In Business

Right Idea – Wrong Target

Lord Falconer threatens regulation of compensation sector. See also BBC NEWS | Politics | Firms warned over accident claims

It was in August that Tory spokesman David Davis took a potshot at human rights legislation. He claimed that it was responsible for the ‘compensation culture’ which was growing up in Britain. Lord Falconer is today to weigh into the debate by at – one and the same time – denying that the compensation culture exists, and simulaneously threatening legislation if ‘No-Win, No Fee’ companies don’t voluntarily clean up their act.

Lord Falconer is merely echoing the ‘Better Regulation Task Force’ which in May dismissed the notion of a Compensation Culture as an Urban Myth, while at the same time presenting evidence for it. The story about the school that made pupils wear goggles to play conkers is merely amusing. But the large council that actually spent more than £2m of its £22m roads budget on tackling compensation claims in 2003-4 is proof positive that the compensation culture is no myth. Claims against schools have risen to £200 million a year, enough for 8,000 new teachers, while claims against the NHS rose to £477 million, the equivalent of 22,700 extra nurses. And then, of course, there is the rising cost of insurance premiums.

Both Wrong

Lord Falconer and David Davis are both wrong – but Falconer is on the right track.

Daytime TV – and the less popular satellite channels – are full of advertisements trying to persuade us to take our bosses to court. Then there’s the youngish people who hang around shopping centres with clip-boards asking anybody who will give them the time if they have had an accident in the last three years. None of these ever mention the human rights act, so it’s acutely unlikely that people who sign up with these companies are doing so out of a sudden desire to test out the limits of new legislation. Sorry, Mr Davis.

At the same time, given the amount of evidence, both in terms of companies that make their money by it and the hard facts of claim costs, to say that it is all just an Urban Myth seems a bit far-fetched. After all, if it is, who is paying the advertising costs? I suppose Lord Falconer doesn’t watch daytime TV and so the question has not struck him in that light.


Regulating the claims industry is not the path to take. Falconer is a lawyer, and sees this as a blight on the legal profession. A better approach would be to go back to daytime TV and ask the question ‘Who is being targetted by this kind of advertising?’ It doesn’t take much analysis to work out that the target audience is the same as for high APR car financing and consolidation loans. The message is a simple one: ‘you may not believe that there’s a large pot of money out there waiting for you, but there is and all you have to do is to contact our company’.

The outcome is also the same: people who are financially unsophisticated sign away their rights or future earnings to companies who will make disproportionate profits on the deal.

It is this kind of predatory commerce, which make its money by preying on the hopes and fears of the financially vulnerable, which needs our attention. The combination of hard sell advertising, bullying sales tactics, and an unfair division of either risk or winnings makes these particular companies unwelcome in our economy.

We can regulate on a sector by sector basis forever. In doing so we penalise genuinely beneficial legal and financial services alongside the sharks. It is time for government to turn its attention to the whole unpleasant spread of businesses that trade on false hopes and real miseries. And we should not be regulating these people. We should be eliminating them permanently from our economic life.

Business will pay the price of language teaching collapse

See also BBC NEWS | Education | Compulsory language lessons fall

Only one in three schools in England make all pupils study a foreign language at GCSE level, according to a new survey commissioned by the National Centre for Languages. 97% of independent schools keep languages until 14, but only 30% of state sector schools. This figure has dropped from 57% just one year ago.

The reason? Since September schools in England have no longer been required to teach foregin languages to children over 14. Curriculum changes have simply led to languages being squeezed out.

I have to admit that I was more or less the worst at languages in my year at school. I scraped a B at O-level in French and a C in Latin. It wasn’t until I went to live in Belgium that I learned to speak French and subsequently Flemish.

But it’s a good thing that I did. When I went to work for Lucas Automotive as a senior manager, I got the job partly because I was able to conduct half of my interview in French.

Unless we only buy from ourselves, the Australians, the Americans, and a few others, and unless we only sell to these same markets, language learning is fundamental to our commercial future. As a German business man once put it to me, ‘if you want to buy from us, you can speak English, but if you want to sell to us, you must speak German.’

Britain can simply not afford to abandon language learning. It is time that government looked to the future.

Employers, government and educationalists need to decide what degrees are for

See: BBC NEWS | Education | Degree grades ‘in need of update’

In the early 80’s, most people who went to university and got an honours degree got a 2:2. In 2003, most got a 2:1 or a first. This is good news for the government, perhaps neutral for educationalists, and bad news for employers.

As an employer, I want to distinguish between job candidates who took their degrees in different years and from different universities, and perhaps in different subjects. I don’t want to have to be an expert on vintage years and best universities, as if I was selecting from a wine list. As it is, like most employers I look more carefully at where they got their degree, because most of us have some kind of notion of Oxbridge, Red-brick and New Universities. This is doubtless hugely unfair. But as I don’t have much confidence in the grading system, it’s the best I have to go on.

For educationalists, the point of the degree is the education, getting people to achieve their personal potential, making them more rounded people. The grade at the end is an unwelcome lottery, where every year some excellent students underachieve, and some people who have a talent for examination papers carry off unexpected laurels.

For the government, of course, a year on year improvement in results is just what the doctor ordered – except for the occasional times when people look back and realise that it is becoming comparatively easier to get a top degree.

It’s now generally agreed that the A-level system needs overhauling. Should we now face the same with degrees? Certainly we must do something – either peg degree results at some kind of gold standard, or give employers something more comprehensive to help them choose the right person for the right job.

To do that, of course, employers, government and educationalists are going to have to come to some kind of agreement about what degrees are for.

Why it’s time to begin to say goodbye to Windows

BBC NEWS | Technology | Concerns over Windows cashpoints and BBC NEWS | Business | UK report says Linux is ‘viable’

Recently the organisation I work for decided to switch its telephone network back to a Unix rather than Windows server basis. The feature set is basically comparable, and there was already an investment in Windows server equipment. The reasoning, though, was compelling: if a virus disabled our NT servers, it would leave us without telephones and without email. By adopting a second operating system, we spread the risk.

This, of course, bucks the trend of ever increasing integration and more and more generalised systems.

It’s something that repays wider consideration. Over the years, commercial concerns large and small have been working to reduce the number of different computer systems they operate because of the overheads in terms of support and licensing. One of the hidden costs of any corporate takeover is the cost of getting the two company systems to talk to each other. At the same time, sales driven businesses have been diligently buying into the upgrade cycle because they want the competitive advantage of the latest database, the latest direct marketing tools, the latest… well, you get the picture.

As the dominant player in the marketplace, Microsoft has been able to leverage all these considerations to put its client software on the desktop and its server software in the back office. This is despite the fact that, for most applications, Microsoft was not offering the best product. Remember OS/2? Never a hit with its original target of the desktop market, it has been the mainstay of ATMs for a long time. Ever considered using Linux? You may be leary of running your business on a free operating system. NASA, though, run all their systems on it, as they don’t consider NT to be sufficiently reliable for their mission critical programmes. Ever used an Apple Macintosh? For nine out of the ten most common tasks that desktop users want, the Macintosh is easier to use, requires less training and gets results faster. But 95% of computers still run Microsoft products. Remember Novell networks? Back in the 90s our Novell 3.11 network used to go for years without having to be reset. When we moved to Windows NT, we, like everybody else, got used to frequent downtime.

You’ve probably heard the old joke about Microsoft claiming that if they ran the automotive industry, cars would now have improved to the point where they did 638 miles to the gallon. Then General Motors (in the joke) counter that if Microsoft ran the automotive industry, all the lights on your dashboard would be replaced by a single ‘General Car Error’ light, and while you were driving along the motorway you would occasionally have to stop and reinstall the engine.

It’s only funny, of course, because it is partly true. Computers offer year by year increased performance beyond anything that is available to business in any other sector. But they offer a level of reliability that is below anything that businesses would accept from any other sectoral supplier.

IBM used to run an advertisement slogan “Nobody ever got fired for choosing IBM”. This was in the 80’s and 90’s when a lot of small businesses got their fingers burnt when their local PC supplier suddenly went out of business, and their exclusively imported Malaysian computers were no longer supported. Microsoft has inherited the spirit of the IBM slogan: when choosing a platform, most companies may agonise over their hardware supplier, but they will choose Microsoft without seriously thinking over the alternatives.

But there is a fundamental difference between choosing a single supplier for a hardware offering and choosing a single supplier for software. Simply, there is no single catastrophe which could wipe out all of the hardware you ever purchased. Even if IBM had gone completely and irretrievably bankrupt without any warning (think of Enron), the hardware you had already purchased would continue to work. In fact, entrepreneurs would have quickly bought up the outstanding support contracts and business would go on almost as usual.

For software, the picture is very different. One virus could bring your network, your desktops, your phones, and anything else which is run on the same operating system. And in this case, going with the majority supplier puts you more at risk. 99% of viruses attack Windows systems, and the vast majority attack only Windows systems. Currently there are no known viruses for Unix based Mac OS X.

What’s more, software is supplied in only partially working condition – something you also wouldn’t accept from any other sectoral supplier. Bug fixes and, for Microsoft, security fixes are frequent. And they are not the kind of thing an entrepreneur could pick up if Microsoft ceased trading. Again, the lesson of Enron is that nobody is too big to fall.

The time has come, I think, for business to begin to disentangle itself from the Microsoft world. It may make sense to have the same operating system on your desktop as in your server, but it makes more sense to build robustness into your Information Technology. By all means keep Windows for the desktop (although Mac OS X has more attractions for me), but let us consider carefully the benefits of other options, especially open-source systems like Linux, which free us from a single supplier and take us back to the relative robustness of separating the front room from the back room.

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