Politicians vs accountants

Posted by Christie Malry on May 7, 2012 at 7:54 pm

Ken Frost rightly picks up on Cameron's idiotic and sloppy attack on the accounting profession:

I see that Cameron is lambasting accountants again:

" David Cameron has warned that the Coalition risks being seen as a “bunch of accountants” unless it “focuses on what matters” in the wake of last week’s dismal local election results."

Would he slag off doctors in this way? Or teachers? So, why pick on accountants? We developed out of a pure market need for information that people can understand and trust. And that need is just as important today.

In fact, unless accountants can focus on what matters in the wake of the last few years' dismal financial results, our profession risks being seen as a bunch of politicians.

Wouldn't that be a shame, eh? 

Maths lesson for Eoin

Posted by Christie Malry on December 1, 2011 at 9:27 pm

The over crowding of our classrooms also emphasise how silly it is to give academy headmasters salaries of £240,000 which are more that 100% bigger than starter teacher salaries.

Here. You can be pretty sure that teachers don't earn £120,000 in their first year. In fact, a first year teacher in London earns £27,000, so that academy headmaster earns 789% more than a starter teacher. Of course, I don't really have a view ex ante as to what an appropriate multiple of a junior teacher's salary would be appropriate for the headmaster. If you went out and hired 7 teachers instead of that headmaster, would the school really run better? No, of course it wouldn't.

The rest of the article is idiotic too. Without knowing more about the way schools are run in other countries, the pupil-teacher ratio may not tell you very much. Here, schools now employ teaching assistants to help support teachers. I know for a fact - because Mrs Malry used to teach there - that French classrooms often don't have teaching assistants at all. I don't know what the position is in other countries. But when I was at school, classroom teaching was one adult per room only. Obsessing about pupil-teacher ratios, without taking into account the other improvements in staffing and pedagogy is unlikely to yield helpful results.

Update:

He has modified his calculation to say "more than 1000% bigger" than the out-of-London starter salary of £21,558. Good to see I'm having an impact.

Eoinomics and teachers' pensions

Posted by Christie Malry on November 29, 2011 at 7:36 am

Public pensions are not gold plated, and £6k p.a. is not an unreasonable sum to pay nurses, teachers, doctors, cleaners, firefighters and police personnel in their retirement.

Oh dear.

This is a favourite trick of the left, and it's an extremely devious one. The £6k figure isn't sourced (of course it isn't, this is an Eoin article),  but happily we know it because it's a number unions bring up in pensions debates. It's the average annual pension for a retired member of (some portion of) the public sector pension schemes.

Now, think of a nurse, teacher, doctor, cleaner, firefighter or policeman. You'll probably think of someone who has worked in that area for all of their life. But there are plenty of them that don't. They work in the sector for a bit and then go do something else - perhaps have a baby, or move out of the public sector altogether. When they retire, their pensions are included in the average pension of a public sector worker and, in doing so, drag down the average. So it's daft and totally misleading to just look at the average figure without digging behind it some more.

While many people might think £6k is a fair pension for a career public sector worker, they might be horrified to find out that the true figure is 2-3 - or in some cases more - times that amount. I'm also sure that they wouldn't think it reasonable to pay someone who had worked in the public sector for only a few years that sort of pension. In addition, their answers might have been different if they had been given some information on the size of private workers' pensions.

Finally, I read somewhere that the 'gold plating' originally meant the fact that their pensions are underwritten by the state, and can therefore never fail to be paid; private sector pensions, until recently, had only their employer behind them. Even with new regulations, private sector defined benefit pensions are only guaranteed up to 90% of the benefits and only up to a capped amount.

Free schools and profits

Posted by Christie Malry on September 4, 2011 at 10:00 am

Nick Clegg calls upon his vast reserves of fuckwittery and, according to the Guardian, puts a stop to the idea that free schools might be able to make a profit:

Nick Clegg has thwarted plans by the education secretary, Michael Gove, to allow the new generation of "free schools" to make profits in the state sector after a massive ideological battle over the coalition's education policy.

The deputy prime minister will on Monday trumpet his success as one of three key victories achieved over Gove, which he says will ensure that free schools have to operate for the "whole community" and not just for "the privileged few" or for profit.

This is totally idiotic. As Tim Worstall points out, and indeed as the comments to the Guardian article make clear, it's easy to not make a profit. You just over pay for your expenses and undercharge your revenues. You will very quickly make no profits. This reveals Clegg's intervention to be Liberal Democrat shallow thinking at its dismal worst.

But, sadly, it's worse even than that. Implicit in lefty thinking is the presumption that, if only we allowed them to, free schools could educate vast numbers of posh middle class kids, obtaining far better results than existing state schools, while managing to cream off massive fees for their 'directors', pay their staff handsomely, charge enormous management charges for brands and other intangibles, but still - miraculously - turn a profit. It doesn't make any sense.

And, even if it did make sense, who could object to such a formula? If there were a button that could turn existing state schools into newfangled 'free schools' that operated along those lines, who could justify not pressing that button? "I'm not pressing it, I want students to languish in lower standard comprehensive schools!", perhaps?

The pursuit of profit has a long and noble history, as people have strived to find easier and more efficient ways of doing things. And, because the new way is cheaper than the original way, we thank the original inventor by paying him/her for dreaming up a new simpler method - be it dishwashing or transport, or any of the countless other simplifications throughout history. What can possibly be the ideological objection to profit-making in schools? Do people really believe that there are huge resources sloshing around state schools, ripe to be skimmed off by merciless capitalists? Existing private schools get better results, for sure, but they do so on the back of far greater resources. Surely private school results on state school resources must be the Holy Grail of teaching.

So who - other than teaching unions, perhaps (who have much to lose from greater efficiency in teaching - can possibly object to all this?

A tale of two employees

Posted by Christie Malry on June 30, 2011 at 12:53 pm

Today, 30 June, lots of public sector workers are going on strike, in a protest over proposals to make public sector workers pay more for their final salary pension schemes.

So let's think about two workers. One, Miss Aubergine, is a newly qualified teacher, on £25,000 per year. The other, Mr Banana, is a "fat cat" on £100,000 per year.

Miss Aubergine's scheme asks currently that she pay 6.1% toward her pension. Under the government's proposals, she will pay another 3%. If we use this latter figure, she will contribute £2,275 per year.

Meanwhile, Mr Banana receives the average defined contribution amount from his employer, 6.1%. He contributes the same amount himself. So his pension pot is receiving £12,200, over 5 times Miss Aubergine's contribution.

What do they get in return? Miss Aubergine gets 1/60th of her final salary, currently £416.67. Meantime, Mr Banana must buy an annuity on the open market. At current levels, a pension with the same inflation protection as Miss Aubergine's would require an annuity rate of 2.9%. In other words his pot would buy him a pension of £353.80, almost 10% less than Miss Aubergine's pension.

Typically, Miss Aubergine would enjoy lots of public sympathy and Mr Banana none. But can it really be right that her incredibly generous pension rights aren't recognised in a transparent and honest way?

And also spare a thought for Mr Coconut, a private sector worker on the minimum wage on the NEST contribution rates of 4%+4%. Should we really continue to tax his income to protect Miss Aubergine's current pension arrangements?