Christmas Reflections

Whilst Christmas is considered a Christian festival, it is thought to have been a festival (Yule) to celebrate the winter solstice. But later this became ‘Christianised’.

Most of the readings at Christmas are from the ‘Old Testament’ - Torah and the Nebiim. Some passages that are not widely read interest me particularly.

The first is Genesis God putting Adam and Eve in the Garden of Eden:

"And the Lord God planted a garden eastward in Eden; and there he put the man whom he had formed.

And out of the ground made the Lord God to grow every tree that is pleasant to the sight, and good for food; the tree of life also in the midst of the garden, and the tree of knowledge of good and evil."

He forbade Adam and Eve to eat from the tree of knowledge. Genesis 2:

¹⁶ And the Lord God commanded the man, saying, Of every tree of the garden thou mayest freely eat:

¹⁷ But of the tree of the knowledge of good and evil, thou shalt not eat of it: for in the day that thou eatest thereof thou shalt surely die.

At the instigation of the Serpent, Adam ate from the Tree of Knowledge. God rebuked Adam. When rebuking the Serpent, He said:

And I will put enmity between thee and the woman, and between thy seed and her seed; it shall bruise thy head, and thou shalt bruise his heel.

It could be argued that the use of the phrase ‘her seed’ looks forward to Jesus who did not have an earthly father, so all the genetic information would have come from Mary. Hence her seed bruising the Serpents head.

One of Jesus’ Jewish companions, John writes: In the beginning was the Word, and the Word was with God, and the Word was God.

And in documenting the revelation he believes God gave him, John refers to Jesus as saying of Himself:  I am Alpha and Omega, the beginning and the ending, saith the Lord, which is, and which was, and which is to come, the Almighty.

Also, Revelation 3:11 - I am coming soon. Hold fast what you have, so that no one may seize your crown.

Outsourced Britain

Outsourcing has many advantages. Economies of scale perhaps as the outsourcer provides similar services to a variety of similar customers. The latter could include central or local state institutions. Also the need for capital investment required were the services to be provided in-house would be borne by the outsourcer.

Companies providing outsourced services would argue that they take on a variety of hidden costs – recruitment, insurance and capital investment to provide outsourced services at a competitive price.

A question that some believe is not asked often enough is whether the outsourced service really is necessary. Clearly the barriers to setting up and running a service in-house are considerable. One of the benefits of outsourcing is that this lead time / initial investment in expertise as well as capital investment is not there. But it can also lead to buying an outsourced service on the basis of ‘it seemed like a good idea at the time’. Also there is the temptation for the person commissioning the outsourcing, to succumb to pressure / inducements.

Whilst I may be mistaken, I feel often that much of the work I come across may not have been absolutely essential; some examples are below[1].

Between 2007 and 2010 I noticed that the pavement on Shaftsbury Avenue was changed three times. From the tar surface to large square paving stones; then to small bricks.  The final change was changing the straight edge of the pavement into curves. What were the benefits of these changes in quick succession? Were they really necessary?

At my local Network Rail station, I’ve noticed many changes. I wonder whether all of them were necessary. For example ticket machines were installed in the centre of the ticket area. In a few years, these were then removed and moved a few feet to other locations in the ticket area. Now they are installed against the walls. For over thirty years passengers went between platforms via ramps which lead, at one end of the platform, to a tunnel and at the other end to a walk-way which lead to the ticket gates and the ticket area. These tunnels were closed and replaced by a bridge which had steps and lifts. Also the ticket barriers were moved a few inches nearer to the ticket area – requiring a considerable amount of work. In addition short pillars (supporting nothing)  have been put on the walkway facing the car park Were these changes really necessary?

Staying with Network Rail, at other stations I see sometimes contractors in high-visibility jackets in groups of three or four not doing anything actually. Perhaps I am missing something?

An aspect of outsourcing that may not be widely appreciated is its consequences for migration. Many staff members of outsourcing companies may be willing to work for low wages because once five years have elapsed, one can apply for permanent residence in the UK.

Moving some outsourced activities into the state can have beneficial effects: continuity, local employment, retention of expertise and intellectual capital.

But outsourcing can be right in many situations – for example when smaller companies or state enterprises wish to benefit from wider expertise and economies of scale and scope that the service provider brings. For these benefits to be realised, it must be managed properly.

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[1] Other examples: Leadenhall Street – repeated resurfacing between 2011 and 2014; Croydon - Streetlights: silver lampposts replaced by black lampposts. Then some silver lampposts restored again.  But finally black lampposts working.

Reflections on Brexit

Reasons the British Public voted for Brexit include: the UK’s contributions to the EU; regulation that British businesses have to comply with; and most importantly, the influx of migrants.

The British Public, understandably, react unfavourably to: hearing languages other than English being spoken widely; foreign styles of dress, e.g. headscarves and burkas; and behaviour not aligned with British cultural norms.

But, much of the migration that evokes unfavourable reaction, originates from sources other than the EU. ‘Outsourcing’, which has increased greatly, partly as a result of privatisation of formerly state-owned industries, is an important source of immigration.

Outsourcing companies can offer competitive pricing on the basis of employees on low pay recruited from India, Pakistan, and African countries. Such employees are allowed visas almost as a matter of course. These employees are prepared to work on very low pay for five years because at the end of the five-year period, they can apply for ‘Permanent Residence’. After they receive permanent residence, they leave their low paying employers (who provide the outsourced service) and get a job at normal pay. The outsourcing companies then replace them with further low paid employees.

Outsourcing of visa application handling in British Embassies and High Commissions overseas is another source migration. There are stories that, whilst applications directly via the High Commission / Embassy, who sends the documents to an outsourcing company (sometimes in a different country) can result in a long delay and possibly refusal, going via a travel agent and paying say 10 to 20 times the standard fee, results in visas (and it is said even British Passports) being issued rapidly. The explanation for this is thought to be that the travel agent offers inducements to the visa application outsourcing company which results in their ignoring normal procedures / checks. Moreover, where the visa application goes directly to the outsourcing company, the company tends to be overly punctilious and delays responding (in the hope that applicants will go via a travel agent who will offer inducements).

An important benefit of being in the EU is that financial firms located in the UK can ‘passport’ i.e. offer their services in the EU without the need for regulatory authorisation (which can be a costly and lengthy process) in those countries. Will this survive Brexit? Moreover, by being in the EU we can influence regulation to take account of the different structure and wider range and scope of financial services in the UK. Hitherto this has encouraged overseas financial firms wishing to trade in Europe, to locate in London to take advantage of: the trained workforce: presence of the world’s leading banks, investment firms and insurance companies; and the infrastructure that provides a full range of services and facilitates financial innovation; and then passport into other EU countries.

To ensure that as many of the benefits remain, perhaps we should make some technical advisors available to the European Commission, so that proposals reaching the Parliament / officials will take account of the UK’s needs including the of nature businesses such as financial services. When I was an advisor to the European Commission, I was able to explain the practical aspects of the greater range and scope of financial services in the UK and ensure that Directives took account of this. Subsequent lack of engagement has resulted in EU regulation such as CoREP which requires even three-man proprietary trading firms to fill in the same 27 spreadsheets worth of data (about 25000 items) that the major banks have to and send the returns to the European Banking Authority.

Ideally though, have a second, fully informed vote and continue as a member of the EU.

The City of London - after Brexit

City of London - Post Brexit

At present the City of London is the world's leading financial centre. Its origins date back to the Roman conquest of Britain in AD 43 and the settlement of Londinium. The Roman historian Tacitus described London as 'a town of the highest repute and busy emporium for trade and traders'. 

London's development in the Middle Ages as a port resulted in it becoming populated by merchants who became increasingly wealthy. The merchants used their wealth to provide finance. Following the advent of the joint stock company in the 17th Century, the City became a burgeoning financial financial and commodity market place. Names of City streets such as Bread Street, Milk Street and Fish Street indicate the nature of the markets in those areas. The markets today trade commodities, shares, bonds, derivatives on exchanges (usually electronically) as well as a very large range of instruments over the counter. 

Some reasons for the continuing success of the City are:

location between the Far Eastern and American time zones

highly developed infrastructure 

pool of skills 

the ability to adapt and innovate

trading culture

Banks, insurance companies, brokers, market makers and dealers in financial instruments choose to locate in London becuse of the above reasons on the one hand and because, under current EU rules, having located in the UK, they can 'Passport' i.e. offer services in Europe without the need to get regulatory approval from the EU countries they wish to operate in. Therefore it is important that 'Passporting' continues if possible after Brexit.

But Frankfurt, Luxembourg, Paris and Dublin would like to migrate the financial services business that takes place in London to their own centres and will seek to stop Passporting after Brexit. 

Arrangements to mutual advantage of London and the other (hitherto competing) European financial centres will have to be developed.

The UK Prime Minister or senior civil servants speaking to their counterparts in Europe is unlikely to yield sufficent sustainable benefits to London / the UK.

If the UK were to send the European Commission, say five technical advisors, free of charge, the options that would reach senior officials / members are likely to have been constructed with sufficient ingenuity and flexibility to be of mutual benefit.

When the Investment Services Directive was being drafted, I was the sole technical advisor on financial services to the Commission. I was able to help drafting to take account of the greater range and scope and different structure of financial services in the UK.

Subsequently that degree of technical involvement doesn't seem to have taken place. For example the CoREP directive requires even three man proprietary trading firms to fill in the same 27 spreadsheets worth of returns that a major bank does. Moreover the returns have to be converted to XBRL and sent to the European Banking Authority. For Europe, this makes sense because in Europe, banks undertake the business undertaken by brokers, market makers and small proprietary trading firms in the UK. But it does not make sense for the UK. 

Appropriate action does need to be taken quickly to preserve the pre-eminent position of the City post Brexit.