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Growing Pains

Nik Darlington 8.15am

The Chancellor, George Osborne, will use a speech to the Conservative party conference hall today to announce, amongst other policies (an Osborne speech isn’t an Osborne speech without a few tricks up those sleeves) a further freeze on Council Tax until 2013.

Mr Osborne is also being prompted from all sides - stage right and left - to reformulate a strategy for growth.

His predecessor at No.11, Alistair Darling, wrote in the Independent on Sunday that the Chancellor is “not daft” and will be acutely aware, to use a nautical analogy of which the sailing lover Darling would approve, of the need to change tack. It won’t, of course, be presented as a “Plan B”; but no less a plan must be set out today.

The Labour party, Ed Balls in particular, has been playing on growth for some tome. Over the weekend, a pointed piece of advice has come from within the Conservative ranks. The Chairman of the powerful Treasury Select Committee, the usually discreetAndrew Tyrie, has insisted that growth plans are not working. He also attacked the ring-fencing of budgets such as healthcare and international development. The MP for Chichester is not alone on his party’s benches in being critical of the Government’s strategy. The mostly youthful grouping of Tory MPs dubbed as the “New Right” are demanding tax cuts to boost spending power of individuals and businesses. Described as economically and socially liberal - and ferociously ambitious - the “New Right” is drawn largely from the 2010 intake and includes historian Kwasi Kwarteng and Matt Hancock, a former (some might say current) advisor to Mr Osborne.

And this morning, the new director of the Institute for Directors, Simon Walker, was doing the round of TV & radio studios calling for a more explicit growth strategy, tax cuts, and a massive outlay on infrastructure such as roads and railways - a “ring-fenced” outlay, perhaps a more veiled criticism of ring-fencing other areas of spending.

Much has been made of the potential growth impact of High Speed Rail. The Government is also banking on a housing boom to stimulate economic activity in a nation reliant on its construction and property sectors, hence the acrimonious efforts to reform planning policy.

Francis Maude, the Cabinet Office minister and Paymaster General, mentioned both yesterday in a provocative interview to the IoS. Notwithstanding the curiosity of appearing to disown the ‘big society’ having only 6 months ago been arguably its most articulate advocate after the Prime Minister, Mr Maude went on a loose diatribe against opponents of HS2 and the National Planning Policy Framework (NPPF) in its present incarnation.

The National Trust (membership approaching 5 million) and other preservationist campaigners such as the CPRE and Woodland Trust are peddling “bollocks”, according to Maude. It is just the latest in a plethora if ill-advised inflammatory comments from Government ministers. The PM has offered a more conciliatory tone but he is being advised that the Tories’ political positioning will benefit from fisticuffs with the forces of darkness that are the National Trust, Jonathan Dimbleby and Bill Bryson.

And opponents of High Speed Rail are opponents of growth. A long thin island like Britain has to have it, he says.

As I write this on my way to catching a train to Manchester, I can’t say I’d be that bit more excited in the knowledge I’d reach my destination a few minutes quicker (and probably for a much higher price). I can’t say either that being in transit is stopping me from thinking purposefully and getting my work done.

On nearly every currently available basis, HS2 is promising to be a weaker option than alternatives, such as upgrading the West Coast Mainline. High Speed Rail to Edinburgh is a different matter, as it might genuinely dissuade people from flying to Scotland, but that is decades off.

And the planning shakeup is even worse. Ministers have bought into a development lobby fudge that the planning system is inhibiting growth, when limited access to credit, slack consumer demand and developers’ intransigence (greenfield gives higher profits) are the immediate barriers.

A more encouraging move is that announced yesterday by Grant Shapps, the housing minister - the Government will make available state-owned land for 100,000 houses on a “build now, pay later” scheme.

But if this Government really wants to stoke the economic furnace and provide infrastructure this country desperately needs, it should be looking seriously at Boris Johnson’s idea for a new hub airport in the Thames Estuary. Instead, ministers appear to view it with an air of amused disdain.

Britain needs more airport capacity and fast. An extra runway at Heathrow ought to be entirely off the table, whatever its owners seem to be hoping. Stanstead and Gatwick are unviable for expansion for environmental and logistical reasons.

A new airport in the Thames would cost as much perhaps as £50 billion but the effect on economic activity in those relatively depressed areas of Kent and Essex east of London, and beyond, would be immense. The environmental impact would be a concern but the least bad amongst the various trade-offs available and almost certainly preferable to the damage that would be caused by carving HS2 across the middle of England.

It would send out a message of a measure of ambition. If Mr Osborne wants an infrastructure driven dash for growth, he should fly east.

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There's no easyJet solution to higher education

Nik Darlington 6.00am

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I used to work for a strategy consultancy advising universities - amongst other organisations such as car manufacturers, telecoms and big pharma - how to set their prices. The higher education sector was a vastly different challenge, a million miles away from four-door saloons.

Or was it? Whilst there are obvious differences in the purchase decision-making for a university education, it was realised that the actual pricing models could be transferred to HE.

Take a new sports car or breakthrough drug. They both involve one-time, high-risk purchases making the costs of failure very high. These are hugely risk-averse industries that need to get their pricing right from the off, based on robust evidence of price and demand. Similarly, higher education has a long cycle of decision-making (the annual recruitment process) and institutions have to get their pricing right or lose out (see the lesson of Leeds Met). Moreover, there are huge potential costs to the student if they make the wrong university or course decision. Another huge similarity that must be recognised is that like for luxury goods, when choosing a university students are making a ‘lifestyle’ choice which is emotional as well as functional. Pricing has to accommodate these 'soft’ factors too.

So we brainstormed. We started with the low-hanging fruit then drilled down and really looked under the bonnet. We thought (blue skies only) outside the box. Many water cooler moments later, our door was open to some issues, firmly closed to others. We factored in everything possible, from financial cost to political achievability.

One of the best ideas was to translate 'bundling’ to the HE context. Not only is it straightforward and very common (think meal deals and broadband with your TV subscription), bundling is also widely practised in US universities. I was very pleased recently to see that Coventry University will be doing just that and bundling “extras” such as printing credits and textbooks within tuition fees.

Other ideas, such as variable fees across 'product’ (i.e. course) ranges, are also being tried out by several universities from next year, instead of pricing everything at £9,000.

There were some sound business ideas on this strategic staircase that didn’t quite have enough bandwidth - with clients, at least. Surcharges, for instance, are smart on paper and expected in industries like airlines but they struggled to fly with university executives. It is already commonplace in the US and in private universities (such as BPP) in the UK to have add-ons like exam fees and registration charges. As public universities increasingly ape private counterparts, their time might yet come.

Above all, one idea proved impossible to sell: yield management. In its most sophisticated sense, yield management is when businesses like hotels and airlines vary their pricing - often in 'real time’ - to adapt to changing consumer demand. As we are all aware, the price of an aeroplane ticket varies hugely depending on the popularity of the route, the date you make your booking and how many seats are available. Could this be translated to universities?

This - or a less complex version of it - appears to be what the universities minister, David Willetts, was floating last week, by implying that universities could discount their tuition fees during clearing in order to drive demand for undersold courses. And, to answer the question - could it work? - in one word: “no”.

Offa rules say universities would then also have to discount fees for all students already on affected courses, but of course if the Government wanted to bring this idea to the table then the Offa rules could be altered.

We concluded that yield management could not work in universities principally because of institutional aversion. Like shadow universities minister, Gareth Thomas, I agree that “you can’t treat university like a lastminute.com holiday”. We received a lot of push-back from university executives for this exact reason (though then the comparison most often made was with easyJet and Ryanair). It would be unfair for two students to sit next to each other in the same lecture hall, one having paid £9,000 and the other £6,000, for example. And it would mean that students focused too much on the price tag of a course, instead of a myriad of more important factors such as university reputation, employability, facilities, satisfaction, teaching hours etc.

Overall, what we found is that in a more deregulated tuition fee environment, as now exists, universities must think differently about their pricing and marketing. There are no easy solutions to higher education. That includes easyJet solutions.

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Muslim students cry usury to avoid interest on student loans - is this fair?

Nik Darlington 6.00am

The Independent reports that an organisation representing Muslim students in Britain is protesting against the coalition government’s reforms to university finance.

The Federation of Student Islamic Societies (FOSI) warns that young Muslims could be forced to sacrifice higher education as a result of the higher rates of interest under a new university loans system. The Indy’s Poppy McPherson writes:

Under some interpretations of Islamic law, the acquisition of loans - particularly those which accrue interest - is forbidden. The new system requires graduates who earn above £21,000 to pay interest levels of up to 3 per cent above inflation. The National Union of Students (NUS) has warned it could be two years before a suitable system is arranged [to accommodate Muslim students].

A FOSI spokesman said:

Under Islamic law interest is seen as something that is prohibited. Previously, the interest rate was at the market rate of inflation. The problem now is that the interest is above the market rate. Because the rate of interest is above the rate of inflation, it is quite blatant usury.

The first point here is also blatant: in Britain, we do not operate under Islamic law. The student finance system has to be devised according to British laws, not those of a religion observed by 3 per cent of the UK population.

Second - and less comforting, but historically apt - thoughout the ages, the spiritual has had to adapt to the temporal (and of course vice-versa). Usury, or the charging of interest of any kind (not necessarily excessive) on a loan, was outlawed by Christian churches for hundreds of years. The first instance of secular law overriding the church was when Henry VIII’s parliament passed ‘An Acte Agaynst Usurie’ in 1545. Islamic banks have already devised a number of methods of rewarding savers, such as entrance into Premium Bonds-style lotteries; or direct investment is encouraged instead of loans.

The third point is most pressing to the present situation of universtiy finances. The Government takes a sizeable hit on the currently interest-free student loan book. The Browne Review identified student loans as a straightforward and fair way of reforming university financing and shifting the burden from the taxpayer to graduates. Removing what was effectively a middle-class subsidy was the right thing to do. The state should not be handing out cash that in some cases will be invested in ISAs or unit trusts, so providing an easy return for students who don’t truly need their loans.

The money to finance universities needs to come from somewhere. The nervous fees and funding fudge contrived by coalition ministers means that not enough is going to come from students. HE institutions will still rely for some years to come on direct grants from the state. For the state to afford this, there has to be more of a contribution from those who can afford it most - the graduates earning enough money to pay off their loans, with interest.

One could just charge Muslim students more for their higher education in the first place, and allow them to forego the payment of interest at a later date. The tuition fees policy of the Scottish Government is an example of how the authorities can get away with discriminating against students within the same state without blinking an eyelid.

If Muslim students do not want to pay interest on their student loans because doing so would contravene their faith, then I have some sympathy for them. However, we cannot have a situation in which some graduates end up paying less because they happen to observe a different religion to their peers.

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We know nothing, except that we are all to blame for this

Nik Darlington 8.45am

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Barking, Birmingham, Bristol and Bromley. Camberwell, Chelsea, Clapham Junction and Croydon. Fulham Broadway. The King’s Road. Sloane Square. Notting Hill. Peckham High Street and the Isle of Dogs.

The rioting and looting was indiscriminate, random and terrifying. Shops, cars, police stations, even fire engines and private homes - old women asleep in their beds - came under attack.

It was into the early hours before I could feel confident that the rioting raging as nearby as Ealing and Wandsworth would not reach Richmond. With police cars speeding past at regular intervals, away from us and towards London, there would not have been much left to stop them if they had happened. But then the closest Richmond has got to a riot was when Waitrose nearly ran out of pappardelle.

What do we know? Well, we know more about what we don’t know, than what we do know.

The attacks have departed any rhyme or reason. What began as an apparently peaceful protest (how much of an oxymoron is that becoming?) in Tottenham after an alleged criminal was shot by police, has since developed into a melee of motivations. We can begin to speculate why people are taking part in variegated mayhem, but you would be foolhardy to assert.

Police cuts? True, police morale is at rock bottom, but the gutting of police forces that certain people are blaming for the riots spreading out of control is not a plausible explanation. It hasn’t happened. [11.07 update: Prime Minister confirms 16,000 troops on street tonight and all police leave cancelled.]

Lack of force dealt out to the rioters? No water cannons? No rubber bullets? No armed forces? A bizarre irony of last night was listening to the sort of people who spend their lives berating the EU saying our law enforcement should be more like Europe. I’m not convinced. Cars, businesses and property would have been vandalised even if the entire cavalry had charged in, and possibly inflamed tempers further. The pictures in your newspapers and on your TV screens this morning would have been worse.

Social media’s role? Allegedly, much of the co-ordination (however inappropriate that word is in this context) of the riots was conducted via BlackBerry Messenger service, which is popular with young teenagers. The people tweeting last night were shocked onlookers and intrepid, tireless hacks. We don’t know (or at least I don’t know) whether Twitter was used to spread the destruction because I don’t follow any rioters. As Hugo Rifkind wrote in the Times last week, Twitter is not as open as we think and we mostly speak to ourselves.

However much the riots displayed Twitter at its best - a rapid gatherer of information, faster and more effectively than any traditional news source - the cold light of this morning is displaying Twitter at its worst - a rapid disseminator of vapid tommyrot by people with little useful to add.

This is not about a clash between ‘right’ and 'left’, 'authoritarian’ and 'liberal’, or any nomenclature you care to mention. Some Conservative MPs are blaming this on “13 years of Labour”. As tempting as that seems judging by the age of some of the rioters, it is wrong, ignorant and unhelpful. Equally, for Ken Livingstone and other Labour party politicians to blame this on “Tory cuts” is pitifully opportunist. Indeed, it is times like this that party politics can be most damaging and counter-productive. It is the lazy outlet for those who would rather not search for honest answers.

Variously, so it is said, the Government, the police, the Tories, the Labour party, the Deputy Prime Minister, the Prime Minister, the Mayor of London the BBC, the public, are 'out of touch’.

If you believe this, I have news for you. The only conclusion we can safely draw is that we are all out of touch. I am out of touch. You are out of touch. We are out of touch with ourselves and with each other; with our neighbours, with our authorities and, by the sight of so many children taking part in the riots and looting, within our own families.

So point your fingers. Whoever you choose to impute, you will, sadly, be right. Because we are all to blame.

Follow Nik on Twitter @NikDarlington

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The most sensational result in British by-election history?

Nik Darlington 10.22am

George Galloway has completed an astonishing return to Parliament with a runaway win in the Bradford West by-election.

With typical understatement, Mr Galloway described it as a “Bradford Spring” and “the most sensational victory in British political history”. Here he is, in his inimitable - and it would be churlish not to say captivating - style.

Comparing this win with the Arab Spring - a passionate mass movement that swept the breadth of an entire continent and has claimed thousands of lives in the name of giving the unvoiced a voice - is the type of unbounded arrogance few can rival, and a hallmark of Mr Galloway’s political career.

Yet in pushing Labour into second place by ten thousand votes, in a seat that Ed Miliband and his party fully expected to win, Mr Galloway has provided a bitter bookend to a week in which the Labour leader’s star had begun to shine so brightly.

It is a frightful result for the Tories too, considering how well the party performed here in 2010 (though we should be thankful the rumours of falling behind Ukip did not materialise). And the Lib Dems lost their deposit, though these days that is hardly surprising.

But David Cameron et al will surely be smiling this morning after a torrid ten days. This was never a seat the party truly expected to win, and Mr Galloway’s stunning triumph poses more questions for his former colleagues in the Labour party than the Tories upon which he wished nothing but “perdition”.

All things considered, this is potentially a great moment for Bradford West. Few fates are more dispiriting than being one of those desperately safe urban Labour seats, taken for granted by the party’s machine. The constituencies that vote in Labour candidates with a resigned shrug year after year after year, candidates who pledge social justice, urban renewal, progressive politics and fair chances, yet deliver little.

If Mr Galloway can change the habit of a lifetime and put Bradford West before his own vanity, he could be precisely what the people there need. Someone to stand up for them as a community, not a fiefdom. Someone to shout stirringly on their behalf, instead of condemning them to suffer under a failed party line.

If Mr Galloway can manage to do this, and few have the charisma to manage it better, then he deserves our (very much qualified) support.

Follow Nik on Twitter @NikDarlington

Tory Reform Group response to Ed Miliband

Nik Darlington and Alexander Pannett 2.15pm

Today, Ed Miliband claimed that the Tory Reform Group was against reform of the NHS.

Mr Miliband was referring to an article written by Craig Barrett, an independent contributor to Egremont, who suggested that Andrew Lansley, the Health Secretary, should accept defeat over the Health & Social Care Bill.

Contrary to Mr Miliband’s claims, Craig’s article specifically encourages NHS reforms:

We ought not consider the NHS purely in financial terms because the benefits to the nation’s health and well-being must outweigh the mere cost. Yet that is not an argument for it to remain unchallenged or unreformed. The NHS must be continually analysed and rationalised to ensure that it is fit for purpose in the modern world.

In a further response, Tim Crockford, TRG Chairman, has the following comments for Ed Miliband:

“The Tory Reform Group supports the health reforms and competition within the NHS. For 13 years, the Labour Party failed to make the proper and necessary reforms to our NHS.

The statement by Ed Miliband at today’s Prime Minister Question Time, as to the view of the Tory Reform Group, is false and a complete misrepresentation. Quoting an extract from an article by a TRG blog contributor and attributing this to the Tory Reform Group is further evidence of how desperate Ed Milliband and the Labour Party have become.”

Victoria Roberts, TRG Deputy Chairman, said:

“Ed Miliband has misrepresented the TRG in a desperate attempt to gain credibility for his own misguided plans or indeed lack of plans.

The TRG has been a staunch supporter of David Cameron and the Coalition’s proposals - we were the first group publicly to call for the coalition to be formed. We have long supported reform of our public services to improve service delivery and standards.

Competition is vital to that reform. Miliband’s opposition to competition - cloaked as it is in protests about the costs of structural change - just demonstrates his utter failure to grasp the magnitude of the issues facing our NHS. Does he have any proposals on how to tackle the cost of ageing and the cost of inefficiencies? Perhaps his time would be better spent thinking of answers to those questions rather than practising quips drafted for him by his researcher to recite at PMQs.”

At the end of it all, the final News of the World has caused quite the perfect storm

Nik Darlington 6.03am

It was heavier than I expected, and thicker, just like my usual choices tucked under the other arm (I won’t reveal which: some mystery is healthy in any relationship).

After 168 years in the business, the terminal edition of the News of the World is weighed down by more than the gravity of the present situation. It is steeped in history, humour, hurt, hubris and boundless self-congratulation.

Articles are laden with badly fitting hyperbole, such as comparing England’s one-day cricket captain Alistair Cook with Martin Luther King, with as much tact and credibility as Ed Miliband did with himself. The pages are pockmarked with “Why I’ll miss my NotW…” snippets, like an unsightly rash. The headline on page 4 - “We’ve saved children from paedos & nailed 250 evil crooks” - shows the journalistic finesse of a bull in a proverbial purveyor of oriental crockery.

It might call itself the News of the World but there’s scarcely any international coverage to speak of . A tacit nod to what is happening beyond these shores is foundin six text message sized chunks on page 24. One of the most widely read English language newspapers in the world heralds the momentous landmark of South Sudan’s independence with: “Salva Kiir was sworn in as the president of South Sudan, the world’s newest nation, in front of tens of thousands of supporters.” Even the arresting news that Nigel Mansell is turning his hand to magic tricks is given more column inches.

To be fair, the News of the World might be a coarse, shrill and Pecksniffian tabloid but those people who say it was more than just a newspaper are correct: it was an overwhelming force, a historic institution read by nearly 8 million people each week after WW2 and just under 3 million in a modern era of declining print readership across all major titles. Whilst the NotW’s own circulation decline has been steep, no other Sunday paper comes close.

Next weekend, where will those 3 million readers go? The mooted Sun on Sunday? News International will take the gamble but competitor titles will hope to hoover up its readers. When I opened my copy this morning, the first things that fell out were two advertisements, one from the Mail on Sunday and another from The Sunday Mirror, both saying broadly the same thing. This was the MoS’s:

Dear Reader

As you will have heard, this is the last issue of the News of the World.

We want to ensure you have a great newspaper to enjoy on a Sunday - and would like to offer you The Mail on Sunday for the next 6 weeks for just £1.

We hope you enjoy our newspaper.

The Sunday Mirror’s pitch was for “a newspaper that is all about your life, your concerns and your interest”, “a real family newspaper” at “a special discounted price of 70p with these vouchers”. “We’re on your side,” writes Tina Weaver, its editor. Two fingers from Colin Myler to James Murdoch? Or just gallows humour? Either way, it shows some chutzpah from both sides.

The paper’s editorial is proud and gutsy. Printed on page 3, the admissions are laid bare, as naked as that page’s regular occupants, relegated this weekend to page 9 (in homage to the sensibilities of Mrs Brooks, the lady who protested too much, I think not).

Quite simply, we lost our way. Phones were hacked, and for that this newspaper is truly sorry. There is no justification for this appalling wrongdoing.

The two public inquiries are welcomed and there is a beyond the grave plea for clemency for the Press Complaints Commission, which needs more powers and resources but not meddling Government legislation. Self-regulation permitted the “appalling wrongdoing” but still it is prized. This might be true but the News of the World, however distant the incumbents are from earlier activities, is not the best advocate at the moment for maintaining press freedoms.

Yet it is regrettable to be too cynical about this last edition. It might have achieved the unnatural combination of schmaltz and arrogance, but one can’t help but feel a bit daunted by reading it. This is not a newspaper sitting strewn in front of me. This is a history book, full of nostalgia and newsprint from yesteryear. It is an archive in tabloid form. It prompts that rare form of excited sadness, a bittersweet emotion.

Above all, this newspaper was felt, even if it wasn’t read. Last summer, for instance, the revelations about Pakistani cricketers accepting money from bookmakers were electric, coming in the middle of a Test series, shocking people who had never heard of the News of the World, let alone read it, and forcing authorities into action all over the world.

Its power and voice were feared. Fraser Nelson writes in his valedictory column, “As MPs will tell you, a story on page 46 of the News of the World has more impact than a front-page of a lesser paper.”

Out of curiosity, I turned to page 46. “G Brown” from Cambridge had written in complaining about teachers’ pensions demands. There were other notes about costs of living and prospects for the re-united Mr & Mrs Ashley Cole. However, the main section on page 46 is the weather forecast. For today, Monday, it reads:

Rather cloudy across Scotland with a few spots of rain. Elsewhere, sunny intervals and only isolated showers.

Throughout the week ahead there will be sporadic showers but the general outlook is improving with frequent sunny spells and a small drop in temperatures.

After the stormy times endured of late and with other storm-clouds gathering in another type of Sky, that’s about as good a forecast as the Murdochs can hope for.

For now, just smile and appreciate the moment of history that rests before you. Cherish it, because this is a tabloid that won’t be lining oily battered haddock tomorrow. Having spent 8,673 editions prying into the lives and emotions of others, they could not have captured the essence of themselves any better in the 8,674th. The final edition of the News of the World has turned out to be quite the perfect storm.

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