mechanism for distributing this money (although I don’t think it should simply be given to the research councils, but that might be a topic for another post).

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Mark Steel at the People’s Assembly

There is a new “organisation” called the People’s Assembly which is, essentially, a movement against austerity. I’ve been rather lax in my reading (at least semi-political reading) and blogging recently and so don’t really know much about it. I do, however, think that austerity has been a disaster, both socially and economically, and so – if I understand the motivation behind this movement correctly – I agree with it wholeheartedly.

What I thought I would do is include, below, the speech given by Mark Steel at the People’s Assembly meeting yesterday. It’s both quite amusing and quite fiery. Something that I won’t expand on much here (but is something I may try and write about at a later stage) is why it appears that the most effective rhetoric for those on the left appears to come from comedians, while the most effective rhetoric on the right appears to come from what, I’ll politely call, firebrands. I’m don’t really understand why there is such a difference in style between the right and the left, but it is something I find of great interest. Anyway, enjoy the video.

The intelligent management of the public finances

This is a topic that I have very interesting. It did seem obvious that trying to simply slash public spending may end up being counterproductive. This post seems to confirm that general view, but I’ll need to read it a bit more carefully to make sure I understand what it is saying and to get a sense of where the number are coming from.

The Uxbridge Graduate

Background

Much discussion has surrounded the contention that high public debt levels are associated with low / no economic growth. Specifically,well-publicised research has suggested that if the public debt to GDP ratio exceeds 90% then economic growth will slow down markedly and perhaps come to a standstill. The British government  has eagerly accepted this finding and has used it to justify its debt reduction strategy, which is that cuts to public spending are necessary if the economy is to return to growth. The government has hence proceeded to cut public spending on the promise that the cuts will reduce borrowing and thereby generate economic growth. However, instead of economic growth, the government’s cuts to public spending have coincided with stagnation and recession.  I suspect this is because the spending reductions have been indiscriminate.

The following sets out my view on why indiscriminate cuts to public spending will often increase the…

View original post 1,257 more words

This is a great post. It is something I was considering writing about, but the author of this is – it seems – more informed than I am and this post explains the issue more clearly and convincingly than I could have done.

Think Left

First posted on February 2, 2013 by alittleecon

Welfare cuts won’t work, they’ll just make things worse

Cuts to welfare spending seem to be in the headlines daily nowadays.  Every time a bad bit of economic news is announced (which is often), the prospect of yet more welfare cuts seems to raise its ugly head.  Just this week, following the terrible Q4 growth figures, there was a story in the Independent about certain ministers who are pushing for further cuts to welfare.

There are a number of issues around welfare which are regularly discussed.  These include ‘fairness’ and ‘making work pay’.  A lot has been written on both sides of the arguments on this, so I’m going to focus on the likely economic impact of welfare cuts.

Now a key argument on welfare cuts is that the deficit needs to come down and everyone needs to contribute (we’re all in this together…

View original post 796 more words

Iceland’s president at Davos

Thanks to the Liberal Conspiracy I’ve come across the video that I’ve posted below of the Icelandic President (Olafur Ragnar Grimsson) being interviewed at Davos. He claims that Iceland’s recovery was largely due to their allowing banks to go bankrupt and by not following the standard orthodoxies of austerity, but instead providing support for the poor and unemployed. Their economy is now growing at about 3% and unemployment is low.

I’ve never heard of him before, but based on this video he seems to be a good example of what I think a politician should be. He seems to think in terms of what would be best for his country and its people, rather than simply thinking of how to protect big businesses and the wealthy. Admittedly, some of those who act to protect businesses and the wealthy believe that this will help everyone. The evidence for this is, however, slim. Anyway, I think the video is worth a watch and I wish more of our politicians were as sensible as he seems to be. Iceland is a small country with a small population, so maybe what worked for them wouldn’t work for us. However, our current policies don’t seem to be working either so trying something that has been proven to work makes more sense (to me at least) than sticking with something that is almost certainly not working.

13 years of overspending and borrowing

I was listening to Radio 4 this evening on the way home. They were interviewing a couple of council leaders about cuts to council tax benefits. It was all a little frustrating listening to it, but what was particularly annoying was the head of West Oxfordshire Council (which include David Cameron’s constituency) parroting the typical Tory phrase that cuts were unavoidable given the 13 years of Labour overspending and excessive borrowing.

I find this really frustrating because what we’re going through now is not a consequence of overspending by Labour from 1997 to 2010. It’s really because of excessive risk taking in the financial sector that required a taxpayer bailout in 2008 and has lead to increased unemployment, reduced tax revenues and increased spending to cover the resulting increase in benefit costs. Below is a figure from Economics.help. The data is from the HM Treasury and, although I haven’t checked it, appears to be the same as what I have found before. When Labour took over in 1997 UK debt was 40% of GDP. It dropped to about 30% over the next few years. They then increased it from 30% to about 37% from about 2000 to 2007. The big jump occurs in 2008, when the financial crisis started. It seems, to me at least, that Labour was spending quite sensibly for most of their 13 years. There were many other things that weren’t sensible (de-regulating the banks for example) but to claim that there was 13 years of overspending and excessive borrowing is just, in my opinion, wrong.

UK debt as a percentage of GDP.

UK debt as a percentage of GDP.

You can also look at the actual deficit (i.e., how much the government had to borrow). The figure below is from the Guardian and shows the annual deficit in pounds since 1980. For the first few years, Labour ran a surplus. They then ran a deficit that, until 2008, never exceeded 3% of GDP. If you add up the values, Labour borrowed about £180 billion between 1997 and 2007. Even so, in 2007 public debt as a percentage of GDP was still lower than when Labour took over from the Tories in 1997.

UK deficit since 1980

UK deficit since 1980

Now, I should make it clear that I don’t think the Labour years were particularly good. I think they moved too far to the right and probably had policies that would have been similar to those of a Conservative government. However, to claim that our current crisis is a consequence of 13 years of overspending and excessive borrowing by Labour is being extremely economical with the truth. I think we should be doing our best to not let people get away these kind of statements.

Global inequality

I’ve written a number of times about income inequality in the UK. As I’ve mentioned before, since 1980 the top 1% have increased their share of the income from 8% to 15%, while the top 10% have increased their share from 25% to 31%. There has clearly been a significant increase in income inequality in the last 30 years or so and I find it amazing that, given the current financial crisis, noone seriously suggests that we should be trying to drive income levels back to what they were in the 1980s. I appreciate that this is not easy, but it would allow most to earn a living wage, probably increase employment, and reduce the benefits bill (since fewer would require benefits). Instead, we’re trying to solve the UK’s current financial problems by cutting benefits for those on low incomes.

Anyway, the reason I decided to write about this was that I noticed today an interesting report by Oxfam claiming that the Annual income of richest 100 people enough to end global poverty four times over. The report claims that in the last 20 years, globally, the top 1% have increased their income by 60%. The top 0.01% by an ever larger amount. In 2012, alone, the richest 100 people in the world increased their wealth by £240 billion. This increase is, according to the CIA world factbook, about the same as the GDP of Portugal. I find this staggering. At a time of financial crisis, the wealthiest 100 people can increase their wealth – in a single year – by the GDP of a Western European country with a population of 11 million.

One problem, I find, with this type of issue is that it is often perceived as some kind of debate about capitalism versus socialism. It is not. It is really a debate about how best to distribute income in a modern society. I have no issue with those who are creative, hard-working, and who contribute most to economic growth being rewarded more than others. I do think, however, that there needs to be some balance. I understand that global wealth can increase, but it doesn’t appear to be doing so fast enough to accommodate the rise in income of the top 1% – at least not without a corresponding loss of income for those on the bottom. Is it morally defensible for the top few percent to take an ever increasing faction of the global income while millions are living in poverty. Noone’s asking the top few percent to become poor. All that is needed is a recognition that increasing their wealth by an amount comparable to the GDP of a major nation might be questionable during these difficult financial times.

I don’t know how to do anything about this. I think the problem is our governments. The wealthy clearly have an influence on government policy. In some sense this is natural. As their wealth increases, it seem clear that this influence will increase and they will do their utmost to dissuade governments from doing anything that might inhibit their ability to further increase their wealth. This seems like a horrible feedback loop that could be extremely dangerous and damaging to world stability (as suggested by Oxfam). To me, governments should be aiming to have a damping influence on this feedback loop, and they seem very reluctant to do this. It seems amazing to me that, in what are regarded as democracies, we have governments that seem to be following a path that will increase the wealth of a tiny fraction of the world’s population at the expense of the wealth of the majority that they are meant to be representing. I don’t really know what else to say, but I do think that this could become a very big issue in the not too distant future if we don’t start acting to redistribute wealth in a more equitable way.