Nick Pickles’s blog

Quite possibly the best bit of judicial insight ever in a copyright case. One Spanish judge dismissed the idea that pirated copies are necessarily lost sales, with refreshing clarity.

“it is not possible to determine the damage and corresponding compensation due to loss of benefits to the rightsholder, for the simple reason that customers of pirated copies of music and movies, when making the purchase of pirated copies, externalize their decision not to be customers of music and movies as originals, so there is no profit that could have been gained. In other words, those customers either buy a pirated copy at a low price or they don’t buy an original at a price between 15 and 20 Euros.

In any case, reversing the legal argument, it is conceivable that a customer, after hearing or viewing the pirated copy, may decide to purchase the original, finding it to their taste, so that the sale of pirated copies, far from harming, benefits the market for original items.”

Back in October, I attended an event in Doncaster discussing the impact of benefit cuts with the local community.

Unsurprisingly, one of the first questions asked was ‘which benefit would you cut first?’ After debate focused on things like the winter fuel allowance going to expats, or child benefit for the Beckhams, I suggested an alternative - abolishing National Insurance, in its entirety.

This surprised some people, but after about an hour of discussion one of the emerging themes was the complexity of the benefits system, and how it both took money away from the front line and penalised those who were less savvy with their paperwork - not to mention those who didn’t get the benefits they recieved because they were unable to navigate through the various forms. When I returned to my origional point, the idea didn’t seem quite so radical.

When NI was first established, it’s purpose was clear - a contributory system of insurance against illness and unemployment. In subsequent years it would be diluted to cover pensions and then contribute to the costs of the welfare state at large. Now, it is essentially a way for Governments to increase the tax take without increasing income tax, for that is a political line no politician ever wants to cross. (Albeit explicitly, as Gordon Brown’s 10p/20p swindle demonstrated.)

As someone who has both a PAYE tax code and submits a self assessment, I’ve been on the recieveing end of NI paperwork madness, being told almost simultaneously I wasnt paying enough and was paying too much.

Aboloshing NI would simplify the process for businesses, make the true level of taxation more transparent and put back on the political landscape the question of taxes and spending. It will of course mean other taxes are increased - probably both income tax and corporation tax, which does raise competitiveness questions - but those issues already exist when the cost of PAYE and NI are combined, something businesses of all sizes all too aware of.

Equally, it would give a once in a generation opportunity to - in theory - not just reduce but transform the  tax system back office, delivering real savings without hitting frontline services.

However, there is an interesting question here - namely, whether doing this could scupper the government’s welfare agenda.

The NPS [National Insurance and PAYE Service] is one of the key components of implementing Universal Credits, and as I’ve previously warned if this technology link breaks down, there could be a high price to pay. The live-flow of data on earnings is essential for the DWP’s system to work, something that has been worrying many who have watched HMRC’s recent IT efforts with Accenture and Capgemini under the multi-billion ‘Aspire’ project.

There has been much positive discussion about improving Government IT, particularly at a pan-Governmenal level. It will be interesting to see amid all the excitement of aboloshing NI, anyone has looked at the impact it would have on existing government systems and the wider Coalition agenda already underway.

David Cameron caused a stir in Whitehall with his ‘enemies of enterprise’ line, with GOD (Gus o’Donnell) reportedly intervening on behalf of the mandarin class.

The thing is - I think Cameron was right. And I’d go further - it’s not just enterprise, I’d suggest the coalition needs to take on the enemies of innovation. And that absolutely includes swathes of whitehall mandarins and managers.

Yesterday the public administration select committee heard from a variety of industry figures about how the way government procures and uses technology could be improved.

The comittee heard some very clear messages - existing large suppliers had become oligarghs, innovation was designed out by lead contractors once the bid was won and it seemed outsourcing providers were incapable of failing badly enough to warrant legal action or heaven forbid not being given any more work.

Bluntly, Government was a gullible and badly informed customer who failed to take any meaningful action when things did go wrong.

Sadly, it seems the IT industry body Intellect has surrendered its role as a representative body of the whole industry, in favour of defending and apologising for the large system integrators who bare a large degree of responsibility for the mess Govt IT is in, however also happen to be a very lucrative revenue stream for Intellect.

But why is innovation such a difficult task for Government? As I have argued in the past, in my view there are simply too many vested interests involved who stand to loose badly if a radical approach was taken.

In the back office, unions and civil servants cling to the status quo to protect their empire - headcount is still king for many. The pain of redundancy (and in some cases up-front cost) means staff are shifted sideways or left in defunct roles, meaning savings are not realised despite investment in technology or process improvment.

In the front office, continued state monopolies mean all the levers of social progress remain in the hands of civil servants and managers, while also allowing politically-motivated action that may not serve the public well in the long run. Equally, this blocks innovation from the private sector, voluntary and charitable organisations which could add huge value to public services.

And indeed, many suppliers - particularly those on long-term maintenance and support contracts - see any change, innovation or performance review as a significant risk to their revenue streams, and act accordingly.

So how can these interests be overcome? The public sector is particularly risk adverse, and this in itself is no bad thing. But equally, it also seems there is little willingness to find ways of experimenting and testing new ideas.

Where systems and processes have been outsourced, the state is increasingly - and sometimes entirely - dependent on the outsourcing provider for insight and expertise. Put another way, when things go wrong or policy changes, the suppliers have the state over a very pricey barrel. Government needs the skills to hold suppliers to account and procure what it really needs, not what it thinks it needs.

The key question remains where are incentives to innovate, and to drive suppliers to design-in innovation? For who in the public sector is it in their best interest to find ways of transforming the way services are delivered? And not just at a pan-government level, these people need to be embedded in departments, dealing with the day-to-day processes that have remained in place for decades.

Furthermore, the political class needs to be far more vocal in holding Whitehall to account, not only when things go wrong but also when new ideas are watered down or parked.

For the Coalition, the prize is a leaner, more efficient public sector that can indeed deliver more for less. The public are not concerned with process, it is outcomes that matter. If the outcome can be improved upon - and in the longer term taxes reduced as the defecit is dealt with - that will be rewarded with many years in Government.

So, Mr Cameron, the challenge is clear - overcome the enemies of enterprise, defeat the enemies of innovation and deliver the transformation in economic activity and public services that Britain so badly needs.

Alan McGee is not known for being shy of a good soundbite. Then again, he’s also not immune to being entirely wrong - this is the man who signed One Lady Owner, Technique, Ultra Living and Toaster to Creation, lest we forget.

His latest outburst was to proclaim “illegal downloading is murdering the music business” on an NME blog post, citing the decline of EMI as proof of this. (Sadly he neglected to mention some equally spectacular errors on the part of the label, most notably an £80m four album deal for Robbie Williams.)

Earlier this week I did a blog post for the excellent Big Brother Watch, on the promising news that an Australian court had ruled that ISPs could not be held legally responsible for every case of copyright infringement by their customers.

Some of the comments took issue with my assertion that the primary motivation of those in favour of using legislation to find and punish small-scale copyright infringers (or put another way, probably billions of under 30s worldwide who share music and films). McGee’s article also called for this, arguing the way to save the music business is to “change the legislation in this country and come down much harder on piracy.” Sadly, he misses the point. That wouldn’t save the music industry - it would save record labels as we know them, pining for the boom years of the 1980s and 90s when CDs still fetched £16.99 in the shops.

In China, 95 per cent of all recorded music is pirated. So how is the Chinese music business doing? Perfectly fine, thanks. The only difference is the money doesn’t go to businesses that look anything like the major record labels of the West.

For bands starting out today, accessing an audience is far easier - and much, much cheaper - than it has ever been. Sites like Myspace are the more high-profile examples, but the fall in cost of computers and the emergence of things like Apple’s GarageBand - a bundled piece of basic but professional recording and production software - have lowered the barriers to entry for emerging artists massively.

Equally, there are far more opportunities to monetarise their music - from brand-based partnerships to touring and festivals (both of which are a bigger industry than they have ever been) and retailing varied packages of recorded music, whether that be the deluxe packages or pay-what-you-like approaches.

This is exactly the driving force behind a very exciting deal struck by Carl Barat recently, which brings together the various income generating aspects of the modern industry, and combines that with the investment backing of venture capitalists. For Barat, the costs of production are an investment for the parties involved, arguably a far more equitable process than the debt-burden of advances.

So, to those who question the feasibility of new business models, Barat is offering an illustration of one possible way forward. Radiohead continued their own off-piste adventure with King Of Limbs, and I am sure this year will see many more experiments

The main point is simple though. The marginal cost of production for digital assets is as near zero as not worth measuring,and this is the pervasive fact that has driven a generational acceptance of piracy as neither wrong nor immoral. Neither the technology nor, I would argue the punishment, exists to reverse this trend.

Its time to stop seeing piracy as theft and embrace it as a marketing force within an entirely new way of working.

A business without capital grows slower. A business without cash goes bust. So why is all the debate about lending?

The government has made much recently of ensuring that SMEs have access to lending. Rightly so, as without access to capital investing in growth is often all but impossible. However, given we have just come out of a recession, is that really the issue for most businesses?

In reality, I expect not. Over the past few months I’ve been self-employed and the single biggest problem I faced was getting paid. My experience of working in SMEs is not dissimilar - and I expect most  businesses have not been worrying about borrowing to finance investment, but about having enough cash to make payroll.

So why don’t we do something about it?

The nature of being an SMEs is that you are dependent on being part of a supply chain. That supply chain usually led by a bigger company. When the top of the supply chain comes under pressure - say it’s a retailer needing to discount to keep hard-up customers - the pressure flows down the supply chain. Rarely is profit margin lost at the top of the chain.

One recent way this pressure has been exerted is to extend the payment period for suppliers. 30 day payment was ditched, in favour of upto 120 days. So you have to pay your staff four times before your company gets paid once. And inevitably, refusing to accept the new terms doesn’t mean you keep the old terms - it means you loose the contract.

Given most people in this country work for SMEs, it would surely be a politically savvy move to help them? Yet all we have is rhetoric on lending and access to public sector contracts - neither of which are the reason small companies fold.

Small businesses have felt the brunt of red tape more than large ones, and employment regulations add a disproportionately large amount of cost. Isn’t it time we levelled the playing field a bit?

I think we are now at a time where we need a legal payment term - perhaps 60 days - and extend unfair contract terms legislation to cover it.

It would cost Government nothing, and arguably do more to help small businesses than any other piece of legislation for decades. It would also support the development of innovative ideas and technologies, which are often born in SMEs, boosting the wider economy. Furthermore, competition would be improved as small companies would have greater cashflow security and therefore the ability to negotiate harder.

I see this as win-win for SMEs, the UK economy and corporate governance. So where’s our champion to make it happen?

The problem is, who is making that case in local papers, on the streets and in community meetings?

Already it’s clear that many labour local authorities are hitting frontline services harder than others. They blame cuts in central government funding, while offering up meagre savings as evidence of some effort towards cutting costs. Sadly it barely touches the surface - Wakefield met council, for example, announced it was cutting 1,000 but the leader continues to enjoy a chauffeur driven Audi sportscar.

There is of course a massive vested interest here - central administration is both the power base of unions, and the power base of civil servants (both in local government and Whitehall) and overcoming this will require more than the odd speech lamenting the deficit.

The problem is - who is driving the innovation?who is challenging the political posturing and supposed ‘inevitability’ of reduced services.

With constituency boundaries being redrawn, parliamentary candidates - often the de facto opposition in some areas of the country - won’t be in place until very close to the next election.

Equally, its sadly true to say some local council groups are not always the most resourceful opposition, and end up opposing everything and making no positive case for change.

The 38 degrees group can claim some credit for mobilising the public on the forest sell off issue - but here’s my concern: where’s the citizen democracy group pressuring MPs and councillors when they announce a frontline cut without first tackling waste or the back office? Who is making the case for reduced allowances, fewer councillors or scrapping glossy taxpayer-funded magazines and newspapers.

I hope central government acts on this and is far more aggressive in taking this fight to local councils cutting the frontline.

One area the government could make a huge difference is in shared services - not driving local authorities to work together, but offering a central ‘app store’ style model of back office tools. In this day and age payroll, absence management, time management, invoice receiving and payment - all can be done quicker and cheaper online.

DCLG could employ a team of specialists, working with ministerial support from one local authority to the next, scrutinising activity and offering cost saving measures.

Localism needs the public to be engaged in decision making - the real challenge is that the biggest decisions on local service delivery are too often being made without an alternative being offered.

The outcome of the next election will quite possibly depend on whether the public believe that alternative existed.

This morning, George Monbiot dropped a proverbial policy-bombshell thats annoyed pretty much everyone, myself included. Guido, Mark Wallace and The Telegraph’s Ed West have all gone to town on the article, with the word ‘facist’ being bounded around a little too easily for my liking.

Let’s be clear - I certainly do not support any proposal which would see the Government forcing people to take strangers into their home. I’ve a funny feeling neither does George Monbiot, but that’s beside the point.

But the status quo can’t really be a viable option either? House prices rocketed on a debt bubble inflated by cheap mortgages, but the underlying pressure was the gap between supply and demand growing at an alarming pace. And of course, the soaring Housing Benefit bill is a by-product of this bubble.

We need alternatives, and however much you disagree with George Monbiot at least he’s proposing something. Where are the other solutions? If he’d written an article arguing for people to be moved from under-occupied social housing to smaller properties, I can’t help but feel the reaction would have been very different.

All Governments are caught in a paradox between building houses and the feel-good factor that comes with rising house prices. Monbiot wants less building, and as a result has to come up with more radical alternatives. Those who want more building - myself included - need to come up with ways to actually build more houses.

I think Monbiot’s wrong to argue against more building. According to the DCLG, just 9.9% of Britain is “developed” with only 5.4% of the country’s land mass accounted for by residential homes and gardens. Under the last government house building under Labour fell to its lowest level since 1946, even with centralised targets driving the process.

We need an era of housebuilding, private, social and council, that will make housing affordable again. Housebuilders and land owners cannot be allowed to distort the market by strangling supply, and banks cannot be allowed to distort demand with high-risk mortgages.

In his article, Monbiot proposes four things (alongside new building) to address the problem:

• Introduce a measure of housing occupation (a “footprint”)
• End the single-person 25% council tax discount
• A tax on under-occupation (he say’s “big”)
• Expanding the Homeshare scheme

To me, the first and last are hardly controversial. While there are cost implications for the footprint, expanding an existing charity can be done without any compulsory action and might be very interesting in terms of dealing with social and sheltered housing.

The tax proposals are hardly revolutionary - council tax is a badly out-dated system much in need of reform, and issues like this highlight how unsuitable it is. The single person discount is well meaning but a short-term fix that doesn’t address the underlying issue. In terms of taxing under-occupation, it’s worth remembering that people in such properties already have higher overheads in terms of utilities and the like, so to some extent this is already happening.

It’s absolutely right that much more energy needs to be put into bringing currently derelict homes back onto the market. Cutting VAT on these renovations would help in this regard, but even if we brought all 1 million derelict houses back onto the market, we’re still 4.8m short of what the Government thinks we’ll need over the next 22 years.

Equally, this is connected to the debate about second home ownership and the impact that has on prices. I see no reason why in an age of decentralisation and local decision making local communities should be able to influence the sale of properties which will not be available on the local accommodation market (either rented or owned.)

Part of the problem with this debate is the British (perhaps English) attitude to property, and in particular property ownership. Logically, it seems perfectly sensible to move to a smaller house and reduce your overheads as your accommodation needs fall, or vice-versa as your needs grow. But for some reason, as a nation we are relatively unique in our attitude to bricks and mortar being some kind of spiritual extension of ourselves.

Furthermore, architectural practices focusing on low-rise property have barely changed in a century, save for the boom in city apartments. The suburban trend of two story buildings makes poor use of the development we do have - build higher has been a continental norm for decades.

Of course, perhaps the greatest irony will be the number of people who are up in arms about today’s article who find themselves on the same side of the argument as Monbiot when trying to stop housing development on green belt land near them.

Whether you agree with drug decriminalisation or not, shutting down the debate before it even starts doesn’t help anyone.

The comments by Bob Ainsworth - a former Home Office Minister - are certainly a notable event, as probably the most senior politician to call for an end of the war on drugs and a radical change in policy.

The last government’s sacking of Professor David Nutt as chairman of the Advisory Committee on the Misuse of Drugs (ACMD) hijacked drugs policy as a political tool more brutally than any act before it.

The Lancet’s recent report once again highlighted the scientific basis of alcohol being more harmful than many illegal drugs, while official statistics show alcohol-related deaths now exceed 15,000. Little has been heard from politicians today on this topic, yet it is the biggest public health issue as far as drugs are concerned. Obesity is already becoming an equally significant issue, with far greater health consequences than many illegal drugs.

As the widespread response to Ainsworth’s comments has shown, it seems science has no place in ‘The War on Drugs’ and indeed any debate about the potential flaws in a prohibition-led approach is entirely unwanted.

Whatever your views on drug policy - within which we must include tobacco and alcohol - not having any discussion will not help address the real problems many face because of drug misuse and addiction. There was a time when alcohol was illegal, yet now it (along with tobacco) is such a part of the social fabric few would consider reintroducing that particular tenet of prohibition.

Bill Hicks’ always said how strange many politicians take drugs and don’t enjoy them, when everyone else seems to manage a good time, and that they must have simply had bad drugs. When drug policy is being debated, it’s one of those issues when it’s patently clear that the political classes are either out of touch with large numbers of the population, or are simply indulging in spectacular hypocrisy.

I’m a big fan of the West Wing and, as so often, President Bartlett had it right when he said: “I inherited the war on drugs from a President who inherited it from a President who inherited it from a President before that. I’m not a hundred percent sure who we’re fighting but I know we’re not winning. Ten years ago we spent five billion dollars fighting drugs and we did such a good job that last year we spent 16 billion.

“Sixty percent of federal prisoners are in jail on drug charges as opposed to two and a half percent that are there for violent crime. We imprison a higher percentage of our citizens than Russia did under Communism and South Africa did under apartheid. Somewhere between 50 and 85% of the prison population has a drug or alcohol abuse problem. We’ve tried ‘Just Say No’, I don’t think it’s going to work.”

It should be recognised that the overwhelming majority of the millions of people in the UK who use illegal drugs do so out of choice. The present prohibition, while denying the liberty of personal choice, only exacerbates the criminality, violence and chemical interference that cause the real social damage. Those suffering from addiction should be afforded the most thorough support to free themselves from their addiction.

We have a drugs policy barely fit for the 1920s, rooted in social prejudice and scientific ignorance. It’s time for a real debate on this, and I applaud Bob Ainsworth for having the nerve to say so publicly and hope many more in Westminster add their voice to the call for a debate, if not a change in the law.

Ever since it became clear that public spending was going to have to be reduced dramatically, I’ve been arguing that across the public sector ‘business as usual’ wasn’t going to deliver the needed savings.

Some departments, councils and quangos have singularly failed to evaluate how they deliver their services, simply opting to cut front-line services to deliver required reductions in cost. Those responsible for this mindset have seemingly escaped criticism, when they should be held to account for a mind-crunching lack of imagination, ingenuity or indeed talent.

One department that this criticism cannot be levelled is the Department of Work and Pensions. Under IDS’ leadership they are proposing a radical re-thinking of how benefits are delivered, with the universal credit replacing tens of other benefits as part of a massive simplification of the benefits system. (51 benefits to around 5)

Quite simply, the enormous costs of administering such a byzantine system (and the associated loss of £3bn+ in errors, treble the amount lost to fraud) is exactly the sort of spending that should be focused on as ripe for cutting. Whatever your views on the reductions in benefits, the fact the administration alone runs into billions should be reason to agree the status quo isn’t sustainable.

So, now the policy battle has been won, IDS needs to deliver the reforms. And here’s where I think an enormous political risk lies, for IDS personally and the coalition.

With the last Governments’ NHS IT debacle, the criticism was often an academic exercise around how much it cost. The ‘human cost’ was not reported, and beyond the hugely unfortunate staff trying to use the systems there were no perceived ‘victims.’

Benefits are quite different. Every IT failure, delay or error will lead to inevitable stories about families unable to feed or clothe their children, tenants being evicted and the disabled being abandoned by the state. If the error is big enough, there will be public outrage on a scale not seen since the Poll Tax. Those who are most likely to live hand-to-mouth will be left empty handed. Perhaps we might see the first deaths caused by a Government IT failure.

The systems involved are currently spread across a range of departments, from the DWP itself to HMRC, The Treasury, with probably others in Health, Education and Business. It’s a myriad web of awkward, old, complex systems many of which are utterly incompatible with others.

To deliver the needed cost savings, these need to be integrated, simplified and then a new system deployed. Not to mention the modernisation that will remove as much human administration as possible, which is where the greatest cost currently lies. As much paper as possible needs to be eliminated, preferably with online services hugely increased. This needs to happen quickly to deliver the required spending reductions this parliament.

And all of this when dealing with the most complex lives, in the most deprived areas, when many do not have internet access and of course not forgetting that many in the civil service have a vested interest in this failing, either at a high level enabling them to keep the armies of staff which have traditionally been the greatest measure of ‘status’ or on a lower level, their individual jobs.

Reforms of this type have long since been the cash cow of the major systems integrators, who have made huge profits delivering systems that rarely deliver their promised functionality and always cost more than expected. Britian has one of the worst track records in delivering IT projects, and much has been written on how this track record can be improved. (And sadly all too often ignored.)

IDS should heed the advice of Edward Leigh, then chairman of Public Account Committee (PAC), before embarking on the reforms. On the DWP’s project with EDS (now HP) in delivering the Child Support Agency’s IT, he said:

“The Department for Work and Pensions never really knew what it was doing in dealing with the contractors EDS and the system was a turkey from day one.”

This is exactly the kind of project for the coalition to set itself apart from Labour’s failures and ignite the British IT industry. The same approach will not work, no matter how much the likes of Accenture, HP or Capgemini promise it will “this time” and the cost could be catastrophic, both financially and politically.

Now is the time to experiment with innovation, run a series of real pilot schemes and open the doors to the best ideas in the country. If the doors remain closed to the same club, all of whom have a vested interest in blocking innovation to protect their own profits, the public will not afford the Coalition the same acquiescence afforded to Labour’s health IT boondoggle.

If the technological infrastructure is wrong, lives will be ruined. The same approach will not deliver – the choice is whether IDS allows those for whom failure is a profitable or personally preferable option to destroy the most important reform agenda for a generation.

IDS was given a huge political trophy, gift-wrapped by George Osborne and the Treasury. The question for IDS should be why it’s ticking.