Uncharted Territory

August 28, 2012

MonopolyWatch: Thames Water’s Counting Difficulties

Our vision: If customers had a choice, they would choose Thames Water.
– signoff on email from Do.Not.Reply@thameswater.co.uk.

I don’t know why that quote creases me up, since it expresses a very sensible aspiration. Maybe it’s because it could be so easily adapted: “Our vision: If voters had a choice, they would vote National Socialist/Communist/United Russia [delete as applicable]”. Or maybe it’s just my sense of humour.

I’ve recently had to move home, so am experiencing no end of hassle, in large part in dealing with various utilities and suppliers. This has led me to formulate a hypothesis: the level of incompetence of an organisation is directly correlated with the extent of its monopoly.

So, as an aside within this inaugural MonopolyWatch newsletter, perhaps US car rental customers should start to worry with Reuters reporting that:

“Hertz Global Holdings [has] agreed to buy rival Dollar Thrifty Automotive Group for about $2.3 billion in a deal that puts about 95 percent of the U.S. car rental market in the hands of three companies.”

Why do we allow takeovers, such as of Dollar Thrifty by Hertz? Do we really believe that 3 choices is enough to ensure healthy competition throughout the entire US? It seems to me that in most markets the presence of at least 10 suppliers is necessary to provide sufficient consumer choice and drive continual quality and feature improvements and cost reductions. Surely “consolidation” across industries such as car rental is driven almost entirely by large organisations seeking to achieve a greater degree of monopoly power? So why don’t we – or at least our elected representatives and public officials responsible for the health of the overall economy – resist this process more strongly?

Back to Thames Water. They’re not the worst, but not far from it. Ealing Council, for example, have no rule for deciding who pays the Council Tax on the day you move. Or perhaps they do have a rule, but don’t understand it! Let me explain: you don’t move in or out at midnight, but Council Tax applies – and there seems to be little disagreement on this point – per calendar day, i.e. from midnight to midnight. In fact, likely you formally move some time around midday, let’s say at 11am on 16th August, for the sake of argument. So who pays the Council Tax for 16th August, the person moving out or the person moving in? Simple enough, you’d have thought. (For the record, I’d expect the rule to be along the lines of hotel room bookings, i.e. the person moving in on 16th pays the Council Tax for 16th, just as if you booked a hotel room for “the night of 16th” that would be the night starting on 16th and ending on 17th!).

How could Thames Water match this? Well, they make a clear distinction on their website between customers moving within their catchment area and those moving outside it:

Clearly, if moving out of Thames’ catchment area means you “need to close your account”, the implication is that moving within the catchment area keeps it open. They even ask you for a moving-in date to the new property. This makes some sense, since there may, as in my case, be an overlap, i.e. the rental for the new place started before the one for the old place ended. I don’t think it’s just me being pedantic: asking for information about where you are moving implies Thames are going to carry the account over, as, for example, Virgin Media do (more about those scum another time).

But whoever is moving out from the new property will also have told Thames you are moving in. Does Thames’ website sort this out in some intelligent manner, e.g. by overriding or matching the names provided by the previous resident at the new property? Seemingly not.

And does Thames’ website ask if you want to carry over your Direct Debit when you move? Nope.

So, after telling Thames where I was moving, I then received a letter inviting me to pay by Direct Debit. Has this resulted from me telling them I’ve moved or from the the landlord telling them I’ve moved in? No idea.

Do Thames reassure customers in any way that they will not be billed twice for the property they are moving to. No.

Is it actually possible I could even end up paying twice? Who knows?

Since I now have a new account number and have had to set up a new payment arrangement, is there any sense in which the account at my previous address has not been closed as if I’d moved out of Thames’ catchment area? Seemingly not.

Nevertheless, I dutifully went on line and set up a Direct Debit to Thames. This is where the tale really takes off. What day of the month did I want to pay on? I selected 15th. But when I went to the next screen the form showed 14th. So I pressed “Back”. Big mistake.

This screen-grab shows what I saw next:

Yeap, no “14”. So “15” is interpreted as 14th in the list, I guess.

Thinking maybe I’d inadvertently selected 14 instead of 15 the first time and that Thames’ had implemented a new form of drop-down list omitting the current selection, I selected 15 again. No dice: the next page still showed 14.

I decided to settle for paying on 14th. And guess what? That wasn’t the only problem with this one simple web page. No sirree. Even though all the data I’d entered – name, address, bank account etc – was showing on the screen, the software didn’t think it was there. I had to enter it all again.

On one level it is a bit odd having alternative gas and electricity suppliers all selling an identical product, coming along the same pipes or wires. Given no differences in what is supplied, one should expect little difference in prices. But at least you can choose energy suppliers that are competent in handling the billing process. Why not allow the same for water?

September 16, 2011

Off the Buses in Ealing

I reported yesterday that TfL is planning to increase fares on average by RPI+2 each year until 2018, and Travelcard prices by RPI+3 over the same period, the supposed justification being that rail fares are to rise by RPI+3. I briefly discussed the implications of this discrepancy, but had a subsequent conversation which led me to consider a different case.

I don’t know about you, but I always feel short-changed if I buy a season pass for a transport network and then find I’d have been better off paying for each journey individually. How likely is this to happen for someone living in Ealing, but working in central London a) now and b) in 2018?

Case 1: A morning and evening peak commuter
This individual uses the tube during the morning and evening peak and sometimes catches a bus back from the station.

In the following table I’ve ignored inflation and just increased costs by 2 or 3% p.a. So in today’s prices a zone 1-3 Travelcard will cost £41.55 in 2018, compared to £34.80 in 2012.

Year   Travelcard cost       Less 10 peak tube fares      Bus fare cost         No. bus fares to break even
2012         34.80                     34.80 – 10*3.10 = 3.80         1.40                             3.80/1.40 = 2.71
2018         41.55                     41.55 – 10*3.49 = 6.64         1.58                             6.64/1.58 = 4.21

So whereas in 2012 our peak commuter would only have to catch the bus 3 times in 2012 to avoid feeling cheated on a weekly Travelcard, he’ll have to catch it 5 times in 2018. If, like me, he walks to and from the station most of the time, he’ll be in a bit of a dilemma by 2018 as to whether or not to buy a weekly Travelcard.

Case 2: A morning peak and evening peak/off-peak commuter
It gets even worse in the case I actually discussed yesterday. The evening peak is from 16:00 to 19:00, so many people working in London may not actually travel home until off-peak fares apply. If this happens 3 times in a week, then the calculation changes somewhat:

Year  Travelcard cost     Less 7 peak, 3 off-peak tube fares     Bus fare cost   No. bus fares to break even
2012        34.80               34.80 – (7*3.10 + 3*2.60) = 5.30              1.40                     5.30/1.40 = 3.79
2018        41.55               41.55 – (7*3.49 + 3*2.93) = 8.33              1.58                     8.33/1.58 = 5.28

By 2018 this commuter will need to use the Travelcard on more than one bus each work-day (or for leisure journeys) to justify the expenditure.

Personally I feel the Travelcard should be a better deal. In London, it seems, regular tube users are likely to pay as much per journey as occasional travellers. And it seems unfair for commuters to have a dilemma as to whether to by a season ticket or not – I haven’t even discussed the effect of Bank Holidays, leave, sick-days and occasional home-working. This is the opposite of the case for main-line rail commuters who get a tremendous deal compared to the occasional traveller.

From TfL’s point of view inflating the cost of Travelcards relative to pay as you go (PAYG) fares may also not make sense in the long-run. The result may be that more of us in suburban London stop buying Travelcards and instead cut out as many bus and tube journeys as possible. As I said yesterday, “maybe it hasn’t occurred to TfL that people might consume less of their product when they put the prices up”.

September 15, 2011

Off the Buses

Boris has announced the 2012 London Transport fare increases already. Do we always get an announcement at this time of year? Or is our leader trying to get the bad news out of the way as long as possible before the mayoral election in May 2012? I note that the last time I visited this topic was in January this year when the last fare rises actually came into effect. With a bit of luck there’ll be a double whammy with negative stories now and in January 2012.

Let’s get the ball rolling with a negative story, then.

The BBC provides a link to the documents issued by the mayor. I only looked at the first one (pdf), which seems to tell me everything I need to know.

It turns out that TfL has a Business Plan based on fare rises of RPI+2%. News to me, most likely totally unjustifiable, but certainly worthy of discussion.

First, are we to believe that TfL’s costs rise faster than general inflation? This seems unlikely, though we do know that many of their employees are extraordinarily privileged to the extent that they apparently deserve a bonus just for doing their job during the Olympics. A lot of people will be working then, and the vast majority will be paid their normal salary, and would expect nothing more. I don’t support the present government, but I was rather hoping they might look at strike law with a view to stopping Londoners being continually held to ransom.

Second, on the customer side, how is it possible to bear continual above inflation rises in transport costs? I’m thinking of low-paid workers travelling into central London. The cost of a weekly Travelcard (tube and bus) season in 2012 will be £34.80 to zone 3, £42.60 to zone 4, after rises of 8.1% in each case. That’s about £1 per hour of work! Surely the minimum wage for central London needs to be higher than elsewhere to compensate? Assuming your pay rises roughly in line with inflation (which is doing well these days), then, if you have to spend more on transport, you have to spend less on something else. That is unsustainable. TfL is not like national rail, which, as the Transport Secretary pointed out this week, is now a service for the wealthy. It is simply not realistic for TfL to increase its prices by more than RPI for a long period of time, unless the lowest wages are increasing by at least the same rate.

So why has TfL adopted the RPI+2% formula? Maybe the document I downloaded doesn’t tell me everything I need to know after all. There seem to be a lot of TfL Business Plans, but the 2009 one for 2009/10 to 2017/18 tells us what we need to know:

“…fares in January 2011 and in subsequent years are now assumed to rise at RPI plus two per cent.”

So it is indefinite. And the purpose is clearly to increase the proportion of operating costs covered by fares and therefore reduce what TfL term “Net operating expenditure”:

Excerpt from TfL Business Plan 2009/10 - 2017/18

Let’s just note in passing that the congestion charge is going to raise less in 2017/18 than 2009/10!

Bizarrely, TfL don’t state what the figures in the table refer to. Presumably they’re 2009 £s (i.e. adjusted for inflation). Assuming that is the case, TfL assumes a steady growth (several % p.a. varying erratically) in passenger numbers as well as a 2% annual increase in the fares. They say:

“As the economy recovers from recession, it is projected that demand will return to current levels by 2012 and then continue to grow strongly as London’s employment and population increase, with demand reaching record levels by the end of the Plan.”

This is a fairly heroic assumption, as it seems to assume a very low elasticity of demand – maybe it hasn’t occurred to TfL that people might consume less of their product when they put the prices up. I’ll return to this point in due course.

TfL’s Business Plan suggests they expect costs to also rise by several % p.a. more than inflation, and also erratically, with a bigger increase in 2012/13 presumably to reflect the need to bribe the staff not to disrupt the Olympics, and in 2017/18, perhaps because Crossrail comes onstream (though there is no concomitant increase in fare revenue).

So in answer to my earlier questions, it seems that unlike every other field of economic activity, running London Transport becomes less and less efficient with time. And low-paid London commuters are expected to pay an ever-increasing proportion of their income on transport.

It seems to make sense that the fare-payer should cover the cost of the service, but let’s make a few observations:

1. Unlike many others, the London transport market is not segmented, so that those who can pay more do (compare walk-on national rail or air fares with advance tickets). I’m not saying I’m a fan of dramatic market segmentation. It creates its own problems, such as making urgent travel punitively expensive for everyone. But in an unequal society, it does allow some access to services for the less well off. Obviously it’d be better to have greater income equality in London, but until that happy day, subsidising fares helps alleviate the problem.

2. The fare-payer is not the only beneficiary of the London transport network. Just as, in the ’80s and ’90s, out of town superstores and malls benefited from the motorway network, such as London’s M25, (and generally improved roads), so the new millennium has seen similar developments – notably London’s twin east and west Westfields (or perhaps the new one should be an Eastfield?) – piggybacking on the city’s public transport network. Maybe these businesses should chip in and subsidise fares from the taxes they and their customers pay.

3. Just as for customers, businesses benefit from the availability of employees. They don’t pay a higher minimum wage even for staff having to travel into the centre of London. Maybe they should, but in the meantime it doesn’t seem entirely unfair for businesses and higher paid employees to subsidise the fares of the low-paid through the tax system. £1 travel cost for each hour of work is a lot for those earning little more than the minimum wage of £6/hour.

4. Today’s fares shouldn’t subsidise investment. That should be paid for by future fares, i.e. the beneficiaries of the investment. And in fact, the goal in TfL’s Business Plan is not apparently to increase fares to pay for more investment. So when Boris mentions investment in the same bluster as higher fares he’s actually being misleading and trying to deflect criticism.

And on top of this, there’s an anomaly in the pricing scheme – this is what really got my goat and prompted me to delve into the mire of transport fares once again:

“Travelcard season prices increase by 8% overall because of the link with National Rail fares which, as approved by the Secretary of State for Transport, are to rise by 8% (RPI+3%).”

What tosh.

Fares other than Travelcards are going to increase by RPI+2% (7% this year), but Travelcards are going to increase by RPI+3%, because you might get the train.

Do they think we’re stupid?

The price for a mainline train within London is the same as the price for the same journey by tube. I can go to Ealing Broadway and get a train to Paddington or I could get the tube there. I’d touch in and touch out with my Oyster card the same either way.

The daily limit applies just the same whether I use tubes and buses or tubes, trains and buses.

No, increasing the weekly limit faster than other fares (and remember this won’t happen just this year, but indefinitely until the policy changes) affects certain people disproportionately. The sort of people most affected are those who use the system most, that is, those dependent on it most likely to get to work, that is, those with least choice.

I’m in zone 3. If you need to get a bus and tube to and from work – and tube stations are thin on the ground out here, so often a long walk – then you’re going to need a weekly Travelcard (£32.20 in 2011; £34.80 in 2012), given that 10 peak pay as you go (PAYG) zone 1-3 tube journeys alone cost £29 in 2011 and £31 in 2012.

Of course, the tragic thing about all this is that many Londoners get the bus all the way into the centre to save a few pounds at the expense of perhaps an hour a day. But even they’re being screwed. The cost of a 7 day bus and tram pass is rising by 7.3% from £17.80 in 2011 to £19.10 in 2012. I can understand why the individual bus fare is increasing by 7.7% – that’s to keep a round number (£1.40 in 2012 after £1.30 in 2011). But £19.00 for the weekly pass would have been a 6.7% increase. Why not stop there? Gratuitous.

As far as I can see, the main beneficiaries of the fare changes for 2012 are off-peak occasional tube travellers for whom the zone 1-2 fare rises by only 5.3% (£1.90 to £2 – OK a nice round figure) and the zone 1-4 fares by a mere 4% (£2.50 to £2.60). For the last, £2.70 would only have represented an 8% increase. It seems fairer somehow to impact what is most likely discretionary travel a little more and that for people trying to make ends meet a little less.

What else could be done to help the low-paid? Besides fair pay, that is.

Well, here’s another curious anomaly. “Peak” in regard to the daily limit means 4:30-9:30am. That is, if you travel between those hours the daily cap will be the peak rate (£10.80 in 2012, rather than the off-peak £7.80). But if you don’t reach the daily limit and just pay as you go, the peak is 6:30-9:30am and 4-7pm (16:00-19:00). Odd. Why not give people more of an incentive to travel before 6:30am, when presumably there is spare capacity? Why not make the peak daily limit apply only if you travel between 6:30 and 9:30am? Wouldn’t this be sensible demand-management? It would help at least some of those who currently spend more than the off-peak daily limit because they take a bus and tube to work (e.g. in zone 3 in 2012 a pre 6:30am tube fare, a peak return fare and two bus fares would come to £2.60 + £3.10 + 2x£1.40 = £8.50, above the off-peak cap of £7.80 but below the £10.80 peak cap).

The case I’m most interested in is my own, of course. It’s the borderline case, where I may as well walk to and from the tube station rather than catch the 297 (or infrequent E10). If the service were more frequent I might take the 297 to Ealing Broadway. As it is, I never do, because I don’t know how long I’ll have to wait, at least until I get to the stop, when there may be a few clues. When I come out of the station, though, I can sometimes see the bus waiting, or at least a queue of people. I’d take it more often if they actually bothered to display a departure time. But sometimes it comes down to a cost consideration. Basically, I’ll rarely pay the full fare. I might take the bus, though, if I reckon I’ll hit the daily limit.

I note that for 2012 the daily limits for zones 1-3 are increasing by more than the relevant tube fares. The peak daily limit is going up from £10.00 to £10.80 (8%) whereas the peak tube fare is increasing only from £2.90 to £3.10 (6.9%). And off-peak, the daily limit is going up from £7.30 to £7.80 (6.8%) whereas the tube fare is increasing only from £2.50 to £2.60 (4%).

So, in 2011, an off-peak return tube journey to the centre, and a journey within zone 1 (£1.90) came to £6.90, leaving 40p of the daily limit to be taken up by a bus fare, but the same itinerary in 2012 would come to £7.20 before the bus, which effectively costs me 60p. OK, it’s a 50% price increase but I expect I’ll still hop on a 297 at Ealing Broadway station if passengers are boarding!

Nevertheless, if TfL persists in increasing weekly Travelcard prices by more than other fares, there will be people who switch to pay as you go, and walk to tube stations rather than take the bus. Maybe this is all very healthy, but it seems a strange policy. It would make more sense to me to raise all TfL prices by exactly the same percentage and charge – now that it’s all electronic with Oyster – to the nearest penny if necessary.

October 12, 2009

Superfreakonomics, Oliver Burkeman, Hubris and Bounded Rationality

Oh dear, oh dear, oh dear! Hubris meets rationality…

I very much enjoyed Freakonomics. I see from the position of the bookmark in the copy on my shelf that I’ve read past halfway, so it must have been good. I recollect that I was particularly impressed by the discussion of the absence of ill-effects of a policy of random selection of pupils by over-subscribed schools in Chicago, clearly the fairest solution. In fact, I remembered the discussion of random selection in Freakonomics just last week when I read of a rant by a Mike Best, Headteacher, Beaminster school, Dorset:

“It was George III who said that the pathway to hell was paved with good intentions, and so it is with Labour initiatives. They have ranged from the mad (random allocation of school places)…”

Sir, George III was famously mad, and, if I recollect any history at all, died before the Labour party was even formed…

Unlike George III, the Freakonomics authors, Levitt and Dubner, urge policy to be made on the basis of dispassionate analysis of data. And not, perhaps, on the say so of so-called experts with a vested interest.

Considering myself an arch-rationalist, I eagerly read an article by Oliver Burkeman in today’s Guardian discussing the sequel to Freakonomics, Superfreakonomics. I didn’t know whether to laugh or cry.

The reviewer’s comments make interesting reading too. Burkeman writes, for example, that:

“Those arrested on charges of terrorism, [the authors] explain, are disproportionately likely to rent their home, have no savings account or life insurance, be a student, and have both Muslim first and last names. Superfreakonomics makes no mention of the possibility that the police might simply be targeting Muslims disproportionately, and Levitt seems genuinely baffled that anyone might object, on civil-liberties grounds, to targeting all those who fulfilled the relevant criteria.”

Burkeman seems to be implying that he believes behaviour likely to lead to arrest on charges of terrorism is evenly distributed throughout the population, and that Muslims are therefore being targeted unfairly. Maybe I’m missing something here, and I don’t want to offend anyone, but isn’t the main terrorist threat at present from Muslim extremists? Just as a while back the main threat in the UK was from Irish nationalists? Or are these social phenomena just a figment of my imagination? Maybe in WWII British soldiers took more Germans than Americans prisoner just because they were targeting them disproportionately.

But this is nothing compared to Burkeman’s discussion of Superfreakonomics’ espousal of the geo-engineering plan to block out sunlight by “pumping large quantities of sulphur dioxide into the Earth’s stratosphere through an 18-mile-long hose, held up by helium balloons…”. Apparently, Nathan Myhrvold is promoting the idea. He should know better as well.

Anthropogenic stratospheric SO2 injection is a complete and utter non-starter, for the simple fact that warming isn’t the only problem caused by CO2 emissions. This has been very well known for some time. Conferences have been held to discuss the problem. I’d have expected Burkeman to know this.

5 minutes thought might cause one to wonder as to the biological effects (the impact on ecosystems, crop yields…) of decreasing light reaching the Earth’s surface – at the same time as CO2 levels are increasing. And you’d still have time to realise that we’d have to keep squirting SO2 into the stratosphere indefinitely, because it only stays up there for a short while, whereas the warming CO2 will remain in the atmosphere until we stop emitting it and/or do something to get the level in the atmosphere back to pre-industrial levels. Any disruption of the SO2 hosing process for any reason (war, terrorism, economic dislocation, court injunctions…) would lead to rapid temperature increases, because the CO2 would no longer be masked. And before the egg-timer rang you’d realise that any hint of adverse side-effects would make the plan entirely impractical on political grounds.

Myhrvold and the Freakos (sounds like a 60s rock band, don’t it?) have, it seems, walked into the hubristic trap of believing they understand the whole problem. Messing with the biosphere and the climate system requires other forms of analysis than the correlation of data-sets and a good understanding of the importance of the role of incentives in explaining human behaviour. The authors have exceeded their intellectual authority – they are skilled at analysing “closed” economic problems (where the boundary can easily be defined), but don’t seem to appreciate that tackling global warming is an “open” problem. I’m particularly astonished at this given their background as behavioural economists – I can hardly believe they are not aware of the concept of “bounded rationality“.

All Burkeman does is lamely point out that:

“The primary objection to this plan, as with other ‘geoengineering’ schemes, is that there’s no predicting the unknown negative effects of meddling in such a complex natural system. And it’s strange, given how much is made in both Freakonomics books of the law of unintended consequences, that they don’t mention this in the context of Myhrvold’s plan.”

Quite. But Oliver, they can’t even deal with the known knowns, let alone even the known unknowns. You don’t need to fret about the unknown unknowns!

The geo-engineering twaddle is all a shame, as Superfreakonomics apparently argues that:

“The problem with trying to reduce carbon emissions … is that the incentives are all wrong. Too many of the benefits are ‘externalities’, from which the people making the sacrifices will never benefit – and the whole history of economics demonstrates that such completely unself-interested behaviour is impossible to implement on a large scale, especially when so many people suspect that their sacrifice would not, in fact, make a significant difference to the outcome.”

I wouldn’t underestimate the potential of peer-pressure – as Burkeman puts it, “our self-interest can include a desire for the warm glow of acting in a moral or charitable way” – but I doubt this will be enough. Surprisingly, Burkeman doesn’t press this argument against the economists – whose profession has been known to not fully understand that there IS such a thing as society – but tails off into incoherence after noting that:

“This, of course, is desperately tricky territory. My immediate personal response is that Levitt’s view is irresponsible defeatism, which I find repugnant.”

“Repugnant”???!!! I’m with Levitt here. We all need to grow up and face facts.

Don’t squirt SO2 into the sky because, if this is the level of intellectual debate on how to deal with global-warming, all I can say is that we need the heavens to help us! (If I may be permitted to pluralise in a cryptic nod to Battlestar Galactica – buy the box-set if you don’t know what the frak I’m on about!).

July 13, 2009

Maggot Madness

I was more than usually bemused by this report on the Cambridge Evening News website.

“Horrified pensioner Anne Flack, of Chartfield Road, Cherry Hinton, felt revolted when she found maggots crawling in the bottom of her black bin after it was emptied this week.”

“Another city resident, Joscelyn Carroll, of Sleaford Street, who has previously found maggots in his black bin, said: ‘I find it ridiculous that with ever increasing council tax they cannot provide a weekly rubbish collection in this heat.’ ”

[My emphasis].

Whilst I very much agree with the sentiment that the bins should be emptied weekly – I’ve even said as much en passant to my local Cambridge Councillor – the issue is (or should be) the green bins. We have black boxes for papers, newspapers and cans; blue boxes for plastic bottles; collection points for batteries; charity shops for old clothes and crockery; procedures for dealing with fridges (even if these would fit in a black bag! [obliquely referencing Doug’s recent anecdote]) and other electrical goods; green bins for garden and kitchen waste as well as cardboard – that is, for those with no biology qualifications, practically everything that could support the typical maggot lifestyle; and black bins for everything else, which should be eff all.

So, the Cambridge Evening News reader might well wonder, why aren’t Anne Flack, of Chartfield Road, Cherry Hinton and Joscelyn Carroll, of Sleaford Street following the instructions of the Cambridge Soviet to the letter? Aren’t they putting their food waste in the green bins? As well as compostables (including “all kinds of cardboard”), I dutifully separate out bottles (glass and plastic), paper, tins and even batteries. There’s absolutely nothing in my black bin to support a maggot-dominated ecosystem. It contains little but inert packaging, much of it the same plastics as in the recycled bottles (not forgetting shiny Christmas wrapping paper – future civilisations millennia hence will wonder at the purpose of this least degradable of all human artefacts). Incidentally, guess why they only recycle plastic bottles? Because the sorting machine can only deal with rolly things! (Pointing out the absurdity of this was the substance of my letter to the Councillor).

Of course, no-one knows (as they say) what happens to the waste in the green bin. One suspects the answer is that it goes somewhere similar to the contents of the black bin – landfill, incineration or a layby on the A14. I find the idea that the waste from everyone’s green bins is pure enough to grow food in to be rather implausible.

Here’s what the Council has to say by way of “clarification”:

” ‘Despite rumours, there is no public health risk associated with putting food waste in green bins in Cambridge and it is completely safe for people to do so.’ ”

Que?, as Manuel would say. Rumours? What rumours? Can you catch swine flu or something from this “food waste”? The green bins are intended for food waste, not just garden waste (hey, wouldn’t it be better if those with gardens maintained their own compost heaps, anyway?). At least that’s what Cambridge Council have been telling me for the last 5 years.

“The council’s advice is to get a kitchen caddy – which is free for Cambridge residents – to collect food waste in the kitchen. Wrap all food waste in paper, rinse off food packaging, and keep wheelie bin lids closed.” [NSS* on the last bit!].

Thanks for letting me know before. But what exactly is a “kitchen caddy”? I use an old plastic food container – the kind the Council won’t recycle. It seems to do the job.

And here’s the screamer:

“Residents are also encouraged to put food waste in their black bin one week, and green the next, to get a weekly collection of food waste.”

Unbelievable. What are we saying now? After all this, it doesn’t really matter what goes in what bin?

Maybe this is a good time to mention that the whole national recycling strategy is, of course, entirely misconceived. Government should simply take steps to create a market for recyclables (e.g. by acting as the buyer of last resort) so that suppliers to recycling companies buy the stuff off us (maybe via enterprising school-kids). Every newspaper, bottle, tin, potato peeling and so on that is recycled saves the landfill or other disposal cost so recycling could even be subsidised, though I’m convinced that, once established, the recycling industry would be profitable. And what’s more, you might find people clearing the bottles, cans and other trash from Parker’s Piece for nothing!

Give people clear incentives to do the right thing and we don’t need to try to run our lives on the basis of contradictory local council diktats.

*NSS = No Sh**, Sherlock! – of course!

March 27, 2009

Supermarkets Revisited: The Locomotive, Sky, Sainsbury’s, Self-Checkout and Plastic Bags

Filed under: Cambridge, Economics, Inefficiencies, Undercover — Tim Joslin @ 9:40 am

I commented a few days ago on the Cambridge Supermarket Wars and later on my own shopping habits. Since then the battle has intensified on the Mill Road front, and a fundamental change has been made to the shopping environment!

First, the bad news. Sadly, the Locomotive on Mill Road is up for sale. The physical reminder of those karaoke nights may soon be no more.

But the good news is that a new convenience store could open on the Locomotive site.

But the other bad news is that (as usual) the politicians are meddling. According to the Cambridge Evening News report:

“…there were calls yesterday for [The Locomotive] to be retained as [a] community pub…

Cambridge city councillor Ben Bradnack, who represents the Petersfield ward in which The Locomotive lies, said: ‘We already have two convenience stores on this side of the Mill Road bridge and they must be finding it difficult anyway.

‘I am not in favour of pubs closing in principle and these stores are for the daytime economy when we really need to think about the nighttime economy.’ “

I’m as concerned as anyone about the loss of our traditional watering-holes. This is often put down to a change in our habits – we drink more at home. But why? We are such social creatures, after all. The reasons are undoubtedly complex, but what surprises me is that Sky TV’s subscription policy is so rarely mentioned as a problem for smaller pubs. We now take it for granted that live televised sport is the right accompaniment for a beer (pork scratchings out, English Premier League in). Smaller pubs tell me that they can’t afford a Sky TV subscription. Custom is drifting away to larger pubs, or, since large crammed bars are not everyone’s cup of tea, people are simply staying at home.

It should not be up to the Council to decide whether the Locomotive site should become a store or whether it should reopen under new management as a pub. At the end of the day, someone has to decide that it is worth investing their money in a business on the site. That’s the system.

And, as I’ve argued before, it is not sensible for the Council to decide how many supermarkets we need. Far better to provide people with a choice. No-one is forced to shop at the Mill Road Tesco. Nor would they be at a new convenience store on the Locomotive site.

The dangers of pretending it is possible to all agree whether or not a Tesco store should be allowed on Mill Road is well illustrated by the emotions that have now been unleashed. Apparently, a pro-Tesco campaigner has been attacked. In front of the local MP!

How local councils (I’m sure Cambridge is not unique) have drifted into the sort of planning micromanagement we now see is a story that should be told. I suspect the problem is that local government has been so emasculated over the years that elected representatives are now trying too hard to find something to justify their own existence.

And, second, the really bad news. The reason I am revisiting the food shopping topic today is that Sainsbury’s have messed with their operation. To my horror, I found yesterday that they have only gone and replaced the multi-queue tills with a self-checkout system.

Remember, as someone following a life-style I thought society was trying to encourage, that is, not running a car, I have little choice as to where I buy my groceries.

I’m especially vulnerable, because Sainsbury’s is a de facto monopoly. They’d therefore have to screw-up big-time before enough customers took their business elsewhere for them to realise they’d made mistakes.

Today was fairly quiet in Sainsbury’s, I presume because the students are away. I dread to think how long the queues will get when they return.

In principle I support the idea of self-checkout. It will eventually reduce the amount of work that has to be done by society as a whole, moving us one step closer to a utopian world of leisure. But the technology is not yet customer-ready.

I noticed yesterday that Sainsbury’s staff were already running around between customers struggling with the new check-out machines. I dread to think how long the queues will be when the students return. Especially as staff approval will be necessary whenever anyone buys alcohol. Some of the students look quite young so we’ll all have to wait while they produce their id. When I was about 12 one of my mates was in the local paper after having had his stomach pumped to remove the whisky from another friend’s father’s drinks cabinet (hey, why wasn’t I invited?). But now we seem to think we’ll keep kids off alcohol by putting the onus on shop-keepers. They can get in serious trouble if they sell liquor to minors.

Obviously Sainsbury’s need to change the system elsewhere in their store. I’ll check sometime, but I didn’t notice that they’d done anything to anticipate this problem. The “obvious” thing to do is to monitor cutsomers’ ages on entrance to the booze section of the store. This would make their wine offers near the entrance to the store rather problematic, but then they should have thought all this through before they brought the new machines in.

Similarly, the delays at the checkout caused by the need to weigh fruit and veg could easily be avoided by having this done in the fruit and veg section. As is the case in many other countries. You simply print out a label with a bar-code which is later scanned at the checkout.

But my really big issue with the automatic checkout system (which is identical to that I’ve used a few times at Asda) is that it (moreorless) forces you to take disposable plastic bags. Yeap, the bags for life system – for which you even get an extra Nectar point on each use – is out the window. That campaign a year or two ago to use fewer plastic bags is clearly no longer a priority. Now, I don’t think cutting out plastic bags in itself is going to save the planet, but I abhor waste. If I end up bringing home plastic bags I refuse to throw them out – they’re bound to come in useful, I think – so they pile up in the corner. I am psychologically incapable of using the new checkout process.

And the reason Sainsbury’s force you to use new plastic bags? Well, it’s because they are dispensed over a weighing panel. And why do you have to weigh all items? Because they don’t trust you, that’s why. They reckon that people would deliberately or accidentally slip a few unscanned items into their bag if they didn’t have the weighing check.

You can skip weighing on the screen, but you have to do this for every item. As the queue builds up behind you. And (at least when I tried it at Asda) after you’ve skipped a few items the machine makes you wait for a member of staff to check your not a thief. You could put all the items in disposable bags, I suppose, and take them out again after completing the transaction. But then you’d look like a complete nutter.

There is a way round this problem though. We could achieve a nirvana of efficient self-checkout and reusable shopping bags. What Sainsbury’s could do is put RFID tags rather than – or perhaps as well as – barcodes on their products. These can be detected within, say, a metre (depending on the set-up). As a first step, Sainsbury’s could tell when you had put a tagged item into your bag without scanning it. Heck, they could even detect you leaving the store with an item you hadn’t paid for. Ultimately, though, you could simply pass your bag in front of an RFID reader and it would register everything.

I really resent being inconvenienced by the introduction to the busiest Sainsbury’s in the country of a system that isn’t the finished article. Especially when I have no alternative supermarket to go to.

March 9, 2009

Dear Sainsbury’s. Just. Put. The Price. Of Warburton’s Seeded Batch. Back. Up.

Filed under: Cambridge, Economics, Inefficiencies, Markets, Undercover — Tim Joslin @ 9:09 pm

Maybe I should start Twittering, as perhaps I’ve already said what I want to say – and I was able to use the letter format again. Nevertheless, I’ll explain, since I consider myself a trainee Undercover Economist, although I prefer to point out failures rather than successes. I’m just a monitor evaluator kind of guy!

A little earlier on – before I was distracted into a short riposte in order to save capitalism – I stopped by Sainsbury’s in the centre of Cambridge.

One of the key items I wanted to purchase was a loaf of Warburton’s Seeded Batch (WSB) bread. I don’t consider myself overly fussy, but, after a long period of trial and error, I have established a clear preference for this particular loaf.  A slice toasted and with marmalade goes nicely with a cup of tea in the morning.  I recommend WSB, though it may not be the right bread for everyone. A while ago I was mildly concerned when a report suggested that WSB contains more than the average amount of salt compared to other loaves.  But in the end I found myself laughing in the face of excess dietary electrolytes.

It was around the time of the sodium chloride exposé that Sainsbury’s started a promotion: £1 rather than £1.51 for a loaf of WSB. Over several months when this offer has been in place much of the time, I have never once succeeded in profiting from it. The casual observer might notice that Cambridge is full of students, for whom the chance to save 51p is an opportunity not to be passed up. Loyal customers end up suffering. If there is a logical, Undercover explanation for this pricing policy I have not yet identified it. Today the inferior and more expensive (£1.59) product I ended up with is a Hovis Granary Original. Original in the sense that it was apparently unevenly sliced by hand.

Does the manager of Sainsbury’s in Cambridge city centre understand supply and demand? The idea surely is to find the highest price at which the day’s supplies of WSB sell out just before the shop closes, disppointing the minimum number of customers who may choose to shop elsewhere next time. Or, perhaps the price should be that at which profit is maximised, although, given the cost of clearing unsold product and, again, the risk of losing customers, this may be at the same point. Reducing the price to £1 and selling out by lunch-time on many days over a period of months does not seem to me the most intelligent promotion. What about giving free sample slices instead?

The Cambridge Sainsbury’s manager is obviously a bit of a keenie. Today he was also offering lemons at a special price of 10p each! What is this, the Soviet Union? Don’t we import citrus fruits from around the world in order to provide a constant supply? Is a promotion really necessary? Cambridge is an international kind of place. Are there perhaps potential lemon customers who’ve never tried one, and may baulk at 30p for a strange subtropical fruit? I suspect the true explanation is a glut of lemons in the store-room after over-enthusiastic marketing of the ingredients for pancakes with lemon and sugar for Shrove Tuesday a couple of weeks ago.

But that doesn’t explain the pile of cross-cut shredders (for paper, I presume, rather than lemons) at £10, reduced from £29.99, that I nearly stumbled into on my way out of the store. What is this? A recession warehouse clearance outlet or a supermarket?

One wonders what the manager of the Cambridge Sainsbury’s does understand, as the store can’t be accessed by car, so those shopping there arrive by bicycle or on foot. Many customers are students who, by and large, do not have access to a freezer, or at least a secure one. Why, oh why, then, all the BOGOFs and other offers on heavy, bulky items? Tomato juice is my “favourite” of the “offers” – I say it is an “offer” as this one has been in place for years, it seems. I enjoy a slurp with lemon juice (am I lucky today!) and Worcester sauce before dinner. But there is a significant saving – relative to the price of industrially squeezed tomatoes, that is – if you buy 3 cartons at once. Is there a car-park outside the Cambridge city-centre Sainsbury’s full of SUVs owned by the purchasers of these cartons? No, they have to lug them home on foot or bicycle. Smart. But this is less an offer by Sainsbury’s than a payment to the customer for tomato-juice storage.

The Director of my MBA programme was fond of pointing out that, on more than one measure, the Cambridge city centre Sainsbury’s is the busiest in the country. Part of the reason, I reckon, is that rents in the centre of Cambridge are so high that only a small number of competing food stores would be profitable.

Because it has a de facto monopoly, there’s no way to tell whether or not the bizarre pricing policies at the city centre Sainsbury’s are what the market wants. True, there’s an M&S foodhall, but that serves the sort of people – of which there are quite a few in Cambridge – who don’t go to Sainsbury’s. And vice versa.

True also, there are a couple of other food stores near where I live, a little way from the centre, but I always feel I’m in a movie when I go to them. The sort of movie where men with guns walk in and shoot the place up.

Competition would be somewhat improved, I suspect, if campaigners hadn’t objected to Tescos plans for its store on Mill Road (the store will open, I understand, but without some of the facilities Tesco wanted). At least some people would have a practical choice between the new Tesco and Sainsburys.

Denying people a choice of shop hardly seems democratic to me. Where is the need to apply the political process? – shops are not mutually exclusive.

The idea seems to be to preserve “independent” stores in Mill Road. Why the locals want to pay over the odds for milk is beyond me. And isn’t it possible that the specialist food stores on Mill Road would benefit from freeing space up from staples for higher value-add specialist products?

The concern is that Tesco would be too strong a competitor – as I pointed out en passant to my MP, if we bar Tesco from the location are we saying that we’ll close down the nearby Co-op if it sharpens up its act?

But the way to level the playing-field is to eliminate distortions of the market for – say – milk due to supermarket chains’ buyer power. If smaller retailers are at a disadvantage this should be addressed by the competition authorities, not through the planning process – as I noted in another context earlier today, the planning process is overused – arguably abused – in the UK.

I expect, insofar as the anti-Mill Road Tesco campaign has achieved its objectives, it will be counter-productive as the specialist food-stores, cafes and so on on Mill Road – which does have character – would gain more from passing trade to and from Tesco than they would lose to the new competition.

Cambridge is clogged with traffic, and it is also part of the environmental agenda to get people out of their cars.  Blocking companies’ plans for local food stores seems a perverse way to achieve a transport modal shift in the town. Green revolutionaries needs to be a bit smarter than this.

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