New Year Message by Ed Miliband MP Leader of the Labour Party
In 2011, thousands of our bravest men and women will continue to serve far from home in Afghanistan with the highest commitment and dedication. My thoughts are with them and their families at this New Year.
Here at home, 2011 will be a year of consequences for Britain. Consequences that will be felt by hardworking families across the country. Consequences of the decision taken to reduce the deficit at what I believe to be an irresponsible pace and scale.
Many people feel powerless in the face of these decisions that will affect their lives, families and communities. The political forces in Whitehall which have made these choices appear forbidding and unheeding.
It is the message I get talking to young people about the loss of their educational maintenance allowances and trebling of tuition fees, people in different areas worried about their services and those wondering where the new jobs to replace those lost are going to come from.
In 2011, many people will wonder what they can do. Some will ask whether there really is an alternative to this scale of cuts. Still more will shrug their shoulders at casually broken promises and conclude politicians are indeed all the same.
Labour's challenge and duty in 2011 is to be people's voice in tough times and show that these are changes born of political choice by those in power not necessity.
And we will take the next steps on the journey to win people's trust that we offer a better, more optimistic future for Britain.
To do that will require learning from what we did right and wrong in government, strong opposition where it is required and laying the foundations for an alternative path for Britain.
I began my leadership by admitting that in government, we had lost touch and lost trust and that we needed to change to be the party that Britain needs. I saw it on the doorstep at the 2010 General Election and I know it can't be put right automatically.
It is why our journey to construct a better future for Britain must start from people's lives and their hopes and dreams. And we must change our party so that it becomes a genuine community force in every part of the country.
People also need our voice now.
So in 2011, we will be arguing for a proper economic strategy rather than an economic policy reduced only to deficit reduction. We would have made cuts but the scale, pace and targeting of these changes is not just wrong, it holds us back from answering the bigger economic challenges we face: about where the jobs of the future are going to come from and how can we create an economy which works for all.
We will stand up for young people because the promise of progress should be that the next generation does better than the last. That is not what young people feel is being delivered when they face the burden of tens of thousands of pounds of student debt, or are told there will be no more help to stay on at school or college or to find a job.
And we will expose the promise of new politics when it is simply about the breaking of promises in 2011 that were made in 2010.
And as we begin a New Year, I call on all people of other parties and none who share our values and worry about the direction of the country under this government to work with us.
I said in my Labour Party Conference speech that I have never believed that all wisdom resides in one political party. That is why I want to reach out to all other forces of progress in Britain.
To those who feel that politics as it is being practised is high-handed, remote and arbitrary, I also urge them to campaign and work with us. Decisions over school sport and in recent days, bookstart, were reversed because of the power of people arguing and winning their case.
It shows that political change comes because people make it happen.
2011 will be a year where we work to change Labour and seek to rebuild trust in us and in politics as a force for good.
Even in these tough times, we must keep the flame of optimism burning.
I sincerely believe that we can build a better future for Britain. That means closing the gap between people's aspirations and their chances of fulfilling them, being a society where we look after each other and meeting the promise that the next generation does better than the last.
That is our mission as a party which we will pursue next year and in the years ahead.
Friday 31 December 2010
Monday 27 December 2010
BUILDING A RECOVERY IN THE NEW YEAR?
Research released today reveals that building the homes required to meet Government’s projections of need would mean £1.2 billion of investment annually across the country and the creation of over 216,000 jobs.
The Home Builders Federation’s report, Reconstructing Our Regions, for the first time unveils the clear economic benefits of meeting housing need and tackling the housing crisis.
The report analyses the potential impact of the Government’s New Homes Bonus incentive to local communities and the upturn in employment in housing construction seen if local areas build the homes needed to meet the Government household projections over the next two decades.
It comes as the housing crisis worsened; last year saw the lowest number of homes built since 1924 and almost five million people on the social housing waiting lists. It also saw a record low number of first time buyers, with more and more people in their 30’s staying with their parents. In fact nearly a third of men and a fifth of women aged 20-34 now living with their parents, there is clearly a massive need for a major house building programme
Meanwhile Local Authorities have seen their funding cut severely – by 27% over the next four years – and unemployment passed two million this year. This demonstrates the importance of new house building for all communities and local economies across the country.
HBF Executive Chairman, Stewart Baseley, says: “Building houses is a win-win for communities across the country. Not only will families get the homes they need but local employment and increased investment will be boosted.
“Economic growth is fundamental to a successful recovery and housing has a huge role to play – I urge Local Authorities to reap the rewards of development and start building the homes the country needs.”
The only problem is the ConDem coalition's policies will make it virtually impossible to deliver the new houses people desperately need. The abolition of the regional housing targets could see even fewer houses being built because it amounts to a NIMBY's charter.
Despite the HBF's upbeat assessment of the economic and social benefits of a major new house building programme, there is little hope of a housing renaissance in the foreseeable future. The introduction the new homes bonus is not fit for purpose. It will do little if anything to address the housing shortage that is set to get worse following the government’s decision to scrap the Regional Spatial Strategies.
The Home Builders Federation’s report, Reconstructing Our Regions, for the first time unveils the clear economic benefits of meeting housing need and tackling the housing crisis.
The report analyses the potential impact of the Government’s New Homes Bonus incentive to local communities and the upturn in employment in housing construction seen if local areas build the homes needed to meet the Government household projections over the next two decades.
It comes as the housing crisis worsened; last year saw the lowest number of homes built since 1924 and almost five million people on the social housing waiting lists. It also saw a record low number of first time buyers, with more and more people in their 30’s staying with their parents. In fact nearly a third of men and a fifth of women aged 20-34 now living with their parents, there is clearly a massive need for a major house building programme
Meanwhile Local Authorities have seen their funding cut severely – by 27% over the next four years – and unemployment passed two million this year. This demonstrates the importance of new house building for all communities and local economies across the country.
HBF Executive Chairman, Stewart Baseley, says: “Building houses is a win-win for communities across the country. Not only will families get the homes they need but local employment and increased investment will be boosted.
“Economic growth is fundamental to a successful recovery and housing has a huge role to play – I urge Local Authorities to reap the rewards of development and start building the homes the country needs.”
The only problem is the ConDem coalition's policies will make it virtually impossible to deliver the new houses people desperately need. The abolition of the regional housing targets could see even fewer houses being built because it amounts to a NIMBY's charter.
Despite the HBF's upbeat assessment of the economic and social benefits of a major new house building programme, there is little hope of a housing renaissance in the foreseeable future. The introduction the new homes bonus is not fit for purpose. It will do little if anything to address the housing shortage that is set to get worse following the government’s decision to scrap the Regional Spatial Strategies.
Tuesday 14 December 2010
CONDEM ASSAULT ON YOUNG PEOPLE
The government’s decision to abolish the Education Maintenance Allowance undermines aspiration and will be counterproductive.
My fear is that hundreds, if not thousands of young people in Derby will now be deterred from staying on at school or going to college. At the moment 3,571 16 – 18 year olds in Derby receive EMA and 36 per cent of Derby College’s students currently receive it.
Our economy needs a well educated and motivated workforce, but these plans, and the tripling of tuition fees, will undermine educational attainment.
These changes represent the dawning of a new era where access to post-16 education becomes the preserve of the rich and elite, creating profound and unwelcome consequences for our society.
My fear is that hundreds, if not thousands of young people in Derby will now be deterred from staying on at school or going to college. At the moment 3,571 16 – 18 year olds in Derby receive EMA and 36 per cent of Derby College’s students currently receive it.
Our economy needs a well educated and motivated workforce, but these plans, and the tripling of tuition fees, will undermine educational attainment.
These changes represent the dawning of a new era where access to post-16 education becomes the preserve of the rich and elite, creating profound and unwelcome consequences for our society.
Wednesday 8 December 2010
FOUR BUILDING BLOCKS FOR A NEW CONSENSUS ON POVERTY
This is an extract from a speech given by Douglas Alexander to the Child Poverty Action Group’s AGM today – 8 December 2010.
“I think there are four building blocks for a new consensus on poverty that I hope at least some of the supporters of this Government could sign up to. But at the same time, we need to make sure this Government is held to account for their efforts to end relative child poverty, not some easier to meet definition of poverty, and that the 2020 target is a commit ment of every mainstream political party in this country.
“Firstly, work remains the best route out of poverty. Even if we do eventually get back to pre-recession levels of unemployment, the employment rates for some groups would still be far below those in countries that do better on child poverty than we do.
“Raising the lone parent employment rate to 75 per cent would take half a million children out of poverty, and that’s what has led this Government to go ahead with our plans to ask lone parents to start looking at part time work when their youngest child turns seven. And I’m willing to look at their proposals to change that age to five if they can produce a proper impact assessment and can show that they will match any toughening of conditionality with investment and support for affordable childcare.
“Secondly, social mobility is crucial, it’s driven by education and it’s the early years that matter most. While I didn’t agree with everything in Frank Field’s report last week, when he says that early years determine a child’s chances in life, he’s exactly right. Although it seems to be an area where Nick Clegg wants to draw some artificial dividing lines with Labour, the fact is that we are the Party of Sure Start not just as a response to the need for better childcare provision, but as a response to the need for better, integrated support to improve life chances for the poorest kids.
“The third building block is more contested; we have to reaffirm that inequality in our economy and our society matters. We have a relative poverty target in this country and there’s a reason why we do. One of the most striking features of the Unicef report last week was the finding that if, in Sweden, you took away all the progressive tax and benefit measures and just let the market determine how many children lived in poverty, you would still have a lower poverty rate than in the UK with all of our tax and benefit measures in force.
“The New Policy Institute study earlier this week, found that about half of the children growing up in poverty do so despite the fact that at least one of their parents goes out to work. In work poverty goes too easily unnoticed and is perhaps harder to deal with because it goes to the kind of economy we want to see in our country. For that reason, Ed Miliband is right to be advocating the living wage.
“Because we need to find ways, not just of moving people into work and then topping up their wages, but helping them get on in work, just as our growth strategy has to be based not just on creating more jobs, but creating more higher skill, higher value added jobs that command better wages.
“The final building block is the most elusive and, although it actually comes naturally to progressive politics, it’s one we need to reaffirm. Poverty isn’t experienced by atomised individuals acting as totally independent economic agents. Poverty is endured by f amilies and to communities – and building relationships and supporting families are central to any sustained assault on poverty.
“What does that mean? It means we have to be alive to the impact that the private economy and public policy are having on the quality of family relationships. Isolation and lack of community are vital determinants in persistent child poverty. It means we need to deliver pride and self respect for poor communities, not just jobs and income transfers. For that reason building relationships, being engaged with local institutions, learning to lead and work with others are indispensible aspects of reducing child poverty.
“The state and the private sector can create the space and time for people to come together, with policies from flexible working to allow people to have time off, to making the streets safe so that people feel they can attend a public meeting on a dark night in winter. But it also means we need to start celebrating, and value, the people who are taking action and assuming leadership roles in their own communities.
“But even the strongest policy consensus won’t get us to what we need. We have to find new ways to give voice to a campaign that makes backsliding, delay, or watering down of the commitment to ending child poverty too politically painful for this Government to contemplate. One of the best things about CPAG is that it has the word “action” in the title, and I know everyone here doesn’t want to wait until we start to see rising child poverty before taking political action. But it also means we need to find new campaigning tools and new language to try and recruit new advocates who haven’t been involved in this cause before.”
“I think there are four building blocks for a new consensus on poverty that I hope at least some of the supporters of this Government could sign up to. But at the same time, we need to make sure this Government is held to account for their efforts to end relative child poverty, not some easier to meet definition of poverty, and that the 2020 target is a commit ment of every mainstream political party in this country.
“Firstly, work remains the best route out of poverty. Even if we do eventually get back to pre-recession levels of unemployment, the employment rates for some groups would still be far below those in countries that do better on child poverty than we do.
“Raising the lone parent employment rate to 75 per cent would take half a million children out of poverty, and that’s what has led this Government to go ahead with our plans to ask lone parents to start looking at part time work when their youngest child turns seven. And I’m willing to look at their proposals to change that age to five if they can produce a proper impact assessment and can show that they will match any toughening of conditionality with investment and support for affordable childcare.
“Secondly, social mobility is crucial, it’s driven by education and it’s the early years that matter most. While I didn’t agree with everything in Frank Field’s report last week, when he says that early years determine a child’s chances in life, he’s exactly right. Although it seems to be an area where Nick Clegg wants to draw some artificial dividing lines with Labour, the fact is that we are the Party of Sure Start not just as a response to the need for better childcare provision, but as a response to the need for better, integrated support to improve life chances for the poorest kids.
“The third building block is more contested; we have to reaffirm that inequality in our economy and our society matters. We have a relative poverty target in this country and there’s a reason why we do. One of the most striking features of the Unicef report last week was the finding that if, in Sweden, you took away all the progressive tax and benefit measures and just let the market determine how many children lived in poverty, you would still have a lower poverty rate than in the UK with all of our tax and benefit measures in force.
“The New Policy Institute study earlier this week, found that about half of the children growing up in poverty do so despite the fact that at least one of their parents goes out to work. In work poverty goes too easily unnoticed and is perhaps harder to deal with because it goes to the kind of economy we want to see in our country. For that reason, Ed Miliband is right to be advocating the living wage.
“Because we need to find ways, not just of moving people into work and then topping up their wages, but helping them get on in work, just as our growth strategy has to be based not just on creating more jobs, but creating more higher skill, higher value added jobs that command better wages.
“The final building block is the most elusive and, although it actually comes naturally to progressive politics, it’s one we need to reaffirm. Poverty isn’t experienced by atomised individuals acting as totally independent economic agents. Poverty is endured by f amilies and to communities – and building relationships and supporting families are central to any sustained assault on poverty.
“What does that mean? It means we have to be alive to the impact that the private economy and public policy are having on the quality of family relationships. Isolation and lack of community are vital determinants in persistent child poverty. It means we need to deliver pride and self respect for poor communities, not just jobs and income transfers. For that reason building relationships, being engaged with local institutions, learning to lead and work with others are indispensible aspects of reducing child poverty.
“The state and the private sector can create the space and time for people to come together, with policies from flexible working to allow people to have time off, to making the streets safe so that people feel they can attend a public meeting on a dark night in winter. But it also means we need to start celebrating, and value, the people who are taking action and assuming leadership roles in their own communities.
“But even the strongest policy consensus won’t get us to what we need. We have to find new ways to give voice to a campaign that makes backsliding, delay, or watering down of the commitment to ending child poverty too politically painful for this Government to contemplate. One of the best things about CPAG is that it has the word “action” in the title, and I know everyone here doesn’t want to wait until we start to see rising child poverty before taking political action. But it also means we need to find new campaigning tools and new language to try and recruit new advocates who haven’t been involved in this cause before.”
Friday 3 December 2010
RECKLESS CUTS COULD UNDERMINE LOCAL NHS
In the Comprehensive Spending Review George Osborne outlined the Government's commitment to protecting the NHS. However, whilst the NHS budget was not actually cut the reality is that the 'growth' in funding will not meet the growth in demand.
Nationally, the NHS must save £20 billion by 2014 which is 20% of its budget. Locally this means that Derby hospitals must save £20 million over the same period, which is 5% of its budget in each of the next four years.
This isn't what people expected when they heard David Cameron promise to protect the NHS. This will have a massive impact in Derby.
I only hope that NHS staff are able to maintain the excellent service standards which they currently provide, but I fear this is unlikely under such tight budget constraints.
Coupled with the cuts comes a complete restructuring of the NHS, with the plan to scrap Primary Care Trusts forcing GPs to take on the role of administering the NHS's £80 billion budget.
The Government is forcing GPs to take on the job of planning, buying and managing the rest of the NHS's services. People want GPs to concentrate on caring for patients, but this colossal task will detract from patient care.
The government's reckless plans could actually undermine the very foundations of one of Britain’s greatest institutions. No wonder they're happy to be described as 'Thatcher's children'.
Nationally, the NHS must save £20 billion by 2014 which is 20% of its budget. Locally this means that Derby hospitals must save £20 million over the same period, which is 5% of its budget in each of the next four years.
This isn't what people expected when they heard David Cameron promise to protect the NHS. This will have a massive impact in Derby.
I only hope that NHS staff are able to maintain the excellent service standards which they currently provide, but I fear this is unlikely under such tight budget constraints.
Coupled with the cuts comes a complete restructuring of the NHS, with the plan to scrap Primary Care Trusts forcing GPs to take on the role of administering the NHS's £80 billion budget.
The Government is forcing GPs to take on the job of planning, buying and managing the rest of the NHS's services. People want GPs to concentrate on caring for patients, but this colossal task will detract from patient care.
The government's reckless plans could actually undermine the very foundations of one of Britain’s greatest institutions. No wonder they're happy to be described as 'Thatcher's children'.
Wednesday 1 December 2010
STUDENTS INDIGNATION IS UNDERSTANDABLE AND JUSTIFIED
It was Harold Wilson who in the 1960s coined the phrase that a week is a long time in politics. How right he was! The events that have unfolded since the General Election would have been unthinkable this time last year.
TV pictures of students taking to the streets and staging sit-ins were only ever seen in archive footage from the 1960s and 70s, but a new political awareness is stirring. Many young people are indignant about the blatant betrayal by the Liberal Democrats.
Every single Lib Dem MP gave a solemn pledge...“to vote against any increase in tuition fees in the next parliament and to pressure the government to introduce a fairer alternative.”
It was these pledges that persuaded many students to vote for the Liberal Democrats, securing victory for them in a number of seats around the country. Little wonder then that students feel betrayed and have taken to the streets to voice their anger.
Their sense of indignation is understandable and justified, not just because the Liberal Democrats have let them down, but because the Government’s proposals are seriously flawed.
The Government’s plans to raise the cap on tuition fees, cut teacher training by 80 per cent and abolish the Education Maintenance Allowance for sixth form students undermines aspiration.
Their proposals represent a radical shift in the way in which we as a society view and support further and higher education. Forcing students to pay the full cost of their tuition and taking away financial support for further education students from poorer backgrounds is, in my view, nothing short of national scandal.
Some universities will be able to charge the highest tuition fees and still attract students, but others like Derby University won’t, and will consequently receive less money via student contributions.
But Derby University is set to lose up to £30 million in government funding. This will require it to increase tuitions fees to more than £7,000 per annum to cover the reduction, which poses a difficult conundrum. If Derby University is forced to increase its fees to £7,000, it might not be able to attract a sufficient number of students to meet the shortfall in Government funding. But if it doesn’t it will create a financial black hole.
This quandary will be faced by many other universities around the country if the Government goes ahead with its proposals. Sadly, when I put this dilemma to David Willetts, the Minister of State for Universities, in the House of Commons on 3 November, no reassurance was forthcoming about Derby University’s future.
It seems the Government has opted for a ‘sink or swim’ approach to students and universities alike. But it doesn’t have to be this way. I support the National Union of Students’ call for the introduction of a graduate tax to ensure the bulk of additional resources for higher education would come from the highest earning graduates.
The Government says it wants MPs to vote on its controversial plans to increase tuition fees before the end of the year. But if the 57 Liberal Democrat MPs honoured their pre-election pledge, the planned increase would be defeated. I understand some Liberal Democrat MPs are considering abstaining, but that isn’t good enough. To have any chance of defeating the Government on this issue they have to vote against these malevolent proposals.
And finally...it is worth remembering that the Government is not introducing these plans because it has to, it is doing so because it wants to. The Government’s policies are nothing short of an ideological assault on state funded education.
TV pictures of students taking to the streets and staging sit-ins were only ever seen in archive footage from the 1960s and 70s, but a new political awareness is stirring. Many young people are indignant about the blatant betrayal by the Liberal Democrats.
Every single Lib Dem MP gave a solemn pledge...“to vote against any increase in tuition fees in the next parliament and to pressure the government to introduce a fairer alternative.”
It was these pledges that persuaded many students to vote for the Liberal Democrats, securing victory for them in a number of seats around the country. Little wonder then that students feel betrayed and have taken to the streets to voice their anger.
Their sense of indignation is understandable and justified, not just because the Liberal Democrats have let them down, but because the Government’s proposals are seriously flawed.
The Government’s plans to raise the cap on tuition fees, cut teacher training by 80 per cent and abolish the Education Maintenance Allowance for sixth form students undermines aspiration.
Their proposals represent a radical shift in the way in which we as a society view and support further and higher education. Forcing students to pay the full cost of their tuition and taking away financial support for further education students from poorer backgrounds is, in my view, nothing short of national scandal.
Some universities will be able to charge the highest tuition fees and still attract students, but others like Derby University won’t, and will consequently receive less money via student contributions.
But Derby University is set to lose up to £30 million in government funding. This will require it to increase tuitions fees to more than £7,000 per annum to cover the reduction, which poses a difficult conundrum. If Derby University is forced to increase its fees to £7,000, it might not be able to attract a sufficient number of students to meet the shortfall in Government funding. But if it doesn’t it will create a financial black hole.
This quandary will be faced by many other universities around the country if the Government goes ahead with its proposals. Sadly, when I put this dilemma to David Willetts, the Minister of State for Universities, in the House of Commons on 3 November, no reassurance was forthcoming about Derby University’s future.
It seems the Government has opted for a ‘sink or swim’ approach to students and universities alike. But it doesn’t have to be this way. I support the National Union of Students’ call for the introduction of a graduate tax to ensure the bulk of additional resources for higher education would come from the highest earning graduates.
The Government says it wants MPs to vote on its controversial plans to increase tuition fees before the end of the year. But if the 57 Liberal Democrat MPs honoured their pre-election pledge, the planned increase would be defeated. I understand some Liberal Democrat MPs are considering abstaining, but that isn’t good enough. To have any chance of defeating the Government on this issue they have to vote against these malevolent proposals.
And finally...it is worth remembering that the Government is not introducing these plans because it has to, it is doing so because it wants to. The Government’s policies are nothing short of an ideological assault on state funded education.
Tuesday 16 November 2010
FSA MORTGAGE PROPOSALS RISK EXACERBATING ALREADY ACUTE HOUSING CRISIS
The Home Builders Federation, Chartered Institute of Housing and the National Housing Federation, (represents England's housing associations) have joined forces to warn of the dire consequences of the FSA’s proposals to change the regulation of mortgages .
They say FSA’s proposals would be so onerous and overly-prescriptive that they would put many lenders off providing mortgages – as they would be so expensive to implement.
The new rules would decimate mortgage availability especially for first time buyers, whose numbers are already at historically low levels, and lower income households. The plans have far reaching social and economic impacts, including a dramatic reduction in house building levels, already at an 80 year low.
Reduced house building that directly and indirectly supports professions from estate agents to brick manufacturers – would result in job losses the impact of which would ripple through local economies across the country.
Independent research shows that if the FSA’s draconian proposals had already been implemented, of the 11 million current mortgage holders;
• Nearly half wouldn’t have been able to borrow what they did
• Up to a quarter may not have been able to borrow anything at all
Moving forward, it is estimated that each year the proposals would mean;
• Up to 153,000 house purchases could not be possible
• 57,000 FTB’s would be refused mortgages
The implications for the housing market of such a reduction in mortgage availability – already one of the main constraints on housing delivery - are clear, and additional pressure would be placed on the already overstretched private and social rental sectors, where 5 million people languish on Local Authority waiting lists.
The organisations also warned that unless the FSA changed its view that lending on shared ownership properties is sub-prime, the banks would continue to turn away more than £240m of valid business. In 2009/10, this resulted in 4,600 low cost homes being left vacant, even though 110,000 households had applied to move into them.
Speaking today, Stewart Baseley, Executive Chairman of the HBF said; “Of course lenders should lend responsibly and the FSA has a responsibility to regulate that lending. But these disproportionately severe proposals would have implications far beyond that and risk destabilising the already fragile housing market still further. The social and economic implications of delivering fewer homes at a time where we already have an acute housing shortage are dire.”
On the issue of the FSA’s guidance on shared ownership lending, Federation chief executive David Orr said: “If the FSA does not amend its stance, it will strangle mortgage lending for first time buyers and destroy the ability of lower income families and key workers, priced out of the open market, to part-buy shared ownership homes from housing associations.”
Sarah Webb, CIH chief executive, says: “There is a clear need for better mortgage lending. However, the proposals in this consultation will prevent many households who could service a mortgage from realising their aspirations to become home owners. Furthermore there is a real risk that these measures will undermine what is already a weak housing market – putting jobs and homes at risk. This isn’t just a case of closing the door once the horse has bolted, this will make matters worse.”
Elizabeth Richards, Head of Legal & Policy at NFoPP, comprising both the National Association of Estate Agents (NAEA) and the Association of Residential Letting Agents (ARLA), comments:
"These proposals may seriously undermine the mortgage market. The National Association of Estate Agents (NAEA) attributes the decline in both buyers and sellers during the past few months to restrictive lending criteria. These new regulations have the potential to exacerbate this problem. Loans to first-time buyers are considerably lower than at this time last year, and the NAEA believes that these new proposals will prevent even more people from buying a home."
Jonathan Fair, Chief Executive of Homes for Scotland commented: “In its efforts to create a mortgage market that is sustainable for customers, we believe that the FSA proposals take regulation too far and could result in a market with fewer participants, less competition and less choice at a higher price for customers. We fear that the proposals could be damaging to customer’s housing choices and to the economy more generally, perversely at the very time where all other public policies are being driven to improve these conditions”.
They say FSA’s proposals would be so onerous and overly-prescriptive that they would put many lenders off providing mortgages – as they would be so expensive to implement.
The new rules would decimate mortgage availability especially for first time buyers, whose numbers are already at historically low levels, and lower income households. The plans have far reaching social and economic impacts, including a dramatic reduction in house building levels, already at an 80 year low.
Reduced house building that directly and indirectly supports professions from estate agents to brick manufacturers – would result in job losses the impact of which would ripple through local economies across the country.
Independent research shows that if the FSA’s draconian proposals had already been implemented, of the 11 million current mortgage holders;
• Nearly half wouldn’t have been able to borrow what they did
• Up to a quarter may not have been able to borrow anything at all
Moving forward, it is estimated that each year the proposals would mean;
• Up to 153,000 house purchases could not be possible
• 57,000 FTB’s would be refused mortgages
The implications for the housing market of such a reduction in mortgage availability – already one of the main constraints on housing delivery - are clear, and additional pressure would be placed on the already overstretched private and social rental sectors, where 5 million people languish on Local Authority waiting lists.
The organisations also warned that unless the FSA changed its view that lending on shared ownership properties is sub-prime, the banks would continue to turn away more than £240m of valid business. In 2009/10, this resulted in 4,600 low cost homes being left vacant, even though 110,000 households had applied to move into them.
Speaking today, Stewart Baseley, Executive Chairman of the HBF said; “Of course lenders should lend responsibly and the FSA has a responsibility to regulate that lending. But these disproportionately severe proposals would have implications far beyond that and risk destabilising the already fragile housing market still further. The social and economic implications of delivering fewer homes at a time where we already have an acute housing shortage are dire.”
On the issue of the FSA’s guidance on shared ownership lending, Federation chief executive David Orr said: “If the FSA does not amend its stance, it will strangle mortgage lending for first time buyers and destroy the ability of lower income families and key workers, priced out of the open market, to part-buy shared ownership homes from housing associations.”
Sarah Webb, CIH chief executive, says: “There is a clear need for better mortgage lending. However, the proposals in this consultation will prevent many households who could service a mortgage from realising their aspirations to become home owners. Furthermore there is a real risk that these measures will undermine what is already a weak housing market – putting jobs and homes at risk. This isn’t just a case of closing the door once the horse has bolted, this will make matters worse.”
Elizabeth Richards, Head of Legal & Policy at NFoPP, comprising both the National Association of Estate Agents (NAEA) and the Association of Residential Letting Agents (ARLA), comments:
"These proposals may seriously undermine the mortgage market. The National Association of Estate Agents (NAEA) attributes the decline in both buyers and sellers during the past few months to restrictive lending criteria. These new regulations have the potential to exacerbate this problem. Loans to first-time buyers are considerably lower than at this time last year, and the NAEA believes that these new proposals will prevent even more people from buying a home."
Jonathan Fair, Chief Executive of Homes for Scotland commented: “In its efforts to create a mortgage market that is sustainable for customers, we believe that the FSA proposals take regulation too far and could result in a market with fewer participants, less competition and less choice at a higher price for customers. We fear that the proposals could be damaging to customer’s housing choices and to the economy more generally, perversely at the very time where all other public policies are being driven to improve these conditions”.
Monday 15 November 2010
BEYOND FISCAL FABLES & GREEK MYTHS
Last week Alan Johnson gave a speech at the Royal Society of Arts about the country’s economic future. This is what he said:
The American writer, Tom Woolfe, once said “a Liberal is a Conservative who’s been arrested.”
I suppose a modern inversion would be that a Conservative is a Liberal who’s been coalitioned.
But Liberal Democrats only have a walk-on part in this drama.
When it comes to the economy, this is very much a Tory government.
George Osborne, declared one important truth at the despatch box on 20 October when he said “to govern is to choose”.
But the Conservatives and their Stockholm Syndrome Coalition partners have adopted a policy of pretending they have no choice in order to try and evade responsibility for the one they’ve made.
Thus we have a mantra that is more to do with message discipline than fiscal discipline. It goes like this:
“After a decade of debt and reckless spending we’ve taken our country back from the brink of bankruptcy.”
Snappy and succinct but untrue.
It’s part of a narrative that denies there was ever a global financial crisis and gives no credit for the actions of the UK and other G20 countries at a time when we really did stand on the brink.
Not giving the credit due to your predecessors in government is nothing new and not of itself reprehensible.
But as we emerge from the most serious economic threat that the World has faced for 80 years the debate about where we go from here is inseparable from the debate on how we got here in the first place.
We cannot allow fiscal fables and Greek myths to provide the context of this vital debate.
And we cannot allow the government to get away with their most audacious myth – that there is no alternative to their economic masochism.
For Ed Miliband and for me, Labour’s economic credibility matters. It will be at the heart of everything we do.
It doesn’t mean ignoring what we got wrong – but it does mean standing up for what we got right.
So I want to use this speech to:
a) Establish the facts of what went before; what we got wrong as well as what went right
b) Explore where those facts leave the real political debate in this country; the choices we face
c) Encourage the government to engage in a proper debate about those choices
So let’s deal with the claims they make compared to the facts.
They claim that we’ve seen a “decade of debt” – the simple and inescapable truth is that Labour paid down debt.
In 2007/8 as the crisis hit, we had the second lowest debt level in the G7 reduced by 14% in the 10 years we’d been in office.
And the claim that we presided over years of ever-rising borrowing is also untrue.
The year before the crisis hit we were borrowing 2.4% of GDP compared to the 3.4% we inherited from Ken Clarke.
And our borrowing (unlike Ken’s) was almost entirely to finance capital investment in schools and hospitals, road and rail.
It wasn’t to pay for day-to-day expenditure as it was in the 1990s.
We were clear – handing on to future generations some of the cost of the infrastructure that they will benefit from is acceptable. Handing on the cost of today’s benefits and pensions is not.
We were never living beyond our means. Borrowing was falling before the crisis as it was at the time of the General Election and forecast to fall in each and every year from the recession induced peak of 2009/10.
The second myth about our record is that even if public finances overall were under control, we were still spending too much.
That what we were spending on our schools and hospitals was excessive given the size of our economy.
That certainly wasn’t an accusation made by the Conservatives or Liberal Democrats at the time. Our last set of spending plans was announced in the Comprehensive Spending Review of October 2007. If our political opponents thought that spending was out of control, that was the time to say so.
George Osborne had only one substantial criticism to make on spending.
Was it that spending was too high? That he wouldn’t match our plans because we’d had a decade of debt with reckless spending? No. His criticism was that the growth rate of spending had been cut in half. And Vince Cable was castigating the then-Chancellor for what he saw as too measly a growth in health spending.
You may be interested to know that the man who is now Chief Secretary to the Treasury was so much in favour of spending restraint that he told the Times after the 2008 Budget:
“the government should introduce seasonal grants of £100 per child for the poorest families and an extra £100 per family in winter to help with the costs of fuel.”
Yes – it’s the same Danny Alexander who now says we were spending too much and who is taking away £500 from each child born into the poorest households by abolishing the Child Trust Fund.
The answer to the question “was our expenditure on schools and hospitals excessive given the size of our economy” – has to be a very clear “no”. There was no binge.
UK spending on education as a proportion of GDP was 5.8% in 2007- almost identical to the OECD average of 5.7%.
The year after, spending on the NHS was 7.2% of GDP compared to 8.7% in Germany and 8.1% in France.
Yes it was a huge increase on the chronic under-funding of the Tory years when 80% of kids in my constituency left school with fewer than 5 decent GCSEs and women gave birth in a former workhouse built in the 19th century.
But it hardly represents excessive spending that had spiralled out of control.
The most recent claim to emerge is that Britain was on the brink of bankruptcy as Osborne claimed in the Comprehensive Spending Review debate.
Let’s revisit what happened during the recession and where Britain was when George Osborne received his seals of office.
Britain had already spent almost three complete quarters out of recession and borrowing was falling.
It had risen not because of Labour’s spending before 2007 but because the global financial crisis caused tax receipts to fall and spending to rise as companies saw their profits fall and workers had their hours cut.
We allowed these automatic factors to increase borrowing and temporarily added to it by providing extra support last year via a fiscal stimulus when the economy was at its weakest thus preventing economic meltdown.
It also provided momentum to push the economy out of recession and into growth with unemployment at half what it was in the 1990s recession despite forecasts that it would reach 2.44 million by the end of this year.
It’s that same momentum that has driven growth in the most recent quarter.
House repossessions and business insolvencies were also at half the levels we saw in the last recession.
As Martin Wolf pointed out in the Financial Times recently, the UK’s level of actual and prospective debt is, and will remain, below the average of the past two centuries.
It’s a long time to have been on the brink of bankruptcy.
There is one more claim that I’ll return to later which we’ve come to know as the Greek myth.
So, I am proud of what Labour achieved in government and proud too that according to the IFS we used the tax and benefit system to close the income gap and break the historic link between being old and being poor with pensioners today being no more likely to be in poverty than any other group in society.
So having set out the facts and rejected the government’s re-telling of history with all its Orwellian overtones, let’s move onto where those facts leave the debate today.
Borrowing is too high and we need to bring it down.
Spending under Labour was not out of control and indeed it was strongly supported by both the Coalition parties but a major crisis has intervened since then which has radically altered the fiscal landscape.
This is a key point because irrespective of our profound and fundamental disagreement about how quickly we bring down the deficit, the simple fact is that the world economy has been totally transformed over the past three years.
Here in the UK, we have seen a fall of 6% in our national income.
In the short-term that meant large falls in tax receipts and increases in spending.
The automatic stabilisers worked and borrowing rose – hence the deficit.
That in itself is not a problem for future spending – because if we can get people back into employment, these changes will work automatically in reverse as well.
But most experts believe that around 5% of the fall in our national income is permanent.
So it will not return – even when the recovery is complete.
This is the lasting effect of the credit crunch both here and around the world.
And over time, as we emerge from the recession, our spending needs to reflect that fact.
But it’s playground economics to work back from that in order to claim that in some way spending on health, education and extra police officers caused the global economic tsunami.
In any mature debate about the economy it’s important to admit that we got some things wrong.
Aside from recognising the failures in national and international regulation there are lessons to be learnt on public finances too.
Not the crass claims of imprudence and profligacy but in one area in particular – the tax base and one element specifically – it’s resilience.
Before the crisis hit, the City paid around 25% of overall corporation tax in this country - £10bn in 2007/8.
And it contributed significantly more from income tax and National Insurance Contributions.
A booming sector with high remuneration and profits was paying a lot of tax but this reliance on the financial sector made our tax base less resilient when the global financial crisis hit.
Profits in the financial sector are always heavily pro-cyclical, even more so when a recession is driven by a credit crunch.
Similarly the housing sector provides significant revenue through stamp duty, inheritance tax and capital gains tax.
It also contributes indirectly through the VAT collected on housing-related consumption.
Again revenue from the sector was heavily reliant on its success - both in terms of prices and transactions.
The run-up to the financial crisis saw significant increases in tax receipt from both these sectors from around 3% of GDP in 2002/03 to 4.25% by 2007/08.
Receipts from those sectors were growing faster than the economy as a whole - making up half the increase in total receipts over the period.
So the tax base was becoming more reliant on sectors that were likely to be particularly at risk from a downturn.
Housing and financial sector receipts fell below their 2002/03 level last year as the global credit crunch made its impact felt.
And because the permanent hit to our economy that I’ve mentioned is expected to manifest itself significantly in these sectors, this fall in receipts is contributing directly not only to the increase in borrowing but to the structural deficit.
What should we conclude from this?
Obviously not that the actual receipts themselves were a problem, indeed, we believe that the financial services sector was under-taxed given the subsidy we now know government’s implicit guarantee of rescue provided.
No, in my view the conclusion goes much wider.
It is that a skewed tax base is a symptom of an unbalanced economy.
A proper understanding of how reliant our tax base had become on certain sectors should have made clear that our economy was too narrowly focused.
To put it another way – the tax base provides a lens through which to recognise distortions of this kind and signal that the government should do more to promote economic diversity.
The Office of Budget Responsibility provides an opportunity to deal with this issue.
Its responsibility for forecasting tax receipts should be extended to require a regular assessment of the resilience of the tax base. This should form part of its annual analysis of the sustainability of public finances.
We need to be sure that the OBR is truly independent and genuinely transparent before we attempt to amend the Bill currently in the Lords to extend its remit in this way.
The final aspect of the serious debate about our economic future requires honesty from the government.
There is a school of thought that supports a much smaller state sector.
That believes the public sector crowds out the prospect of private sector jobs.
That accepts public services as a safety-net but rejects their role in securing excellence as mainstream providers.
It is a view that I fundamentally disagree with and that my party doesn’t subscribe to but others do.
From some of the hyperbole we’ve heard in the House from the government benches, you’d be forgiven for thinking that they’d spent the last 13 years in opposition arguing that principled position – opposing investment in our public services.
As I’ve already demonstrated they continued to support our spending plans and indeed argued for more until after the collapse of Lehman Brothers.
But leaving this aside, now is the perfect opportunity for those who believe it to make that argument openly and honestly. To say that the scale of the spending cuts – which no other country is following including those with fiscal deficits as high or higher than our own – is in pursuit of the ideological objective of a smaller state.
This may well be what is driving this government to cut deeply and quickly and to do so at a time when recovery is far from secure.
It’s important to remember that no other country is going this far, this fast.
The US, which has a higher deficit, plans to reduce it by less than half over the next 5 years. Japan, which has roughly the same level of deficit is learning from its experience of the last decade and cutting by less than quarter
Our plan to halve the deficit by 2014 was robust, completely in accordance with the G20 Pittsburgh accord in 2009 and indeed the Toronto accord in July of this year.
The government quotes approval from organisations such as CBI, OECD and IMF but, as I said in the CSR debate, the Irish government could quote such approval for their eye-wateringly tough measures and they’re back in recession with further bad news this morning.
Politicians do not just deal in the cold calculations of economic institutions; they are responsible for engaging in the reality of people’s lives.
We live in uncertain times and no-one can predict with any clarity how the global economy will perform over the coming months or years. The Bank of England’s quarterly Inflation Report admitted as much yesterday.
It seems to me to say a great deal about this Chancellor that despite the clear lack of consensus, even on the MPC, about the direction of the economy and the impacts of the consolidation, on this uncertain journey he has chosen to ignore the signals saying “proceed with caution”, and instead gone full speed ahead.
This wasn’t surprising from a Conservative leadership who almost uniquely in the Western World, called for spending cuts at the height of the recession.
It was surprising that the Liberal Democrats in general and Vince Cable in particular went along with a policy they had vigorously and I have to say, eloquently, opposed.
Here we come to the Greek Myth and the claim that they discovered something on taking office that they hadn’t known during the election campaign.
As expert witnesses to the Treasury Select Committee last week confirmed this was simply not the case.
Far from emerging on May 2010, the problems in Greece had been abundantly clear since the turn of the year. All that changed in May is that the Euro Zone finally made some progress in resolving the situation.
The sudden spike in Greek bond yields in April and the downgrading to junk status was the result of fears that Germany may not approve the Greek bailout rather than anything new in the nature or scale of the Greek debt. Once that was resolved, the crisis abated.
We know this from first-hand experience. Nick Clegg is fond of mentioning the important meeting of EU finance ministers that took place the weekend after the election. But neither Nick Clegg nor George Osborne attended.
They weren’t in office. Alistair Darling was and as he said - the only thing that changed that weekend was Nick Clegg’s desire for a ministerial car.
And so our approach to reducing the deficit, ensuring that there was sufficient private sector momentum before the public sector cuts began, cutting back more carefully with genuine protection for the poorest and more vulnerable and with a meaningful strategy for jobs and growth was a continuation of the approach we took to bring this country through the global recession.
Because for us, jobs and growth need to come first. If the recovery is undermined, it will cost us more. For every 100,000 people who find themselves out of work it costs the taxpayer half a billion pounds in benefit payments alone.
The government itself tells us that its plans will see 500,000 jobs in the public sector going. And PricewaterhouseCoopers have predicted that the same number of jobs will be lost in the private sector. And that’s an important point.
This isn’t about arguing that the public sector should remain the size it is now. It’s about understanding that, when the world economy faces a difficult time and the recovery at home remains fragile, now is not the time to be taking a gamble with people’s livelihoods.
Two years ago the world’s leaders showed that they could act together in the face of an economic crisis. Those risks remain – and the same cooperation is needed today. But the worrying signs ahead of this week’s G20 does nothing to reassure us that the political will is there to make a difference.
I hope the government is right about growth, but the risk is that the private sector simply cannot create jobs at the pace that will be required. And families up and down the country will pay the price.
It’s ridiculous to accuse us of having no plan (which the government combines with saying how our plan would have cut departmental budgets by more that they intend – so no plan except for that plan).
It’s true that we didn’t announce details of a new CSR over a year before it was due to kick in. But we published the Budget with itemised changes on public sector pay, pensions, efficiencies, taxes and all the voluminous detail contained in the red book.
In the March Budget we itemised £21 billion reduction in the deficit from tax rises and over £20bn of the spending reduction that would be necessary.
I set out that we would support a further £7.5 billion of tax rises, and billions in welfare reforms, in my speech at KPMG four weeks ago.
We would tax banks more, attack children’s benefits less and prioritise policing.
We would not raise VAT and we would have retained the Future Jobs Fund, the abandonment of which is probably the greatest single error amongst many that the government has made.
And, as Douglas Alexander set out in a thoughtful speech last week, we would approach welfare reform in the context of our values of solidarity on the one hand and obligation on the other. Responsibility for ourselves, reciprocity towards each other – protecting better but demanding more.
The programme pursued by the government to get people on Incapacity Benefit back to work is, of course, exactly the one that we were due to implement over the same period.
The Greek Myth is meant to justify abrogating election pledges on everything from VAT to child benefit but it can surely not disguise the single biggest victory for the Tory ideology of a smaller state – the funding of higher education.
Let me declare my paternal interest in a policy I helped create.
In 2004 Labour argued that graduates should make a contribution to their higher education.
The Tories opposed any contribution saying that the answer to the higher education funding gap was to contract the number of students.
The Lib Dems agreed with the expansion of HE but thought it should be funded entirely by the taxpayer.
Many in my party took the same view but considered the change to be necessary and narrowly won the vote.
Our bravery has been vindicated. Fees were introduced at the same time as a substantial increase in funding by the taxpayer, our universities have flourished and the social class gap, which widened during 40 years of free university education, has narrowed considerably with a 30% increase in youngsters from poorer homes going to university since fees were introduced.
The Conservatives ended their opposition to fees in 2005.
I always felt that whilst the Lib Dems were wrong, their position that students should make no contribution was a genuine conviction.
For their leaders to leap from opposing any graduate contribution to students paying the total cost of their university education is probably the most cynical political betrayal I have ever witnessed.
The government is withdrawing public investment from most undergraduate teaching. The arts, humanities and social sciences will receive no public funding whatsoever.
At a time when our economic future will depend on this country’s strengths as a powerhouse of innovation, with higher education as a major component, the government is wrong to abandon the Dearing principles upon which Labour’s policy was based in favour of the miserable and narrow utility of the Treasury approach to Higher Education.
We welcome the fact that the Conservatives and the Lib Dems have accepted that graduates should make a contribution but we disagree with the principle of them paying all the cost.
This is the central issue now and it’s why the Shadow Cabinet has agreed to look at whether a graduate tax can be a fairer and more sustainable alternative to the current mess as part of our policy review proposals.
People not dissimilar to Cameron and Osborne used to tell me in 2004 that we need plumbers not graduates.
You know it’s a curious fact that it was never going to be their kids that became the plumbers.
The truth is – we need both and the Greek Myth is being used to destroy a system of funding that ensured that the student contribution enhanced rather than replaced central funding by the state.
Tuition fees is a perfect example of how the Greek Myth excuse of the Lib Dems combines with the smaller state quest of the Tories to produce a disastrous policy for the country.
Ed Miliband is leading Labour into a new era.
We will use opposition to discuss and debate, to reflect and renew.
No party having lost power can ignore its record in government.
But in today’s economic climate with the country going through a difficult period it is essential to keep returning to the question of how and why this happened.
The government has chosen to distort and misrepresent our record in a way that goes beyond the normal cut and thrust of British politics.
That’s why we have to set the record straight.
Labour transformed health and education, and reduced crime.
We managed an economy with controlled inflation and low interest rates whilst supporting the poor and vulnerable.
The country experienced the highest level of employment ever and paid down our debt to the second lowest of the major developed countries.
Like all advanced economies, the UK was hit by the global banking crisis and because we have one of the biggest financial sectors in the world, we were particularly badly affected.
Ultimately however, it was the fiscal deficit that prevented economic meltdown. No responsible government could have avoided it but we came out of recession with nearly a million fewer unemployed than expected, minimal repossessions and not a single penny lost to British savers in UK banks.
Our plan to reduce the deficit was robust and more considered than the reckless gamble that the government has decided to take with our economy and public services.
We need a mature debate about our economy; just as the causes of the current global crisis are complex so the solutions must admit to greater complexity, fewer unavoidable and a consideration of genuine alternatives.
We stand ready to engage in an honest debate with the government on these issues when we move beyond the fables and myths to the complex reality of the problems we face.
This is the very least the British public should be entitled to expect.
The American writer, Tom Woolfe, once said “a Liberal is a Conservative who’s been arrested.”
I suppose a modern inversion would be that a Conservative is a Liberal who’s been coalitioned.
But Liberal Democrats only have a walk-on part in this drama.
When it comes to the economy, this is very much a Tory government.
George Osborne, declared one important truth at the despatch box on 20 October when he said “to govern is to choose”.
But the Conservatives and their Stockholm Syndrome Coalition partners have adopted a policy of pretending they have no choice in order to try and evade responsibility for the one they’ve made.
Thus we have a mantra that is more to do with message discipline than fiscal discipline. It goes like this:
“After a decade of debt and reckless spending we’ve taken our country back from the brink of bankruptcy.”
Snappy and succinct but untrue.
It’s part of a narrative that denies there was ever a global financial crisis and gives no credit for the actions of the UK and other G20 countries at a time when we really did stand on the brink.
Not giving the credit due to your predecessors in government is nothing new and not of itself reprehensible.
But as we emerge from the most serious economic threat that the World has faced for 80 years the debate about where we go from here is inseparable from the debate on how we got here in the first place.
We cannot allow fiscal fables and Greek myths to provide the context of this vital debate.
And we cannot allow the government to get away with their most audacious myth – that there is no alternative to their economic masochism.
For Ed Miliband and for me, Labour’s economic credibility matters. It will be at the heart of everything we do.
It doesn’t mean ignoring what we got wrong – but it does mean standing up for what we got right.
So I want to use this speech to:
a) Establish the facts of what went before; what we got wrong as well as what went right
b) Explore where those facts leave the real political debate in this country; the choices we face
c) Encourage the government to engage in a proper debate about those choices
So let’s deal with the claims they make compared to the facts.
They claim that we’ve seen a “decade of debt” – the simple and inescapable truth is that Labour paid down debt.
In 2007/8 as the crisis hit, we had the second lowest debt level in the G7 reduced by 14% in the 10 years we’d been in office.
And the claim that we presided over years of ever-rising borrowing is also untrue.
The year before the crisis hit we were borrowing 2.4% of GDP compared to the 3.4% we inherited from Ken Clarke.
And our borrowing (unlike Ken’s) was almost entirely to finance capital investment in schools and hospitals, road and rail.
It wasn’t to pay for day-to-day expenditure as it was in the 1990s.
We were clear – handing on to future generations some of the cost of the infrastructure that they will benefit from is acceptable. Handing on the cost of today’s benefits and pensions is not.
We were never living beyond our means. Borrowing was falling before the crisis as it was at the time of the General Election and forecast to fall in each and every year from the recession induced peak of 2009/10.
The second myth about our record is that even if public finances overall were under control, we were still spending too much.
That what we were spending on our schools and hospitals was excessive given the size of our economy.
That certainly wasn’t an accusation made by the Conservatives or Liberal Democrats at the time. Our last set of spending plans was announced in the Comprehensive Spending Review of October 2007. If our political opponents thought that spending was out of control, that was the time to say so.
George Osborne had only one substantial criticism to make on spending.
Was it that spending was too high? That he wouldn’t match our plans because we’d had a decade of debt with reckless spending? No. His criticism was that the growth rate of spending had been cut in half. And Vince Cable was castigating the then-Chancellor for what he saw as too measly a growth in health spending.
You may be interested to know that the man who is now Chief Secretary to the Treasury was so much in favour of spending restraint that he told the Times after the 2008 Budget:
“the government should introduce seasonal grants of £100 per child for the poorest families and an extra £100 per family in winter to help with the costs of fuel.”
Yes – it’s the same Danny Alexander who now says we were spending too much and who is taking away £500 from each child born into the poorest households by abolishing the Child Trust Fund.
The answer to the question “was our expenditure on schools and hospitals excessive given the size of our economy” – has to be a very clear “no”. There was no binge.
UK spending on education as a proportion of GDP was 5.8% in 2007- almost identical to the OECD average of 5.7%.
The year after, spending on the NHS was 7.2% of GDP compared to 8.7% in Germany and 8.1% in France.
Yes it was a huge increase on the chronic under-funding of the Tory years when 80% of kids in my constituency left school with fewer than 5 decent GCSEs and women gave birth in a former workhouse built in the 19th century.
But it hardly represents excessive spending that had spiralled out of control.
The most recent claim to emerge is that Britain was on the brink of bankruptcy as Osborne claimed in the Comprehensive Spending Review debate.
Let’s revisit what happened during the recession and where Britain was when George Osborne received his seals of office.
Britain had already spent almost three complete quarters out of recession and borrowing was falling.
It had risen not because of Labour’s spending before 2007 but because the global financial crisis caused tax receipts to fall and spending to rise as companies saw their profits fall and workers had their hours cut.
We allowed these automatic factors to increase borrowing and temporarily added to it by providing extra support last year via a fiscal stimulus when the economy was at its weakest thus preventing economic meltdown.
It also provided momentum to push the economy out of recession and into growth with unemployment at half what it was in the 1990s recession despite forecasts that it would reach 2.44 million by the end of this year.
It’s that same momentum that has driven growth in the most recent quarter.
House repossessions and business insolvencies were also at half the levels we saw in the last recession.
As Martin Wolf pointed out in the Financial Times recently, the UK’s level of actual and prospective debt is, and will remain, below the average of the past two centuries.
It’s a long time to have been on the brink of bankruptcy.
There is one more claim that I’ll return to later which we’ve come to know as the Greek myth.
So, I am proud of what Labour achieved in government and proud too that according to the IFS we used the tax and benefit system to close the income gap and break the historic link between being old and being poor with pensioners today being no more likely to be in poverty than any other group in society.
So having set out the facts and rejected the government’s re-telling of history with all its Orwellian overtones, let’s move onto where those facts leave the debate today.
Borrowing is too high and we need to bring it down.
Spending under Labour was not out of control and indeed it was strongly supported by both the Coalition parties but a major crisis has intervened since then which has radically altered the fiscal landscape.
This is a key point because irrespective of our profound and fundamental disagreement about how quickly we bring down the deficit, the simple fact is that the world economy has been totally transformed over the past three years.
Here in the UK, we have seen a fall of 6% in our national income.
In the short-term that meant large falls in tax receipts and increases in spending.
The automatic stabilisers worked and borrowing rose – hence the deficit.
That in itself is not a problem for future spending – because if we can get people back into employment, these changes will work automatically in reverse as well.
But most experts believe that around 5% of the fall in our national income is permanent.
So it will not return – even when the recovery is complete.
This is the lasting effect of the credit crunch both here and around the world.
And over time, as we emerge from the recession, our spending needs to reflect that fact.
But it’s playground economics to work back from that in order to claim that in some way spending on health, education and extra police officers caused the global economic tsunami.
In any mature debate about the economy it’s important to admit that we got some things wrong.
Aside from recognising the failures in national and international regulation there are lessons to be learnt on public finances too.
Not the crass claims of imprudence and profligacy but in one area in particular – the tax base and one element specifically – it’s resilience.
Before the crisis hit, the City paid around 25% of overall corporation tax in this country - £10bn in 2007/8.
And it contributed significantly more from income tax and National Insurance Contributions.
A booming sector with high remuneration and profits was paying a lot of tax but this reliance on the financial sector made our tax base less resilient when the global financial crisis hit.
Profits in the financial sector are always heavily pro-cyclical, even more so when a recession is driven by a credit crunch.
Similarly the housing sector provides significant revenue through stamp duty, inheritance tax and capital gains tax.
It also contributes indirectly through the VAT collected on housing-related consumption.
Again revenue from the sector was heavily reliant on its success - both in terms of prices and transactions.
The run-up to the financial crisis saw significant increases in tax receipt from both these sectors from around 3% of GDP in 2002/03 to 4.25% by 2007/08.
Receipts from those sectors were growing faster than the economy as a whole - making up half the increase in total receipts over the period.
So the tax base was becoming more reliant on sectors that were likely to be particularly at risk from a downturn.
Housing and financial sector receipts fell below their 2002/03 level last year as the global credit crunch made its impact felt.
And because the permanent hit to our economy that I’ve mentioned is expected to manifest itself significantly in these sectors, this fall in receipts is contributing directly not only to the increase in borrowing but to the structural deficit.
What should we conclude from this?
Obviously not that the actual receipts themselves were a problem, indeed, we believe that the financial services sector was under-taxed given the subsidy we now know government’s implicit guarantee of rescue provided.
No, in my view the conclusion goes much wider.
It is that a skewed tax base is a symptom of an unbalanced economy.
A proper understanding of how reliant our tax base had become on certain sectors should have made clear that our economy was too narrowly focused.
To put it another way – the tax base provides a lens through which to recognise distortions of this kind and signal that the government should do more to promote economic diversity.
The Office of Budget Responsibility provides an opportunity to deal with this issue.
Its responsibility for forecasting tax receipts should be extended to require a regular assessment of the resilience of the tax base. This should form part of its annual analysis of the sustainability of public finances.
We need to be sure that the OBR is truly independent and genuinely transparent before we attempt to amend the Bill currently in the Lords to extend its remit in this way.
The final aspect of the serious debate about our economic future requires honesty from the government.
There is a school of thought that supports a much smaller state sector.
That believes the public sector crowds out the prospect of private sector jobs.
That accepts public services as a safety-net but rejects their role in securing excellence as mainstream providers.
It is a view that I fundamentally disagree with and that my party doesn’t subscribe to but others do.
From some of the hyperbole we’ve heard in the House from the government benches, you’d be forgiven for thinking that they’d spent the last 13 years in opposition arguing that principled position – opposing investment in our public services.
As I’ve already demonstrated they continued to support our spending plans and indeed argued for more until after the collapse of Lehman Brothers.
But leaving this aside, now is the perfect opportunity for those who believe it to make that argument openly and honestly. To say that the scale of the spending cuts – which no other country is following including those with fiscal deficits as high or higher than our own – is in pursuit of the ideological objective of a smaller state.
This may well be what is driving this government to cut deeply and quickly and to do so at a time when recovery is far from secure.
It’s important to remember that no other country is going this far, this fast.
The US, which has a higher deficit, plans to reduce it by less than half over the next 5 years. Japan, which has roughly the same level of deficit is learning from its experience of the last decade and cutting by less than quarter
Our plan to halve the deficit by 2014 was robust, completely in accordance with the G20 Pittsburgh accord in 2009 and indeed the Toronto accord in July of this year.
The government quotes approval from organisations such as CBI, OECD and IMF but, as I said in the CSR debate, the Irish government could quote such approval for their eye-wateringly tough measures and they’re back in recession with further bad news this morning.
Politicians do not just deal in the cold calculations of economic institutions; they are responsible for engaging in the reality of people’s lives.
We live in uncertain times and no-one can predict with any clarity how the global economy will perform over the coming months or years. The Bank of England’s quarterly Inflation Report admitted as much yesterday.
It seems to me to say a great deal about this Chancellor that despite the clear lack of consensus, even on the MPC, about the direction of the economy and the impacts of the consolidation, on this uncertain journey he has chosen to ignore the signals saying “proceed with caution”, and instead gone full speed ahead.
This wasn’t surprising from a Conservative leadership who almost uniquely in the Western World, called for spending cuts at the height of the recession.
It was surprising that the Liberal Democrats in general and Vince Cable in particular went along with a policy they had vigorously and I have to say, eloquently, opposed.
Here we come to the Greek Myth and the claim that they discovered something on taking office that they hadn’t known during the election campaign.
As expert witnesses to the Treasury Select Committee last week confirmed this was simply not the case.
Far from emerging on May 2010, the problems in Greece had been abundantly clear since the turn of the year. All that changed in May is that the Euro Zone finally made some progress in resolving the situation.
The sudden spike in Greek bond yields in April and the downgrading to junk status was the result of fears that Germany may not approve the Greek bailout rather than anything new in the nature or scale of the Greek debt. Once that was resolved, the crisis abated.
We know this from first-hand experience. Nick Clegg is fond of mentioning the important meeting of EU finance ministers that took place the weekend after the election. But neither Nick Clegg nor George Osborne attended.
They weren’t in office. Alistair Darling was and as he said - the only thing that changed that weekend was Nick Clegg’s desire for a ministerial car.
And so our approach to reducing the deficit, ensuring that there was sufficient private sector momentum before the public sector cuts began, cutting back more carefully with genuine protection for the poorest and more vulnerable and with a meaningful strategy for jobs and growth was a continuation of the approach we took to bring this country through the global recession.
Because for us, jobs and growth need to come first. If the recovery is undermined, it will cost us more. For every 100,000 people who find themselves out of work it costs the taxpayer half a billion pounds in benefit payments alone.
The government itself tells us that its plans will see 500,000 jobs in the public sector going. And PricewaterhouseCoopers have predicted that the same number of jobs will be lost in the private sector. And that’s an important point.
This isn’t about arguing that the public sector should remain the size it is now. It’s about understanding that, when the world economy faces a difficult time and the recovery at home remains fragile, now is not the time to be taking a gamble with people’s livelihoods.
Two years ago the world’s leaders showed that they could act together in the face of an economic crisis. Those risks remain – and the same cooperation is needed today. But the worrying signs ahead of this week’s G20 does nothing to reassure us that the political will is there to make a difference.
I hope the government is right about growth, but the risk is that the private sector simply cannot create jobs at the pace that will be required. And families up and down the country will pay the price.
It’s ridiculous to accuse us of having no plan (which the government combines with saying how our plan would have cut departmental budgets by more that they intend – so no plan except for that plan).
It’s true that we didn’t announce details of a new CSR over a year before it was due to kick in. But we published the Budget with itemised changes on public sector pay, pensions, efficiencies, taxes and all the voluminous detail contained in the red book.
In the March Budget we itemised £21 billion reduction in the deficit from tax rises and over £20bn of the spending reduction that would be necessary.
I set out that we would support a further £7.5 billion of tax rises, and billions in welfare reforms, in my speech at KPMG four weeks ago.
We would tax banks more, attack children’s benefits less and prioritise policing.
We would not raise VAT and we would have retained the Future Jobs Fund, the abandonment of which is probably the greatest single error amongst many that the government has made.
And, as Douglas Alexander set out in a thoughtful speech last week, we would approach welfare reform in the context of our values of solidarity on the one hand and obligation on the other. Responsibility for ourselves, reciprocity towards each other – protecting better but demanding more.
The programme pursued by the government to get people on Incapacity Benefit back to work is, of course, exactly the one that we were due to implement over the same period.
The Greek Myth is meant to justify abrogating election pledges on everything from VAT to child benefit but it can surely not disguise the single biggest victory for the Tory ideology of a smaller state – the funding of higher education.
Let me declare my paternal interest in a policy I helped create.
In 2004 Labour argued that graduates should make a contribution to their higher education.
The Tories opposed any contribution saying that the answer to the higher education funding gap was to contract the number of students.
The Lib Dems agreed with the expansion of HE but thought it should be funded entirely by the taxpayer.
Many in my party took the same view but considered the change to be necessary and narrowly won the vote.
Our bravery has been vindicated. Fees were introduced at the same time as a substantial increase in funding by the taxpayer, our universities have flourished and the social class gap, which widened during 40 years of free university education, has narrowed considerably with a 30% increase in youngsters from poorer homes going to university since fees were introduced.
The Conservatives ended their opposition to fees in 2005.
I always felt that whilst the Lib Dems were wrong, their position that students should make no contribution was a genuine conviction.
For their leaders to leap from opposing any graduate contribution to students paying the total cost of their university education is probably the most cynical political betrayal I have ever witnessed.
The government is withdrawing public investment from most undergraduate teaching. The arts, humanities and social sciences will receive no public funding whatsoever.
At a time when our economic future will depend on this country’s strengths as a powerhouse of innovation, with higher education as a major component, the government is wrong to abandon the Dearing principles upon which Labour’s policy was based in favour of the miserable and narrow utility of the Treasury approach to Higher Education.
We welcome the fact that the Conservatives and the Lib Dems have accepted that graduates should make a contribution but we disagree with the principle of them paying all the cost.
This is the central issue now and it’s why the Shadow Cabinet has agreed to look at whether a graduate tax can be a fairer and more sustainable alternative to the current mess as part of our policy review proposals.
People not dissimilar to Cameron and Osborne used to tell me in 2004 that we need plumbers not graduates.
You know it’s a curious fact that it was never going to be their kids that became the plumbers.
The truth is – we need both and the Greek Myth is being used to destroy a system of funding that ensured that the student contribution enhanced rather than replaced central funding by the state.
Tuition fees is a perfect example of how the Greek Myth excuse of the Lib Dems combines with the smaller state quest of the Tories to produce a disastrous policy for the country.
Ed Miliband is leading Labour into a new era.
We will use opposition to discuss and debate, to reflect and renew.
No party having lost power can ignore its record in government.
But in today’s economic climate with the country going through a difficult period it is essential to keep returning to the question of how and why this happened.
The government has chosen to distort and misrepresent our record in a way that goes beyond the normal cut and thrust of British politics.
That’s why we have to set the record straight.
Labour transformed health and education, and reduced crime.
We managed an economy with controlled inflation and low interest rates whilst supporting the poor and vulnerable.
The country experienced the highest level of employment ever and paid down our debt to the second lowest of the major developed countries.
Like all advanced economies, the UK was hit by the global banking crisis and because we have one of the biggest financial sectors in the world, we were particularly badly affected.
Ultimately however, it was the fiscal deficit that prevented economic meltdown. No responsible government could have avoided it but we came out of recession with nearly a million fewer unemployed than expected, minimal repossessions and not a single penny lost to British savers in UK banks.
Our plan to reduce the deficit was robust and more considered than the reckless gamble that the government has decided to take with our economy and public services.
We need a mature debate about our economy; just as the causes of the current global crisis are complex so the solutions must admit to greater complexity, fewer unavoidable and a consideration of genuine alternatives.
We stand ready to engage in an honest debate with the government on these issues when we move beyond the fables and myths to the complex reality of the problems we face.
This is the very least the British public should be entitled to expect.
Saturday 6 November 2010
THE UK NEEDS A MORE SUSTAINABLE AND COMPASSIONATE FARMING SYSTEM
The Sustainable Livestock Bill and the Public Bodies (Sustainable Food) Bill will be debated in the House of Commons next Friday and deserve support.
The Bills would require the government to prioritise moving away from factory farming and towards more sustainable agriculture with higher standards of animal welfare.
Pig and poultry farming in the UK and the rest of Europe are in the main highly intensive. There are 800 million chickens reared for meat in factory farms. Up to 50,000 chickens are crammed into huge overcrowded sheds. They are pushed to grow so quickly that their legs often buckle under the strain of supporting their rapidly growing body.
Many pigs are kept in barren overcrowded pens. In natural conditions pigs are highly active, spending 75% of their day rooting, foraging and exploring. Such activities are impossible for factory farmed pigs.
Dairy farming is poised to industrialise too. There are plans to establish an 8,100 cow farm in Lincolnshire – that’s 60 times bigger than the average UK dairy farm – with other proposals to develop mega-dairies in the pipeline.
The BBC’s ‘Countryfile’ featured one such a farm in America to explain what these industrialised dairy farms are like. The cows were kept indoors with little or no proper access to pasture and produced 2m pints of milk every day.
Factory farming is dependent on feeding huge quantities of cereals and soy to animals. UK livestock consume more than half of UK cereal production. Feeding cereals and soy to animals is inefficient as much of their food value is lost during conversion from plant to animal matter. Several kilos of cereals are needed to produce 1 kg of edible meat. Using cereals and soy as animal feed is a wasteful use not just of these crops but of the land, water and fossil fuel energy used to grow them.
The UK uses one million tonnes of soy every year to feed livestock. The production of soy for animal feed and the clearing of land for cattle pastures are key factors driving deforestation in South America. This entails massive biodiversity loss and releases huge amounts of stored carbon into the atmosphere thereby contributing to climate change.
The concentrate feed given to industrially reared animals contains high levels of nitrogen. Much of this is excreted in their manure. It is then washed into rivers and lakes and leaches from the soil into ground water, contaminating sources of drinking water and damaging wetland and coastal ecosystems.
A move away from intensive systems would produce more nutritious meat. Free range chickens are significantly less fatty than those reared indoors. Intensively produced chickens contain more fat than protein whereas organic chickens have more protein than fat. Studies show that beef from grass-fed cattle has lower total fat levels and higher levels of the beneficial omega-3 fatty acids than beef from grain-fed animals.
The public sector currently spends £2.2 billion on food each year - on meals in schools, hospitals, care homes and prisons. Most of the poultry and pig meat used in public sector meals is factory farmed and most of the eggs are battery eggs. The Public Bodies (Sustainable Food) Bill would require public bodies to use food that has been produced to high nutritional, environmental and animal welfare standards.
The Bills would require the government to prioritise moving away from factory farming and towards more sustainable agriculture with higher standards of animal welfare.
Pig and poultry farming in the UK and the rest of Europe are in the main highly intensive. There are 800 million chickens reared for meat in factory farms. Up to 50,000 chickens are crammed into huge overcrowded sheds. They are pushed to grow so quickly that their legs often buckle under the strain of supporting their rapidly growing body.
Many pigs are kept in barren overcrowded pens. In natural conditions pigs are highly active, spending 75% of their day rooting, foraging and exploring. Such activities are impossible for factory farmed pigs.
Dairy farming is poised to industrialise too. There are plans to establish an 8,100 cow farm in Lincolnshire – that’s 60 times bigger than the average UK dairy farm – with other proposals to develop mega-dairies in the pipeline.
The BBC’s ‘Countryfile’ featured one such a farm in America to explain what these industrialised dairy farms are like. The cows were kept indoors with little or no proper access to pasture and produced 2m pints of milk every day.
Factory farming is dependent on feeding huge quantities of cereals and soy to animals. UK livestock consume more than half of UK cereal production. Feeding cereals and soy to animals is inefficient as much of their food value is lost during conversion from plant to animal matter. Several kilos of cereals are needed to produce 1 kg of edible meat. Using cereals and soy as animal feed is a wasteful use not just of these crops but of the land, water and fossil fuel energy used to grow them.
The UK uses one million tonnes of soy every year to feed livestock. The production of soy for animal feed and the clearing of land for cattle pastures are key factors driving deforestation in South America. This entails massive biodiversity loss and releases huge amounts of stored carbon into the atmosphere thereby contributing to climate change.
The concentrate feed given to industrially reared animals contains high levels of nitrogen. Much of this is excreted in their manure. It is then washed into rivers and lakes and leaches from the soil into ground water, contaminating sources of drinking water and damaging wetland and coastal ecosystems.
A move away from intensive systems would produce more nutritious meat. Free range chickens are significantly less fatty than those reared indoors. Intensively produced chickens contain more fat than protein whereas organic chickens have more protein than fat. Studies show that beef from grass-fed cattle has lower total fat levels and higher levels of the beneficial omega-3 fatty acids than beef from grain-fed animals.
The public sector currently spends £2.2 billion on food each year - on meals in schools, hospitals, care homes and prisons. Most of the poultry and pig meat used in public sector meals is factory farmed and most of the eggs are battery eggs. The Public Bodies (Sustainable Food) Bill would require public bodies to use food that has been produced to high nutritional, environmental and animal welfare standards.
Thursday 4 November 2010
FAMILIES IN DERBY COULD BE UP TO £10 A WEEK WORSE OFF BECAUSE OF HOUSING ALLOWANCE CUTS
The changes to the housing allowance means the outlook for low income households in Derby is bleak.
The Conservative led government, aided and abetted by the duplicitous Liberal Democrats, want to change the way the local housing allowance is calculated.
The change they propose means 700,000 people in Britain are set to lose out by an average of £9 a week according to official DWP figures, with losses in every local authority in Britain from October 2011.
As a result of this measure up 88 per cent of LHA recipients in Derby will lose out. Families on modest incomes in Derby will be concerned that from next year they could be £10 a week worse off because of cuts to the support they get with housing costs.
Almost a quarter of the people in Derby who receive some help with their housing costs are in employment. This change represents a slap in the face to all those low paid workers who are trying support themselves rather than remaining on unemployment benefit.
This is a big drop in income for people who are already struggling to make ends meet. It offers no time for individuals or landlords to adjust and could lead to increased homelessness.
.
What this Government just doesn't seem to understand is that higher homelessness, like longer dole queues, make it harder not easier to deal with the deficit.
That’s why the government should think again about these rushed and ill thought out plans.
The Conservative led government, aided and abetted by the duplicitous Liberal Democrats, want to change the way the local housing allowance is calculated.
The change they propose means 700,000 people in Britain are set to lose out by an average of £9 a week according to official DWP figures, with losses in every local authority in Britain from October 2011.
As a result of this measure up 88 per cent of LHA recipients in Derby will lose out. Families on modest incomes in Derby will be concerned that from next year they could be £10 a week worse off because of cuts to the support they get with housing costs.
Almost a quarter of the people in Derby who receive some help with their housing costs are in employment. This change represents a slap in the face to all those low paid workers who are trying support themselves rather than remaining on unemployment benefit.
This is a big drop in income for people who are already struggling to make ends meet. It offers no time for individuals or landlords to adjust and could lead to increased homelessness.
.
What this Government just doesn't seem to understand is that higher homelessness, like longer dole queues, make it harder not easier to deal with the deficit.
That’s why the government should think again about these rushed and ill thought out plans.
Wednesday 3 November 2010
I WILL BE VOTING AGAINST THE CONDEM’S DISASTROUS PLANS TO PENALISE STUDENTS AND FAMILIES
I received a communication from the General Secretary of the University and College Union (UCU) today in the wake of David Willetts’ announcement on higher education funding.
The future of higher education funding will be decided before Christmas. The University and College Union (UCU) is working to ensure that higher education is accessible to all those who might benefit from it without the fear of crippling debt. All those with the ability, NOT just the ability to pay should be able to access higher education.
UCU believes that it is unacceptable for students to be graduating paying double or triple the amount of fees above the current level. The government response to the Browne review along with the spending review proposals effectively means the privatisation of most of higher education as the cost of university is shifted from the state to the student and their family.
The UCU want to see world class education provided to students by a motivated workforce that is sufficient in number. Our higher education system is something to be proud of – it is world renowned – but it is danger of being fundamentally damaged by swingeing cuts and massively higher tuition fees.
Higher education contributes around £59 billion to the economy each year with over 2.5% of jobs depending on higher education funding.
We know that:
Over £1.2 billion has been cut from the higher education budget so far; and the CSRwill reduce funding by a further 40% by withdrawing all teaching funding for Arts Humanities and Social Sciences;
The government has cut 10,000 university places this year;
There has been a 23% increase in applications to university this year;
Last year around 190,000 people who had the ability and wanted to go to university missed out on a place;
At least 14,000 jobs have already been identified as at risk.
The UCU believes that increasing tuition fees will have a massively negative effect on students’ access to education. Research out this week from an NUS and HSBC study showed that 70% of students would be deterred by fees of £7000, never mind the £9000 proposed today.
Under the scheme announced today, graduates who earn the national average salary will be hit with tax bills 20% higher than non-graduates. Tomorrow’s teachers, scientists and doctors could see their tax bills rise by as much as a quarter. This amounts to a stealth tax on learning and aspiration.
The UCU does not believe that a market in education as currently proposed should not be an aim of any political party – nor do I.
Our higher education system is world class. The number of graduates leaving university each year has increased. The economy depends on a plentiful supply of graduate level worker leaving education each year.
A whole generation of young people have been told that the way to better themselves, their life chances and society is to go to university. Increasing fees and restricting access threatens to pull the rug out from under those young people at a time when they most need support.
I will certainly be voting against these disastrous plans when the measure to raise the cap on tuition fees is voted on the floor of the House in the next few weeks.
The future of higher education funding will be decided before Christmas. The University and College Union (UCU) is working to ensure that higher education is accessible to all those who might benefit from it without the fear of crippling debt. All those with the ability, NOT just the ability to pay should be able to access higher education.
UCU believes that it is unacceptable for students to be graduating paying double or triple the amount of fees above the current level. The government response to the Browne review along with the spending review proposals effectively means the privatisation of most of higher education as the cost of university is shifted from the state to the student and their family.
The UCU want to see world class education provided to students by a motivated workforce that is sufficient in number. Our higher education system is something to be proud of – it is world renowned – but it is danger of being fundamentally damaged by swingeing cuts and massively higher tuition fees.
Higher education contributes around £59 billion to the economy each year with over 2.5% of jobs depending on higher education funding.
We know that:
Over £1.2 billion has been cut from the higher education budget so far; and the CSRwill reduce funding by a further 40% by withdrawing all teaching funding for Arts Humanities and Social Sciences;
The government has cut 10,000 university places this year;
There has been a 23% increase in applications to university this year;
Last year around 190,000 people who had the ability and wanted to go to university missed out on a place;
At least 14,000 jobs have already been identified as at risk.
The UCU believes that increasing tuition fees will have a massively negative effect on students’ access to education. Research out this week from an NUS and HSBC study showed that 70% of students would be deterred by fees of £7000, never mind the £9000 proposed today.
Under the scheme announced today, graduates who earn the national average salary will be hit with tax bills 20% higher than non-graduates. Tomorrow’s teachers, scientists and doctors could see their tax bills rise by as much as a quarter. This amounts to a stealth tax on learning and aspiration.
The UCU does not believe that a market in education as currently proposed should not be an aim of any political party – nor do I.
Our higher education system is world class. The number of graduates leaving university each year has increased. The economy depends on a plentiful supply of graduate level worker leaving education each year.
A whole generation of young people have been told that the way to better themselves, their life chances and society is to go to university. Increasing fees and restricting access threatens to pull the rug out from under those young people at a time when they most need support.
I will certainly be voting against these disastrous plans when the measure to raise the cap on tuition fees is voted on the floor of the House in the next few weeks.
Sunday 31 October 2010
LESS THAN ONE IN FIVE WANT HUNT BAN REPEALED
Seventy-seven per-cent of the public want the hunt ban to be enforced, according to a new poll published today.
The League Against Cruel Sports has challenged its opponents by using their own questions to “prove the point” against repeal, according to a poll published in the Independent on Sunday today.
The poll, by YouGov for the League Against Cruel Sports, found that 77% of the public think that, “Where there is clear evidence of people breaking the Hunting Act, the police should investigate and, where appropriate, prosecute" whereas only 15% thought they should not. Less people thought that enforcement of the smoking ban should be a priority.
The poll came as hunts around the country met yesterday for the first time in this hunting season. The polling results are a clear slap in the face for the hunting community.
For years, the hunters have said that opinion polling was flawed; claiming that if only the ‘right’ question were asked the outcome would be very different. Their challenge was taken up by the League, and the results of this poll demonstrate that less than one in five people support repeal of the Hunting Act.
The Hunting Act 2004 came into force in February 2005. The League now employs a team of investigators to monitor hunts and collect evidence of illegal activity which is then passed to the police.
And this hunting season begins with representatives of four hunts about to stand trial for Hunting Act offences. So the message is clear. If hunts break the law, the League Against Cruel Sports are very likely to be there to bring them to justice.
Cases are ongoing against persons linked to the Fernie Hunt in Leicestershire, the Sinnington Hunt in North Yorkshire, the Quantock Staghounds in Somerset and the South Devon Hunt. Earlier this year a terrierman linked to the Ullswater Foxhounds in Cumbria was convicted under the Hunting Act.
Unsurprisingly the vast majority of MPs on the ConDem government benches support hunting, but not enough to win a vote to repeal the Hunting Act. This is a totemic issue and says a lot about the values each of the parties represent, with Labour supporting a progressive and compassionate society and most of the ConDem coalition wanting to take us back to a barbaric past.
The League Against Cruel Sports has challenged its opponents by using their own questions to “prove the point” against repeal, according to a poll published in the Independent on Sunday today.
The poll, by YouGov for the League Against Cruel Sports, found that 77% of the public think that, “Where there is clear evidence of people breaking the Hunting Act, the police should investigate and, where appropriate, prosecute" whereas only 15% thought they should not. Less people thought that enforcement of the smoking ban should be a priority.
The poll came as hunts around the country met yesterday for the first time in this hunting season. The polling results are a clear slap in the face for the hunting community.
For years, the hunters have said that opinion polling was flawed; claiming that if only the ‘right’ question were asked the outcome would be very different. Their challenge was taken up by the League, and the results of this poll demonstrate that less than one in five people support repeal of the Hunting Act.
The Hunting Act 2004 came into force in February 2005. The League now employs a team of investigators to monitor hunts and collect evidence of illegal activity which is then passed to the police.
And this hunting season begins with representatives of four hunts about to stand trial for Hunting Act offences. So the message is clear. If hunts break the law, the League Against Cruel Sports are very likely to be there to bring them to justice.
Cases are ongoing against persons linked to the Fernie Hunt in Leicestershire, the Sinnington Hunt in North Yorkshire, the Quantock Staghounds in Somerset and the South Devon Hunt. Earlier this year a terrierman linked to the Ullswater Foxhounds in Cumbria was convicted under the Hunting Act.
Unsurprisingly the vast majority of MPs on the ConDem government benches support hunting, but not enough to win a vote to repeal the Hunting Act. This is a totemic issue and says a lot about the values each of the parties represent, with Labour supporting a progressive and compassionate society and most of the ConDem coalition wanting to take us back to a barbaric past.
Saturday 30 October 2010
A PROFOUNDLY DANGEROUS GAMBLE WITH THE ECONOMY
The Comprehensive Spending Review has now been completed and the chancellor has made his statement in the house trying to justify the most vicious cuts in living memory.
But in spite of the harmful implications for millions of ordinary people, and the ConDem government’s profoundly dangerous gamble with the economy, Thursday’s parliamentary debate on the CSR was curtailed.
The ConDem coalition stuck to the line that the public sector is irrelevant to the economy. They believe the private sector will lead us to the economic promised land.
At PMQs on Wednesday, David Cameron claimed that growth figures were “twice as good as market expectations” and that it was “largely driven by the private sector.” Of course the reality is official figures indicate that growth was barely half what it was in the second quarter of 2010. But the construction sector is critical to a private sector led recovery. It provides a £223m trade surplus to the UK, employs 3m workers (8% of the workforce) and 300,000 firms work in the sector. And 92p in every £1 spent on construction is retained in the UK.
Furthermore, every £1 invested by the public sector in construction yields a return of 56p to the exchequer and generates £2.84 in total economic activity.
Coincidentally, on the morning of the CSR debate I met with representatives of the UK Construction Group. This body speaks for the country’s leading construction contractors with an annual turnover of more than £36bn – some 30% of the construction industry’s total. Its representatives told me that the published growth figures for turnover in the construction sector were “unbelievable”. Their members actually expect to see output falling over the next couple of years, not least because public sector investment represents around 40% of the industry’s turnover. The ConDem coalition’s decision to scrap the Building Schools for the Future programme has severely knocked confidence in the construction sector.
It’s not just the evidence from the UK Construction Group that demonstrates George Osborne and Danny Alexander’s prospectus is based on false premise. On October 13th, PricewaterhouseCoopers published a report into the impact of the fiscal squeeze. PWC suggested that the construction sector could see a reduction in output of 5% directly leading to the loss of 100,000 jobs and a further 900,000 in other areas.
Of course the ConDem coalition continue to repeat their clichéd mantra that “there is no alternative”. But writing in the New Statesman, David Blanchflower said a Harvard economist had told him the ConDem coalition’s fiscal deficit reduction programme is the biggest macroeconomic experiment in any of our lifetimes – and that was before the Comprehensive Spending Review. Blanchflower says economists and policymakers from around the world are astonished that the UK government is ignoring the risks and are proceeding to slash public spending and raise taxes during a once-in-a-hundred-years financial crisis.
Of course the Tories actually supported Labour’s spending plans until the economic recession started to bite and the duplicitous Lib Dems did so until they took their 30 pieces of silver. But the Tories have used the downturn as a cover to revert to the nasty Tories of old, committed to harsh social policies and a small state.
It’s worth remembering that when the last recession hit, poverty increased, record numbers of people lost their homes, public services were ravaged and unemployment reached almost 4 million. By contrast the last Labour government intervened to reduce poverty, support homeowners, maintain employment levels and protect frontline public services.
When the market fails, it is vital that the public sector intervenes to promote growth and assist the private sector to grow. Such an approach reduces the social security bill, maximises tax revenues and stimulates demand in the economy thereby creating an economic virtuous circle.
The ConDem coalition constantly talk about taking difficult decisions as if it’s some sort of macho badge of honour. But the only people that their decisions are difficult for are hard pressed low paid and middle income families along with the most vulnerable groups in society. In other words most of the population, but not the numerous millionaire former Bullingdon Club members sitting on the government benches. These individuals haven’t got a clue what life is like for ordinary people and don’t seem to care about the impact of their cuts on the population at large.
The UK economy is heading for a perfect storm and George Osborne’s hand is firmly on the tiller. My worry is that millions of our fellow citizens could be washed overboard and drowned after the crazed skipper destroyed the lifeboats.
But in spite of the harmful implications for millions of ordinary people, and the ConDem government’s profoundly dangerous gamble with the economy, Thursday’s parliamentary debate on the CSR was curtailed.
The ConDem coalition stuck to the line that the public sector is irrelevant to the economy. They believe the private sector will lead us to the economic promised land.
At PMQs on Wednesday, David Cameron claimed that growth figures were “twice as good as market expectations” and that it was “largely driven by the private sector.” Of course the reality is official figures indicate that growth was barely half what it was in the second quarter of 2010. But the construction sector is critical to a private sector led recovery. It provides a £223m trade surplus to the UK, employs 3m workers (8% of the workforce) and 300,000 firms work in the sector. And 92p in every £1 spent on construction is retained in the UK.
Furthermore, every £1 invested by the public sector in construction yields a return of 56p to the exchequer and generates £2.84 in total economic activity.
Coincidentally, on the morning of the CSR debate I met with representatives of the UK Construction Group. This body speaks for the country’s leading construction contractors with an annual turnover of more than £36bn – some 30% of the construction industry’s total. Its representatives told me that the published growth figures for turnover in the construction sector were “unbelievable”. Their members actually expect to see output falling over the next couple of years, not least because public sector investment represents around 40% of the industry’s turnover. The ConDem coalition’s decision to scrap the Building Schools for the Future programme has severely knocked confidence in the construction sector.
It’s not just the evidence from the UK Construction Group that demonstrates George Osborne and Danny Alexander’s prospectus is based on false premise. On October 13th, PricewaterhouseCoopers published a report into the impact of the fiscal squeeze. PWC suggested that the construction sector could see a reduction in output of 5% directly leading to the loss of 100,000 jobs and a further 900,000 in other areas.
Of course the ConDem coalition continue to repeat their clichéd mantra that “there is no alternative”. But writing in the New Statesman, David Blanchflower said a Harvard economist had told him the ConDem coalition’s fiscal deficit reduction programme is the biggest macroeconomic experiment in any of our lifetimes – and that was before the Comprehensive Spending Review. Blanchflower says economists and policymakers from around the world are astonished that the UK government is ignoring the risks and are proceeding to slash public spending and raise taxes during a once-in-a-hundred-years financial crisis.
Of course the Tories actually supported Labour’s spending plans until the economic recession started to bite and the duplicitous Lib Dems did so until they took their 30 pieces of silver. But the Tories have used the downturn as a cover to revert to the nasty Tories of old, committed to harsh social policies and a small state.
It’s worth remembering that when the last recession hit, poverty increased, record numbers of people lost their homes, public services were ravaged and unemployment reached almost 4 million. By contrast the last Labour government intervened to reduce poverty, support homeowners, maintain employment levels and protect frontline public services.
When the market fails, it is vital that the public sector intervenes to promote growth and assist the private sector to grow. Such an approach reduces the social security bill, maximises tax revenues and stimulates demand in the economy thereby creating an economic virtuous circle.
The ConDem coalition constantly talk about taking difficult decisions as if it’s some sort of macho badge of honour. But the only people that their decisions are difficult for are hard pressed low paid and middle income families along with the most vulnerable groups in society. In other words most of the population, but not the numerous millionaire former Bullingdon Club members sitting on the government benches. These individuals haven’t got a clue what life is like for ordinary people and don’t seem to care about the impact of their cuts on the population at large.
The UK economy is heading for a perfect storm and George Osborne’s hand is firmly on the tiller. My worry is that millions of our fellow citizens could be washed overboard and drowned after the crazed skipper destroyed the lifeboats.
Wednesday 27 October 2010
PATHWAYS INTO POVERTY
The Government have made much of the importance of ensuring sufficient financial support is provided to low income working households. In the first paragraph of the recent “21st century welfare” paper, the Government stated:
“We want to support people to move into and progress in work, while still supporting those in greatest need.”
But the reality is very different. In truth the Tories haven’t changed and the Liberal Democrats are utterly duplicitous. A wide range of welfare reform announcements have been made across the emergency budget in June, and the Comprehensive Spending Review, which will substantially cut many benefits paid to low income working families.
Analysis by Family Action indicates that at least 8 welfare cuts announced in the comprehensive spending review directly hurt low income working families. When combined with cuts announced in the budget, the analysis identifies 21 key welfare cuts will hurt the finances of low income working families.
Changes to eligibility rules for working tax credits could lead to some couples with one person working 16 hours per week losing up to £3810 per year in Tax Credit entitlement. Indications suggest that the changes could leave them worse off in than out of work – and push these families into poverty.
Changes to the eligibility rules for Working Tax Credit also penalise couples, and could discourage stable families.
Reductions in help with childcare costs through the childcare element of working tax credit could cost working families up to £30 per week - £1560 per year.
Freezing entitlements to Working Tax Credits, could lose low income working households £153 from their Working Tax Credit entitlement next year relative to uprating WTC elements with current RPI. By 2013/14 this could increase to £483.
Making Education Maintenance Allowance and (potentially) Council Tax Benefit discretionary locally managed funds, could lead to low income working households losing eligibility to these important benefits.
Changes to the contributory Employment and Support Allowance could lead to income losses of up to £91.40 per week for couple households where one member is working, and where the other is too ill to work. The changes could lead to households such as this being pushed into poverty.
Extending the age threshold for the shared room rate for Housing Benefit will push many low income working households into severe low income poverty. One example shows that single person aged 30, working 30 hours per week and living in an average price privately rented studio flat (£107 per week), could see their income after housing costs fall from £111 per week, to just £75 per week.
“We want to support people to move into and progress in work, while still supporting those in greatest need.”
But the reality is very different. In truth the Tories haven’t changed and the Liberal Democrats are utterly duplicitous. A wide range of welfare reform announcements have been made across the emergency budget in June, and the Comprehensive Spending Review, which will substantially cut many benefits paid to low income working families.
Analysis by Family Action indicates that at least 8 welfare cuts announced in the comprehensive spending review directly hurt low income working families. When combined with cuts announced in the budget, the analysis identifies 21 key welfare cuts will hurt the finances of low income working families.
Changes to eligibility rules for working tax credits could lead to some couples with one person working 16 hours per week losing up to £3810 per year in Tax Credit entitlement. Indications suggest that the changes could leave them worse off in than out of work – and push these families into poverty.
Changes to the eligibility rules for Working Tax Credit also penalise couples, and could discourage stable families.
Reductions in help with childcare costs through the childcare element of working tax credit could cost working families up to £30 per week - £1560 per year.
Freezing entitlements to Working Tax Credits, could lose low income working households £153 from their Working Tax Credit entitlement next year relative to uprating WTC elements with current RPI. By 2013/14 this could increase to £483.
Making Education Maintenance Allowance and (potentially) Council Tax Benefit discretionary locally managed funds, could lead to low income working households losing eligibility to these important benefits.
Changes to the contributory Employment and Support Allowance could lead to income losses of up to £91.40 per week for couple households where one member is working, and where the other is too ill to work. The changes could lead to households such as this being pushed into poverty.
Extending the age threshold for the shared room rate for Housing Benefit will push many low income working households into severe low income poverty. One example shows that single person aged 30, working 30 hours per week and living in an average price privately rented studio flat (£107 per week), could see their income after housing costs fall from £111 per week, to just £75 per week.
Thursday 21 October 2010
ConDem MPs Cheer the Deepest Public Expenditure Cuts in Living Memory
In his response to George Osborne's appalling Comprehensive Spending Review statement, Alan Johnson, Labour’s Shadow Chancellor, criticised it as a huge gamble from a government with no plan for growth and jobs.
This is the text of his speech:
Mr Speaker, members opposite are cheering the deepest cuts in public expenditure that have taken place in living memory.
Today is the day that an abstract debate about spreadsheets and numbers turns into stark reality for people’s jobs and services.
Their pensions, their prospects.
Their homes, and their families.
The day that the statistics which were sitting so comfortably in the lap of the Chief Secretary yesterday, become uncomfortable reality for hundreds of thousands of families.
The deficit deceivers opposite have peddled a series of myths to the British public.
The most incredible is that the biggest global economic crisis since the great depression i s the fault of the previous government.
Perhaps the Chancellor will confirm three facts.
Fact one, when the global crisis hit the UK had the second lowest debt of any G7 country.
Fact two, that the last government inherited a debt interest level of 10p in every pound of tax received. And that even after a world recession, bequeathed a figure 15% lower.
Fact three, that the interest rates the UK pays on its debt have been falling since the beginning of the year.
The last CSR was in 2007, when the Chancellor was at this despatch box complaining not that we were spending too much, but that we were spending too little.
He complained that we were slowing the growth in health and education expenditure.
Indeed his party supported every penny of our spending plans until well after the collapse of Lehman Brothers in America set off a disastrous chain reaction around the world.
The Chancellor described his Emergency Budget in June a s unavoidable and fair.
It was actually unfair, as the IFS pointed out in a devastating critique within 48 hours.
And it was also avoidable.
The deficit has to be paid down.
But today’s reckless gamble with people’s livelihoods runs the risk of stifling the fragile recovery.
The ridiculous analogy of credit card debt insults the intelligence of the British public.
If countries around the world hadn’t run up debts to sustain their economies people would not have lost their credit cards, they’d have lost their houses, their savings and their jobs.
The Liberal Democrats know this.
Because it’s what they argued when seeking the support of the electorate.
Before the Deputy Prime Minister discovered Greece, in the period between the ballot boxes closing and the door of his ministerial car opening.
They, like us, argued that in the context of reducing the deficit, speed kills.
The Chancell or repeats a list of organisations that support his swift cuts.
Curiously he fails to mention the opposing views of the other nations that make up the UK – Scotland, Wales, and Northern Ireland.
Perhaps that’s what he means when he describes himself as a one nation Tory.
And here’s another supportive quote.
"The measures we have taken have been commended by international bodies such as the European Central Bank, the European Commission, the IMF and the OECD. They have also won the approval of the international markets."
That was the Irish Minister of Finance last December, telling the Irish Parliament that his austerity plan was working, just four months before they slid back into recession.
After months of overblown rhetoric from the Chancellor, the concerns of those watching his announcement today will be about :
• staying in work,
• staying in their homes
• and staying safe on our streets.
We are told that the expected job losses from this spending review amount to 490,000, in the public sector alone.
And a Pricewaterhouse Coopers report last week told us that a million jobs are at stake - because the impact on the private sector will be just as severe.
Isn’t it the case that, at the same time as they throw people out of work, the government is reducing the support to help people return to the workplace?
They’ve already cancelled the Future Jobs Fund.
Now, whilst the Work and Pensions Secretary tells us that the system must ensure that people are better off in work, the changes to Working Tax Credit announced today will have the opposite effect.
Reducing childcare support for working parents adds to the problem.
This isn’t a strategy for jobs. It’s a recipe for unemployment.
On housing the Chancellor has announced the retreat of central government from any role in building new affordable homes.
So I ask the Chancellor can he tell the House, how many jobs will be lost in the construction sectors as a result of his decision to all but end capital funding for housebuilding?
And on crime which has fallen dramatically over the last 13 years - how on earth can the government think they are in tune with people’s priorities when a substantial cut in the Home Office budget is bound to result in police officers being taken off the streets?
Spending does have to be reduced.
But the frontline services on which people rely must be protected.
The public do not want to see teacher numbers fall, fewer police officers on their streets, or hospitals short-staffed.
So we support moves to protect schools and the NHS.
However, it seems clear that the Deputy Prime Minister has failed to meet his pledge that the pupil premium would not be funded from within the schools budget – a clear case of robbing Michael to pay Liam.
On the NHS, the small re al terms increase will be more than swallowed by the waste of £2 to £3bn on a top down reorganisation they promised in the election not to undertake.
And while we’re on the NHS, will the baseline for the Department of Health resource spending be reflected in the actual 2010/11 budget?
Mr Speaker, without growth the job of getting the deficit down becomes impossible.
A rising dole queue means a bigger welfare bill.
And less tax coming in.
A cost of at least half a billion pounds for every 100,000 people thrown out of work by the government's approach.
So to get the deficit down the starting point must be jobs, jobs, jobs.
And that is the core of the difference between us and the government.
The Ministry of Justice tells us that they will see 14,000 staff go. Does he agree with the department’s assessment that the vast majority of those,11,000, will be from the frontline?
Can he confirm that £230m of taxp ayers funds have been earmarked for redundancy costs in that department alone?
What is the total scale of redundancies expected across the public sector? What will the total redundancy bill be?
Thanks to the Chief Secretary we know that the Treasury has provided him with estimates. He should share them with the House.
I welcome the Chancellor’s decision to revisit his plans for capital spending and support for science.
The Business Secretary has rightly fought to partially protect the science budget, and to put more money into regional development.
It’s true that he had to switch overnight from opposing any graduate contribution to their education to support for unlimited fees, but such contortions are nothing new for the Rt Hon Member and his colleagues.
But given the warning signs in the UK and global economies, we believe the case for going further on infrastructure is clear.
The banks that benefit from the ending of the b onus tax, and the cut in Corporation Tax, can well afford to take more of the strain.
This additional would mean that vital infrastructure projects could go ahead – keeping people in work now, and creating the environment for growth in the years to come.
And we call again on the government to change their perverse decision on Sheffield Forgemasters
It is right that the government looks for savings from the welfare bill.
Where changes are fair, proportionate and encourage work we will support them as we have shown in respect of incapacity benefit, a reformed gateway for Disability Living Allowance and on upratings.
We will look at the other changes announced today.
But there is nothing fair about Child Benefit changes that leave a single earner on £45,000 losing thousands of pounds, while a family on £80,000 gets to keep every penny.
As things stand the government is looking for a bigger contribution to reducing the deficit to come from children than from the banks.
That can’t be right.
Will the Chancellor confirm that his change to Child Benefit equates to a 6p increase in income tax for a single earner family on £45,000?
Perhaps because of the consternation caused on this issue he has dropped plans to remove child Benefit for older children. Can he rule this our completely, or is it still under consideration?
And, while we accept that Housing Benefit should be reformed, how can anyone on the benches opposite suggest that removing 10% of the rent for a family’s home from someone who has been looking for work for 12 months is fair?
Can the Chancellor confirm that the poorest will bear a greater burden than the richest – with the middle squeezed even further?
And that women are shouldering three quarters of the cuts?
Does he still claim that these measures are progressive and fair?
Mr Speaker. There is an alternative to this slash and burn approach.
This Spending Review is not about economic necessity, it’s about political choice.
The Chancellor argues that Labour would have done nothing about the deficit.
But he goes on to say that his cuts are no worse than ours.
He can’t have it both ways.
But he’s wrong on both counts.
The government is removing almost twice as much from departmental budgets as we think is wise, before we consider the further welfare reforms he has announced today.
It is our firm belief that the rush to cut the deficit endangers the recovery and reduces the prospects for employment in the short term, and prosperity in the longer term.
We believe we can and should sustain a more gradual reduction. Securing growth.
I don’t believe that the Chancellor or the Prime Minster sufficiently understand the worries and concerns of families up and down the country.
And I think those worries will have multiplied as a result of the spending review statement today.
This is the text of his speech:
Mr Speaker, members opposite are cheering the deepest cuts in public expenditure that have taken place in living memory.
Today is the day that an abstract debate about spreadsheets and numbers turns into stark reality for people’s jobs and services.
Their pensions, their prospects.
Their homes, and their families.
The day that the statistics which were sitting so comfortably in the lap of the Chief Secretary yesterday, become uncomfortable reality for hundreds of thousands of families.
The deficit deceivers opposite have peddled a series of myths to the British public.
The most incredible is that the biggest global economic crisis since the great depression i s the fault of the previous government.
Perhaps the Chancellor will confirm three facts.
Fact one, when the global crisis hit the UK had the second lowest debt of any G7 country.
Fact two, that the last government inherited a debt interest level of 10p in every pound of tax received. And that even after a world recession, bequeathed a figure 15% lower.
Fact three, that the interest rates the UK pays on its debt have been falling since the beginning of the year.
The last CSR was in 2007, when the Chancellor was at this despatch box complaining not that we were spending too much, but that we were spending too little.
He complained that we were slowing the growth in health and education expenditure.
Indeed his party supported every penny of our spending plans until well after the collapse of Lehman Brothers in America set off a disastrous chain reaction around the world.
The Chancellor described his Emergency Budget in June a s unavoidable and fair.
It was actually unfair, as the IFS pointed out in a devastating critique within 48 hours.
And it was also avoidable.
The deficit has to be paid down.
But today’s reckless gamble with people’s livelihoods runs the risk of stifling the fragile recovery.
The ridiculous analogy of credit card debt insults the intelligence of the British public.
If countries around the world hadn’t run up debts to sustain their economies people would not have lost their credit cards, they’d have lost their houses, their savings and their jobs.
The Liberal Democrats know this.
Because it’s what they argued when seeking the support of the electorate.
Before the Deputy Prime Minister discovered Greece, in the period between the ballot boxes closing and the door of his ministerial car opening.
They, like us, argued that in the context of reducing the deficit, speed kills.
The Chancell or repeats a list of organisations that support his swift cuts.
Curiously he fails to mention the opposing views of the other nations that make up the UK – Scotland, Wales, and Northern Ireland.
Perhaps that’s what he means when he describes himself as a one nation Tory.
And here’s another supportive quote.
"The measures we have taken have been commended by international bodies such as the European Central Bank, the European Commission, the IMF and the OECD. They have also won the approval of the international markets."
That was the Irish Minister of Finance last December, telling the Irish Parliament that his austerity plan was working, just four months before they slid back into recession.
After months of overblown rhetoric from the Chancellor, the concerns of those watching his announcement today will be about :
• staying in work,
• staying in their homes
• and staying safe on our streets.
We are told that the expected job losses from this spending review amount to 490,000, in the public sector alone.
And a Pricewaterhouse Coopers report last week told us that a million jobs are at stake - because the impact on the private sector will be just as severe.
Isn’t it the case that, at the same time as they throw people out of work, the government is reducing the support to help people return to the workplace?
They’ve already cancelled the Future Jobs Fund.
Now, whilst the Work and Pensions Secretary tells us that the system must ensure that people are better off in work, the changes to Working Tax Credit announced today will have the opposite effect.
Reducing childcare support for working parents adds to the problem.
This isn’t a strategy for jobs. It’s a recipe for unemployment.
On housing the Chancellor has announced the retreat of central government from any role in building new affordable homes.
So I ask the Chancellor can he tell the House, how many jobs will be lost in the construction sectors as a result of his decision to all but end capital funding for housebuilding?
And on crime which has fallen dramatically over the last 13 years - how on earth can the government think they are in tune with people’s priorities when a substantial cut in the Home Office budget is bound to result in police officers being taken off the streets?
Spending does have to be reduced.
But the frontline services on which people rely must be protected.
The public do not want to see teacher numbers fall, fewer police officers on their streets, or hospitals short-staffed.
So we support moves to protect schools and the NHS.
However, it seems clear that the Deputy Prime Minister has failed to meet his pledge that the pupil premium would not be funded from within the schools budget – a clear case of robbing Michael to pay Liam.
On the NHS, the small re al terms increase will be more than swallowed by the waste of £2 to £3bn on a top down reorganisation they promised in the election not to undertake.
And while we’re on the NHS, will the baseline for the Department of Health resource spending be reflected in the actual 2010/11 budget?
Mr Speaker, without growth the job of getting the deficit down becomes impossible.
A rising dole queue means a bigger welfare bill.
And less tax coming in.
A cost of at least half a billion pounds for every 100,000 people thrown out of work by the government's approach.
So to get the deficit down the starting point must be jobs, jobs, jobs.
And that is the core of the difference between us and the government.
The Ministry of Justice tells us that they will see 14,000 staff go. Does he agree with the department’s assessment that the vast majority of those,11,000, will be from the frontline?
Can he confirm that £230m of taxp ayers funds have been earmarked for redundancy costs in that department alone?
What is the total scale of redundancies expected across the public sector? What will the total redundancy bill be?
Thanks to the Chief Secretary we know that the Treasury has provided him with estimates. He should share them with the House.
I welcome the Chancellor’s decision to revisit his plans for capital spending and support for science.
The Business Secretary has rightly fought to partially protect the science budget, and to put more money into regional development.
It’s true that he had to switch overnight from opposing any graduate contribution to their education to support for unlimited fees, but such contortions are nothing new for the Rt Hon Member and his colleagues.
But given the warning signs in the UK and global economies, we believe the case for going further on infrastructure is clear.
The banks that benefit from the ending of the b onus tax, and the cut in Corporation Tax, can well afford to take more of the strain.
This additional would mean that vital infrastructure projects could go ahead – keeping people in work now, and creating the environment for growth in the years to come.
And we call again on the government to change their perverse decision on Sheffield Forgemasters
It is right that the government looks for savings from the welfare bill.
Where changes are fair, proportionate and encourage work we will support them as we have shown in respect of incapacity benefit, a reformed gateway for Disability Living Allowance and on upratings.
We will look at the other changes announced today.
But there is nothing fair about Child Benefit changes that leave a single earner on £45,000 losing thousands of pounds, while a family on £80,000 gets to keep every penny.
As things stand the government is looking for a bigger contribution to reducing the deficit to come from children than from the banks.
That can’t be right.
Will the Chancellor confirm that his change to Child Benefit equates to a 6p increase in income tax for a single earner family on £45,000?
Perhaps because of the consternation caused on this issue he has dropped plans to remove child Benefit for older children. Can he rule this our completely, or is it still under consideration?
And, while we accept that Housing Benefit should be reformed, how can anyone on the benches opposite suggest that removing 10% of the rent for a family’s home from someone who has been looking for work for 12 months is fair?
Can the Chancellor confirm that the poorest will bear a greater burden than the richest – with the middle squeezed even further?
And that women are shouldering three quarters of the cuts?
Does he still claim that these measures are progressive and fair?
Mr Speaker. There is an alternative to this slash and burn approach.
This Spending Review is not about economic necessity, it’s about political choice.
The Chancellor argues that Labour would have done nothing about the deficit.
But he goes on to say that his cuts are no worse than ours.
He can’t have it both ways.
But he’s wrong on both counts.
The government is removing almost twice as much from departmental budgets as we think is wise, before we consider the further welfare reforms he has announced today.
It is our firm belief that the rush to cut the deficit endangers the recovery and reduces the prospects for employment in the short term, and prosperity in the longer term.
We believe we can and should sustain a more gradual reduction. Securing growth.
I don’t believe that the Chancellor or the Prime Minster sufficiently understand the worries and concerns of families up and down the country.
And I think those worries will have multiplied as a result of the spending review statement today.
Saturday 16 October 2010
STUDENTS DECEIVED BY SHAMELESS LIB DEMS
Following the publication of Lord Browne’s proposals for the future funding of universities in England, a key question is whether universities will be better-off under the proposals. The answer seems to be an emphatic ‘no’.
The Browne Review assumes that the Comprehensive Spending Review (CSR) will cut 80% of the annual teaching grant that is currently allocated to universities via the Higher Education Funding Council for England (Hefce). This teaching funding allocation amounts to £3.5bn and Browne recommends that this should be reduced to just £700m with a further proposal that this funding should be targeted at ‘strategically important and vulnerable subjects’.
If Browne’s recommendations are adopted in the CSR, public investment in teaching (which has already been reduced by £1bn) would fall by £2.8bn per annum. As a result, million+ and London Economics have estimated that universities, whether they like it or not, would have to levy an average fee of £7,400 per annum to make-up for the loss of teaching funding which Browne recommends. Even if the CSR does not accept Lord Browne’s recommendations in full, any significant reduction would impact on the level of fee that universities would have to levy – the greater the reduction, the higher fee which all universities will have to charge.
Fee levels: no race to the bottom
The Browne Review also recommends a taper so that if a university charges more than £6000, they will only receive a proportion of the additional fee levied – for example, a university would only receive 94% of a £7000 fee or 89% of an £8000 fee. The result is that universities will have to charge even more to recoup funding lost as a result of the taper.
The majority of students (80%) are currently studying subjects which are in Hefce Price Bands C and D. These are by no means just classroom-based subjects. Many are practice-based and professionally or vocationally focused and require state-of-the-art facilities to ensure that they are at the standard being used by industry and employers.
million+ surveyed universities to estimate the percentage of teaching funding that they would lose in the event that all funding was removed from subject Bands C and D (i.e. the effect on individual institutions bearing in mind that teaching funding is not evenly spread by subject band amongst all institutions).
Many universities reported that they would lose between 95% and 97% of all teaching funding. Once Lord Browne’s recommendations were taken into account, universities reported that they would have to levy fees of up to £8000 per annum. Even if the reductions recommended by Lord Browne are implemented in a different way i.e. not using the current subject price bands, the scale of the reductions envisaged will mean that all universities will have little option but to consider uplifting fees significantly.
There is likely to be little merit in universities in England engaging in a race to the bottom in terms of fee levels which, in the case of universities with the most socially inclusive student profiles, would simply end up in them having less resources for students who benefit the most from the opportunity to study at university.
Differential impact on universities and students
It is well-known that some universities have much more inclusive social profiles than others. Those institutions which make the biggest contribution to social mobility commonly have up to 40% of their students from socio-economic groups 4-7. These universities also make the most significant contribution to social mobility by offering opportunities to first-generation students and to students who enter university later in life. They also educate the over-whelming majority of students from black and minority ethnic backgrounds.
It would be unwise to conclude that these universities will not seek to replace current levels of investment for teaching through higher fees if teaching funding is cut substantially in the CSR. These universities are engaged in world-leading research and high quality teaching which otherwise might otherwise be at risk. However, there is an obvious concern that even with a progressive student support system, the prospect of high fee levels will deter students from widening participation backgrounds.
Moreover, universities which have a higher proportion of students from wealthier backgrounds are very likely to end up receiving more resources – either because their students can pay upfront more easily or are not so likely to be deterred by higher levels of loans. These universities are also much less likely to have to provide large numbers of students with bursaries compared to other universities.
‘Subsidy’ vs public investment
The Browne Review enters new territory in describing the public funding of teaching as a subsidy rather than an investment. If the ConDem Coalition Government accepts the approach that this terminology implies, this will signal a major shift in policy. Effectively, public investment is being removed from higher education and the responsibility for the future funding of universities in respect of teaching is being transferred to the individual. Lord Browne describes this as ‘funding following the student’. In reality, the funding is not being transferred directly to the student - rather the student is required to take out a loan and repay it.
This is very different to the partnership approach advocated in the Robbins and the Dearing Reports. It is also very different to the approach being taken in the UK’s competitor countries where the need for the government to invest directly in higher education through public funding of universities for teaching as well as research is recognised even where countries have a student fee regime.
Although the system proposed by Browne is a modification of the 2004 HE Act which introduced the current variable fee system in England, it effectively abandons the principle of ‘additionality’ i.e. the income provided through the repayment of graduate contributions by students was additional to the public funding provided by government.
Rather the assumption of Browne is that the fee-loan system for students and repayments by graduates will substitute for public funding. Moreover, Browne assumes that the unit of resource for teaching will be reduced. As a result, the foundation of the 2004 Act (additionality) is replaced by substitution and a cut in resources for teaching.
The Browne Review, the CSR and the deficit
The recommendation by the Browne Review that teaching funding is cut by 80% supports the Government objective of reducing the deficit principally because teaching funding is counted against the PSBR. However this is not the whole story. Unless they can pay upfront, students will take out state-funded loans to pay fees and will repay as graduates (as now). The government will therefore have to continue to borrow to fund the higher fees loans to cover the higher fees which universities will be forced to levy. So why will this not increase the deficit?
The Treasury accounts for fee loans in a different way from the direct funding of universities through the Hefce teaching grant. Only the ‘RAB charge’ - the amount that the government estimates will not be recovered from graduates over the 30 year period of the loan - goes down in the Treasury books. As a result the Treasury is inclined to spend extra money on loans whilst making substantial cuts to teaching funding and arcane Treasury accounting rules will make it appear that greater savings have been made.
Of course, it would be open to the ConDem Coalition Government to amend the Browne recommendations and to make different decisions in the CSR about investment in teaching funding in English universities.
However, judging by their record so far, I don’t think anything this awful coalition does is likely to improve on the Browne recommendations.
The Browne Review assumes that the Comprehensive Spending Review (CSR) will cut 80% of the annual teaching grant that is currently allocated to universities via the Higher Education Funding Council for England (Hefce). This teaching funding allocation amounts to £3.5bn and Browne recommends that this should be reduced to just £700m with a further proposal that this funding should be targeted at ‘strategically important and vulnerable subjects’.
If Browne’s recommendations are adopted in the CSR, public investment in teaching (which has already been reduced by £1bn) would fall by £2.8bn per annum. As a result, million+ and London Economics have estimated that universities, whether they like it or not, would have to levy an average fee of £7,400 per annum to make-up for the loss of teaching funding which Browne recommends. Even if the CSR does not accept Lord Browne’s recommendations in full, any significant reduction would impact on the level of fee that universities would have to levy – the greater the reduction, the higher fee which all universities will have to charge.
Fee levels: no race to the bottom
The Browne Review also recommends a taper so that if a university charges more than £6000, they will only receive a proportion of the additional fee levied – for example, a university would only receive 94% of a £7000 fee or 89% of an £8000 fee. The result is that universities will have to charge even more to recoup funding lost as a result of the taper.
The majority of students (80%) are currently studying subjects which are in Hefce Price Bands C and D. These are by no means just classroom-based subjects. Many are practice-based and professionally or vocationally focused and require state-of-the-art facilities to ensure that they are at the standard being used by industry and employers.
million+ surveyed universities to estimate the percentage of teaching funding that they would lose in the event that all funding was removed from subject Bands C and D (i.e. the effect on individual institutions bearing in mind that teaching funding is not evenly spread by subject band amongst all institutions).
Many universities reported that they would lose between 95% and 97% of all teaching funding. Once Lord Browne’s recommendations were taken into account, universities reported that they would have to levy fees of up to £8000 per annum. Even if the reductions recommended by Lord Browne are implemented in a different way i.e. not using the current subject price bands, the scale of the reductions envisaged will mean that all universities will have little option but to consider uplifting fees significantly.
There is likely to be little merit in universities in England engaging in a race to the bottom in terms of fee levels which, in the case of universities with the most socially inclusive student profiles, would simply end up in them having less resources for students who benefit the most from the opportunity to study at university.
Differential impact on universities and students
It is well-known that some universities have much more inclusive social profiles than others. Those institutions which make the biggest contribution to social mobility commonly have up to 40% of their students from socio-economic groups 4-7. These universities also make the most significant contribution to social mobility by offering opportunities to first-generation students and to students who enter university later in life. They also educate the over-whelming majority of students from black and minority ethnic backgrounds.
It would be unwise to conclude that these universities will not seek to replace current levels of investment for teaching through higher fees if teaching funding is cut substantially in the CSR. These universities are engaged in world-leading research and high quality teaching which otherwise might otherwise be at risk. However, there is an obvious concern that even with a progressive student support system, the prospect of high fee levels will deter students from widening participation backgrounds.
Moreover, universities which have a higher proportion of students from wealthier backgrounds are very likely to end up receiving more resources – either because their students can pay upfront more easily or are not so likely to be deterred by higher levels of loans. These universities are also much less likely to have to provide large numbers of students with bursaries compared to other universities.
‘Subsidy’ vs public investment
The Browne Review enters new territory in describing the public funding of teaching as a subsidy rather than an investment. If the ConDem Coalition Government accepts the approach that this terminology implies, this will signal a major shift in policy. Effectively, public investment is being removed from higher education and the responsibility for the future funding of universities in respect of teaching is being transferred to the individual. Lord Browne describes this as ‘funding following the student’. In reality, the funding is not being transferred directly to the student - rather the student is required to take out a loan and repay it.
This is very different to the partnership approach advocated in the Robbins and the Dearing Reports. It is also very different to the approach being taken in the UK’s competitor countries where the need for the government to invest directly in higher education through public funding of universities for teaching as well as research is recognised even where countries have a student fee regime.
Although the system proposed by Browne is a modification of the 2004 HE Act which introduced the current variable fee system in England, it effectively abandons the principle of ‘additionality’ i.e. the income provided through the repayment of graduate contributions by students was additional to the public funding provided by government.
Rather the assumption of Browne is that the fee-loan system for students and repayments by graduates will substitute for public funding. Moreover, Browne assumes that the unit of resource for teaching will be reduced. As a result, the foundation of the 2004 Act (additionality) is replaced by substitution and a cut in resources for teaching.
The Browne Review, the CSR and the deficit
The recommendation by the Browne Review that teaching funding is cut by 80% supports the Government objective of reducing the deficit principally because teaching funding is counted against the PSBR. However this is not the whole story. Unless they can pay upfront, students will take out state-funded loans to pay fees and will repay as graduates (as now). The government will therefore have to continue to borrow to fund the higher fees loans to cover the higher fees which universities will be forced to levy. So why will this not increase the deficit?
The Treasury accounts for fee loans in a different way from the direct funding of universities through the Hefce teaching grant. Only the ‘RAB charge’ - the amount that the government estimates will not be recovered from graduates over the 30 year period of the loan - goes down in the Treasury books. As a result the Treasury is inclined to spend extra money on loans whilst making substantial cuts to teaching funding and arcane Treasury accounting rules will make it appear that greater savings have been made.
Of course, it would be open to the ConDem Coalition Government to amend the Browne recommendations and to make different decisions in the CSR about investment in teaching funding in English universities.
However, judging by their record so far, I don’t think anything this awful coalition does is likely to improve on the Browne recommendations.
Thursday 14 October 2010
CONDEM TAX PLANS ON PENSION TO HIT FAMILIES
The ConDem’s announcement on pensions tax today will hit families on modest incomes extremely hard.
Now everyone's at risk because the Government is taxing on the basis of people's wish to save for a pension, rather than because they are high earners.
But there was an alternative. Labour supports the principle that pensions tax relief should play a part in getting borrowing down. But under our plans no-one earning under £130,000 would lose out.
This was a key part of the fair taxes with which we planned to halve the deficit over four years. Labour opposed to the Government’s approach because it’s less progressive than our plan – which only affected people earning over £130,000. Furthermore, it sends the wrong message by taxing people because they are saving a lot into their pension, rather than because they are on high incomes.
Tax relief on pensions exists to help people save for an income in retirement.
But the cost of pensions tax relief in the UK has doubled over the last decade and the proportion of tax relief going to those on the highest incomes has risen markedly.
The introduction of the additional rate of income tax of 50 per cent applying to individuals on incomes of £150,000 and over would have exacerbated this.
The Labour Government’s aim was to deliver a system of pensions tax relief that was fair, affordable and sustainable. In the context of our commitment to halve borrowing over the next four years, Labour acted to address the disproportionate levels of relief going to high income individuals. This approach raised £3.5bn as part of our deficit reduction plan.
This meant that from 2011/12 onwards those with incomes of over £130,000, and gross incomes of £150,000 would see their pensions tax relief restricted from the current overly generous level.
The restriction took the form of a taper to apply for those on gross incomes between £150,000 and £180,000, gradually reducing tax relief on pension contributions until it is restricted to the level received by basic rate taxpayers - 20 per cent.
The restriction would apply to only 300,000 individuals, about 2 per cent of pension savers, or around one per cent of working-age taxpayers.
These individuals currently receive around a quarter of all tax relief on pension contributions – on average receiving £20,000 per person in tax relief, compared to £1,000 for basic rate taxpayers. Individuals with incomes of less than £130,000 were completely unaffected by this change.
But the ConDem coalition argues that Labour’s restriction of tax relief for the richest individuals is too complex. They have set out an alternative approach which that restricts the annual allowance to £50,000, significantly below its current limit of £255,000. On top of that, the lifetime allowance will be reduced from £1.8 million to £1.5 million – which caps the total someone can put into a pension.
The Government has said its will raise around the same amount of revenue as our approach – peaking at £4bn a year. They also say that 100,000 people will be affected and estimate that 20% of these earn under £100,000.
Their approach means that the revenue is being raised from those that make significant pension contributions, rather than simply those on very high incomes as under Labour’s plans.
Because some individuals make very large pension contributions relative to their income levels, this potential alternative approach would affect people on incomes well below the £130,000 cut-off in our approach.
There are also other questions to be raised about the ConDem’s approach. Given that the Government’s proposals will affect some on much lower incomes that would be affected by Labour’s plans, they need to say what is being done to raise awareness of this change. They should also identify how did those without financial advisors have a voice in the development of this approach, to match the lobbying by the very rich that has persuaded the Coalition to water down the impact on them?
Now everyone's at risk because the Government is taxing on the basis of people's wish to save for a pension, rather than because they are high earners.
But there was an alternative. Labour supports the principle that pensions tax relief should play a part in getting borrowing down. But under our plans no-one earning under £130,000 would lose out.
This was a key part of the fair taxes with which we planned to halve the deficit over four years. Labour opposed to the Government’s approach because it’s less progressive than our plan – which only affected people earning over £130,000. Furthermore, it sends the wrong message by taxing people because they are saving a lot into their pension, rather than because they are on high incomes.
Tax relief on pensions exists to help people save for an income in retirement.
But the cost of pensions tax relief in the UK has doubled over the last decade and the proportion of tax relief going to those on the highest incomes has risen markedly.
The introduction of the additional rate of income tax of 50 per cent applying to individuals on incomes of £150,000 and over would have exacerbated this.
The Labour Government’s aim was to deliver a system of pensions tax relief that was fair, affordable and sustainable. In the context of our commitment to halve borrowing over the next four years, Labour acted to address the disproportionate levels of relief going to high income individuals. This approach raised £3.5bn as part of our deficit reduction plan.
This meant that from 2011/12 onwards those with incomes of over £130,000, and gross incomes of £150,000 would see their pensions tax relief restricted from the current overly generous level.
The restriction took the form of a taper to apply for those on gross incomes between £150,000 and £180,000, gradually reducing tax relief on pension contributions until it is restricted to the level received by basic rate taxpayers - 20 per cent.
The restriction would apply to only 300,000 individuals, about 2 per cent of pension savers, or around one per cent of working-age taxpayers.
These individuals currently receive around a quarter of all tax relief on pension contributions – on average receiving £20,000 per person in tax relief, compared to £1,000 for basic rate taxpayers. Individuals with incomes of less than £130,000 were completely unaffected by this change.
But the ConDem coalition argues that Labour’s restriction of tax relief for the richest individuals is too complex. They have set out an alternative approach which that restricts the annual allowance to £50,000, significantly below its current limit of £255,000. On top of that, the lifetime allowance will be reduced from £1.8 million to £1.5 million – which caps the total someone can put into a pension.
The Government has said its will raise around the same amount of revenue as our approach – peaking at £4bn a year. They also say that 100,000 people will be affected and estimate that 20% of these earn under £100,000.
Their approach means that the revenue is being raised from those that make significant pension contributions, rather than simply those on very high incomes as under Labour’s plans.
Because some individuals make very large pension contributions relative to their income levels, this potential alternative approach would affect people on incomes well below the £130,000 cut-off in our approach.
There are also other questions to be raised about the ConDem’s approach. Given that the Government’s proposals will affect some on much lower incomes that would be affected by Labour’s plans, they need to say what is being done to raise awareness of this change. They should also identify how did those without financial advisors have a voice in the development of this approach, to match the lobbying by the very rich that has persuaded the Coalition to water down the impact on them?
Friday 8 October 2010
IMF Says ConDem's cuts have slowed UK recovery
The Shadow Chief Secretary to the Treasury was reelected to the Shadow Cabinet last night.
Earlier this week he wrote about the IMF confirming that George Osborne’s cuts have put the UK recovery in the slow lane – and warned that cuts would need to be rolled back if growth comes in lower than expected. The Independent Office of Budget Responsibility has warned that there is just a 40% chance of the UK hitting its new growth projections.
Here’s the three top-lines:
1. The recovery delivered by Labour is one of the best in Europe. Growth in 2010 for the UK beats France, Italy and Spain – and is largely based on strong growth in the first and second quarter of the year.
2. The IMF has revised up its forecasts for growth in 2011 across the Eurozone – but cut its forecast for the UK by 0.1%. Euro-area growth estimates on the other hand have been revised up 0.2%. The IMF’s chief economist Oliver Blanchard said:
“Unless advanced countries can count on stronger private demand, both domestic and foreign, they will find it difficult to achieve fiscal consolidation.”
In the UK, however, the government has hit private sector demand hard with the VAT hike and big threats to jobs from fast public spending cuts this year. Indeed, the IMF’s report concludes:
“In the United Kingdom, domestic demand is expected to remain relatively subdued, particularly following the recent measures to cut the budget deficit”.
3. A focus on getting people back to work is now the key says the IMF;
"To spur a stronger recovery and more employment growth, government policies need to become more proactive and coordinated”
In the UK, the government has cut back on back-to-work programmes like the Future Jobs Fund which has been praised by frontline JobCentre staff. George Osborne’s budget hits UK growth so hard that an extra 100,000 will be put on the dole – and the benefits bill will go up by nearly £1 billion. That means bigger cuts are needed elsewhere.
Earlier this week he wrote about the IMF confirming that George Osborne’s cuts have put the UK recovery in the slow lane – and warned that cuts would need to be rolled back if growth comes in lower than expected. The Independent Office of Budget Responsibility has warned that there is just a 40% chance of the UK hitting its new growth projections.
Here’s the three top-lines:
1. The recovery delivered by Labour is one of the best in Europe. Growth in 2010 for the UK beats France, Italy and Spain – and is largely based on strong growth in the first and second quarter of the year.
2. The IMF has revised up its forecasts for growth in 2011 across the Eurozone – but cut its forecast for the UK by 0.1%. Euro-area growth estimates on the other hand have been revised up 0.2%. The IMF’s chief economist Oliver Blanchard said:
“Unless advanced countries can count on stronger private demand, both domestic and foreign, they will find it difficult to achieve fiscal consolidation.”
In the UK, however, the government has hit private sector demand hard with the VAT hike and big threats to jobs from fast public spending cuts this year. Indeed, the IMF’s report concludes:
“In the United Kingdom, domestic demand is expected to remain relatively subdued, particularly following the recent measures to cut the budget deficit”.
3. A focus on getting people back to work is now the key says the IMF;
"To spur a stronger recovery and more employment growth, government policies need to become more proactive and coordinated”
In the UK, the government has cut back on back-to-work programmes like the Future Jobs Fund which has been praised by frontline JobCentre staff. George Osborne’s budget hits UK growth so hard that an extra 100,000 will be put on the dole – and the benefits bill will go up by nearly £1 billion. That means bigger cuts are needed elsewhere.
Tuesday 5 October 2010
BIGGEST ASSUALT ON FAMILIES IN POST WAR HISTORY
So the ConDem coalition has agreed to make £9 billion cuts in benefits after George Osborne and Iain Duncan Smith “struck a deal”.
The reforms will see the current welfare system replaced with a universal benefit with millions of welfare claimants having their benefits scrapped and replaced with one “universal credit”. Housing benefit, income support, incapacity benefit and dozens of other payments are set to go.
It remains to be seen how Iain Duncan Smith’s plans compare with Labour’s proposals for a ‘better off in work’ credit to ensure everyone would be at least £40 per week better off. No doubt we’ll hear warm words from IDS about how much he cares about poverty. But I was a Welfare Rights Officer in the 1980s and 1990s and I remember how the Tories impoverished millions of people with their callous welfare reforms. I also remember Nigel Lawson giving a £4bn tax handout to the UK’s richest families in 1988 while simultaneously cutting £4bn from the country’s poorest families.
David Cameron is apparently going to get in on the act. I hear he is planning to use the Tory Party conference to say that there is a purpose to the pain of deficit reduction because Britain will emerge a fairer society following the spending cuts. Meanwhile, George (Slasher) Osborne says his decision to cut child benefit was "difficult but fair". But the reality is it’s the first phase of the ConDem’s plans to residualise social security as part of their attack on what they pejoratively refer to as the ‘big state’.
I remain extremely sceptical that the Tories will do anything to help the poorest people in Britain. My fear is their plans to marginalise social security will lead to even bigger cuts if it is made the preserve of Britain’s poorest people.
I’m not the only one to have expressed doubts about the Tory proposals. When the ConDem coalition launched the consultation about their plans they were criticised by the Institute for Fiscal Studies for “ducking difficult decisions”. The IFS concluded that the proposals were “likely to be accompanied by financial losses for significant numbers of families”. The Institute for Public Policy Research (ippr) concluded it was “difficult to see how the [Tories’] plans will tackle the real causes of worklessness.” And Shelter expressed concerns about the impact of the “brutal cuts” to housing benefit.
It is yet another example of the 1984 style Ministry of Truth tactics being pursued by this ConDem government that is trying to portray itself as the champions of the poor.
But the ConDem coalition has already…
• Cut the Future Jobs Fund
• Ended the Young Persons Guarantee
• Slashed funding for job centres
• Increased marginal tax rates for at least 85,000 of Britain’s poorest people as revealed in the Treasury’s Red Book
• Reduced tax credits and child benefit by changing the index from RPI to CPI
• Chopped entitlement to tax credits for families earning £50,000 down to just £30,000
No doubt Cameron will deploy the usual verbal contortions in his conference speech to convince people that he’s building a fairer society by making the same old Tory cuts. But the truth is Britain’s poorest people are being sacrificed on the altar of deficit reduction, just as they were in the 1930s, 1980s and 1990s.
The reforms will see the current welfare system replaced with a universal benefit with millions of welfare claimants having their benefits scrapped and replaced with one “universal credit”. Housing benefit, income support, incapacity benefit and dozens of other payments are set to go.
It remains to be seen how Iain Duncan Smith’s plans compare with Labour’s proposals for a ‘better off in work’ credit to ensure everyone would be at least £40 per week better off. No doubt we’ll hear warm words from IDS about how much he cares about poverty. But I was a Welfare Rights Officer in the 1980s and 1990s and I remember how the Tories impoverished millions of people with their callous welfare reforms. I also remember Nigel Lawson giving a £4bn tax handout to the UK’s richest families in 1988 while simultaneously cutting £4bn from the country’s poorest families.
David Cameron is apparently going to get in on the act. I hear he is planning to use the Tory Party conference to say that there is a purpose to the pain of deficit reduction because Britain will emerge a fairer society following the spending cuts. Meanwhile, George (Slasher) Osborne says his decision to cut child benefit was "difficult but fair". But the reality is it’s the first phase of the ConDem’s plans to residualise social security as part of their attack on what they pejoratively refer to as the ‘big state’.
I remain extremely sceptical that the Tories will do anything to help the poorest people in Britain. My fear is their plans to marginalise social security will lead to even bigger cuts if it is made the preserve of Britain’s poorest people.
I’m not the only one to have expressed doubts about the Tory proposals. When the ConDem coalition launched the consultation about their plans they were criticised by the Institute for Fiscal Studies for “ducking difficult decisions”. The IFS concluded that the proposals were “likely to be accompanied by financial losses for significant numbers of families”. The Institute for Public Policy Research (ippr) concluded it was “difficult to see how the [Tories’] plans will tackle the real causes of worklessness.” And Shelter expressed concerns about the impact of the “brutal cuts” to housing benefit.
It is yet another example of the 1984 style Ministry of Truth tactics being pursued by this ConDem government that is trying to portray itself as the champions of the poor.
But the ConDem coalition has already…
• Cut the Future Jobs Fund
• Ended the Young Persons Guarantee
• Slashed funding for job centres
• Increased marginal tax rates for at least 85,000 of Britain’s poorest people as revealed in the Treasury’s Red Book
• Reduced tax credits and child benefit by changing the index from RPI to CPI
• Chopped entitlement to tax credits for families earning £50,000 down to just £30,000
No doubt Cameron will deploy the usual verbal contortions in his conference speech to convince people that he’s building a fairer society by making the same old Tory cuts. But the truth is Britain’s poorest people are being sacrificed on the altar of deficit reduction, just as they were in the 1930s, 1980s and 1990s.
Monday 4 October 2010
RMT ASK PM TO INTERVENE IN TUBE STRIKE
The RMT has written to the Prime Minister today to request that he personally inetervenes in the tube dispute.
This is the text of the RMT's letter:
Rt Hon David Cameron MP
Prime Minister
10 Downing Street,
London,
SW1A 2AA
Dear Mr Cameron
London Underground Dispute
We are writing to ask you to intervene to ensure direct talks take place between the trade unions and the Mayor of London.
We are taking this unprecedented step because the Mayor is more interested in using the dispute to shore up his standing amongst the Tory faithful than addressing the genuine fears of passengers and tube staff.
We hope you would agree that instead of barracking tube workers from Birmingham he should be listening to London and the real concerns of passenger, pensioner and disability groups who are saying the cuts on London Underground will disproportionately hit the more vulnerable in the capital.
Only last week the independent passenger group London Travel Watch warned,
“...we know that passengers feel safer and more secure with a staff presence and many passengers - the elderly, those with physical impairments or learning difficulties, as well as those unfamiliar with the system – will still rely on help to buy tickets. We are very worried that their needs will be neglected.”
This strike is not about "irresponsible militants” taking on the Coalition, it is about London Underground staff giving up a day’s pay to put safety first. Indeed, if the Mayor simply kept to his election promises regarding adequate staffing on London Underground there would be no dispute.
Only direct talks with the Mayor can solve this dispute because there has been a complete breakdown in trust with London Underground. Tube staff are asking if Boris Johnston lied to Londoners during his election about cuts to ticket offices how can they believe a word his managers are saying now?
Nonetheless we are prepared to sit down any time, any place with the Mayor to talk for as long as it takes to resolve this dispute.
We hope you agree that is the responsible approach and we look forward to hearing from you as a matter of urgency.
This is the text of the RMT's letter:
Rt Hon David Cameron MP
Prime Minister
10 Downing Street,
London,
SW1A 2AA
Dear Mr Cameron
London Underground Dispute
We are writing to ask you to intervene to ensure direct talks take place between the trade unions and the Mayor of London.
We are taking this unprecedented step because the Mayor is more interested in using the dispute to shore up his standing amongst the Tory faithful than addressing the genuine fears of passengers and tube staff.
We hope you would agree that instead of barracking tube workers from Birmingham he should be listening to London and the real concerns of passenger, pensioner and disability groups who are saying the cuts on London Underground will disproportionately hit the more vulnerable in the capital.
Only last week the independent passenger group London Travel Watch warned,
“...we know that passengers feel safer and more secure with a staff presence and many passengers - the elderly, those with physical impairments or learning difficulties, as well as those unfamiliar with the system – will still rely on help to buy tickets. We are very worried that their needs will be neglected.”
This strike is not about "irresponsible militants” taking on the Coalition, it is about London Underground staff giving up a day’s pay to put safety first. Indeed, if the Mayor simply kept to his election promises regarding adequate staffing on London Underground there would be no dispute.
Only direct talks with the Mayor can solve this dispute because there has been a complete breakdown in trust with London Underground. Tube staff are asking if Boris Johnston lied to Londoners during his election about cuts to ticket offices how can they believe a word his managers are saying now?
Nonetheless we are prepared to sit down any time, any place with the Mayor to talk for as long as it takes to resolve this dispute.
We hope you agree that is the responsible approach and we look forward to hearing from you as a matter of urgency.
Saturday 2 October 2010
BRITAIN’S POOR BEING SACRIFICED ON DEFICIT REDUCTION ALTAR
Reports in today’s newspapers suggest the ConDem coalition has agreed a £9 billion cuts in benefits after George Osborne and Ian Duncan Smith “struck a deal”.
Ian Duncan Smith is expected to make an announcement giving details tomorrow – Sunday. The reforms are expected to see the current welfare system replaced with a universal benefit with millions of welfare claimants having their benefits scrapped and replaced with one “universal credit”. Housing benefit, income support, incapacity benefit and dozens of other payments are set to go.
It remains to be seen how Ian Duncan Smith’s plans compare with Labour’s proposals for a ‘better off in work’ credit to ensure everyone would be at least £40 per week better off. No doubt we’ll hear warm words from IDS about how much he cares about poverty. But I was a Welfare Rights Officer in the 1980s and 1990s and I remember how the Tories impoverished millions of people with their callous welfare reforms. I also remember Nigel Lawson giving a £4bn tax handout to the UK’s richest families in 1988 while simultaneously cutting £4bn from the country’s poorest families.
That is why I’m extremely sceptical that the Tories will do anything to help the poorest people in Britain. David Cameron is apparently going to get in on the act. I hear he is planning to use the Tory party conference to say that there is a purpose to the pain of deficit reduction because Britain will emerge a fairer society following the spending cuts.
I’m not the only one to have expressed doubts about these Tory plans. When the Con Dem coalition launched the consultation about their plans they were criticised by the Institute for Fiscal Studies for “ducking difficult decisions”. The IFS concluded that the proposals were “likely to be accompanied by financial losses for significant numbers of families”. The Institute for Public Policy Research (IPPR) concluded it was “difficult to see how the [Tories’] plans will tackle the real causes of worklessness.” And Shelter expressed concerns about the impact of the “brutal cuts” to Housing Benefit.
It is yet another example of the 1984 style Ministry of Truth tactics being pursued by this ConDem government that is trying to portray itself as the champions of the poor.
But the ConDem coalition has already…
• Cut the Future Jobs Fund
• Ended the Young Persons Guarantee
• Slashed funding for job centres
• Increased marginal tax rates for at least 85,000 of Britain’s poorest people as revealed in the Treasury’s Red Book
• Reduced tax credits and child benefit by changing the index from RPI to CPI
• Chopped entitlement to tax credits for families earning £50,000 to just £30,000
No doubt Cameron will deploy the usual verbal contortions in his conference speech to convince people that he’s building a fairer society by making the same old Tory cuts.
The truth is Britain’s poorest people are being sacrificed on the altar of deficit reduction, just as they were in the 1930s, 1980s and 1990s.
Ian Duncan Smith is expected to make an announcement giving details tomorrow – Sunday. The reforms are expected to see the current welfare system replaced with a universal benefit with millions of welfare claimants having their benefits scrapped and replaced with one “universal credit”. Housing benefit, income support, incapacity benefit and dozens of other payments are set to go.
It remains to be seen how Ian Duncan Smith’s plans compare with Labour’s proposals for a ‘better off in work’ credit to ensure everyone would be at least £40 per week better off. No doubt we’ll hear warm words from IDS about how much he cares about poverty. But I was a Welfare Rights Officer in the 1980s and 1990s and I remember how the Tories impoverished millions of people with their callous welfare reforms. I also remember Nigel Lawson giving a £4bn tax handout to the UK’s richest families in 1988 while simultaneously cutting £4bn from the country’s poorest families.
That is why I’m extremely sceptical that the Tories will do anything to help the poorest people in Britain. David Cameron is apparently going to get in on the act. I hear he is planning to use the Tory party conference to say that there is a purpose to the pain of deficit reduction because Britain will emerge a fairer society following the spending cuts.
I’m not the only one to have expressed doubts about these Tory plans. When the Con Dem coalition launched the consultation about their plans they were criticised by the Institute for Fiscal Studies for “ducking difficult decisions”. The IFS concluded that the proposals were “likely to be accompanied by financial losses for significant numbers of families”. The Institute for Public Policy Research (IPPR) concluded it was “difficult to see how the [Tories’] plans will tackle the real causes of worklessness.” And Shelter expressed concerns about the impact of the “brutal cuts” to Housing Benefit.
It is yet another example of the 1984 style Ministry of Truth tactics being pursued by this ConDem government that is trying to portray itself as the champions of the poor.
But the ConDem coalition has already…
• Cut the Future Jobs Fund
• Ended the Young Persons Guarantee
• Slashed funding for job centres
• Increased marginal tax rates for at least 85,000 of Britain’s poorest people as revealed in the Treasury’s Red Book
• Reduced tax credits and child benefit by changing the index from RPI to CPI
• Chopped entitlement to tax credits for families earning £50,000 to just £30,000
No doubt Cameron will deploy the usual verbal contortions in his conference speech to convince people that he’s building a fairer society by making the same old Tory cuts.
The truth is Britain’s poorest people are being sacrificed on the altar of deficit reduction, just as they were in the 1930s, 1980s and 1990s.
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