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the latest source of comment and analysis from the Institute for Security & Resilience Studies at UCL.


Artificial Intelligence

By Jas Mahrra, on 10 July 2015


Dr JP MacIntosh, Director ISRS recently spoke at FT’s Camp Alphaville panel on When Markets Become Self-Aware – The Rise of AI. Here is a bit more about what he has to say on the subject.

AI can and has been oversold, over packaged, over expensive & doesn’t do the job. That’s been a recurring pattern since cybernetics morphed into AI after WW II. AI investment waves have come and gone. As the recipient of a recent PhD in the field put it, today’s machine learning is “statistics on steroids”. Yes, that’ll doubtless provide a financial engineering competitive advantage for a narrow window of time but we’re some way from the singularity and each competitive advantage snatched at and lost probably doesn’t amount to a singularity let alone the singularity that those suffering narrow inductive rational rapture have long fantasised. Uncertainty still wins through as the Flash Crash perhaps demonstrated.


Tax Reform in Scotland

By Jas Mahrra, on 5 June 2015


Chris Cook, Senior Research Fellow responded to the Commission on Local Tax Reform in Scotland

The Commission on Local Tax Reform issued a call for evidence requesting views about the future of local taxation in Scotland. It’s stated aim is to bring together local and national politicians from different political parties from across Scotland to look at ways of developing a fairer system of local taxation.

Submission to the Commission on Local Tax Reform.pdf


Greece – a Varoufakis Conversion

By Jas Mahrra, on 9 February 2015


Chris Cook, Senior Research Fellow comments about Greece’s economic challenges

Greece’s new Syriza goverment has two major economic challenges to address; a resolution of Greece’s unsustainable debt burden followed by a transition to a long term sustainable economy.

The full article is published in Piera: A Varoufakis Conversion


Caspian Energy Grid

By Jas Mahrra, on 5 January 2015


Chris Cook, Senior Research Fellow attends the Ashgabat Energy Charter Forum

On 9 December 2014, the Ashgabat Energy Charter Forum was held in the capital of Turkmenistan. The Forum, convened by the Energy Charter organisation was held under the topic of Reliable and Stable Transit of Energy. Chris Cook, attended in the capacity of an expert. Read about his personal impression of the conference and his thoughts on his proposal for a Caspian Energy Grid in the specialist energy publisher Newsbase (written in his capacity as Director at Wimpole International).

Downstream Monitor – MEA Week 50 Newsbase

Editors note: Whilst the conference in Ashgabat addressed issues of concern to the whole planet as our blog reflects, we like most participants in the conference (e.g. the UN and the EU) in no way condone the behaviour of the regime of Turkmenistan. As for example, reported by the BBC in its article on Turkmenistan.


Bash Software Vulnerability – Addressing the root cause

By Jas Mahrra, on 26 September 2014


TSI Director, Tony Dyhouse comments on the recently reported Shellshock vulnerability in Bash software

What is most shocking about this particular situation is that it demonstrates vulnerabilities still exist right at the foundation layers of our software – the operating systems. As a result, everything we layer on top of that can be vulnerable and this is a totally unsustainable situation. Patching software continues to be a relevant short term fix but it cannot be considered a long term security strategy and we need to decrease the need for it in the future and treat the root cause. To achieve a more stable and secure technology environment in which businesses and individuals can feel truly safe, we have to peel back the layers, start at the bottom and work up. This is utterly symptomatic of the historic neglect we have seen for the development of a dependable and trustworthy baseline upon which to develop a software infrastructure for the UK. Ultimately, this is a lifecycle problem. It’s here because people are making mistakes whilst writing code and making further mistakes when patching the original problems.

TSI is the Trustworthy Software Initiative:  http://www.uk-tsi.org/



The SSL debacle

By Jas Mahrra, on 14 April 2014


ISRS Fellow, Vinay Gupta comments on the recently discovered “Heartbleed” exploit

The new OpenSSL exploit, “heartbleed” illustrates some little-considered modes of failure of our modern critical infrastructure environment.

The error itself is trivial: a single line of code contains the equivalent of a minor clerical error. The bug is a little like a reverse buffer overflow: rather than letting assailants write to memory, it allows them to read from memory – including memory containing valuable information like passwords or crypto keys.


If this bug had affected one site, it would have been unimportant. However, the severely under-resourced team maintaining the OpenSSL library were actually servicing some 20% of the internet. Because the software worked and was available without cost, it was everywhere.

OpenSSL was widely regarded as a basket case from the beginning: security researchers considered the software (originally written for at most casual use) to have been built on top of far beyond its fundamental integrity. Heartbleed is not the last bug of this size that this codebase might conceal.

There are allegations that the NSA knew of heartbleed for several years and exploited it as part of on-going internet monitoring operations. The NSA strenuously denies this. There is no doubt, however, that trade on the internet has been valuable for several years because of this undetected bug, and if any agency (on any side) detected it, they would have had a substantial intelligence gathering advantage.

These issues do not start and end with e-commerce and secure email. There is every possibility that SCADA and smart cities projects are also effected, and potentially systems like aircraft avionics software development environments.

Bugs are contagious. A breached password is used to load malware, the malware is used to compromise source code, the source code opens up a back door in a factory or on a plane. Contagion was very real in the financial markets, and it is equally real in the sociotechnical systems which develop and support our high-tech economy. We must be wary.


Back to the future with Scottish currency

By Mandeep K Bhandal, on 18 February 2014


ISRS Senior Research Fellow, Chris Cook discusses his framework for an independent Scotland to use the pound, a plan A Plus.

The article was posted on the Financial Times, Alphaville on February 17, 2014.

The rejection by all the Westminster parties collectively of the SNP’s Plan A for a post-independence UK currency union has elicited a string of possible Plan B solutions, several of them already considered and rejected as inferior to Plan A by the SNP’s expert group of ‘wise men’.

But the current debate is ill-founded, since the UK can have no more control over who uses the £ symbol as a unit of account, than they can have control over the use of metres and kilogrammes. As for currency, which is not necessarily the same thing as a unit of account, any number of countries ‘peg’ their currencies to a stronger currency as a unit of account.

The Republic of Ireland pegged their currency to the £ sterling for decades, and Hong Kong firstly pegged their currency to the £, and then after a brief and unhappy flotation, pegged their Hong Kong $ to the US dollar. Other countries go further, such as Ecuador and Panama, and actually use another country’s currency, which increases the dependence of these nations on that country’s monetary and fiscal policy.

All of the current Plan A and B proposals involve the creation of currency by a central bank – whether the Bank of England or the European Central Bank – and the creation of credit by private banks. But my proposal – let’s call it Plan A Plus – is complementary to the existing proposed Plan A, since it envisages a different monetary and fiscal architecture.

One of the subjects of my research as a Senior Fellow at the Institute of Security & Resilience Studies, University College London has been whether there may be possibilities for the future arising out of practice in the past. Because clearly UK sovereigns did fund their expenditure for many centuries before the Bank of England came along in 1694; while trade and enterprise also flourished long before the Joint Stock Company came along perhaps 400 years ago.

Sure enough, it is here – Back to the Future – where the basis of a Plan A + may be found.

Treasury to Taxpayer (T2T)

The credit of sovereigns was and is based upon their capacity to levy and collect taxes, and for centuries sovereigns raised funding to fight wars and carry out public works on the basis of their credit. The king’s treasury would propose to tax-payers – most taxes were land-based in those days – to prepay taxation at an agreed discount, let us say a £2 discount for a £10 tax pre-payment, usually made in kind, such as in goods or services provided to the sovereign.

The taxpayer would receive a record of prepayment, which was the half of a split ‘tally stick’ known – interestingly – as the ‘stock’, with the ‘counter-stock’ being retained by the Exchequer. When the tax was due, the tax-payer would take the £10 stock instrument to the Exchequer; it would be matched; the obligation to pay £10 tax would be met; and the taxpayer would realise a profit of £2 or 25% on his prepayment.

The accuracy of this explanation of national accounting remains indelibly in our language today, firstly in the origins of the phrases Tax Return, which was the accounting event of a physical return of a token, and secondly, in the phrase Rate of Return, which was actually the rate over time at which the (say) 25 per cent profit from the discount could be realised: the more tax you paid, the faster was the rate of return of the stock.

The use of the word Stock in its original meaning of an undated credit instrument has also fallen into disuse. It has been replaced by the twin peaks of finance capital: Equity (permanent shares of ‘Common Stock’ or Joint Stock’ in a Company legal vehicle) and Debt (temporary interest-bearing Loan Stock) and of course the government gilt-edged stock or gilts, which misleadingly have been termed the National Debt.

So the reality is there is no such thing as a National Debt: it is and always has been a National Credit, based upon the power of the Treasury to levy and collect tax directly from taxpayers.

So this proposed Plan A + is based upon the simple concept of direct T2T issuance of credit instruments by a Scottish Treasury firstly to fund its expenditure and secondly to provide the circulating credit necessary for the facilitation of trade and the creation of productive assets, and productive in every sense – not just productive of profit.

How it Works

The Treasury will simply create and issue whatever credit is necessary. At the operational level, system management, accounting, credit creation and issuance would be managed by service providers who would cover agreed costs, and also have a stake in the outcome, through the use of a partnership structure. A Scottish Monetary Authority would supervise and set standards.

In other words, we would see banks and credit unions transition from a role as middlemen, who come between lenders and depositors and take the credit risk, to pure service providers. This would be fine with the banks, because the only capital they then need is that necessary to cover operating costs.

Surely such a utopian mutual architecture will never work? Well actually, it already does, in the shipping industry where those risks which Lloyd’s of London will not insure have been mutually insured by Protection and Indemnity (P&I) Clubs for some 140 years. These Clubs have been managed by the same service provider – Thomas Miller – for 135 years. What works for shipping risk will equally work for credit risk.

But surely you need a Central Bank as a lender of last resort? In fact this has never been necessary, since the buck has always stopped with the Treasury. Central Banks today operate as the ‘fiscal agent’ of Treasuries, creating modern money as credit and spending it on the instructions of Treasuries.

Great theory, but it’ll never work in practice? Well actually, Hong Kong has never had a Central Bank and the three HK clearing banks issue bank-notes and create credit supervised by the HK Monetary Authority.

Show me the Money

The current rather esoteric position is that the issuance by three Scottish banks of their own series of Scottish bank-notes is backed £ for £ by the Bank of England’s internal issuance of £1 million notes (‘Giants’) and £100m notes (‘Titans’) somewhere in the vaults of the Bank of England.

There is no reason whatever why a Scottish Treasury could not – under the supervision of the Scottish Monetary Authority – create and issue its own Titan and Giant Treasury Notes in virtual or paper form and denominate them in pounds sterling purely as a unit of account. The three Scottish note-issuing banks -and any other prospective note issuers – could then continue to issue notes to fulfil the public requirement for cash, precisely as they do now.

This brings us to the fundamental question of all currency: as the economist Hyman Minsky pointed out “Everyone can create money; the problem is to get it accepted”. In other words, what would be the basis of this Scottish currency, and why should people trust it?

A Matter of Trust

Treasury credit is underpinned by or based upon the tax base, and as we have seen, UK sovereign funding consisted for centuries of Treasury credits issued at a discount and returnable in payment for land taxes.

In 1705 that remarkable Scot, John Law, made a proposal – “Money and trade considered: with a proposal for supplying the nation with money.” – in which he set out a plan for a centrally issued land-backed currency for Scotland. Clearly the world has moved on from the largely agricultural society of that time when most of the economic value arose from the use of land.

However, I believe that Scotland now has – in creating a monetary and fiscal system fit for a 21st century knowledge economy – the opportunity to greatly simplify and make more equitable the future productive value of what has been called the Common Weal of Scotland. The fact that some 500 people (including many foreigners) own more than 50 per cent of Scotland is clearly one avenue to explore.

So perhaps by decentralising the Treasury into Treasury Branches (as was done in Alberta in the 1930s) one could imagine local Danish style levies on land rental value. But instead of these being hoovered up by central government, they could simply be pooled and then re-distributed directly to local people as land levy credits denominated in £s and acceptable in payment for property occupation In this way, those with above average use of the Common Weal of land would make a net transfer to those with below average use.

Similarly a levy on carbon fuel use could be collected and the resulting pool distributed as an ‘energy dividend’ of energy prepay credits, both to alleviate fuel poverty, and to enable direct investment in renewable energy, and above all, in Danish-style community heat infrastructure.

But, one step at a time. Politics is arguably the art of the ‘adjacent possible’, and it is completely possible, straightforward, and above all in the interests of the banks themselves, to make a transition to a direct Treasury to Taxpayer (T2T) credit and currency system managed by a new breed of banking service providers. Meanwhile, Government funding would be raised using the undated prepay tax stock instrument.

In this way Scotland may be the first country to create, and monetise, the National Credit.





Eco Cities 2013 – a Free Ride?

By Mandeep K Bhandal, on 3 October 2013


ISRS Senior Research Fellow, Chris Cook provides an account of his experience at the ECOCITY, the World Summit on sustainable cities held in Nantes, France on 25 – 27 September.

One of the subjects discussed on several panels during the 2013 Eco Cities conference was transport policy and the conflict between optimal policy from an ecological perspective, and from a conventional economic perspective was evident.

Firstly, at a session on ‘Urban Services: what is the right price?”, Allan Alakula, Head of Tallinn’s Euopean Union Ofice in Brussels, outlined the policy in Tallinn, Estonia implemented earlier this year to make all public transport free.

It was pointed out in discussion that ‘free’ does not mean ‘without cost’ and a lively discussion soon developed in relation to the basis of the local taxes which fund the service, which apparently fall upon local income.  It was pointed out that – leaving environmental issues to one side – this meant that local property owners, the value of whose property benefits greatly from good public transport links, were literally getting a free ride at the expense of those who do not own property.

Anders Roth, Environmental Manager of the City of Gothenburg’s Traffic and Public Transport Authority was one of my co-panellists the next day on the subject of ‘Local Environmental Taxation: Incentives and/or subsidies’.

He outlined Gothenburg’s interesting new approach to congestion charging of ring roads, and their experience in relation to the results of a policy to tax employer-provided car parking.  It is not straightforward to encourage intermodal shifts without unforeseen consequences.

In relation to free public transport, he said that Gothenburg had considered it, but had rejected it because it was seen as a regressive policy which benefited the better off relative to the less well-off.

I outlined in discussion that a local levy be made on carbon road fuel, and that a ‘carbon dividend’ might then be paid equally to Gothenburg citizens in credits returnable in payment for public transport use.  The outcome would then be that those with above average carbon transport fuel use make a net transfer to those with below average use, and that greater funding for improved public transport services is also available.



Eco Cities 2013 – Human Resilience and the Resolution Trade

By Mandeep K Bhandal, on 3 October 2013


ISRS Senior Research Fellow, Chris Cook provides an account of his experience at the ECOCITY, the World Summit on sustainable cities held in Nantes, France on 25 – 27 September.

Representatives from Cities all over the world came together from 24th to 27th September 2013  in Nantes to discuss with representatives from other sectors – private sector, social enterprise and academia – a broad range of subjects with an ‘Eco’ theme.

The first panel on which I contributed was titled Fostering the mutualisation of goods and services with economic and legal frameworks.

The objective was to discuss the following questions.

Mutualisation of housing has a twofold objective: the optimisation of the use of resources in the city and the reduction of its ecological footprint. To what extent can cooperatives and co-housing projects achieve this mutualisation goal? How to spread these economic and legal models to other functions of the cities? What are the social benefits of such organisational modes?

Human Resilience

One of the participants, Pierre Zimmermann, outlined interesting initiatives over the last decade by the City of Strasbourg in respect of ‘autopromotion’ self-build projects using municipal land.  But even with a sympathetic administration such initiatives faced slow going due to competition from the private sector; institutional inertia within the public sector; and the ever-present problems of sourcing development financing and long term funding.

The second presentation was extremely relevant to the subject of human resilience. In 2003 thousands of the elderly died alone in France from the effects of the prolonged heat wave that summer.  This unprecedented mortality brought home the fact that a large number of the post-war generation, the majority being female, now lived alone, often in substantial properties, with no-one to visit or care for them.

As a result, Aude Messéan founded Le Pari Solidaire, a charity which brings together students with a need for accommodation with elderly people with spare accommodation, and a need for company, and some light assistance.

Protocols and Prepay

Both of these presentations brought home the need for the unconventional frameworks for property occupation and tenure which I have been developing, and which are based upon legal framework agreements and financial instruments which pre-date modern finance capital.

The two elements are firstly, the Capital Partnership revenue sharing protocol within which productive assets may be financed and funded, and secondly, the simple but radical rental pre-pay instrument which enables funders to invest directly at a discount in units returnable against future streams of rental income.

As the panel discussed, such rental units would firstly enable self-builders in Strasbourg to be rewarded for their efforts with sweat equity paid in rental units. Secondly, it could enable the scaling up of La Pari Solidaire through generic exchange of care for rental units of property occupation. This could bring together a generation which is ‘long’ of property, and ‘short’ of care, for themselves and their home, with a generation which is long of care but short of a home.

I think of this exchange as the ‘Resolution Trade’ through its capacity to resolve otherwise intractable issues, including the above inter-generational exchange , but extending to the resolution of unsustainable property debt.

What Resilience Means To My Generation?

By Mandeep K Bhandal, on 21 August 2013


Following a two week Internship Programme at ISRS, Iona Palmer-Baunack provides an assessment of what resilience means for her generation.

What Resilience Means To My Generation?

When I first came to the Institute for Security and Resilience Studies I must admit that I had no idea what resilience was or what the word even meant and I know for a fact that a lot of my peers would agree with me in saying that neither do they; unfortunately the people of my generation don’t understand this concept of resilience even though it is a concept that surrounds them in everyday life and will be an important component of their future.

Many people of my age, including myself before I came to do my internship at ISRS, will hear about the war in Afghanistan, the on-going conflict in Egypt, or a flood in Wales yet they don’t think about the effects of any of these situations- it goes in one ear and out the other. However, what I have come to realise is that these issues that my generation don’t take any notice of effect or could have a direct effect on us, for example:  the current situation in Egypt may seem like a million miles away to any one of my friends but what happens when that conflict becomes bigger and develops into a civil war which leads to repercussions such as a rise in oil prices- what someone my age doesn’t think about is that rise in oil price for example could directly affect them if their parents could no longer afford the increase in petrol for their car or gas for the heating in their house then they will be directly affected.

Furthermore, it is not just about the theoretical side of resilience and understanding that an everyday news bulletin could have an effect on us it is also realising that resilience is incredibly important for our generation, if not  more so than for our parents’ generation, as we will live in a world of increased population and increased demands for products. What my generation needs to begin to understand is that we will be the ones having to come up with solutions and new innovations to deal with a population of potentially 10 billion people who all want cars, computers, or mobile phones and therefore we will have to come up with new ways of being able to deal with this increased demand, i.e., finding new resources and inventing new ways to export and import products in order to reduce the danger of global warming. And it is not just about these luxuries that one must think about but also the simple things such as food, if the population reaches or even exceeds 10 billion people the demand for food will of course increase, but it is clear from various amounts of studies that have taken place that there is not enough suitable space on our planet to cater for that many people in terms of growing crops and farming animals- therefore yet again it will be my generation who either have to suffer and live with the consequences and maybe even face huge cases of famine or my generation who deal with the risk that we can foresee and come up with new innovation in terms of supporting this increase in population.

Another very important aspect of resilience concerning my generation is cyber; as a generation we have grown up in a world filled with computers, mobile phones, iPads, and various forms of social media and if we were all honest we would not be able to survive without them but what we don’t see is the risks that are involved in the cyber world. For example: a popular iPhone app nowadays is SnapChat which is an app where you can send a picture to someone which is deleted within 10 seconds, however it is not deleted but it is kept on a data base so what you send ultimately could be traced. Another key example is in social media, teenagers seem to assume that Facebook is a safe forum however it is not – anyone can hack into your account and find the information they are looking for- so do not go telling everyone you’re on holiday for a month!!! A final example is that of internet banking- internet banking has become increasingly popular over the years and I believe that within a couple of years our generation will only be banking online but do we realise the dangers of this? What happens if a terrorist attack takes place online?  How would we access our money? And what would the repercussions be for us as a country?

So in conclusion, I think that resilience is so incredibly important for my generation especially and that if we don’t, as a generation, begin to realise this and learn about resilience and what it really is then we are going to face major problems in our future and even ruin what generations before us have achieved for us.