Tuesday, 20 February 2018

The End of UKIP

The general view is that UKIP has slid into irrelevance because it succeeded in its primary goal: securing victory in the 2016 EU referendum. Rafael Behr in The Guardian is not convinced: "Its finances and membership have dwindled as its purpose has become obscure. But why is it obscure? Brexit isn’t done yet. Is it inevitable that an organisation with a single vast ambition should atrophy the moment that ambition captures the state? Surely that is the time for such an organisation to thrive. Seen through the eyes of future historians, it is weird that the locomotive party of a revolution should shunt itself into a ridiculous siding". Of course, there are plenty of examples of organisations that have gone into a rapid decline once their political goal was achieved, from the Suffragettes in the UK to the Prohibition movement in the USA. To make his case, which is ultimately a charge of the betrayal of the electorate, Behr has to convince us that UKIP was more than a mere campaign with a narrow goal; that it amounted to a political movement that sought to reorder society more generally, despite its inability to make political headway outside the special circumstances of elections to the European Parliament. This means reviving the claim of Matt Goodwin and Rob Ford that UKIP's rise represented a general discontent with politics and the established parties; a theory that was clearly disproved in 2017.

Looked at in terms of political dynamics, the cause of Brexit has simply moved from the extra-Parliamentary field to the Parliamentary. It is now official (if vague) government policy and the Tory ultras offer loud resistance to back-sliding. You could view this as either the UKIP-ification of the Conservative Party or the return of a "lost tribe", as Boris Johnson put it, that had been alienated during the post-Thatcher years, but neither story is convincing. The ultras were there all along, cheering Enoch Powell's condemnation of the EEC well before they started sniping at John Major, while UKIP's rise to prominence didn't happen until the 2004 European Parliament elections (when it increased its seats from 3 to 12), which was more than a decade after the Single European Act and the Maastricht Treaty. And while this date coincides with the start of increased migration from the EU, the rise of immigration as an issue of public concern began in the late-90s, amplified by a hostile media focus on asylum-seekers. Tellingly, Nigel Farage did not become leader of UKIP until 2006 and the party did not achieve pole position in the European elections (24 seats) until 2014. Seen through the eyes of future historians, the Tory ultras are a dissenting faction that can be traced back to the Macmillan years while UKIP was a political mayfly.

Behr questions whether it was ever really a party, though only in order to denigrate its cause: "A party founded on a big idea should be able to survive a change of leadership. It should grow when its idea captures the mainstream. And if that party shrivels into a ball of congealed venom, what does that say about the wisdom of its idea?" There is a gulf, both organisationally and conceptually, between a "party of revolution" and "a party founded on a big idea". For a start, political parties tend towards the fox rather than the hedgehog, in Isaiah Berlin's formulation, because they need to institutionalise a broad base of support to secure power. Even if they are driven by a core idea - the inevitability of class conflict, the primacy of individual liberty etc - the political dynamic requires that its impact be worked out in detail across all areas of society: a revolution is general, not particular. This translation of theory into practice was something that UKIP signally failed to do. Its vision of society never quite came into view beyond an incoherent nostalgia and an obsession with quotidian trivia like smoking in pubs, much of which was simply a reflection of the personality of the then leader.

Nigel Farage's success in that role owed much to his projection of an unflappable character that was part spiv, part city gent, part mein host. His appeal for the media was colourful presentation as much as views congenial to the assumed prejudices of consumers. The failure of his successors to achieve a similar prominence wasn't simply a case of pygmies following a giant. After all, Farage as a politician was a one-note gobshite and a practical failure. Not only did ne never manage to get elected as an MP, but his record of indolence and financial abuse in Strasbourg would have shamed the beneficiary of a rotten borough. In retrospect, it looks like Paul Nuttall's embroidery of the facts of his history was as much about trying to invent a character sufficiently colourful to maintain media interest as it was a reflection of his inner Walter Mitty. The over-riding impression that the recently defenestrated Henry Bolton gives has nothing to do with his racist girlfriend. It is that he is a dull man with delusions of significance. He reminds me of a 1980s sitcom.

UKIP clearly wasn't a party in the conventional sense, hence its repeated failure in Parliamentary elections (the exceptional circumstances of Douglas Carswell notwithstanding) and its notorious volatility in local government, where its councillors have frequently split or defected. Its mix of jejune libertarians and crusty reactionaries precluded any coherent ideology, revolutionary or otherwise, while its attempts to develop a programme beyond Brexit were repeatedly undermined by eccentricity and the intervention of the racist and Islamophobic right. So was UKIP more a single-issue campaign than a party? There's obviously truth in this - Brexit was the overwhelmingly dominant concern for reasons of unity as much as conviction, while the behaviour of the party's MEPs in the European Parliament never graduated beyond protest - but this doesn't explain how UKIP came to dominate politics in 2016. Behr's attempt to cast Brexit as a complex, emotional spasm over which neither UKIP nor the Tory ultras have much control doesn't answer the question. He seems reluctant to acknowledge that UKIP during the Farage era was a creation of the rightwing media rather than an organic, populist uprising - again repeating the error of Goodwin and Ford.

That Nigel Farage quickly went freelance after the referendum as an all-purpose spokesman for the gammon tendency was less opportunism than a case of advancing his career to its next logical stage: from leader of the band to solo artist. Farage has always depended more on the indulgence of newspaper editors and broadcasting producers than on the support of the party. It is clear that his seat on the BBC's Question Time will remain available for a good while yet, but that might not be the case if he were shackled to UKIP's corpse. Contrary to his loud assertions, he is probably happy that there will be a Brexit transition as it will extend his relevance for a few more years, perhaps longer. That he has sought to internationalise his brand, first in the USA and now in the Republic of Ireland, is an irony that appears to be lost on the Little Englanders of UKIP's fast-diminishing rump. The challenge for Farage is that media interest is shifting towards Jacob Rees-Mogg, who is an even more artificial character but has the advantage of a seat in the House of Commons. That the Tory ultras have settled into a routine of performative protest might look like a tribute to UKIP's salad days in Strasbourg, but it's really just the lasting influence of Enoch Powell.

Saturday, 17 February 2018

The Rise and Fall of the Filter Bubble

The term "filter bubble" was brought to prominence by Eli Pariser in his 2011 book, The Filter Bubble: What the Internet is Hiding From You. Ironically for a book that anthropomorphised the Internet, imagining it as a malevolent entity that sought to confound us, the subject was personalistion, but in this case the attempt to produce more "relevant" content for users through the analysis of their networks, past choices and demographic characteristics. Pariser's theory was that personalisation in social media was simply reinforcing existing biases by excluding conflicting viewpoints. Google's search results and Facebook's news feed were being subtly censored in a way that simultaneously increased plurality (there was now an infinite number of bubbles rather than the single narrative of the totalitarian dystopia) while reducing individual cognitive diversity (you were isolated in your own, singular bubble). This wasn't a new idea - it's just a version of the echo chamber, after all - but Pariser caught the zeitgeist by suggesting that the tech titans were at best indifferent to social capital and at worst malign. Despite ample evidence that default personalisation produced little variation in results, the filter bubble became an established fact in the discourse on the social impact of the Internet.

One reason for this was that the idea chimed with the narrative of increased political polarisation, particularly in the USA. The Internet was thought to be driving people into more entrenched camps, producing greater partisanship and "alternative facts". Inevitably, the filter bubble has been blamed for Brexit and the election of Donald Trump. This distracts attention from the more overt bias and influence on popular discourse exercised by newspapers and television, which may be getting worse as the global news market takes a more nationalistic turn. Insofar as polarisation is an actual social phenomenon, rather than just a reflection of changes in the dynamics of party politics (e.g. the declining significance of race as a bipartisan issue, both in progressive and conservative registers, in the US after the 1960s), it appears to be most acute among older voters with a greater reliance on traditional media. As one American academic study noted, "We find that the growth in polarization in recent years is largest for the demographic groups least likely to use the internet and social media".

In practice, a greater exposure to content of any sort will lead to greater diversity. Even if you only augment The Sun with The Daily Mail you will increase the diversity of views, simply because the overlap between the two is not perfect. The net effect on diversity of opinion will be positive, even if slight (it can't be negative). If you use social media, the odds are that you will be exposed to a broad variety of viewpoints simply because your own family and friends will likely include people with different opinions and affinities. They may be utterly wrong about everything, but you're still going to be exposed to their perspective. Unless you rigorously curate your preferences, and so take control of your personal filter (in which case the idea of an imposed filter bubble does not apply), you are probably exposed to far more diversity of opinion today than you were twenty years ago. Some of that additional opinion will be nonsense or propaganda, but there is no good reason to believe that the relative proportions of "good" and "bad" in new media will be any different to traditional media.

Despite the flaws in the filter bubble theory, its proponents continue to believe its fundamental truth even in the face of contrary evidence. For example, Rachel Botsman (a former director of the William J Clinton Foundation) writing in The Guardian concedes that social media actually increase diversity but remains determined to salvage the filter bubble: "A recent Reuters Institute Digital News Report found that 44% of people in the US who use social media for news end up seeing sources from both the left and the right, at more than twice the rate of people who don’t use social media. However, that’s not to say they necessarily pay attention to any contrary views. When Facebook rolled out its 'related articles' feature last year, users continued to ignore information that undermined their favoured narrative." If you can be bothered to click on the link in Botsman's article you will discover that she has misrepresented the Facebook change, which actually led to lower rates of sharing of contentious articles by providing counter-narratives.

Botsman is typical of the neoliberal establishment in simultaneously extolling freedom and insisting on the need for restraint: "I’m a huge advocate of free speech, open democracy and online dialogue that mirrors the exchange of opinions that happens offline – at work, at home and even in classrooms. The issue is that it has become a free-for-all, a corruptible beast that we can’t, or haven’t, yet learned to control". It should be obvious here that the "beast" is not the Internet but that more traditional animal, the bestial mob. Social media has become a symbolic substitute for society, allowing establishment figures like Botsman to not just attack the common herd for its lack of manners and good sense but to revel in their own contempt. To this end, the inflation of the troll from a social nuisance to a state actor with malign intent (those Russian bots) is a distraction from what would otherwise be a whine against the impropriety and disrespect that characterises the everyday exchanges that Botsman claims to value. The hyping of the threat to democracy is an anti-democratic manoeuvre.

That the filter bubble has actually come to prominence during a period of increased cognitive diversity should lead us to wonder what purpose the concept serves. One explanation can be found in the space where political centrism intersects with the anxieties of traditional media outlets over falling advertising revenues. Centrism by definition deplores partisanship and polarisation, but it also believes that regulation is necessary in the public sphere to ensure a level playing field. This obviously conflicts with the traditional liberal exaltation of the free press, requiring the hyperbole of extreme threats, from antisocial corporations to state actors, to excuse intervention. For traditional outlets like newspapers, the existential crisis presented by the changing advertising landscape is enough to justify a state of exception, but they have no better idea how to tackle the problem of increased diversity than the centrists. The consequence has been a steady inflation in the scare stories and an increasing note of hysteria among traditional media commentators facing falling sales and thus the prospect of their own eventual redundancy.

The limited attempts to address the circulation of "fake news" via social media have centred on the independent verification of news sources. These have tended towards ranking, i.e. classifying content as more or less reliable based on the reputation of the source. This means providing a weighting of content providers that can be incorporated into algorithms, which is little advance on Google's Page Rank. The obvious aim is to reconcile the different interests by giving traditional outlets a privileged position as sources, but this simply substitutes credibility for traffic and is therefore economically unsustainable. The fight is ultimately over money, not truth. Platforms like Facebook are comfortable with this approach not only because it doesn't threaten their revenues but because it allows them to avoid the responsibility of editorial control. To rub salt into the wounds of traditional outlets, this can as easily be done by outsourcing judgement to unpaid volunteers (community self-policing) or not-for-profits as to established media brands. As Mark Zuckerberg disingenuously explained it: "We do not want to be arbiters of truth ourselves, but instead rely on our community and trusted third parties".

The filter bubble, as a controlled environment in which the consumer is passive, has gradually given way to the idea of an active network in which people share junk news (i.e. deliberately false and extremely partisan). From slaves of the machine they have become active amplifiers of each other's prejudice (the way these networks are described often employs tropes familiar from reports of Islamic radicalisation). This evolving idea has been politicised by the evidence that such networks are more prevalent on the politial right than the left, leading to the idea of "network contagion" being associated not just with polarisation but with political populism. A recent study by the Oxford Internet Institute (OII) has been widely cited by liberal media in this regard, despite its methodology being quite hilariously flawed. Its sample of junk news is biased towards the right (so comparisons with junk news circulation on the left are impossible) and no rationale is provided for its segmentation of consumers into value-laden groups such as "the resistance". Many of the junk news sources turn out to be vanilla conservative outlets, like National Review.

The stylistic characterisation of junk news in the OII study includes this classic line: "These outlets use emotionally driven language with emotive expressions, hyperbole, ad hominem attacks, misleading headlines, excessive capitalization, unsafe generalizations and fallacies". This description would obviously apply to many mainstream newspapers. The real reason for the rightward bias in junk news is simple economics: there is a large market for rightwing junk and a willingness to spend disposable income on value-reinforcement (the gammon pound, in British terms). This isn't just a structural reality, reflecting the correlation of age with both increased conservatism and financial comfort, but the result of a deliberate cultivation of this market segment through traditional media since the 1970s, notably cable TV, shock-jock radio and partisan newspapers. Though exploited mainly by conservatives, the key enablers of this development have been successive neoliberal reforms that simultaneously removed the social obligations that had been placed on traditional media and insisted that editorial strategy should be subservient to market forces. If you want to understand junk news, start with the deregulation of US TV news in the mid-90s (enacted under a certain William J Clinton).

Having started out as a vision of passive isolation, the filter bubble has matured into the trope of an active cult. The next stage in its evolution points towards irrelevance as more apocalyptic visions of media and content-generation emerge, such as the idea that bad actors will soon be able to fake video so well that we will struggle to believe the evidence of our own eyes (it is worth remembering that cinema has been simulating contemporary reality since Sergei Eisenstein restaged the storming of the Winter Palace, while the tradition of impersonating public figures on the telephone is as old as, well, the telephone). What is telling about this imaginative hellscape is less the implausibility (the technology capable of determining a simulation will advance in parallel with the technology for creating one) but the assumption that we will have once more been reduced to passive idiots, which tells you a lot about the media editors who commission such fantasies. The filter bubble is dead. Long live the filter bubble.

Saturday, 10 February 2018

The Ides of March

The reporting of the leaked government forecasts on the regional impact of various Brexit scenarios this week was a good example of the media's "bias against understanding", with little attempt to explain what the numbers actually represented, let alone what they would mean in practice. Some people interpreted them as evidence of economic depression (i.e. an absolute fall in output), which at 15 years long would be nothing if not remarkable, rather than a reduction in the rate of GDP growth over the period. That all Brexit outcomes are going to make us relatively worse off has never been in serious dispute (i.e. beyond the free-trade fringe), and some leavers were resigned to this from well before the referendum, valuing greater "control" over immigration and domestic law above national wealth. Few commentators noted that the forecast limit does not imply a recovery from sub-par growth after 15 years, that horizon simply being as far out as the analysts felt confident modelling. Given that national wealth is cumulative, it would take many years to make up the lost ground, and that's assuming we could achieve above-par growth for a sustained period (we haven't managed it yet during the recovery that started in 2013), so what is actually being forecast is a generation-long recession.

The noise around the forecasts has helped distract attention from the crisis in government over the Brexit end-state, so much so that I'm wondering if the leak was actually engineered by Number 10 rather than "meddling" civil servants. The division in the cabinet over the desired future is not one that can be bridged. A compromise between those who want maximum alignment with the EU and those who want the minimum would satisfy neither. It would be a lose-lose. As there is no win-win either, the only possible outcome is zero-sum: one side has to win and the other lose, hence the fevered talk of expulsions and leadership challenges. In microcosm, this reflects the larger negotiation between the UK and the EU, except there is little doubt that whatever happens the EU27 will not lose. The best the UK can do is minimise its losses (that was the real message of the multiple GDP growth scenarios), but that necessarily means rejecting any compromise with the Brexit ultras and seeking maximum alignment. This dilemma has led to the current irritable state of affairs in which the EU is pointing out that the UK government has yet to hand in its homework, while ministers in London pretend to be affronted by what they characterise as Brussels' high-handedness.

While cake has been the most prominent food metaphor to date, the tactical objective of the UK government remains cherry-picking: the idea that a series of bespoke sectoral deals can be negotiated that will preserve key European markets and supply-chains while allowing full autonomy in respect of trade agreements with other countries. The problem is that cherry-picking is politically unacceptable to the EU27 because of the obvious precedent it would set, not just for existing members but for those like Switzerland and Turkey who are resigned to non-membership but would like improved benefits. Despite its notorious weakness for fudge, the EU remains a construct built on institutions, hence all that is on offer to the UK is a limited set of fixed menus, essentially Norway or Canada. If this wasn't challenging enough, the true believers of Brexit (and the opportunists, for that matter) are disinclined to accept any deal that doesn't look like a clear loss for the EU. They want to be able to say that money has been repatriated for the NHS and that the EU has admitted it cannot live without our market for German cars and Italian prosecco. They also want remainers neutralised. They want, to put it bluntly, a dead body.

For the ultras, any continuing authority by the EU over trade or commercial regulation is a red line. Though they are insisting that this authority should end in March 2019, it would be reasonable to compromise on the transition period, despite the hype about being a "vassal state" (a time-delimited vassal state is obviously a nonsense), but that only amounts to a delay until December 2020. Any form of associate status of either the Customs Union or the Single Market would entail continuing EU authority in practice, hence the insistence that only a bilateral trade deal (i.e. one in which the UK has equivalent authority to the EU27) is acceptable. Though the maximum alignment faction, led by Philip Hammond, look closer to the EU27's position, in reality there remains a big gulf between them and Michel Barnier & co because of the insistence that the UK cannot be a member of "the" or "a" customs union. Brexit in name only might look attractive to the #FBPE crowd, but it isn't on offer from the EU27 except in the form of explicit membership of both the Customs Union and the Single Market, which isn't something that Hammond & co can sell domestically.

To no one's surprise, the Irish border has come back into focus as the most intractable problem facing the negotiating teams. Unless the UK stays within both the Customs Union and Single Market, a harder border is inevitable. The questions that arise are where and how hard. The Tories and the DUP are both opposed to a border in the Irish Sea, even though this would be the most practical solution and enjoys popular support (or perhaps indifference), even among unionist voters. For the DUP it is an existential issue that would represent the first step towards their full absorption into a united Ireland. Suggestions that a land border between Northern Ireland and the Republic could be magicked away by technology remain literally incredible. While the Tory ultras insist that there is no need for a hard border, they are essentially playing a game of chicken because they simply don't care what the outcome is. If a hard (or even hardish) border reappears, they will simply blame the EU. If it could be engineered, which I doubt, I suspect that Rees-Mogg and his ilk would accept an Irish Sea border as the price for a "clean break" for Great Britain.

All the structural forces are pushing towards a continuation of the status quo, both during the transition and after, while the political imperative of Brexit remains the need for a visible rupture, even if the material consequences are negative. Everything the government is currently doing is aimed at putting off the inevitable crisis that this entails and hoping that something will turn up. But nothing will turn up. The EU27 aren't going to do anything that calls either the legitimacy or purpose of the union into doubt, which means that a "generous" trade deal for the UK simply isn't going to happen. The Brexit ultras aren't going to go away. Labour will, quite reasonably, present itself as the only party capable of facing down the ultras and the DUP to secure a pragmatic Brexit. Whether they could actually achieve this will remain a counterfactual unless the government falls. The preservation of her administration until 2021 is Theresa May's prime objective, but there is every sign now that she will be lucky to last beyond the end of March. The ultras (and the opportunists) know that the transition agreement will set the tone for the final deal, so the chance to secure the Brexit they want will soon pass: "There is a tide in the affairs of men" etc.

Sunday, 4 February 2018

The Twilight of the Behemoths

The Carillion and Capita stories have highlighted many of the problems that outsourcing gives rise to in the public sector, with notable sub-plots concerning the illusion of risk transfer and the impact of austerity on profit margins, but doubts over outsourcing as a business strategy are also evident in the private sector. The chief argument for business process outsourcing is not direct cost reduction but a focus on "core competence", which is essentially a dilute version of Adam Smith's theory of comparative advantage. In other words, the business should concentrate management on those activities that deliver profit and have the potential to deliver higher levels of productivity. There are two key assumptions here. First, that management is a scarce resource, which in turn justifies high executive pay. But there is little evidence that outsourcing itself intensifies senior management focus. In practice, outsourcing usually means transferring dedicated middle managers outside the corporate boundary. It has little impact on core management. The second assumption is that support services typically suffer from lower productivity due to being relatively labour intensive (i.e. Baumol's Cost Disease). But while many of the functions outsourced may have been characterised by low-productivity growth, this is as likely to have arisen from historic under-investment or poor management as from over-manning.

Sloughing off all non-core activities to outside suppliers makes the firm look lean, but it also means that complexity has been shunted elsewhere; it hasn't been eradicated. Because outsourcers have tended to consolidate, both to achieve economies of scale and lock-in clients by acquiring specialist services, this has led to that complexity and associated risk being concentrated (there is a parallel here with financial derivatives in the lead-up to 2008). Jonathan Lewis, the recently-installed CEO of Capita, has described his business as "too complex" and one that has "underinvested in infrastructure and over-relied on acquisitions for growth". In Coase's theory of the firm, the cost of a business's reduction to its core competence is the increased overhead of supplier contract management. However, that transaction cost analysis rarely considers the implications from the perspective of the outsourcer. Though it has become a cliché that firms such as Carrillion and Capita have become experts in wining contracts, it is less appreciated that this expertise does not reduce the cost of contract management. If anything it exacerbates the problem by ignoring downstream costs. Tales of outsourcers charging silly money for contract amendments may be evidence of price-gouging, but they may also indicate simple inefficiency.

Efficiency gains by outsourcers will have come through a combination of productivity-enhancing technology and lower labour costs, but the ability to make significant improvements through either has declined since the millennium. Much of the growth in outsourcing represented one-off conjunctions in the global economy, such as the first wave of office automation in the 80s, the arrival of the Internet in the 90s (which allowed a lot of customer service to be outsourced to consumers), and the labour-supply shock of globalisation (i.e. offshoring). It is notable that outsourcers are themselves now plagued by under-investment in technology as much as by complexity, while offshoring has lost much of its ability to shave labour costs as global wages converge. The result is that outsourcers now find themselves struggling to achieve significant productivity growth, which undermines their ability to offer falling real costs as contracts come up for renewal, a situation exacerbated in the UK where public sector clients may have no option but to insist on lower prices, all reductions in service scope or quality having been exhausted in the early years of austerity.

If outsourcing appeared to be an irresistible development in the 1990s and early 2000s, the last decade has been marked by an oscillation between outsourcing and insourcing as both private firms and public sector bodies have taken key functions back in-house. While this has sometimes been a temporary measure following an unsatisfactory contract with a particular outsourcer, an increasing number of firms and councils have decided that the initial outsourcing went too far, leading not only to predictable failures in service quality and cost over-runs, but also exposing the organisation to the risks of internal demoralisation and external reputational damage. The Labour Party's current preference for the renationalisation of the railways, and for local authorities to build houses rather than invest in dubious schemes like the Haringey Development Vehicle, echoes a trend that is already well-established in both the private and public sectors. Far from being an ideologically-inspired programme, insourcing is usually advanced for wholly pragmatic reasons: we know it can work (because it previously did so), and we now know that the downsides of outsourcing outweigh the downsides of inhouse provision.

Firms that opt for insourcing frequently cite greater management control as the primary consideration. This is not just control over operating costs or service delivery but also control over data assets. While this is partly driven by "big data" hype, it also reflects a material change in many businesses to a greater reliance on information processing and a wider appreciation of the value of intellectual property, which has caused some firms to question what their core competence actually is. Technology has played a key role in facilitating both outsourcing and insourcing, with the swing to the latter reflecting developments such as cloud computing and software as a service, which obviate the need for up-front capital and allow firms to invest in activities such as data analytics and software development without a comparable investment in infrastructure support. Wider social developments have also played a part with the emergence of low wage regions in developed economies allowing firms to onshore certain functions that in the past might have been offshored, though this also leads to the business being fragmented into geographically dispersed silos, which entails its own transaction costs.

What this highlights is that the traditional division between outsourced and insourced, which was coterminus with functional organisations (e.g. customer service or the IT department), is being blurred. This is another way of saying that the boundary of the firm is now more fluid and dynamic and thus closer to the Coasian ideal. From the outside, it is hard to tell what functions a business operates itself and what it outsources, though this is rarely a matter of concern for its customers. As the private sector has become more discriminating, outsourcing contracts have tended to become smaller, more specialised and more flexible in their management. This has been to the benefit of smaller, more specialised outsourcers, many of which are indistinguishable from independent consultancies, and explains why the larger, traditional outsourcers such as Capita and Serco have been struggling. Scale is no longer an unalloyed benefit and a reliance on big contracts has come to be seen as risky, and not just in respect of public sector clients. The outsource market has become more plural, more varied and more bespoke, which is a sign of maturity.

Though the current headlines are focused on historic errors likes PFI deals in construction or expensive facilities management contracts, what's really going on is the decline of the big "one-stop shops" across both public and private sectors. This same structural change is evident in large-scale housing. The Haringey Development Vehicle was not merely a poorly-designed plan that would have disadvantaged borough residents, it was an out-of-date, 90s-era approach to the problem of supply that sought to create another behemoth with a long-tail of risks for the council. Given that London already has an over-supply of luxury new-builds and is probably facing a crash in prices at the top of the market in the next few years, it is possible that Lendlease, the developer, was starting to get cold feet over the Haringey scheme. The rejection of the HDV is clearly not a nefarious plot by Momentum, but nor is it just a stirring tale of local democracy. It reflects a wider change that will be characterised in the public sector not just by more insourcing, or more plural and selective outsourcing, but above all by a desire to "take back control".

Wednesday, 31 January 2018


Arsenal reached the two-thirds point of the season last night in classic style, losing 3-1 to bottom-placed Swansea, which allowed the Welsh club to leap out of the relegation zone for at least a day. Given that this was a match of barely credible cock-ups by the Gunners, fans were left fearing that the well-trailed transfer of Pierre-Emerick Aubameyang was about to go tits-up as Olivier Giroud came on. Surely he would get crocked within 5 minutes, so scuppering his move to Chelsea and Michy Batshuayi's linked transfer to Dortmund? In the event, Giroud remained typically unruffled and the Gabonese international's move to London was confirmed this morning, though it is doubtful a fresh striker is all that we need to turn around a season teetering between modest success and dull failure. The rumour that David Luiz might travel in the opposite direction to Giroud didn't help. Despite late-Wenger Arsenal's reputation for football as improvisational jazz, the last thing we need is another impulsive defender with a tendency to nod off at key moments. More positively, Mesut Ozil (football's Thelonious Monk) is reported to have extended his contract to 2021.

Our points tally for the first third of this season was 22; for the second it was 20. Last season we got 25-25-25 and finished fifth. The previous season we managed 26-22-23 and finished second. Given the higher number of points among this season's top-four at this stage, and assuming Arsenal don't dramatically improve and secure 30 in the final third, we're looking at a finish under 70 points for the first time since 2011 when we finished fourth on 68. I suspect this year such a total would secure no better than sixth, which means our continued presence in European competitions in the year of the Glorious Brexit may depend on winning the Europa League. That's not beyond a team that has proven capable of raising its game in cup competitions, but the early exit from the FA Cup against Nottingham Forest suggests we may even be losing that knack. The Carabao Cup may yet put a gloss on the season, and in many respects I'd rather we faced a team like Manchester City in the final rather than one determined to exploit our weaknesses more than rely on their own strengths, but finishing the campaign empty-handed and well off the pace is looking increasingly likely.

Given Petr Cech's recent mistakes, notably at Bournemouth and Swansea, and his increasingly forlorn search for that elusive 200th clean-sheet, I doubt he will be first-choice goalkeeper beyond the end of his current contract, which ends in June 2019, and perhaps not even beyond the end of this season if David Ospina leaves when his contract expires in July. With Emi Martinez and Matt Macey too young, Arsenal will need to buy an experienced 'keeper in the summer. That won't necessarily mean an immediate end to Cech's Arsenal years, and I'm sure many would welcome him eventually following the same route as Per Mertesacker into coaching at London Colney (though Jens Lehmann might have something to say about that), but you have to expect that the 35 year-old will spend a lot more time warming the bench in future, unless he chooses to drop a level or return to Sparta Prague. In retrospect, I still find it hard to understand why Wojech Szczesny was shipped off to Italy. He might have got on the wrong side of Arsene, but at 27 he is now entering his prime at Juventus and the current manager isn't likely to be around beyond 2019. That looks like a blunder by the club hierarchy, and evidence that they have been reluctant to over-rule Wenger.

Goalkeeping errors can cost you points, but the number depends on opportunity and therefore the quality of the defence generally. More worrying than Cech's slow decline is the increasing fragility of our central defenders. Arsenal hasn't been a strong defensive team for over a decade, but the current setup looks particularly erratic. If we look at the goals for and against at the end of the four seasons between 2013 and 2017, the progression is 68-41, 71-36, 65-36, 77-44, suggesting a significant drop-off in 2016-17 masked by attacking efficiency. The tally for the 25-game mark of those seasons was 48-26, 47-28, 39-22 and 54-28. The move to a back three was meant to provide greater defensive resiliency without impeding our goal-scoring, but it hasn't been as effective as Chelsea's switch in Autumn 2016, hence the chopping and changing in formations this season. At the 25-game mark we have scored 46 and conceded 34. While there is every reason to hope that we'll improve in attack and thus pick up points, at this rate we could finish the season with a goals against total of 50. If you want to win the league, you usually need to score over 80 and concede fewer than 30.

With Koscielny now limited by age and chronic injury, Mustafi unconvincing, and Holding and Chambers still raw, we are going to need to invest in at least one established central defender soon, notwithstanding the arrival of the promising Greek youngster, Konstantinos Mavropanos, at the start of the January transfer window (apparently a Sven Mislintat pick). Jonny Evans wouldn't be an upgrade, in my opinion, though Roma's Kostas Manolas might be. Counter-intuitively, a player like David Luiz might be able to fill the defensive midfielder slot that neither Francis Coquelin nor Mohamed Elneny has managed to make their own, though buying a specialist in that position would surely be the simpler option. The way that Elneny has moved between defence and midfield during recent games might suggest a conscious plan rather than improvisation, or perhaps just Wenger harking back to the flexible role played by Emmanuel Petit. On the flanks, we will almost certainly persist with attacking full-backs, which is fine by me, but this just increases the need for greater solidity in and around the penalty area, as well as more movement in attack to create short-passing combinations when they overlap.

Elsewhere in midfield, the question remains whether Granit Xhaka is worth Wenger's continued indulgence, given the number of times he is caught ball-watching as another opponent steals in to score. For all his passing accuracy (on his day), he remains too slow for my taste and too much of a liability if you want to accommodate Jack Wilshere or Aaron Ramsey. While those two never quite hit it off as a pair, not least because they instinctively made the same runs, I suspect that age and greater wisdom might make them more compatible now. While it would be fun to see them flanked by Ozil and Mkhitaryan and with Lacazette and Aubameyang up-front, I suspect that will be a Plan B only. Plan A will presumably sacrifice a striker for a holding midfielder and rotate Wilshere and Ramsey for a single slot alongside Xhaka. My own belief is that Arsenal's balance requires the Swiss international to be dropped to the bench. His utility has been blunted by opponents sitting deep, preventing him using his long-range passing to get attackers in behind, while he doesn't have the burst of speed to open up angles for shorter passes.

While Sven Mislintat, Huss Fahmy and Ivan Gazidis will get plaudits for the Aubameyang and Ozil deals, the real test for the new "talent acquisition" regime will come with long-term reinforcements for central defence and midfield, if not during this window then certainly in the summer. So far, Gazidis appears to have delivered on his promise of a shakeup while Wenger has remained diplomatic, a sign that he knows his tenure is coming to an end and that the new guys must be given a degree of autonomy during the transition. Assuming no more significant activity today (there's just under 5 hours to go before the transfer window shuts), I think it would be fair to say that the club is finally shaking off its recent torpor. The question now is whether a rejigged attack will be enough to compensate for a fragile defence and produce something close to 10 wins out of the remaining 13 league games, not to mention victories in the cups. I'd love to see it happen, but I suspect the need for bedding-in will make it difficult. We're going to be improvising for a while yet.