Male violence against females castrates economic development

Over decades many billions of pounds have been spent on aid to developing countries which many question as failing to be efficacious on any meaningful level, and all too often worsening a local situation. Many are the posited reasons for this tragic shortcoming, such as ubiquitous corruption at every level in the recipient countries, the curse of tribalism and sectarianism, civil and international war and the huge loss of revenues through global corporation tax avoidance, aided by an international tax regime badly in need of overhaul. Trade practices by developed countries, which discriminate against exports from developing countries, also add fuel to the fire. But one key issue that seems to have been overlooked and is crying out for robust reform is male (mostly sexual) violence against women and girls.

This age-old problem in developing countries has been highlighted by the second report from Britain's House of Commons International Development Committee, "Violence Against Women and Girls,"* released on June 13, 2013. It calls for the Department for International Development (DFID) to review its funding channels so as to raise funding to women's organisations. Additionally, it asks that DFID makes violence against women and girls a central focus of its humanitarian operations, ensuring that the protection of women and girls is a priority from the outset. It specifically asks that refugee camps be designed to be a refuge not a place where women are at risk of rape and other forms of violence. The "DFID must also get tough with multilateral aid agencies who fail to prioritise this, as too often they do," recommends the report.

Britain, says the report, can be proud of its recently increased efforts to tackle violence against women and girls overseas following its 2010 Call to Action on Violence Against Women and Girls. The DFID has a strong policy framework in place to achieve change for women's lives but the UK's international leadership is weakened by its failure to address violence against women and girls within its own borders, particularly female genital mutilation (FGM) from which 20,000 girls within the UK are at risk and 66,000 women are living with its consequences. Despite being illegal in Britain since 1985, FGM has not resulted in any prosecutions, even though there were 148 referrals to the police since 2009. To counter this lamentable record, robust action should be taken against political correctness, urges the report.

The many forms of male oppression against women add up to a colossal loss of economic output, which if eliminated would go far to reduce the need for overseas aid. FGM, for example, has afflicted 140 million females globally, according to estimates from the World Health Organisation. It is generally carried out by unskilled practitioners who use unsterilised instruments and no anaesthetics, risking potentially lethal infection. Other consequences include severe pain during urination, menstruation, sexual intercourse and childbirth and psychological trauma. The problem is not confined to the 42 or so African counties but is also widespread in some Asian countries and the Middle East.

Other forms of violence against women and girls include child marriage and domestic violence. According to a World Bank study, rape and domestic violence are more dangerous than cancer, motor vehicle accidents, war and malaria. Violence also constrains women and girls' ability to learn and flourish, to be active members of their families and communities, and to contribute to their countries' growth and development. If, instead, there was investment in adolescent girls there would be long-term benefits, as women with economic and decision-making power will tend to choose to have fewer children, have them later and invest more in their health and education.

Domestic violence against women takes many forms and among the most fatal are the so-called dowry disputes in India, leading to "accidental" kitchen fires in which the wives are deliberately immolated. Far worse is India's female foeticide and infanticide rates. One activist group estimates 8 million female foetuses were aborted following ultrasound scans over 2001-2011 simply because they were female and so considered a financial burden. India's odious dowry system, a key driver behind female infanticide, that so demeans women was outlawed in 1961 but so rampant is the practice that the law might as well not exist. The results is that the old methods of infanticide which were easily detectable have given way to a 'scientific' approach through such methods of induced pneumonia shortly after the child's birth. Figures for female infanticide are hard to come by but what is certain is that girls under one year are 50% more likely to die than boys, often through negligent homicide. Sadly, the figure for the many forms of female infanticide must run into millions.

The crass parental attitude that favours male children over female are already beginning to pose serious social problems in countries like India and China. India's ratio of girls to boys is one of the world's worst after China and its Prime Minister described female foeticide and infanticide as a "national shame."

The root causes of violence against women and girls are the same; inequalities between men and women and damaging social norms that condone or tolerate the subjugation of women and girls, says the report. Man's sins are many but few can eclipse his base treatment of women down through the ages on so vast a scale. The problem will never be fully solved unless the offending males begin to cherish women instead of treating them callously.
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*Violence Against Women and Girls", HMSO, London, £20

Legal aid proposals threaten British justice

Justice for all on equal terms is the cornerstone of any civilized society and Britain can be proud of its law record but that principle looks set to be undermined if the Government pushes through unamended a second round of money-saving cuts to legal aid, this time aimed at the criminal legal aid budget.

The Government has no choice but to trim its huge deficits and there is no reason why the legal aid budget, now running at over £2 billion a year, should be exempt from examination, for there is undoubted waste and abuse. But the Government should remember that justice is not a for-profit business that can necessarily respond to efficiency drives and that there is a risk that if the proposed changes are not clearly thought through the baby (justice) will be thrown out with the bath water. Indeed, according to Lord Neuberger, Britain's most senior judge, the proposed changes may even lead to higher costs and drive aggrieved defendants to "take the law into their own hands." There is an equally alarming and likely consequence -- an erosion of freedom to demonstrate lawfully owing to financially punitive risks.

Lucy Scott-Moncrieff, President of the Law Society, echoes that view when she claimed: "In several previous attempts the Government has been unable to come up with a workable model for price tendering and we do not see how they will be able to address the fundamental difficulties this time round. We also think it is implausible that tendering will save the sort of sums the Treasury is looking for and there is some doubt that it will save anything at all."

Such comments are probably over egged, for the Government claims that it has already trimmed £350-400 million from the legal aid budget by cutting funding to a range of civil cases, including divorce-related problems, social welfare, debt and housing. But cuts to the civil legal aid budget were an easier nut to crack for they did not undermine justice nor pose potentially very serious consequences. So what is the nature of the threat to justice and why has the criminal legal aid budget, now more than half the total legal aid spend, grown significantly?

First, a look at the historical facts. Legal aid was established by the Attlee Government in 1949, since when millions of people have been given help, advice, support and representation. It ensures vulnerable, disadvantaged people are not denied access to justice because of their inability to pay for it. As such it is one of the corner stones of a fair and decent society. The overall cost of legal aid has grown considerably over recent years, up from £1.5 billion in 1997 to over £2 billion in 2004, in monetary terms, but it has remained steady ever since. There has, however, been a disproportionate growth in the criminal legal aid spend, up 37% compared with the legal advice for representation on civil and family matters, excluding asylum, down 24%.

The rapid growth in legal aid expenditure has been matched by a big increase in the overall number of legal practitioners. Between 1955 and 2004 the number of solicitors holding practice certificates rose from 17,697 to 96,757, an increase of 438%. The increase in independent/self employed barristers over the same period has been even greater, up from 2,008 to 11,564, a 476% rise. It has been suggested that, particularly in relation to criminal legal aid, the number of lawyers is a driver that contributes to increases in the legal aid spend. There can also be little doubt that while some of the cost increases are inflationary and some due to rises in work volumes in certain areas of law, much of the increase can only be ascribed to costs rising significantly above the rate of inflation in the rest of the economy. This rise in criminal legal aid spending has had a corrosive effect of cutting the spend on civil legal aid, particularly family-related issues, which is undesirable for society as a whole.

One of the problems with the criminal legal aid bill is the few but highly expensive criminal cases that absorb too great a share of the budget, so the spread of funding is not responding effectively to demand. It is, however, difficult to see how the cost of these cases can be significantly reduced. Undoubtedly, the crux of the cost problem is an administrative one. The administration overheads of funding numerous firms, many of which do only a small amount of criminal legal aid work each year, are placing an unnecessary financial burden on the system and although attempts have been made through franchising to restrict the number of firms being paid each year, the Government's view is that it is clear that a system where only contracted suppliers would be able to undertake criminal defence work was needed to drive out this inefficiency and introduce quality controls. The solution, suggests the Government, is a few, maybe four, super contractors covering a whole county who would be chosen on the basis of price, irrespective of their ability, but what would be the unwholesome consequences of such action and are there less onerous solutions?

Unless amended or rejected in its entirety the Government's proposals would mean defendants would lose the right to choose the solicitors they want to represent them in legal aid cases. This is crucial, on which more later. Criminal defendants living in households with disposable incomes of £37,500 or more would be stopped automatically accessing legal aid. The Government wants to introduce "plea only" advocates. In other words the lawyer who represents you in court is only able to represent you if you plead guilty as they are not qualified to undertake "not guilty" cases and they will not be paid if defendants don't plead guilty, hardly a source of unbiased advice. It is suggested that guilty defendants pay their court costs out of future earnings including the seizure of their cars. There is nothing wrong with that, after all, in China the relations of those executed by firing squad are invoiced for the bullets, but it may prove unworkable in many cases. A residency test is also proposed to see that legal aid does not go to the recently-arrived immigrants. That may seem harsh but for those of a certain sensibility it is an uncomfortable, though little aired, fact that the growth in the legal aid bill owes much to "asylum" seekers. According to Migration Watch, between 1997 and 2010 there were 610,000 applications for asylum in the UK. In addition to the principal asylum applicants a further 24% entered the UK as dependants of claimants. The Home Office refused 72% of applicants but they all have a right of appeal. The legal aid bill for asylum and immigration cases between 2003 and 2010 totalled £824 million. In 2009/2010 alone it was £90 million and that does not include the cost of manning the immigration courts. There can be no doubt that the issue of so-called asylum seekers is a key driver in the rising cost of the legal aid bill. One alternative suggestion, therefore, which would require a change in the law, would be to abolish the right of such claimants to any appeal after they have received a fair immigration hearing. Another suggestion that would at least help preserve the quality of advice is to allow all existing lawyers who specialise exclusively on criminal legal aid cases to keep their certificates to practice, irrespective of any administrative efficiencies that my be imposed.

To return to the issue of lawyer choice, this is crucial because the quality of advice is paramount in achieving a fair trial. There are also some areas of criminal law, like football offences, that require specialist knowledge, which contracted, mega law firms would almost certainly not have. Time spent between lawyer and client is also important for the quality of justice. Under the Government's proposals, rushed solicitors with many cases to deal with on any one day would be unable to provide the necessary time to give proper advice.

The Government is reportedly looking to save £220 million from its second round of cuts to the legal aid bill, this time on criminal cases, but should they be considering any cuts at all if it means that justice is trammelled?It would be disastrous if justice became a two-tier system where the rich only could afford quality representation while those of modest means must represent themselves, hire a lawyer privately, fall on the mercy of charities or accept the lawyers forced  on them. Even those who know that they are innocent may choose to plead guilty because even an innocent verdict would leave the defendants seriously out of pocket as the court costs awarded to them would be based on a table of legal aid costs while the defendant's privately-engaged solicitors would charge much more. This is an example of where the threat to freedom to lawful protest is insidious if not sinister. And so the innocent would go forth branded guilty and all for the want of adequate, meaningful legal aid for the common man. Never, in the annals of British jurisprudence, would justice be so ignobly served on so vast a scale. The Government should look again if it does not want to see a costly rise in the prison population and a descent into lawlessness, not to mention the incalculable damage to investors abroad who prize Britain's legal system that gives them so much confidence to invest in the country.
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For those who feel passionately in meaningful justice for all, their views can be exercised simply by signing the online petition: Epetitions.direct.gov.UK/petitions/48628

Corporate tax avoidance threatens your children's future

Death and taxes are life's two certitudes but global corporations have done remarkably well at minimising taxes, especially corporation tax. The scale of avoidance is incalculable, insidious and threatening to society's composure and therefore your children's future.

The recent furore over such tax avoidance, however, overlooks other, more sinister aspects which if not addressed comprehensively soon risks social breakdown and anarchy on the streets. Is that a gross exaggeration? Well, let's look at some of the facts. In 2010/2011 the UK government's total tax revenues of £551 billion included £163 billion in business taxes, of which £42.1 billion was corporation tax, or only 7-8% of the total tax take. One might think should such a low percentage be a cause for concern, especially as corporation tax rates are steadily declining and may one day be replaced by other business taxes. The answer is YES because the current uproar over corporate tax avoidance is not just about one tax; it involves others, it involves employment levels, an even playing field for all businesses and the insidious threat from emerging monopoly power. Worst of all, perhaps, is a possible future dominated by plutocracies.

The UK government is under pressure to slash the social security budget, along with its EU counterparts, and what do we see are the consequences? We are treated to an almost daily diet of TV news showing huge protests, violence and incendiarism, the last typified by London's 2011 summer riots in which looting suggests an economic connection. This is not to argue that there is no abuse and colossal waste in Britain's social security budget. Far from it and so the Government must act accordingly to expunge it but there can be no doubt that if all global corporations doing business in Britain had paid their fair share of UK corporation and other taxes the Government's coffers would have swollen by billions of pounds every year and so relieve the pressure to slash the social security budget.

CBI condemns abusive tax avoidance

What is it, however, that allows global corporations to avoid taxes on a staggering scale and what should be done to excise this canker from society? The facilitator is a complex, global web of disparate tax regimes first set down by the League of Nations nearly 100 years ago and now badly in need of root and branch reform. First, however, some definitions. There are three aspects to tax minimisation schemes: 1) Tax evasion through ploys like under declaring taxable income, which is clearly illegal, 2) Abusive tax avoidance which is legal but considered unacceptable even by the Confederation of British Industry (CBI), 3) Responsible tax management which is both sensible and necessary. There is no suggestion that largely American-owned businesses generating significant sales in Britain, like Starbucks, Amazon, Google and Microsoft, are operating illegally but it is clear that their tax planning, based on highly artificial devices with no commercial purpose, falls within unacceptable abuse. Here are a few examples of how the irresponsible schemes work.

1) Starbucks sources UK coffee from a wholesale subsidiary in Switzerland, which is commercially sensible because it is cheaper to have one team responsible for sourcing all of its coffee and Switzerland seems to be the centre of the world coffee trading business. But there can be little doubt that Switzerland would not be such a world centre if it did not charge a low 12% tax rate on the trading profits. The issue becomes even murkier still when global corporations use "transfer payments", an issue first tabled for cleansing before World War 2. Transfer pricing and payments have great scope for tax reduction because they mean global companies like Starbucks can decide how much its UK business pays to non UK companies within the Starbucks' empire for access to the US firm's brand, coffee making technology, engineering support and so on. Unsurprisingly, the overseas companies are based in low tax regimes so there is a strong temptation for a multi-national to overprice the goods and services provided. to reduce or eliminate profits, and therefore tax, in a relatively high tax country. This odious transfer charging has been used to devastating effect over many years in developing countries least able to afford multi-billion pound losses through tax avoidance by wealthy, global businesses. The benefits from these financial artifices mean that Starbucks, for example, paid only £8.6 million in UK corporation tax over the last 14 years and nothing at all in the last three years, despite clocking up nearly £400 million in sales during 2011.

2) E-commerce also eases the path for creative tax avoidance schemes and Amazon is a good example. When buying a book from Amazon, UK purchasers enter into a legal contract with and pay their money to Amazon Luxembourg where the VAT rate is only 3% -- an example of how more than just corporation tax avoidance is involved. Despite booking multi-billion pound sales in Britain last year Amazon reportedly paid no tax on the profits from these sales because they were funnelled through Luxembourg. Experts claim that if Amazon did not route sales' profits through Luxembourg it would be paying as much as £100 million a year in UK corporation tax.

3) Microsoft sells its software from Ireland or, in the case of electronic downloads, through Luxembourg, so most of the money the company makes from British customers is earned in Ireland, where corporation tax is only 12.5%, about half the UK rate. This is part of an elaborate structure that the US Senate committee described as designed "to shift and keep profits offshore."

Overly concentrated wealth threatens democracy

There are no accurate figures on how much has been lost to tax havens but the figures are undeniably staggering, one estimate being $20 trillion. Another estimate indicates that the 70 plus "business friendly jurisdictions" are sheltering between $21 trillion and $32 trillion, up from only $11.5 trillion in 2005. This, of course, includes a large element of individual tax avoidance, and along with company tax avoidance should be tackled to prevent future social disharmony. Britain' HMRC (formerly the Inland Revenue) estimates that the country is losing £5 billion every year through corporate and individual tax avoidance.

As remarked earlier, tax loss does not just harm government revenues. Aggressive tax avoidance schemes also create an uneven playing field for competitors. Whitbread, a British company for example, owns Costa Coffee and pays its fair share of UK corporation tax, unlike Starbucks and Caffe Nero, the latter reportedly having paid no corporation tax on a $40 million profit in just one year. This puts Costa Coffee at a serious disadvantage and could even lead to market domination (monopoly) as fair tax payers are driven to the wall. One could argue that Amazon's unfair tax advantage over bricks and mortar book retailers is helping to drive them out of business. Reportedly, Amazon already has a 25% share of the UK book market. What then for the future prices of books? No monopoly can ever be trusted to work in the public interest. But potentially far worse than all these is the threat to democracy from plutocracy.

Ever since World War 2 the disparity between income groups has widened, first slowly but now rapidly. A key component behind this is the growth in global tax havens. As Angel Curria, head of the OECD warned, big corporation tax avoiders  "will undermine democracy. This is about the survival of democracy." If civilization is to work harmoniously then those who enjoy its benefits must also be prepared to pay their fair share of the costs. The warning signs of failure to do so are plainly evident. Greece came close to anarchy over austerity measures brought on by rife tax evasion, corruption and crass economics. Spain is flirting with political dismemberment while the wealthier, economically more responsible EU members are tiring of subsidising fiscal delinquents. Most of their citizens believe that their governments will renege on the their debts.* If nothing is done to reform rich-world financial centres as well as island tax havens then anarchy on the streets is not a fanciful notion.

Fortunately, the right noises are now being made by governments. France has slapped Amazon with a $252 million contested demand for back taxes, interest and penalties. It has been rumoured that Google may also receive a French tax demand for one billion Euro. The UK Government is suggesting that the public sector should tie their contracts only to companies that pay their fair share of tax. This shows the huge importance of concerted power because such spending accounts for £1 in every £7 spent in Britain. It signpost the way consumers should go. Consumers hold the ultimate weapon but for it to be effective it must be concerted and sustained. No global corporation, no matter how big and wealthy, can withstand consumer action through boycott. It is every company's worst nightmare and it has already been proved against Starbucks, who have now agreed to pay £20 million in corporation tax over the next two years. But be not deceived. It is a short- term sop akin the the Roman emperors throwing bread to appease the Roman mob. Such boycotts also worked against multi-nationals using child slave labour in the clothing industry.

The likelihood, however, is that consumer protest will wane and the matter soon forgotten. That would be risky because although a global initiative is under way to clean out the Augean stables of tax avoidance it will take years to reach consensus, if ever. That is why pressure must be kept up. The public should pressure their MPs and MEPs about what, if anything, they are doing to make the tax regime fairer for all. They should themselves learn more about the main tax exploiters and be prepared to engage in peaceful, lawful protest. Apathy is not an affordable luxury. The next time you sip your Starbucks or Caffe Nero coffee ask yourself if you are sipping to your health or toasting to your descendants' angst. Is that the kind of future you wish to bequeath to your children?
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*Google my blog headline: "Good governance must prevail"

'Green' issues could help reshape global logistics

The politics of business is to minimise costs but the problem for mankind today, more than ever, is the need to identify hidden or external costs which do not harm company balance sheets but leave a legacy of widespread costs elsewhere -- incalculable, insidious, death-dealing. Once identified, these costs should be carefully considered and fairly apportioned to those businesses responsible. More than that, however, ways and means must be found to cut these internal and external costs for businesses and that may mean changing attitudes towards business techniques like JIT (just-in-time) deliveries.

JIT, of course, is a business boon that allows firms to slash costly inventories which simply put money to sleep and carry other risks. But when supply chains become globally stretched and rely on parts and sub assemblies being airfreighted many times before the whole product is assembled in one place then that, along with other air pollution, carries a huge, incalculable external cost that seriously contributes to killing many thousands and robs economies of billions of dollars, largely through respiratory and cardiovascular diseases.

Pollution comes in many forms, both legal and illegal. The latter is the lesser problem that can be effectively controlled through determined prosecutions but the former is far more intractable and complex. But just how big are these legal pollutions and what can be done to cut them substantially while at the same time enhance corporate profits?

In China alone an estimated 500,000 people die every year from air pollution while many more are left seriously ill. This is not helped by the lack of environmental law enforcement and rampant corruption among big energy suppliers. Cars in the capital, Beijing, use high sulphur fuel which is higher than the national standard. The cost to China is breathtaking. It is estimated that in Beijing and surrounding regions the economy loses between US$19 billion and $39 billion a year owing to the side effects of PM 2.5 pollutants, much of it generated by cars and industry. That is equivalent to a loss of 3.4% to 6.7% of GDP for those regions alone. This air pollution, however, is not confined to China. Toxic-laden prevailing winds dump the insidious threat on South Korea, causing health problems for their citizens.

Dirty ships kill

In northern Europe about 50,000 die prematurely from cargo ships' emissions. This is because cargo ships use high sulphur content oil but as from 2015 all cargo ships plying north European waters must cut their sulphur content by 90%. Elsewhere in the world, however, this specific problem is being unfairly addressed. In Hong Kong smog kills 3,000 a year and much of that can be attributed to cargo ships' emissions. To their credit, container shipping lines like Maersk and 17 other operators have been using low sulphur fuel for the last two years to curb pollution but many others refuse to do so because it carries an extra cost burden and they are under no legal obligation to comply. Clearly, the Hong Kong authorities, who have not met their air quality targets set in 1987, need to act robustly and swiftly to deliver a level playing field. To be fair, they have cut the port charges but that covers only 40% of the added cost of going 'green'. If Hong Kong is to meet its air quality target then it must make all shipping lines comply over sulphur emissions. There may, however, be a problem when switching over to low sulphur fuel because on entering ports ships' engines have cut out, leading to helpless drift and collisions costing millions of dollars.

Around the world many authorities need to legislate for cleaner air but that will add costs to distribution companies, which ultimately will be passed on to the final consumer so it is important to consider ways to reduce their costs. One of those ways is to redesign global supply chains and another is to consider changes to the means of transport.

 Renaissance for rail?

Already, global supply changes are taking place which should favourably impact the air pollution issue and, perhaps, other climate threats. The rationale behind the outsourcing of production to far away countries over the last two decades was simply one of harnessing cheaper labour costs in those countries. But changes are under way which are not only eroding that cost advantage but also reveal the hidden costs of global outsourcing which were not allowed for. These include, for example, rampant intellectual property theft, (especially virulent in China), natural calamity risks that seriously disrupt JIT supplies, inflexibility to react quickly enough to changes in demand, poor quality issues and long production runs. This could mean that global supply chains will move to serving regional areas rather than global as western companies begin to re-shore back to their homeland or nearby countries. That will have a favourable impact on carbon emissions, especially from airfreight, but there are more 'green' dividends to come by changing and developing the means of transport.

A good example of how a change in the transport mode can pay 'green' dividends while also cutting internal costs is the new rail route from Chongquing, China, that passes through Kazakhstan, Russia and Poland before reaching Germany. This 11,179-km rail route will not only help western companies like HP slash transport costs to $10,000 per container, a third the price of air freight, it will halve delivery times to 21 days compared with 40 days by sea. Compared with air transport, rail transport's carbon footprint is only one thirtieth. In Britain, which has a well-developed rail network, the move to establish large container ports like that at London Gateway will see a big switch from road to rail container transport, reducing the carbon footprint by two thirds.

Sea shipping, owing to economies of scale, is the cheapest of all transport modes and the least polluting per container but there is scope to cut their emissions and costs through technology changes. A promising development here is the Belfast-based B9 shipping company which will use windjammers with automated sail trimming for most of the voyage, supplemented by Rolls Royce methane gas turbines for when winds are light and for port manoeuvring. The biomass fuel will be from discarded food mountains. The first vessels promised will only be of 3,000 tonnes, though there are plans for 5,000 tonne vessels, but B9 believes there are around 10,000 short-trade coastal ships in this bracket that could be replaced and so deliver a substantial environmental gains.

There are many other reasons to be optimistic over air pollution based around technology changes, like video conferencing and online selling but much can be done to cut distribution's carbon footprint significantly which, alas, has been exacerbated by global outsourcing and JIT delivery techniques.
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Logistics wins the war for Taliban

It must now be abundantly clear that the coalition forces' war in Afghanistan is lost, an outcome that would surprise no one with any grasp of geo-logistics.* It is a dismal testament to the hubris of advanced nations' reliance on their modern weaponry in a hostile terrain where the costly problem of stretched logistics could be turned against the invaders. The war may well go down in the annals of military history as the one that cost so much and achieved so little.

There are, of course, many reasons why the coalition forces could not achieve a military victory, not least Afghan corruption and narco politics, but there can be little doubt that the cost of logistics was decisive -- the most potent weapon in the Taliban's armoury. But why were the logistics costs so high in the first place and how could a relatively poorly armed Taliban wreak such havoc?

To understand that, one must appreciate the prevailing regional politics. To Afghanistan's south and east lies Pakistan, a country of ambivalent feelings with provinces supportive of the Taliban. To the west is Iran, hostile to any American involvement, and to the north the former Soviet Union states and Russia, which would have required the latter's approval for land-based supplies from Europe. That left just two routes, one air and one land. The land route, however, is notoriously hazardous as it means using the mountain passes where supplies could be easily destroyed. Just one attack here destroyed 40 oil tankers. That left air transport as the main option.

The costs of airlifting supplies from Europe to Afghanistan are stratospheric. One tonne of supplies, for example, would cost US$14,000 compared with just $500 if a rail route had been possible. Put another way, the cost of airlifting a fully equipped American brigade would be over $200 million. This helps explain why the coalitions' total costs are running at an estimated $2 billion a week. Britain alone has reportedly spent £17 billion so far but the true cost is much higher as that does not include the cost of supporting the maimed, the widows and their children that will continue for many years after the war. There will also be a costly fallout from those service personnel who can, alas, be expected to commit suicide. In the Falklands War the number of UK personnel who subsequently committed suicide exceeded all the UK fatalities during the war.

Afghanistan's harsh, arid, largely mountainous terrain, honeycombed with caves, make it ideal guerilla warfare terrain, which Russian discovered to their cost during their occupation. These natural advantages were put to good effect by the Taliban whose per capita support costs were less than one tenth of the coalition forces. Their relatively low cost weapons exposed another cost problem for the coalition. In a recent Taliban attack on the sprawling Bagram air base the destruction of six jump jets cost over $100 million. Hi-tech weapons can be cost effective but they come at a very high price and their usefulness in  a guerilla war is marginal.

The horrific logistics cost factor has at last dawned on the British Government, who have announced an early, substantial withdrawal this year rather than 2014. Reports also suggest that the White House wants to reduce its current 68,000 troops to less than 10,000 in 2014. It is, of course, possible that the current, global economic climate has worked in the Taliban's favour, for debt financing of war is not popular back home when ordinary people are struggling under Government cutbacks caused by years of cheap credit binging, leading to unsustainable debt mountains.

So much for the costs so far but what of the achievements? It's true that much of Afghanistan has been free of Taliban trouble and that in the cities women and children enjoy a level of freedom and dignity unknown under harsh, Taliban rule. They do not want to see a return to Taliban rule, but that does not mean they will not get it. Wealthy Afghans are taking no chances. They are already moving vast sums abroad with a view to following the gold because they fear collapse after 2014 when the coalition will leave only a small presence. The only people to have truly gained are the army of foreign contractors replete from lucrative government contracts paid for by long-suffering taxpayers who have only more pain to come.

The world has grown tired of warfare and what the appalling costs mean for the global community. Global investors are, at last, rumbling those Governments who used the debt tap to finance their irresponsible binge spending over decades. They are on notice to rein back their profligacy and a major chunk of that is military related. Each year the world spends an estimated $1.47 trillion on armaments and warfare, depriving help from the sick, the homeless and elderly huddled around their winter fires insufficient to prevent death from hypothermia.

If military logistics teaches one lesson it is that if geographical factors can be harnessed by the invaded forces and turned into a potent logistics weapon against the invader then the latter is in serious and very costly trouble.
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*How geography can impact logistics operations

Skills gap threatens Britain's industrial renaissance

As remarked in a previous report, "Supply chain shifts threaten Asia," there are many hidden costs attached to outsourcing manufacturing to the Far East to serve markets back in the West. These include inflexibility, poor responsiveness from far off factories, poor quality issues, wholesale intellectual property theft, large minimum production runs and Nature's fury which can wreck JIT delivery schedules. Many outsourcers overlooked these significant costs but the biggest oversight, and this is not hindsight, was the threat from rising production and distribution costs which are now beginning to make the Far East a less attractive, if not uneconomic, place to locate. That does not mean that the Far East will fail to attract foreign investment, but rather that it means such foreign investors will concentrate on serving the regional markets instead, given their potential for huge growth.

So just how fast are these production and distribution costs rising and will it mean that UK and European manufacturers face a golden manufacturing opportunity? Since 2003 wages in Thailand have jumped from US$3 a day to $10 a day while shipping costs have risen by 20%, says one British parts supplier for pick-up trucks. Elsewhere in Asia wage rates have been soaring. In China, minimum wages in the provinces have risen by more than 20% in the year to September and the Chinese government has pledged to double workers' average income this decade. According to one American consultancy, if Chinese wage rates rose 30% a year, the renminbi by 5% a year against the dollar, along with freight rates, it would be as cheap to produce in America as in China by 2015. But already certain products can be made in America cheaper than in China. Likewise, in Britain it is already cheaper to produce high-end clothes rather than in places such as China, Bangladesh and India.

There is no doubt that many British companies are bringing back to the UK some or all of their manufacturing side but it is, perhaps, still only a trickle rather than a trend, but many trickles reach their oceans as mighty, raging rivers. That trickle, however, will be effectively dammed if Britain cannot overcome its serious shortage in manufacturing skills, particularly at the hi-tech end. It is thought, for example, that in Britain's West Midlands there will be around 90,000 hard-to-fill manufacturing jobs over the next five years. One French fashion house now makes between 50% and 70% of its entire global production in the UK and would like to make more there but complains that Britain no longer has the skills.

It may come as a surprise to many readers that recent research claims that Britain is producing more manufactured goods than in 1966 when manufacturing employment was at its peak. This is due to survival strategies put in place by manufacturers to mitigate the effects of globalisation. But these successful firms are now concerned about the lack of high-tech skills in the labour market and some are even worried that their businesses many not survive into the next decade owing to their inability to recruit employees with the right expertise.

Closing the skills gap

There is no doubt that if Britain is to take advantage of the golden opportunity for a manufacturing renaissance then the skills gap must be closed. The British Government is fully aware of this and has some laudable initiatives, like the £140 million being pumped into high-value manufacturing and the financial support for its quango, Skills for Logistics. But the fact is that the firms that need the skilled labour do not have the capacity to offer training because they are largely SMEs.* Such training schemes were largely offered by the big firms which have subsequently relocated from the UK. This means that it it clear that much more is needed to encourage apprenticeships and may even require far more spending on school education to make manufacturing more appealing at GCSE and A level. This may require rewarding some schools better than others who can show that they are producing pupils more suited to a manufacturing society than a services economy so that pupils will be guaranteed jobs waiting for them rather than the arts degree graduates for whom the jobs paucity leaves them walking the streets unsuccessfully looking for work. The government may even need to overhaul school education root and branch for there can be no doubt that the level of education attained by many pupils leaving school is abysmal. The current GCSE qualifications attained by British pupils at 16 has been discredited as a dumbkopf version of its predecessor, the GCE O level, and there is far too much reliance on course work.

Such remedies can be very costly for the Government already strapped by a chilly economic climate but there are ways that both Government and the people, in concerted actions, can add billions of pounds to the Exchequer's coffers. Owing to the complexities of global tax laws, many leading corporations take advantage of low tax rate economies and tax havens. There is nothing illegal about this though the argument that such avoidance is profoundly immoral is unassailable. There has been much recent media criticism of American companies, like Google, Amazon and Starbucks, paying little or no tax in Britain where much of their sales and profits arise. One British MP claimed that Google, Amazon and Starbucks paid a UK corporation tax rate of 0.4%, 2.5% and zero respectively, compared with the current UK corporation tax of 25%.

Finding the cash

It will take time to resolve this through normal channels because it calls for international regulation but concerted action by aggrieved consumers could bring far quicker results. If people wish to change odious corporate cultures there is no greater weapon in their hands by far than collective, sustained and focussed boycotts of the offenders' goods and services. It is an irresistible power that is every boardroom management's potential nightmare.

Apart from the multi-billion pound loss to the Treasury through tax avoidance schemes, money which could be well spent preparing Britain for a manufacturing renaissance, there is a more alarming reason why this insidious canker must be lanced, and quickly. As pointed out by one British department store that pays its taxes in full those firms that pay little or no UK corporation tax have an unfair advantage over those who do and in time the vast sums saved on tax avoidance could be reinvested in the businesses so that, all other things being equal, they would out-compete the full tax-paying companies. Eventually, that could leave the Exchequer so short of revenues that much of its social spending would have to be slashed, risking social collapse and anarchy.

Balance of payments remains untamed spectre

Britain now stands at a crossroads presenting a golden opportunity for a more assured, long-term future. The right route must involve a manufacturing renaissance concentrating on the high, value-added products, in particular, but that will never be achieved without the closure of the skills gap. If this opportunity is missed Britain seriously risks raising the spectre that once was a frequent hot political issue -- a balance of payments crisis. The importance of these statistics has faded in recent decades owing to the liberalisation of financial markets that allowed firms and countries to ramp up their borrowings to fill the gap. But the trouble with debts, as the recent turmoil in the PIIGS** members of the EU so painfully shows, is that if the creditors' confidence in the ability of debtors to repay the loans is shattered then financial Armageddon looms.

Britain's fervent espousal of a finance-based economy to the detriment of manufacturing has had a corrosive impact on the balance of payments. In the second quarter of 2012 the UK's balance of payments deficit reached a record £20.8 billion and the deficit on goods reached £28.1 billion, the largest ever recorded. Back in 1950 Britain had more than a third of its labour force in manufacturing and there was a trade surplus in manufactured goods equal to 10% of GDP. That trade surplus has now fallen to a deficit more like 4% of GDP. Is there any wonder that there is a widespread feeling that the country has put too much faith in finance at the expense of manufacturing?

Capital inflows required to finance national trade deficits may stop, possibly abruptly, if there are mounting, imagined currency or default risks. As far as defaults go the imagined has turned to reality for many countries. For Britain, the default risk is lower but not fanciful. With a fair wind and the right moves to rebalance the economy away from a scenario dominated by paper pushers and City pinstripe bookies, Britain faces a once-in-a-lifetime, golden opportunity. It now remains to be seen if the coalition Government has the resolve to steer the right course and carry the nation with it.

*SMEs: small and medium sized companies
**Portugal, Ireland, Italy, Spain, Greece 
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Unique articulated forklift will save warehouses millions

It may seem pushing the limits of credulity to claim that a newly launched, special kind of forklift delivers instant truck payback and much more by cutting new/altered warehouse building and running costs. But that is just what Translift Bendi* has done with its Mini Bendi pedestrian articulated forklift developed in close cooperation with ASDA, one of Britain's largest food retailers and part of the Walmart group, the world's largest retailer.

There is nothing new about the ability of articulated forklifts to reduce new or redesigned warehouse building and running costs or even eliminate satellite warehouses entirely. What is new, however, is the introduction of forklift operations with pedestrian traffic in a safe way and so save substantial costs that would otherwise be incurred if truck operations were entirely separated from pedestrian workers.

Undeniably, the articulated forklift is by far the most versatile of forklifts thanks to its 220 deg fork mast rotation and large cushion tyres that combine all the virtues of outdoor counterbalance trucks with internal warehouse machines working in very narrow aisles (VNA) down to 1.6 mt wide. Such versatility can substantially cut forklift numbers and avoid costly warehouse expansion. But just how is the Mini Bendi, costing around £20,000, able to help ASDA not only reduce construction costs but also running costs and what are the hard figures?

A typical ASDA store in the UK costs around £10 million to build, and ASDA's Simon Grass, back-of-house development manager, believes the Mini Bendi has saved 0.5%, or £50,000, from the building cost, including £4,000 on sprinklers. As he explains: "Reducing the building costs helps to maintain hardly any cuts in the building panels, therefore no waste. The steel columns are lower, reducing steel tonnage and costs. In terms of the building and how it looks it is now lower and more acceptable when running through the planning procedure. We now have a truck that offers greater flexibility as well as efficiency and productivity benefits compared with other types of handling equipment."

ASDA has hundreds of large superstores in Britain, with more planned, which gives an inkling on the potential for multi-million pound savings that the Mini Bendi can achieve nationally, and far more if marketed globally. As Simon Grass was keen to stress: "It is not just new stores that benefit from the Mini Bendi. When ASDA reviews one of its more established stores within the estate, the Mini Bendi can save significant space, time and money in the back-of-house areas, as ASDA can reduce the capital spend on realigning the warehouse to separate colleagues and forklifts. This is because the Mini Bendi can perform the same tasks as many of the existing reach trucks within the estate. ASDA can simply swap them over and the area becomes pedestrian friendly."

As a business, ASDA constantly looks at ways to separate pedestrian and forklift trucks to minimise the cost of accidental collisions. However, when segregating it would often lead to usage and productivity becoming inefficient, explained Mr Grass, but "We no longer need to compromise."

Owing to the truck's way of working, ASDA can now have pedestrian pick within the same area, permitting the stores to drop and fill effectively. This supports the reduction in the building footprint and thus improves the building's selling efficiency because ASDA can either build a smaller store or increase the selling space. Either way, it makes no difference to the store running costs like rates, possibly rents, and all the utility costs, all of which the Mini Bendi confers for the building's lifetime -- a truly remarkable return from a humble, pedestrian lift truck.
*www.Bendi.co.uk
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