Evaluation, statistics and OR

What price the oil economy?

The BBC and France24 both have stories today about the price of oil being near $99 per barrel, and instead of the usual downturn in barrel price at this time of year, there is indeed a concerning upward drift in oil prices.

Some things mitigate against this - oil is priced in US dollars, yet for both sterling and the Euro, the dollar is weak and therefore the worst of the price rises are ameliorated.  Consider for a moment how the UK would be faring if oil was priced in Euros, with the pound at a record low against the Euro (not one that is making headlines in the UK currently, but for a number of us, it is THE most important indicator at the moment)?

The weak dollar is therefore a good thing for the UK, even if exporters are concerned, as the UK economy is fuelled, in every sense by oil.  Power is generated using oil and gas - we closed the coal mining industry in the 80s if you recall.  People get to work and to school by car - the BCC is right to say that public transport is not fit for purpose - there aren't enough routes outside the main hub and spoke systems, trains are overcrowded and delayed, buses ditto.  From being a gas producer, the UK is now a net importer of gas, due to a somewhat misguided decision to allow power generation using natural gas in the early 90s. 

So while there is a bit of a rise in inflation (and how long until power and oil costs are taken out of the calculations?), the impact is not as great as it might be.

France is in a similar position, in that 80% of it electricity is generated by nuclear power, but benefits from having less of a commuter mentality.  Apart from Paris, which is different to the rest of France on so many levels, the average French worker assumes that they will be able to go home for lunch if they want. 

In sectors where working away from the business base is required, construction for example, the assumption is that you will get an allowance close to 10 Euros for a nice leisurely lunch.  This is why you can get an excellent four course lunch with wine and coffee, though often limited choice, across rural France for about 10 Euros a head.

Because the French don't have any oil reserves themselves, and closed their coal industry about 10 years ago, they have had to import for a while, so mains gas is more limited and options like geothermal heating, heat exchangers in wells and rivers, and site specific gas and paraffin heaters are commonplace.  They also take more interest in insulation technology than the UK, and all houses being sold now have to have an energy consumption report before being put on the market.

But future scenarios are still scary - what if the US goes to war with Iran, what if the dollar regains its strength, what if Venezuela decides to stop selling oil for a couple of months (well it has had a financial bonanza recently, so why not?)?  How will our Western, oil-based economies cope? 

My tongue in cheek predictions about this scenario!

The UK will blame it all on Labour, find the responsible civil servant, sack him and then take on a big four consultancy to find a way out of the crisis (the consultancy will offer a role to the sacked civil servant on three times his original salary).

The French will go on strike.

Evaluating Urban Regeneration Policy

The Policy Exchange has launched a report this week called Cities Unlimited - An Assessment of UK Regeneration Policy, which looks at urban regeneration over the past 10 years.  While it concedes that the Labour government has been committed to improving the prospects of deprived urban communities, it argues that it has failed, in that conditions over a number of indicators have continued to deteriorate against the national average and against high performing urban areas.

I have been involved with regeneration programmes for over 13 years now, and have seen the names change, the conditions change and have evaluated a number to see whether individuals and communities have benefited.  I would agree with the authors of the report that the number of new schemes and ways of allocating money are too numerous to allow for simplicity and would almost go so far as to say that this proliferation has been a nice job opportunity for quasi-civil servants and consultants.

I would also agree at the macro level that the areas that have received huge amounts of funding are still in need of huge amounts of funding.  I would suggest that those areas that have received funding and are now hugely prosperous (parts of Leeds and Canary Wharf spring to mind) are also now fairly devoid of the people and the industries that were there when the money started to flow in.  Sometimes regeneration funding has the perverse effect of displacing the problem, and concentrating the deprived into smaller and more difficult areas.

With most of the target areas for these regeneration funds, the cause of the problem is significant structural change - a hundred years ago that might have been the move from the land to towns, but now that change is from a manufacturing and production base to a services base.  While funds have been pumped into places like the Black Country, North Tyneside, Sheffield and Liverpool from public sources, funds have also flooded into prosperous areas like Milton Keynes, Reading, Swindon and Edinburgh from private sources.

The report might argue that the poor are getting poorer on comparisons to national averages and prosperous areas, but the rich are also getting richer, and the speed of that change is not being assessed in the same way.

If I were trying to look at this scientifically, I suspect I would have compared to the national average, but I would also have tried to compare with a deprived area that didn't receive the big pots of money, to see how they were doing.  For example when I was trying to gain regeneration funds for local areas, it was easy enough to prove that parts of Kidderminster and Bromsgrove were at levels of deprivation comparable with Hillfields in Coventry or New Town in Birmingham, just the numbers were smaller.  How have Rifle Range and Charford fared over the past 12 years?

The other aspect to this is that the causes of the need for regeneration are still there and still influencing need.  Industrial decline and the movement away from manufacturing has not stopped just because funds are being put into community and economic regeneration.  Coventry has seen some spectacular successes in urban regeneration, but at the same time, global pressures have seen the closure of the Peugeot manufacturing plant at Ryton, the collapse of Marconi, ripple effects from the closure of Longbridge and the movement of production of Jaguars away from Browns Lane.  How much worse would conditions be in Coventry if they hadn't received Single Regeneration Budget, Neighbourhood Renewal Funds, Local Economic Growth Initiative and European Regional Development Funding?

Staying on rates

I am known for being a pedant, particularly about numbers and their use or abuse.  Today's rant is about pedantry when using jargon and jargon that is highly emotive to boot.

The article on the BBC that has caused today's raised blood pressure is sadly not the brief but depressing article on GCSE languages, that would normally have me ranting for Britain (or England at least).

Today's annoying article is a supposed scoop on raising the school leaving age to 18, which will apparently feature in the Queen's speech.  If that were the case - if young people were going to be forced to stay in school until the age of 18 - it would be truly radical, I expect it would entail a fairly radical increase in school costs (particularly for those schools currently without a sixth form), and a pretty large increase in family allowances as well.  It would be expensive.

It would also be unpopular with a large part of the non-school education sector.  The unsung jewel in the crown of English education, the FE College, would lose a large part of its full time student base, the flexibility to deliver a range of qualifications to those not aged 16 to 18, and a huge wedge of its funding.  The much maligned private training provider who supports the national apprenticeship system would also find their funding cut, their market dried up and would be looking at how to close without becoming insolvent first.

I think I have made my point - it would be radical, unpopular and would have serious implications.

What Schools Secretary Ed Balls is actually looking to do, is to formalise the current objective that all young people stay in some form of education or training until they reach the age of 18.  Currently about 10% of 16 year olds do not progress into education or training, but some go into work without training, while others  fall into the NEET category (Not in Education, Employment or Training). 

For years in Coventry and Warwickshire, we ran something called the Success Index, which monitored as a shared measure of success for partners in education and training, the proportion of young people in education, training and employment WITH training.  Then when NEET became the target of choice, as being not quite so difficult and being monitored at national level for Connexions performance indicators, Coventry and Warwickshire had to lower their standards.

Mr Balls - you are now advocating what we used to monitor and strive for - about time and well done.  HOWEVER can you please get the terminology right, as at least in this case it is highly important.