Sunday, 4 December 2011

Back To The Future?

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Looking back over the last 52 weeks, and using the Dow Jones index of the New York Stock Exchange as a guide, it is possible to track in broad strokes the effects of the Sovereign Debt Crisis on that crucial stock market.

The chart above (which indexes the Dow Jones based on the week of 19th September 2011 as 100) starts in November 2010 just as the 85 billion Euro bailout of Ireland was agreed accompanied by the toughest budget in the Irish Republic's history. This action itself followed on from an E110bn Greek bailout in May 2010 also accompanied by austerity measures. Following the rescue of the Irish banking system we saw the Dow Jones steadily climb until mid-February 2011 to the first of three market peaks, each of which turned out to be shortlived.

A further bout of market pessimism, despite the EU agreeing to the setting up of the E500bn European Stability Mechanism to replace the temporary European Financial Stability Framework in 2013, sees the market decline again in March.

A second peak in the Dow Jones is reached in late April, but once again Eurozone worries, with the Portuguese government admitting it cannot deal with its finances without EU help (resulting in a E78bn bailout in May) sees the market drop and economists also begin to talk about Greece being forced to leave the Eurozone.

However, the market begins to recover for a third time as new austerity measures are imposed upon the Greeks, despite huge levels of civil unrest, accompanied by the EU agreeing a second E109bn bailout. The market reaches a third peak in July.

But the respite is short-lived as August brings further doubts about the ability of the Greeks to remain in the Eurozone, and, again, opinion begins to be voiced as to whether it would be better if Greece defaulted, as concerns about contagion in the sovereign debt market lead to yields increasing on Spanish and Italian bonds.

An announcement by the European Central Bank that it will buy government bonds does not prevent a severe drop in the Dow Jones which is followed by a period of doubt and uncertainty with the market seeing alternating triple-digit falls and rallies.

Eventually, in October, a certain degree of bullishness settles into the market that the worst of the crisis is over, as an E130bn bail-out of Greece combined with a partial voluntary default on some private sector debt is agreed. This is accompanied by the appointment of an unelected technocrat to power in the cradle of democracy. A similar technocratic appointment in Italy, seen as the next domino in the bail-out stakes, accompanied by yet more austerity, sees the Dow Jones climb by some 14% before dropping back a little over the last week or so.

After a year that has saw three separate peaks, with the last followed by a major decline into a period of intense market volatility, there are those who suggest that the recent rally in the Dow Jones will be sustained - that the worse is over.

This scenario sees the Eurozone area experiencing a relatively moderate recession, and the UK and US a few years of moderate growth, but that the BRICs and other emerging nations will soon pull the World Economy back to the levels of growth experienced pre-crisis.

That might be a little optimistic.

Because we may have been here before.

Below is the same chart as above but I have now added a second set of data. This too is for the Dow Jones Index but this time covering the 52 week period up to the week of 28 April 2008 (with the week commencing 19th February 2008 set at 100).

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This time the chart begins in April 2007 by which time concerns about the subprime mortgage lending market in the United States were beginning to have major effects. By June, Bear Stearns announced the failure of two of its hedge funds and soon after the Dow Jones reached it's first peak in before declining.  The hedge funds' collapse was seen as an intensification of the subprime crisis rather than something deeper, however in August the European Central Bank stepped in to offer liquidity to banks.

The Dow Jones then began to creep up again, reaching a new, second peak, and its highest ever recorded level of over 14,000 in October.  But by this time the UK had seen its first run on a bank since 1866 as customers queued around the block to get their cash out of Northern Rock whilst banks like UBS and Citigroup now announced $3bn losses to subprime, with Merrill Lynch reported to have exposure of almost $8bn.

Nevertheless, perhaps buoyed by the IMF forecast of only slightly reduced World Economic growth of 4.8% in 2008 followed by 5.1% in 2009, the Dow Jones peaked for a third time in early December.

However over the Christmas period and into January, as worries about liquidity and the subprime exposure of individual banks increased, the Dow dropped by over 10%.  This did not prevent Wall Street from awarding itself $32 billion in bonuses of course.

Just as now, there then followed a volatile period in which the market seemed to change direction depending on conflicting news headlines and/or pure speculation.  Increasing commodity prices (Oil had been forecast to drop in price by 20%, but would instead increase in price by almost 50% by July) added to the mix, whilst the Federal Reserve reduced interest rates to 3.5%, and then, a week later, to 3%.  Meanwhile in February, the nationalisation of Northern Rock by the British government was finalised.

A key moment came on the 11th March, when the share price of Bear Stearns collapsed. After a weekend of frantic negotiations a company that had a market value of $18bn a year previously was sold to JP Morgan for $1/4 billion.

Just as in November 2011, the apparent resolution of a problem with an insolvent entity (for Bear Stearns read Greece), seemed to calm the market.  Over the next nine weeks, the Dow Jones steadily rose, even after the IMF published its Global Financial Stability Report estimated potential losses due to the crisis at $945 billion.  By the end of April, the nine week rally saw the Dow Jones hitting the 13,000 level again, which although still short of the 14,000 it had hit in October, seemed a good indicator that the global economy - and the financial system - would soon return to business as usual.

Comparing the two 52 week periods, the track of the Dow Jones show, in both cases, three separate peaks, followed by a decline.  There then followed a period of volatility, followed by a "recovery" when it was felt that the worse was over and the "bad apple" problem (Bear Stearns, Greece) had been resolved.

The difference is that for 2008, we now have the benefit of hindsight, and we can look back at 2008, and see what happened next.

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What came next, was, of course, the nationalisation of the US government-chartered mortgage institutions colloquially known as Fannie Mae and Freddie Mac, the collapse of Lehman Brothers, the nationalisation of RBS, the $700bn US government asset purchase system, the bailout of AIG, etc, etc, etc.

From a level of 14,000 in October 2007, the Dow Jones dropped to 6,600 by March 2009. Similar effects were felt on Stock Markets around the globe as $50 trillion worth of assets were destroyed. The effect in the real economy saw millions made unemployed as the world experienced its first year of negative growth since the end of World War II. 

The OECD countries saw a drop of almost a trillion dollars in private fixed investment between the beginning of 2008 and the end of 2009.  In the UK, by the first quarter of 2010, GDP had dropped by £18.6 billion with over £10 billion of fixed investment lost, while personal spending saw a decline of over £8 billion as people tightened their purse strings.

In response, politicians have inflicted austerity cuts on those least culpable whilst many of those individuals and corporations who benefited most in the years of boom continue to take advantage of tax loopholes to avoid paying taxes of between £35-£220 billion per year in the UK alone - tax revenues that could otherwise protect frontline services like healthcare, education, and welfare.

The fact that the Dow Jones in 2011 has unerringly retraced the ebbs and flows of the Dow Jones in 2007-08 does not in itself mean that we are about to have a global recession as we had in 2008/09.  Past performance is, after all, no guarantee of future performance.

But there is a feeling amongst many that the financial crisis further revealed the underlying weaknesses of the current financial system that already been exposed by the Asian banking crisis and the default of Russia in the late 90's. It has demonstrated the unsustainable nature of a global economic system in which massive trade imbalances are sharpened by private consumption.  Private consumption that, due to wage repression, is itself reliant on debt creation fueled by massive credit transfers from producer countries and historically cheap interest rates. 

The response to the $1.4 trillion subprime mortgage shock of bailing out the banks has merely served to transfer an unsustainable debt problem from private banks to the public sector where it has exacerbated an existing problem caused by politicians caught in the trap of promising both low taxes AND decent levels of public services.  In comparison to subprime, the combined sovereign debt bill of Portugal, Ireland, Italy, Greece and Spain is in the region of $4.8 trillion, and financial institutions are placing bets on the yields from government bonds for the PIIGS just as they did on mortgage backed securities and their derivatives in the subprime mortgage sector.

It now seems that because major reforms to the global banking system have largely failed to materialise, allowing banks and other financial entities to continue with business as usual, it is likely that another global recession, one potentially even more devastating then the first, may be about to hit the world's economy.

Friday, 18 November 2011

Hydra Bookshop - opening Saturday 26th November

The Hydra Bookshop will open on
Saturday 26th November 2011.

'The Hydra' is a bookshop and coffee shop by day; event space and meeting place by night situated at 34, Old Market Street (BS2 0EZ). We have a warm inviting event space suitable for groups of up to 25. As a community bookshop we aim to support local groups by creating a space were your publications can be sold, with a percentage going to maintaining the bookshop. Run by local people as a workers' co-operative, the shop grew out of the Bristol Radical History Group and similar networks across the city.
There will be an opening week of events organised by Bristol Radical History Group. The details will appear in the Events Calendar on the website  shortly

Thursday, 10 November 2011

Trojan Horses

Last Wednesday (2nd November) I watched the early evening news on the BBC which described how the Greeks were being difficult about accepting a deal that will “halve their debt”. The BBC made it very clear how unreasonable the Greeks were being for looking this apparent gift horse in the mouth. A similar theme continued in the Guardian the following Monday (7th November);

“Greece received a €110bn bailout in May 2010 with the latest aid package writing off half of the country's €360bn debt load.” describing the latest aid deal as “a €130bn bailout package.”

Sounds like an offer you couldn't refuse doesn't it? (And we all know the unpleasant horse experience linked to that phrase).

The Greek people, having themselves been the provider of a dubious gift horse in the past, are perhaps more able than most to perceive the need to be weary of such apparent largesse.

Which is why our friendly neighbourhood Franco-German “kingmakers” made it clear to the Greek Prime Minister that any attempt to ask the Greek people for their opinion should be abandoned – politicians tend to only support referenda when they think they will get the answer they want.

Greek sovereign debt is in the region of 350-360 billion Euros (£300-310 billion). If there really was a 50% write-off (or “haircut”) on all Greek debt then we should see 175-180 billion Euros wiped off the Greek debt mountain. This would bring the Greek debt to GDP ratio down from a unsustainable 157%, to a more manageable 79% - a level of debt lower than that of the UK, Germany or France (but not below the level of Spain, another “troubled” country, with sovereign debt levels at only 68% of GDP).

Yet, according to the Debt Sustainability Analysis leaked to the press during the recent Euro summit, IF the “ungrateful” Greeks accept the terms of the new “bailout” deal, AND assuming there are no other shocks to the economic system, AND if other proposals go according to plan including even more austerity measures, privatisations, and reductions in Greek sovereignty, they might, just might, be able to get their debt down to 130% of GDP by 2030. A level of debt greater than that carried by Italy at 120%, which the same BBC programme described as very worrying and an indication that Italy might be the next sovereign state in the firing line.

Obviously, something doesn't add up. The most obvious questions that might spring to mind are:
1) How come a deal to “halve Greek debt” doesn't?
2) Why, if Greece has now had two debt “bailouts” totalling 240 billion Euros, is Greek debt actually getting higher rather than lower?

As we will see, those behind the new bailout know that it only provides, at best, enough funding for a E26bn reduction in Greek debt - a 7% reduction not 50% - and even this depends on the level of take-up of a haircut that is only voluntary because of fears regarding the stability of the financial derivatives market.

Unfortunately, there is no simple way to explain why the bailouts don't do what they say on the tin, so I have split my attempt at an explanation into six hopefully more digestible chunks.
Part 1 Where we learn that not all debt is created equal.
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A closer look at the components of Greek sovereign debt allows us to roughly calculate that the Greek sovereign debt includes somewhere in the region of 150-160 billion Euros worth of debt in the form of bonds and loans owed to official agencies including the EU (E47bn), IMF (E18bn), the ECB (at least E45bn), other European central banks (about E13bn), legacy loans from the Bank of Greece (E6bn) and other bilateral/special loans. None of this “official sector” debt, it appears, will be subject to the 50% haircut.
That leaves about 200 billion Euros worth of privately held sovereign debt, including debt held by Greek and Cypriot commercial banks (E60bn), foreign commercial banks (E30bn), sovereign wealth funds (E25bn), public sector workers' pension funds (E30bn) and other private sector institutions.
A 50% reduction on this would see the overall Greek debt reduced by about E100 billion (30%) and, indeed, E100 billion was the figure used by the (now ex-) Greek prime minister in a speech to his party group last Thursday (3rd November) as he tried to convince his audience that the decision as to whether the Greek government would hold a referendum was one for the Greeks alone despite the fact that everybody knew that Merkel and Sarkosy had already said Nein/Non!
In fact, the final reduction is likely to be considerably lower than the E100 billion referred to by Mr Papendreou.
Part 2 Where we learn it's not just what you owe but how much you have to pay for it.

Despite all the headlines about the overall level of Greek sovereign debt, the immediate problem for Greece is the rising cost of servicing their debt, coupled with the fact that too much of the borrowing is over a short term period.

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Some of Greece's current problems have been forced upon Greece by a market that has become more risk aware (as recently as 2009, the level of Greek debt as a percentage of GDP was still lower than it had been some 7 years previously), other problems are self-inflicted - such as the largest shadow economy in “western” Europe (at some 28% of GDP) with high levels of tax avoidance and evasion badly impacting upon the level of tax revenues collected.

As with politicians in almost every developed country, Greek politicians have promised to deliver the public services the electorate demands, whilst being unwilling to collect the tax revenues needed to pay for them.

The net result is that Greece has borrowed from the market and as the level of Greek debt has risen, so the cost to the Greek government of paying for that debt has increased which means the Greek government has increasingly been forced to borrow on shorter terms from the market because the cost of borrowing short-term is (usually) cheaper (because the investors are only committing their funding for a shorter, and thus, theoretically, less riskier, period of time).

This has a consequence in an increase in the frequency that the Greek government has to go to the market looking for “new” borrowers in order to “rollover” (ie. re-borrow) significant portions of its debt.

Because markets have (belatedly) become more risk conscious, increasing concerns about the ability of Greece to repay its debts have caused the price of Greek bonds to fall in order to sell thus forcing up the cost of borrowing for the Greek government even more.
This, in turn, forces the Greeks to borrow on even shorter terms (forcing them to “rollover” their debt ever more frequently) and at ever higher rates of interest (increasing debt interest payments and reducing the ability of the Greek government to reduce its deficit) - in other words, the Greeks are stuck in a Catch 22 situation, with their debt levels and interest payments spiralling out of control.
Therefore, part of the plan to “rescue” Greece is not just to reduce the overall level of debt via a 50% “haircut”, but also to encourage bondholders to agree to swap their short-term bonds for longer bonds with maturities of, if possible, 30 years at lower market rates than those available via the bond markets. This would reduce the frequency of Greek sovereign debt “rollovers”, relieving pressure on Greek government finances (and reducing the impact of a negative or “bear” market).
Overall, the deal will have the effect of reducing the impact of a negative market on Greek government finances by removing the need for the Greeks to repeatedly go to the market to rollover their existing debt, which in turn may help to stabilise the cost of Greek borrowing.

Part 3 Where we learn that insurance is not always worth the paper it's written on

However, the proposed 50% “haircut” and bond swap programme referred to above is intended to be voluntary which has major implications in terms of reducing the debt burden.

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The reasons for the Eurozone deal-makers wanting the debt holders to agree to a voluntary haircut rather than a forced haircut is to avoid triggering Credit Default Swaps (CDS). CDS are essentially a form of insurance against the very thing that is happening here – the potential for the seller of a bond to experience a credit event and default on all or some of their payment obligations. Therefore it would seem the most obvious course of action would be to force a 50% partial default, triggering the ability for the bond holder to claim on the CDS to recover their investment. After all, isn't that what insurance is for?

The problem is that there are major concerns about the ability of the CDS market to cope with a sovereign default, even a partial one by a relatively small country, an economy that only accounts for a tiny percentage of Europe's GDP – many senior figures in the finance industry recall how, after the Lehman Brothers collapse in September 2008, it became clear that the insurance giant AIG was exposed to tens of billions of dollars of payments for CDS due within weeks without the ability to pay them. Having allowed Lehman Brothers to fail, the officials concerned were so panicked by the potential knock-on effect of a failure in the CDS market, that they reversed their policy of not using taxpayers funds to bail-out private companies, and bailed out AIG.

As of November 4th, 2011, the Depository Trust and Clearing Corporation (DTCC) held details of over 4,400 live single-name CDS contracts directly referencing Greek government debt with a Gross Notional of $74 billion. Many CDS experts have insisted that the headline figure worth noting is the much smaller Net Notional ($3.7bn) and that the problem with AIG was because it had a high Net Notional unlike Greek CDS, but, in the end, it all comes down to levels of trust. In a largely unregulated market nobody really knows what sort of chain reaction might be sparked by the triggering of the insurance supposedly provided by CDS.

The simple fact is that many in the financial industry and in the political realm are scared stiff of the very insurance system meant to guard investors against credit events like a Greek default.

So, rather than trigger the CDS, the deal will look for a voluntary haircut from the private sector even if that means that the potential reduction in Greek debt will be considerably lower than might otherwise have been the case.

Part 4, Where we learn that you can only have the haircut you're willing to pay for.

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Back in May 2010, the European Union and the International Monetary Fund funded a E110 billion package to “rescue” Greece, by providing it with the funds to meet its obligations for 2010-2012.. The IMF pledged E30 billion, with the EU offering E80 billion provided by the other Eurozone countries.

Of the E110 billion, approximately E10 billion was allocated to recapitalise (“bailout”) those Greek banks most affected by the debt crisis.

So far E65 billion of the funding has been disbursed in 5 payouts between May 2010 and July 2011 – E18 billion from the IMF, and E47 billion from the EU supplied by the Eurozone taxpayers including Germany (13.5bn), France (10bn), as well as the Italians (E9bn) and Spanish (E6bn) who might be considered to have enough problems of their own. Included in this total is E3.5 billion that has gone directly to recapitalise the banks.

Of the other E61.5bn disbursed, most of this has gone to meet the E43bn Greek deficit for 2010 and 2011 which included E27.5bn in debt interest payments to the holders of Greek debt (including payments on the loans provided as part of the bailout package itself).

The next EU/IMF payout of E8bn is due to go to Greece as soon as it accepts the terms of the latest bailout package. This left E37 billion still in the pot (including E6.5bn earmarked for bank recapitalisations) however this has been reduced to E34bn after Slovakia declined to take any further part, and Portugal and Ireland also themselves became recipients of bailouts.

However, by July 2011, it had become clear that the first “bailout” had failed to reassure the market about Greece's problems, leading to a second proposed E109bn “bailout”, subsequently increased to E130 billion on October 26th..

Of this new funding pot of E130 billion, some E30 billion will be made available for more Greek bank recapitalisations. Added to the E6.5bn left over from the recapitalisation pot for the first bailout, this means that E36.5 billion is available to prop up the banks directly.

Another E30 billion will be made available as “sweeteners” to encourage existing private sector bondholders (including banks) to swap their existing short-term bonds at a 50% haircut for longer term bonds maturing in up to 30 years.

That leaves E70 billion, along with the remaining E27.8 billion from the first bailout for a total of E97.8 billion to keep the Greek government solvent over 2012-2014.

Over that time period, the EU/IMF/ECB “Troika” who are now effectively governing Greece, predict that the Greek government will actually run a primary balance surplus of E14bn.

However, after allowing for the Greek debt interest payments which total E49bn over the same period, the surplus turns back into a deficit of E32.7bn, to which must be added another E2.3bn due from the failure to meet the deficit target for 2011 When this deficit is added to the E6.5bn of arrears that the Greek government owes to hospitals, local government, state bodies, social security funds etc, that leaves roughly E56bn available for the 50% “haircut” that was supposedly going to halve Greek sovereign debt.

Part 5, Where we learn that the 50% haircut....isn't

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The Institute of International Finance, the organisation negotiating of behalf of many of the banks as to how the new bailout should work, estimates that there is some E150bn of the E200bn private sector owned Greek sovereign debt due to be rolled over in the 2012-2014 time period. It is this debt that will be eligible for a voluntary haircut and bond swap.

Back in July, the IIF estimated that the offer of a 21% haircut and swap to longer-term bonds would be taken up by some 90% of private sector bondholders, holding E135bn of Greek debt. The IIF proposal provided four options for bondholders, only two of which included the haircut, with a result that the overall reduction of Greek debt would actually have been just 10% of the E135bn at E13.5bn.

However, the value of the bond held by the institutions who actually signed up to the original deal would appear to have been closer to E112bn – meaning that the plan would only have seen Greek debt reduced by about E11-12bn. It is easy to see why the EU and IMF were less than impressed by this proposal and instead insisted on a bigger haircut of 50%.

If the same number of private sector bondholders are willing to accept the 50% haircut (with the added incentive of the E30bn of sweeteners referred to earlier) the cost of the haircut will be the E56bn identified earlier. Given, however, that the E30bn of “sweeteners” to encourage private sector involvement will subsequently be added to the Greek debt, the net change will, in fact, be E26bn or 7% of Greek Debt.

This assumes of course that all of the private sector bondholders who were willing to take up the July deal with a 21% haircut that became 10%, will sign up for the October deal with its larger 50% haircut that is really a 23% haircut.

In other words, it would appear that of the E240bn of taxpayers' money that have gone to “reduce” the Greek sovereign debt, only E56bn at most will actually be available to buy bonds at the haircut price of 50%, leading to a gross reduction in Greek debt not of 50% but of 7%. 

However, financial industry scuttlebutt is that only 60% of the private sector bondholders are supportive of the latest "50%  haircut" deal and thus the likely outcome due to the “voluntary” nature of the haircut is a debt reduction of just E15bn or just over 4% of Greek sovereign debt.

 Part 6 Where we emphasise that Greece has not been bailed out

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This is not a bailout of Greece.

A real bailout of Greece might be looking at a moratorium on debt interest payments (which will see the Greek government pay out over E76bn over 2010-2014), it might look at underwriting longer term Greek private sector bonds encouraging holders of short-term bonds to swap into them to reduce the rollover effect.

In return the Greek government might have been tasked to agree binding targets to collect the taxes avoided and evaded, often by many of its wealthiest citizens, and then investing the additional revenues thus collected (in the region of E25bn/yr) into modernising and “greening” Greek public infrastructure and services, creating jobs rather than imposing austerity measures that destroy jobs often by abandoning infrastructure investment and reducing key services.

As in the UK, austerity has served to stifle the Greek economy forcing it into recession, killing off revenue generation, and creating social conflict.

This isn't a bailout of the Greek economy, it is a bailout of banks and other financial institutions - a Trojan Horse in which at least E190bn of the E240bn “bailouts” will go to compensate banks and other financial institutions in order to prevent them from forcing Greece to default on the loans that those same institutions willingly lent to Greece.

If banks continue to be compensated by the taxpayer for making “bad loans”, bad loans are what they will continue to make.

As a result it seems increasingly likely that this Greek tragedy will now be played out again in a much larger Roman arena – with the implication that Greece could merely have been playing the Bear Stearns role to Italy's Lehman Brothers.

The financial sector has become an end in itself and whole economies are being devastated to serve it (and pay for its mistakes), rather than the financial sector serving those economies in order to improve the general condition of the populace as a whole.

The road to serfdom, indeed.

Tuesday, 25 October 2011



A Presentation and Debate : Open and free to all

Bristol Civic Society presents

The aim of this event is to debate a transport policy for Bristol that strives to balance the wide range of interests in the city that is deliverable within the legal and financial constraints imposed largely by Central Government. The event will contribute to the Council’s Central Area Action Plan consultation.

Councillor Tim Kent, Cabinet Member for Transport

Bristol City Council

will open the meeting.


Peter Mann, Director of Transport Bristol City Council

Robert Sinclair, Chief Executive of Bristol Airport

James Smith, Civic Society Transport Group member

Will give an overview of the current plans for transport in Bristol including the legislative and financial constraints within which transport proposals have to be developed and implemented.

The concerns of local business about the current transport situation - the importance of transport to delivering local economic growth.

A Bristol resident’s perspective - the delivery of the third Joint Local Transport Plan - what the Council should do to limit the impact of traffic growth in the city’s central area.

Following the speakers there will an hour of questions and debate.

Monday 7th November Colston Hall No 2

7.00pm (doors open 6.30pm)

We expect a high attendance, so to ensure entry please arrive in good time.

Friday, 21 October 2011

Bristol High Street survey

The Council’s Sustainable Development and Transport Scrutiny Commission scrutinises Council performance and influences its policy and decision-making. It’s holding an inquiry in November to examine best practice in supporting local high streets and making them vibrant and diverse places to visit.

The Commission is keen to hear from people about their local high streets as evidence for the inquiry.

The Commission’s chair, Councillor Mark Bradshaw says:

I’d welcome people’s views on the high streets they use, what they like about them and what can be done to improve them. The information you give will be invaluable to develop the Council’s action plan on retail for the city”.

There has already been a business survey recently carried out in Stokes Croft, Old Market, Christmas Steps/Colston Street, Old City, Park Street and East Street - information from these surveys, which include some of the same questions, will be taken into account.

Residents can give their views at:

There’s also a business survey at:


Friday, 7 October 2011

Beware Banks Bearing Gifts

In October 2009, the then Greek government of the central-right liberal-conservative New Democracy party were ousted in the general election by the Panhellenic Socialist Movement. When the Socialists looked at the treasury finances they found that their liberal-conservative predecessors had hidden the size of the budget deficit in order to disguise the fact that they were failing to comply with their Eurozone obligations. The new Government found out that rather than the 3.7% claimed, the real deficit was more than three times what the conservatives had said it was, at some 12.5% of GDP (this was in the first two weeks after the election, later the deficit was revised upwards again to 14%) This was hardly surprising because during the election year, the government had, as usual, pulled all its tax collectors off the streets which is apparently the norm for Greek elections (this is one of the contributors to Greece having such low rates of tax collection contributing to a shadow (black market) economy equivalent to about 28% of GDP).

What makes it worse however, was that Greece had repeatedly been warned about providing inaccurate economic data, including by Claude Trichet at the ECB as far back as 2004 in response to revelations about past Greek statistical irregularities

When the Greeks were allowed to enter the Eurozone as a late comer in 2001 it was known even then that they were massaging their debt and deficit figures. The German Chancellor at the time Gerhard Schroder has since admitted as much but perhaps he was too pre-occupied with Germany heading towards an economic downturn and itself in danger of missing budgetary targets, and thus didn't ask too many questions.

"Probably the Greeks tricked us, but......I could not say to the Greek Prime Minister, 'you are cheating us'" Schroder, March 2011 as reported by David Marsh (author of "The Euro: the battle for the new global currency") .

But here's the real kicker, I quote a 2010 Vanity Fair article by Michael Lewis, a former broker and author of the best selling "Liar's Poker" about his adventures as a bond trader;

"To remain in the euro zone, they [the Greeks] were meant, in theory, to maintain budget deficits below 3 percent of G.D.P.; in practice, all they had to do was cook the books to show that they were hitting the targets. Here, in 2001, entered Goldman Sachs, which engaged in a series of apparently legal but nonetheless repellent deals designed to hide the Greek government’s true level of indebtedness. For these trades Goldman Sachs—which, in effect, handed Greece a $1 billion loan—carved out a reported $300 million in fees. The machine that enabled Greece to borrow and spend at will was analogous to the machine created to launder the credit of the American subprime borrower—and the role of the American investment banker in the machine was the same. The investment bankers also taught the Greek-government officials how to securitize future receipts from the national lottery, highway tolls, airport landing fees, and even funds granted to the country by the European Union. Any future stream of income that could be identified was sold for cash up front, and spent. As anyone with a brain must have known, the Greeks would be able to disguise their true financial state for only as long as (a) lenders assumed that a loan to Greece was as good as guaranteed by the European Union (read Germany), and (b) no one outside of Greece paid very much attention."

This state of affairs began to unravel when the true extent of the Greek deficit was revealed. And the reverberations are threatening to sound the death knell of the Eurozone, and plunge Europe into a second recession dragging Britain and probably the rest of the world down with it.

As Angela Merkel said in Feburary 2010; "it would be a disgrace if it turned out to be true that banks that had already pushed us to the edge of the abyss were also party to falsifying Greek statistics."

Friday, 9 September 2011

The Sins of the Father?

Police and unemployed marchers clash in Old Market, 1932
In an article for Bristol 24-7 called “Confessions of a failed Bristol rioter” I described the anger my father, a council tenant, felt at the rioting that took place in St Paul's in 1980. He didn't know that his 15 year old son sympathised with the rioters, let alone that he had tried to join them.

Nevertheless, my father was concerned about his son being "led astray" by others, and when I left school (without any qualifications) it was my father who arranged for me to get a "proper job" working as a labourer laying bitumen-sealed felted roofs (a skill which came in handy recently when my garage roof sprang a leak).

It was also my father who later organised for me to attend a computer course, and encouraged me get a part-time job as a postman so that I could still contribute to the family's income (I apologise now to the residents of the Turtlegate Avenue area of Withywood for the poor state of their postal services in the 1980s).

As a direct result of that one course, I ended up working for two very successful IT companies before starting an independent business consultancy and now working as a campaigner for a charity that aims to improve the pedestrian environment (I also occasionally do some political campaigning for my local Green parties).

However, IF a policy that council tenants should lose their homes if a member of the same household was involved in the recent riots had been in place in the 1980's, and IF I had managed to be more "successful" in my efforts to riot as a teenager, then that history would have been very different.

The sins of the son would have been visited upon the father (and the mother and a younger brother and sister) in the form of eviction from their council home, and it is likely that, as a result, the bonds between concerned father and rebellious son may well have been irretrievably damaged.

It is very unlikely that the lesson I would have learnt from the eviction of my family would have been one about the benefits of contributing positively to society – after all I would have just seen how my father, who had contributed positively to society all his life had been rewarded for that lifetime of civility - with enforced homelessness.

Indeed the negative effects would have extended to my wider family because it is likely that my father may well have placed some of the blame with my maternal grandfather (Granfer), who, unlike myself, had been a “successful” rioter in his past.

Most young men, at some point in their life, experience a stage when they rebel against what their father represents. My father stood for law and order and a certain respect for the establishment, along with a belief that the pen would always prove mightier than the sword.

My own developing politics were more radical, less accepting of the existing order, and greatly informed by Granfer’s recalling of his experiences growing up in the 20’s and 30’s in slum conditions in the Old Market area. He felt that often the sword was the only thing that would force those in power to take any notice of those towards the bottom of society.

In 1932, as an unemployed 17 year old, Granfer heard that there was going to be a march to support calls for government funding of “public works” to provide jobs for the masses of unemployed resulting from the Great Depression - and for those jobs to be prioritised to those amongst the unemployed who had failed the “means test” and thus were deemed ineligible for benefits.

A route for this march had been pre-arranged with the police which would see them start from the Horsefair, proceed to Lawford’s Gate and then return via Old Market Street to the Council House in Corn Street where a petition would be handed in.

When the day came, some 200 demonstrators gathered, banners waving, near the Bridewell police station and began to march. When they reached Lawford’s Gate they had grown to some 2,000+ marchers. At this point, somebody in authority decided that the march must stop.

A double row of police, batons drawn, lined up across Old Market Street. When the marchers came face to face with the police, confusion reigned and, inevitably, fighting broke out. A second group of police stationed in a side street charged the crowd trapping some of the marchers.

Many of the marchers armed themselves; a building site nearby provided bricks and scaffolding poles, chunks of coal were taken from a coal cart for use as missiles, even carts loaded with vegetables were cleared as potatoes, turnips and other assorted greens were thrown at the police.

When Granfer returned home, bloodied but unbowed, it was to the hero-worship of his youngest brother, 9 year old Stan. I imagine that others might have been calling for Granfer, his father and mother, his brother and sister, to lose the "benefit" of their council owned home.

The authorities did eventually invest in “public works” in the 1930's – including the building of affordable housing and clearing the worst of Bristol's slums. Granfer found work building the new homes and, eventually, moved into one of them in Knowle West where my mum was born in 1940.

The country was now at war - a war that had its origins in the previous war and the impact of the demands for reparations and debt repayments that followed it. The sins of the fathers were being visited upon the sons.

At the beginning of August 1944, Granfer was in Normandy. Unbeknownst to him, his hero-worshipping younger brother Stan, now 20 and recently married was also in action just a few miles away. Great Uncle Stan was killed in action on the 1st August 1944 near Caen. The story told of his death was that he was killed because the equipment he had been issued with proved completely ineffective against the German tanks attacking his unit. 

After the war, Granfer returned to Bristol and bricklaying, this time building many of the houses on the new Hartcliffe estate in the 1950's once again including his own where he would spend the rest of his life, and where he would tell his eldest grandson about growing up in inter-war Bristol. There were no stories about the war – other family members filled in those gaps. 

However Granfer's experiences both before and during the war had left him with a intense hatred for the "ruling classes" who he felt had speculated to get rich in the 1920's contributing to the financial crash, and then in the 1930's had completely failed to recognise or prepare for the threat of war, resulting in the lives of British troops being needlessly sacrificed when their equipment and tactics were found to be completely outclassed.
If the council had really wanted to evict the person other than myself who was most responsible for my attitudes and actions during the rioting of 1980, then they would have had to knock on the door of an OAP who had fought for his country, losing his brother in the conflict, and had helped build many of Bristol's homes either side of World War II. .

But I suspect that evicting an old soldier might not have looked good, so instead they would have had to evict my father, the man who did his best to instil respect for law and order into his rebellious son and who felt dismay and anger at the rioting. The man who offered a more restrained counterbalance to the radicalism of Granfer. It is likely that if my family had been evicted from their home, I would have moved even closer to Granfer's views whilst railing against the injustice of my family being penalised for my actions.

But that's what happens when two-dimensional politicians offer simplistic populist responses to complex problems. They produce unsatisfactory and ultimately self-defeating reactions that simply store up further problems which bubble to the surface further down the line, when the sins of the fathers are visited upon the sons.

Wednesday, 31 August 2011

Bristol Independents - 17th September 2011

Bristol Independents Day


We are asking all of Bristol to join us at the start of British Food Fortnight on 17 September to support Bristol’s Independents and…

Try something local, from somewhere local on Bristol Independents Day!

On the 17th, the Bristol Independents campaign will launch a pilot project highlighting 8 of Bristol’s local shopping areas on recipe postcards featuring ingredients that can be purchased from local shops in each area. There will also be a competition where you can nominate your favourite local food business, and in turn, be entered into a prize draw to win local goodies.

The initiative plans to include many more independent businesses and high streets in the coming months. The 17th is just the beginning of a campaign to support Bristol’s local independent traders!

Associated events and promotions will be announced closer to the day.

Why support local independent traders?

The Who Feeds Bristol? report has revealed:

  • Bristol has around 180 specialist independent food shops owned by 140 businesses that sell food from which you can cook a meal from scratch (includes bakers).
  • 10 out of 35 wards have no greengrocer.
  • Half the wards have less than 10 independent food retailers.
  • Specialist independent food shops are disappearing. They generally offer competitive prices, don’t charge a premium for small volumes and can respond to requests; many buy from local suppliers.

How can I get involved?

Organise a local food event in your area on the 17th, let us know and we’ll include it in our publicity. Otherwise, visit our website (coming soon), take the ‘good food’ pledge and enter our competition.

Contact Jane Stevenson 0117 966 1639


Sunday, 14 August 2011


In response to recent disturbances;

"The events of April 1980 were characterised by the number of young people involved, both black and white, and the feelings of antagonism they have to the police. No serious assessment can be made unless these attitudes are examined.

The society in which we live rules on the basis of consent, it is clear that the authorities do not have this consent as far as large numbers of young people are concerned.

The differences in attitudes between young people and the older generation towards authority, are not so much the oft quoted generation gap, but more a question of the older people having accepted their lack of power, and adopting a mode of existence that does not bring them into conflict with the establishment, some are able to sublimate their lack of power by exerting authority in the family.

Young people experience factors that do not apply to the rest of the population, they first have no independent income and have to rely upon hand-outs from their parents. Inside the family they have no power and have to accept the decisions just or unjust of parents. During their leisure hours they are the objects of criticism and hostility if they fail to conform to the dress and behavioural patterns of the adult world, although they often see the older generation themselves ignorning these standards.

Some young people of course learn at an early age to adopt attitudes that are acceptable to the dominant ideology, they are described as co-operative, normal, well-behaved, decent, etc whereas others who have not learnt this trick are called slow learners, trouble makers, yobbos. The language which we use to describe people is of course very arbitrary, in a military situation the second group of youth would be called fearless, tough, hero, etc, in fact many of the factors which we criticise in the young we would applaud in the police force. Society tends to make judgments on people by the type of clothes they wear, the type of house they live in, the car you drive; it is not surprising that young people who in the main do not possess these status symbols see themselves as quite separate from the rest of the population. To counteract this feeling of separation young people have developed their own culture, their own fashions, their own entertainments and even their own language, in an attempt to establish an identity and hence some form of status, if only amongst their own peers. Part of this culture is the challenging of the status quo and those who protect it.

The police are composed of people who hold the same views as society as a whole on young people, and because of the nature and function of the police force, tend to hold these views in a much more comprehensive form, and deviation from the norm is a threat to law and order and the "standards" of society, the police force is of course able to enforce these concepts by legal force, and their attitudes to young people always commence from the assumption that the police are correct, and the young wrong, often expressed in the phrase "they need teaching a lesson".

The fact that the police force has such powers and wears a uniform makes them indentifiable to the young as a potential enemy.

Crime, of course, does exist, and the function of the police is to prevent and detect it. Young people feel they are more likely to be harassed than are the older generation, this feeling is of course based on experience, and if your skin happens to be black, this applies even more so.

It does not require many incidents of unjustified questioning, heavy handed attitudes, sarcasm, and superior behaviour, for there to be erected a fairly unified concept amongst many young people that such attitudes are universally held by all the police, as in fact they may well be.

It would have been useful to the enquiry to have examined how widespread such behaviour is amongst the police, but it is significant that those in charge of the force in Avon refused to co-operate with us and have not appeared to give evidence or answer questions.

For black youth all the foregoing is multiplied many times, for whatever denials and assurances are made, it is clear that the police hold deep, racist views, which are expressed when they harass black people, and can be clearly seen when a crime is being investigated in which a black person may have been involved. Anyone with a dark skin in such circumstances is fair game for questioning!"

NOTE; The above is a reproduction of Appendix 3 of the report from an enquiry with the following terms of reference "to enquire into the social and economic conditions prevailing in the St Paul's area and to make recommendations which might ensure a level of communal harmony and stability sufficient to minmise the risk of a repetition of anything like the events of April 2nd 1980"

The enquiry team was established with representatives from the Bristol Trade Union Council and members of the local community, and heard evidence at St Werburghs Community Centre from local residents, Bristol City councillors, and other interested parties. Despite two separate invitations the police refused to attend, stating that they had already given evidence to a House of Commons select committee. Avon County Council also declined to take part.

Friday, 29 July 2011

A Brief History of.....BRISTOL'S TRANSPORT WOES – Part One

The Rise and Fall of Rail Based Transport in Bristol 1824-1941

1) Trains Part 1 (1824-1840) Temple Meads Station – location, location, location.

The first railways in the Bristol area were powered by a combination of horse and gravity, and were designed to transport coal from the South Gloucestershire coalfield to the river Avon. The first, the Avon and Gloucestershire, carried coal from Coalpit Heath and other collieries down to the Avon at Londonderry Wharf (opposite Keynsham) where barges carried the coal along the Avon to either Bristol or Bath. Much of this route is now a linear walk known as the Dramway.

The Bristol and Gloucestershire was also a horse-drawn railway which carried coal from the collieries at Coalpit Heath, Shortwood and elsewhere to Cuckold's Pill (Avon Street Wharf). North of Mangotsfield it used much the same track as the Avon and Gloucestershire before following the route of what is now the Bristol and Bath Railway Path to central Bristol. This railway was opened in 1835.

When plans were first laid for a steam-powered railway line connecting Bristol to London (the first proposals were as early as 1824), there was much discussion as to where the Bristol terminus should be built. Many suggested that it should be near Old Market on the basis that it could make use of the existing railway infrastructure of the Bristol and Gloucestershire.

Another body of opinion suggested a site should be found nearer the City Docks in order to provide direct access to the port so that goods, the real commercial impetus for the railways, could be transferred directly from the railway to the ships - this was the solution taken by Bristol's great commercial rival Liverpool.

However, both options required the reuse of brownfield sites and demolition of existing buildings and structures, which in turn would involve some additional costs. In the 19th century just as today, greenfield sites were usually more profitable to develop than brownfield sites. In the end, ease of development took precedence over ease of inter-connectivity and a greenfield site at Temple Meads on the south side of the river next to the cattlemarket was selected as the Bristol terminus for the Great Western Railway.

As a result, following the opening of the new station the biggest growth industry in Bristol was that of the hauliers as goods were unloaded and trans-shipped by traditional horse and cart between railway and dock. By contrast, in Liverpool goods could be offloaded directly from the railway carriages into the holds of the waiting ships.

It would not be until 1872 that direct connection to the docks was provided with the opening of the first stage of the Bristol Harbour Railway from Temple Meads to Wapping Wharf (including the building of a tunnel under St Mary Redcliffe, the compensation for which allowed the church to purchase land at Arno's Vale for a cemetery). It would be 1906 before the majority of the City Docks would have a direct rail connection by which time the focus for Bristol's shipping trade was moving to Avonmouth and Portishead.

2) Trains Part 2 (1839-1854) The Gauge War - technological brilliance vs commercial pragmatism

As we have seen, there was already a railway line in Bristol before the Great Western Railway was constructed, and like almost all other railway lines in England, it was Narrow Gauge with a width between the rails of 4 foot 8 ½ inches.

Nevertheless, the GWR was convinced, largely due to the arguments of their chief engineer, Isambard Kingdom Brunel, that Narrow Gauge was technically deficient and that a superior 7 foot Broad Gauge should be used by the GWR. The GWR accepted Brunel's arguments and proceeded to use Broad Gauge for its routes. Pretty much everybody else stayed with Narrow Gauge. Bristol and the West would thus plough a separate furrow from the rest of the country and once more the question of interchange was deemed to be of secondary importance.

Meanwhile, in 1839, an Act of Parliament had provided for the building of a 22 mile extension of the Bristol and Gloucestershire railway from Westerleigh to meet the Cheltenham and Great Western Union railway which ran to Gloucester.

The Bristol and Gloucestershire railway line, as we have seen, was Narrow Gauge. The Cheltenham and Great Western Union railway was Broad Gauge. At a meeting in Bristol on 31 March 1840, the now renamed Bristol and Gloucester railway company announced that the new extension would be Narrow Gauge to match the Birmingham and Gloucester railway due to open that same year. Where the new extension met the CGWU at Standish junction, the shared line on to Gloucester would be mixed gauge with shared maintenance and duplicated facilities. Bristol and Gloucester also announced plans to amalgamate with the Birmingham and Gloucester to form the Bristol and Birmingham railway – the merger eventually happened in 1844.

However, on 13 April 1843, it was suddenly announced that an agreement had been reached with the GWR that the entire line from Bristol to Gloucester would, in fact, now be Broad Gauge. Subsequently, Broad Gauge services from Bristol to Gloucester began in 1844. However, services north of Gloucester into the industrial powerhouse of Birmingham and the west midlands remained Narrow Gauge.

The result was chaos. Goods shipped from the west midlands by Narrow Gauge had to be trans-shipped by hand across the platform at Gloucester to the Broad Gauge trains waiting to depart to Bristol. Not only did this cause delays, but frequently goods were lost or damaged during transit. A system designed by Brunel to facilitate the transfer failed for reasons that were never properly identified but industrial sabotage was implied.

Whatever the cause of the chaos, if you were a manufacturer in Birmingham the choice for shipping goods overseas was fairly simple. You could send your goods to Liverpool where the route was entirely Narrow Gauge (thus no need for trans-shipping) and where the railways continued right up to the dockside for direct loading, or you could send them to Bristol, where the change in gauge would mean they had to be trans-shipped at Gloucester before arriving at Temple Meads where they would be trans-shipped again before arriving dockside.

Within a year of opening the entire route from Birmingham to Bristol passed into the hands of the Midland Railway. However, it was only in 1854 that the entire length of the line was converted to the same, narrow, gauge - it appears that conversion was not a priority for the Midland Railway probably because the overwhelming majority of its goods traffic now went to Liverpool not Bristol.

3) Trams Part 1 (1870-1875) – market driven or public service?

Before the 19th century, provincial British cities were small enough that urban transport was not considered to be a major need. The small size of most cities meant that residence, workplace and other amenities were within a short walking distance of each other.

However, as cities began to sprawl into suburbs in the 19th century, the need for efficient urban transportation became apparent. Horse-drawn omnibuses began to make an appearance in Britain in the 1830's but remained beyond the means of most ordinary people due to high operating and maintenance costs.

It was only in the second half of the century, when it was realised that the use of tramlines to reduce friction allowed the same team of horses to pull double the weight (and thus double the passengers per horsepower), that the possibility of cheap but efficient public transport became a possibility. The new horse-drawn trams also provided a step change in the quality of transportation with reduced noise, faster journey times, and a smoother ride in an era when most streets were cobbled.

However, Government legislation still favoured road-based omnibuses over rail-based trams and it would be nearly twenty years before the Tramways Act of 1870 was passed providing enabling legislation for urban tramways, legislation prompted by the success of the Liverpool Tramways Company. Yet again Bristol was having to play catch-up with its commercial rival in the north.

Within months of the Tramways Act being passed there were two private proposals for horse-drawn tramlines in Bristol. One was by a Bristol company, for a tram line connecting Bristol Temple Meads with Clifton and Hotwells. The second, by a London-based company, was considerably more expensive and extensive involving the construction of an entire network of lines at a cost of £120,000 (relative to share of GDP this would be equivalent to about £160m today).

There then followed lengthy debates in the local press and the council chamber about the merits of each scheme. Much of this debate had more to do with ideology than the technical merits of the individual schemes. Essentially there was one body of opinion that insisted that business ventures such as tramways should be run by the private sector responding to market forces in order to reduce the need for public subsidy – whilst their opponents felt that tramways were public services that if left to the private sector would see high fares and/or lowered safety and service standards in pursuit of profit. The debate continues to this day in one form or another.

In the end, swayed by local hostility against the rumoured London speculators said to be backing both schemes, Bristol's councillors decided to build the tramways themselves with the intention of leasing out the operation of the line to the most trustworthy bidder - leaving the council with the option of replacing the operator if it failed to meet the standards expected. Two lines were proposed - one from St Augustine's Parade to the bottom of Blackboy Hill via Perry Road. the second from Old Market Street to Lawrence Hill. Neither would connect to Temple Meads station – and costs were estimated at £14,000.

Unfortunately, almost as soon as parliamentary approval for the project was given, a rise in the price of iron led to a financial crisis and it became clear that the council's funding capabilities would not allow the building of both lines. In the end only a small section of the first line to Blackboy Hill was completed, and the resulting search for a trustworthy operator was a dismal failure.

The council was rescued by a group of local businessman who agreed to lease the existing line for 21 years (they eventually purchased it outright for £8,000 a few years later) provided permission was given to build further lines from Old Market to St George and Fishponds, as well as a link from Old Market to the original line via Perry Road.

Permission was duly given, and henceforth, Bristol's public transport service would be run by the private sector in the shape of the Bristol Tramways Company.

4) Trams Part 2 (1881 to 1910) - a successful Bristol transport story?

Despite the inauspicious start, by 1881 Bristol's tramway had expanded to provide lines to Blackboy Hill, Horfield (Egerton Road), Eastville, St George, Totterdown, Bedminster and Hotwells and was carrying over 6 million passengers per year.

One potential problem was the lack of a single central transport hub.  With the obvious focus for a transport interchange - Temple Meads - being perceived as too far from the centre of the city, the less than satisfactory result was the development of three separate tram termini.  South Bristol trams stopped at Bristol Bridge, east Bristol trams at Old Market, and north Bristol trams at St Augustine's Parade (which later became know as the Tramways Centre, and then just “The Centre”).

Although tramlines linking the three termini were built, journeys involving multiple trams required the purchasing of separate tickets, and a price premium. The problem of no single city centre public transport hub remains with us today.

Another key event in 1881 was the Bristol Tramways Company signing an agreement with the Great Western Railway and the Midland Railway to have the sole right to provide public hire service at Bristol Temple Meads "the base of all passenger carrying operations in Bristol". The company then leased this monopoly to third party carriage operators before eventually uniting them all into the Bristol Cab Company with the same directors and officers as the Bristol Tramways Company.

This monopoly proved devastating to the tram company's rivals who were providing horse-drawn omnibus services, and within a decade the last two independent omnibus companies in Bristol failed, at which point the Tram and the Cab companies duly merged to formed the Bristol Tramways and Carriage Company (BTC) in 1887. By 1891, the number of passengers carried by the company had almost doubled to 11.2 million.

Free of any real competition, the BTC began to address the increasingly obvious shortcomings of using horse driven trams. The cost of fodder for the almost 900 horses used by the company accounted for 34% of operating expenses, almost the same as the costs associated with it's human workforce. When veterinary fees and stabling were added, costs associated with the horses rose to some 50% of revenues.

The company began to look enviously across the Atlantic, where the success of electric tramways in the United States, especially the Richmond Street Railway opened in 1887, showed that there was the opportunity to both reduce operating costs and improve the effectiveness of tram services.

Across the Atlantic, electric trams had been shown to be clean, quiet and reliable. The ability to use double-decked carriages, with improved speeds and faster turnaround time offered considerable opportunity for cost efficiency savings. The trams had also demonstrated that they were fuel efficient enough to offer both lower operating costs and lower fares despite the considerable capital outlay required for electrifying the line.

One final advantage of particular importance given Bristol's topographical situation was the ability of electric trams to cope with steep gradients.

Convinced of the need to introduce electric trams, BTC began work on the electrification of the Old Market to St George line and its extension to Kingswood (which included some challenging gradients). The line opened on the 14th October 1895 and was a resounding success - schools and factories were closed in east Bristol as people flocked to see the new clean and innovative technology. Over a million passengers used the service in its first four months.

The "improved facilities and lower fares" (fares were lowered by a quarter) led to a public clamour for the conversion of existing lines and the building of new ones elsewhere in the city. An intense period of capital investment followed, and by 1901 the entire network had been electrified involving the conversion of 16.5 miles of existing track and the construction of 11.5 miles of new track. BTC now offered services to Staple Hill, Kingswood, Hanham, Brislington, Knowle, Bedminster Down and Ashton Gate. Later extensions were added up to Filton (1907) and Westbury on Trym (1908) whilst passenger numbers averaged almost 47 million per year between 1906-1910.

Meanwhile, BTC's operating profits, which as a percentage of revenues had averaged 19% in the five years before electrification, now jumped to an average of over 34% for the five years after electrification.

However, hidden beneath the success of the tram, could be found the causes of the tram's eventual downfall.

5) Trams part 3 - (1910-1941) - The cost of capital and market insecurity.

Although the wide distribution of shares in BTC (over 400 shareholders from a wide range of backgrounds but all from relatively prosperous areas of the city) gave it access to capital beyond the means of companies in which ownership was concentrated in the hands of a few directors, nevertheless the capital intensive nature and sophistication of creating an electrified network placed considerable strain on the company's financing.

Between 1895 and 1902, during the period when Bristol's tramways were electrified, the paid-up capital of BTC increased by 400%. On top of this, the effects on investor confidence in tramways of three separate pieces of legislation need to be considered. Firstly, in the original 1870 Tramways Act, a clause gave local authorities the power to purchase privately owned tramways after 21 years (and every 7 years after that). In Bristol, agreement had been reached which meant that this option could not be exercised until 21 years after the extensions to the line completed in 1892. This meant that the council could only exercise its right to buy the tramway in 1913, any takeover before that would have to be by negotiation.

A further development came in 1893 when the House of Lords ruled that the purchase price should be based on the cost of construction less depreciation - with no allowance made for goodwill or profitability - thus reducing the potential price of purchase considerably. This was then followed in 1896 by parliamentary legislation empowering local authorities not only to own tramways but to operate them as well. Within a year five northern cities were doing just that with encouraging results and by 1913, Bristol and Norwich would be the only major English cities which still had privately run tramways.

It was within this context that a row broke out over who should supply electricity for the soon to be electrified tramway. With Bristol having been one of the first cities to undertake electricity supply, the council argued that BTC should contract with them to supply the power for the tramway operation rather than building their own power stations.

BTC refused, insisting that they should have full control over their own power supply. In response, the council set up a Tramways Purchase Committee to look into buying the entire tramways system as per the 1870 act. The dispute continued into 1898, when eventually, under pressure from a Bristol public keen for a cheaper, faster and more efficient tramway, the council eventually backed down. BTC built its central power station on Temple Back next to Counterslip Bridge and directly across the road from the council's own central power station. The private sector versus public sector conflict set in stone.

The end result of this combination of rising capital costs, ongoing disputes with the council, and the possibility of the entire tramway being taken over relatively cheaply, meant that the appetite for further private investment in trams was at a low point. Following a decade at the end of the 19th century in which 14 separate new lines or extensions were completed (as well as the electrification of the entire network), the first decade of the 20th century saw just two further tram extensions - from Durdham Down to Westbury on Trym, and a link from Horfield to the new Bristol Aeroplane Company works at Filton - the latter largely due to the ownership links between the Aeroplane company and the Tramways company. Other less capital intensive public transport possibilities started to look more attractive.

In 1905, the Tramways company purchased a dozen double-decker motor buses for some of its tramway feeder routes. The following year it opened a bus route to Clifton following continued rejection by local residents of tram proposals for the area. As petrol engines became more efficient and reliable, and dis-satisfied with the standard of the buses purchased externally, the company decided in 1908 that instead of investing in tramways susceptible to a council takeover, it would instead invest in construction works at Brislington to produce some 300 motor vehicles (including buses) per year. It was the shape of things to come.

Although the number of passengers carried by the company continued to increase - reaching 63 million in 1916, there was no further extension to the tramway itself after 1908 whilst the trams themselves remained the same basic model used in 1895 with no real further innovation. .

Inevitably, the question of public ownership was raised again in 1913 when a report estimated the value of the tramway at £600k, and that it would produce an annual profit for the city of £37,000 per annum. It noted the increasing use of motor buses but concluded that trams offered the most effective and economic way to provide the travelling facilities required by the Bristol travelling public.

This report added weight to the results of an earlier study produced by the National Civic Federation in 1907 which found that fares in Bristol were 66% higher than for those cities where the trams were publicly owned, whilst staff were expected to work much longer hours for less pay than their public sector brethren.

In the end following a long dispute in the press and parliament, and despite a Parliamentary Act approving the purchase of the tramways and a poll showing a majority of Bristolians in favour of taking the tramway into public ownership, BTC remained a private company after the company insisted on a valuation of £2 million for its tramways and the council subsequently lost its appetite for the purchase with the onset of a recession and then war.

Discussions about ownership would be raised again in 1922, 1929 and 1936 and the indecision and uncertainty about ownership continued to have the effect of reducing the incentives for private tram investment whilst simultaneously preventing public investment. Instead, what limited investment was available for public transport in Bristol went into the expansion of the bus network.

The 12 buses in 1905, had become 44 buses by 1914 (although this compared to 169 tramcars). After World War I, the mix would increasingly be in favour of buses, and the production of Bristol tramcars ceased in the 1920's.

By the 1920's, the tram was no longer seen as a viable alternative to the bus in Bristol. This was essentially confirmed on the 11th January 1922 when proposals to construct a two lane road with a high speed tram link on its central reservation were thrown out when councillors voted in favour of buses rather than trams "to allow complete interplay of all forms of private, commercial and public transport". As a result the ensuing road became one of the first four lane highways in the country when it was opened in 1926 as the Portway.

The timing was significant – in the inter-war period, some 30,000 new homes were built in Bristol the vast majority of them on low density estates expanding out in to the surrounding countryside. With no new tramlines or railways to connect most of these new suburbs, their residents became increasing reliant on bus services as the only source of public transport.

Finally, after decades of uncertainty, on 1st October 1937, the Bristol Transport Act received its Royal Assent, and, for the price £1,125,000, the city council took over the city's tramway undertaking. It then almost immediately began to close the tram routes down, with the Westbury-on-Trym route being the first to go on 7th May 1938. The reasoning was that the bus was now the way forward - trams were no longer considered the most effective and economic way to provide the travelling facilities required by the Bristol travelling public.

As a result, the 1937 Act had also provided for the council to pay £235,600 towards half the cost of replacement bus services and the setting up of a Transport Joint Committee, with representatives from both the Council and the Bristol Tramway and Carriage Company. It would be this body that would co-ordinate Bristol's public transport services – a service entirely based on the bus and known as the Bristol Joint Services.

The planned gradual reduction of tram services was abruptly accelerated in 1941 when a Luftwaffe bomb damaged the central power station on Temple Back. Rather than restoring the electricity generation it was simply decided to abandon the trams services there and then.

The era of rail-based urban transport in Bristol was over – from now on the focus would be on the provision of road-based services both public and private with only local rail services available to offer any alternative to road transport.

Key Sources;
Nichols, Gerry: Public Transport in Bristol 1945-1965 (included in Post-War Bristol 1945-1965 – Twenty years that changed the city, editor Peter Harris, published by the Bristol Branch of the Historical Association, 2000)
Harvey, Charles & Press, Jon: Sir George White and the Urban Transport Revolution in Bristol, 1875-1916 (included in Studies in the Business History of Bristol, editors Harvey and Press, published by Bristol Academic Press, 1988)

Friday, 24 June 2011

Joining up Bristol’s local community energy groups

Joining up Bristol’s local community energy groups’

Bristol Energy Network and the Centre for Sustainable Energy Present….

A meeting to hear a talk from Dan McCallum, Awel Aman Tawe Community Energy Successes from South Wales and to discuss what community groups can learn from their experiences

* Learn from what other groups across Bristol and the South West about what they are doing to help reduce energy use in their communities

* An opportunity for groups and individuals to share their projects and experiences

* Meet people from other energy groups from Bristol and the South West

* Find out how the Bristol Energy Network and CSE can support your project

Wednesday 29th June 2011 6.30 to 9pm

Knowle West Media Centre, Bristol

Refreshments and light food will be provided.

To book please e-mail Kirsty Mitchel,
 or phone:

0117 934 1400

All community groups are invited