Esther McVey talks shit (part 137)

“In the UK it is right that more people are ... going to food banks because, as times are tough, we are all having to pay back this £1.5 trillion debt personally which spiralled under Labour. We are all trying to live within our means, change the gear and make sure that we pay back all our debt which happened under them.”

Capita's runaway success story

'More than a year has passed since the UK Border Agency awarded a four-year, £30m contract to a private firm, Capita, to track down immigrants who have overstayed their visas in the UK. Hiring a private firm for a task that is normally the responsibility of the state did not escape criticism. “We are appalled the Government has offered a contract of this size to a private company,” Ruth Grove-White, policy director at the Migrants Rights Network, told The Independent.

The Border Agency calculated at the time that there were 174,000 immigrants who had overstayed. If Capita could find them, it would be a solid sign of the Government being tough on illegal immigration. Capita tried hard. It sent 39,100 text messages telling recipients that they had to leave as they no longer have the right to remain. The texts set off an avalanche of complaints, including those from people who had lived in the UK legally for years.

So how successful has Capita been, overall? Yesterday, while minds were focused on the Autumn Statement, the Home Office posted online the reply to a Freedom of Information request, which revealed that, after 14 months, the Capita contract had caused 4,160 people to depart these shores. So only about another 170,000 to go.

The good news is that the contract specified that Capita will be paid by results, which must have saved a pile of money.'

Independent

George Osborne promises coal or cash for ex-miners - as is their right

During a visit to Thoresby Colliery in north Nottinghamshire this afternoon, the Chancellor George Osborne announced that he would reverse the decision to cut the entitlement of former miners' winter fuel allowance. Mind you, he didn't quite put it like that.

Osborne said the government would guarantee 400 pit workers, who had recently been made redundant, a free delivery of coal every year worth £1,300 or £600 in cash instead. A further 1,000 retired workers will also get help under a concessionary fuel scheme dating back to the 1980s.

Mr Osborne said it was "important to support a group of people who through no fault of their own had lost out" and demonstrated the government's wish to support workers in all industries across the country. "I am determined to help those ex-miners so the government is going to step in and pay for the concessionary coal," he added.

However, Labour MP for Bassetlaw, John Mann, who has been campaigning to save the miners' fuel allowance, said ministers had "caved" in to pressure in the face of potential legal action. "The concessionary fuel allowance is a contractual obligation to be paid to former miners and in some cases their widows," he said. "It is not a benefit, but part of what these former miners are owed."

The National Concessionary Fuel Agreements were put in place between the state-owned British Coal Corporation and the mining unions in the 1980s. When British Coal was privatised in 1994, the government retained the obligation to provide concessionary fuel to former British Coal workers entitled to it. The responsibility passed to UK Coal when the company restructured its operations and changed its name in 2001.

Osborne later tweeted: "When UK Coal went bust ex miners lost their coal allowance. A very unfair situation I have put right today."

Give me strength.

Conservatives 'attempt to delete record of all party speeches from internet'

The Conservatives have attempted to erase from the internet a record of all party speeches given in the decade before they came to power, it has been reported.

Computer Weekly said the party had not only removed its archive of speeches and press releases from 2000 to its election in May 2010 from its own website, it had also struck them from the record of search engines such as Google.

The party was said to have used a robot blocker to force the Internet Archive - described as the public record of the web - to remove the entire record of speeches and news it had collected in 1,158 snapshots from the Conservatives' website since May 1999.

The magazine said: "The erasure had the effect of hiding Conservative speeches in a secretive corner of the internet like those that shelter the military, secret services, gangsters and paedophiles." [Sounds about right]

Computer Weekly said that since it had raised the issue with the San Francisco-based Internet Archive, some speeches had re-appeared on the site.

A party spokesman said that it wanted to keep its website as easy to use as possible.

"We're making sure our website keeps the Conservative Party at the forefront of political campaigning," the spokesman said in a statement.

"These changes allow people to quickly and easily access the most important information we provide - how we are clearing up Labour's economic mess, taking the difficult decisions and standing up for hardworking people."

The Independent

Iain Duncan Smith is no longer fit-for-work

What are Iain Duncan Smith's redeeming qualities? Today's public accounts committee report shines a spotlight on a department which is out of control. Bad news is ignored. Vast sums of money are authorised by personal assistants for work which has not always been specified. Up to £425 million has been wasted and may need to be written-off, including £140 million on IT equipment which is no longer suitable for the project. The left hand does not know, or even seem to care, what the right hand is doing.

Duncan Smith has undertaken the most ambitious restructuring of the welfare system in a generation and it is blowing up in his face. The report was one of the most damning to be published this year. Duncan Smith's response, according to the Times, was to demand MPs on the committee pin the blame on his permanent secretary, Robert Devereux.

It's all a day in the life for the work and pensions secretary, whose relationship with the truth is as tenuous as George Best's relationship with sobriety. He claimed the benefits cap had forced 8,000 people into work. This earned a slap on the wrist from the Office for National Statistics, which said it was not possible to find any causal link between the cap and those finding work. His response was very revealing.

"I have a belief I am right," he told Radio 4. "You cannot absolutely prove those two things are connected – you cannot disprove what I said. I believe this to be right. I believe we are already seeing people going back to work who were not going back to work until this group were capped." It's worth reading that quote twice. It is the product of a mind which is fundamentally unconcerned by reality, a loop playing constantly to itself.

It's just the tip of the iceberg. He said that every week half a million new jobs come through at the Jobcentre. This was false. He said Britain had the highest rate of jobless households in Europe. This was false. He said 70% of the four million jobs created when Labour was in office were taken by people from overseas. This was false. He claimed Shelter defined homelessness as two children sharing a room. This was false.

The list goes on and on. It's all part of a pattern that goes back to the start of his career, when Michael Crick found several inaccuracies in his CV. He said he had attended the University of Perugia, when it was in fact the  Università per Stranieri – an institution which did not grant degrees. He said he attended Dunchurch College of Management, when in fact it was weekend courses at GEC Marconi's staff college. 

Last week, the Supreme Court ruled Duncan Smith's back-to-work programme, which forced claimants to work for high street chains like Poundland for free, was illegal following a government appeal. It had failed to give recipients enough information about sanctions faced by people being told they had to work without a wage.

His response was to say that he was "very pleased that the supreme court unanimously upheld" his programme. "Ultimately, this judgment confirms that it is right that we expect people to take getting into work seriously," he added. Surely the British public are entitled to something less misleading than that? Is it too much to ask for even a hint of contrition for having broken the law, rather than rank evasion and a steadfast refusal to accept fault?

He went out of his way to smear the reputation of Cait Reilly, a 24-year-old who brought the case. Reilly had been volunteering at a Birmingham museum, hoping it would one day turn into a paid position. She was not overly keen on dropping that voluntary role to work for free in Poundland. Duncan Smith went on television and suggested she was part of "a group of people out there who think they are too good for this kind of stuff". For a secretary of state to treat a young person in this way is unspeakable.

Cynicism and Machiavellianism are common traits in politics. Many of the greatest politicians, from Churchill downwards, have been quite capable of making a case by focusing relentlessly on the attributes which most flatter them. But the smears against young people trying to make their way, the casual misuse of the facts, the glib indifference to the proper functioning of a system which affects the lives of the least privileged, is of a different magnitude altogether.

He's not even smart enough to pull it off. Matthew D'Ancona's history of the coalition sees George Osborne comment that "you see Iain giving presentations and realise he's just not clever enough". Last month John Major warned that the work and pensions secretary's welfare reform programme was "enormously complicated". He went on: "Unless he is very lucky, which he may not be, or a genius, which the last time I looked was unproven, he may get some of it wrong."

Duncan Smith's reply was belligerent, inelegant and supremely thin-skinned. "Well, as I say, I never really get too fussed about what people think about their own intellects," he said. It is, you may have noticed, a sentence which means nothing. Or, at best, is so lacking in meaning as to not be worth saying. "I'm always happy to be in awe of someone whose own intellect delivered us the cones hotline, I must say." The reference to Major's silliest policy was childlike and out of place. Barely anyone even remembers the cone hotline. But seeing as he wishes to reflect on the past, perhaps his audience should do so too.

Think back. When did Iain Duncan Smith ever achieve anything? Even Osborne, who plunged this country back into recession, can at least point to that time he called Gordon Brown's bluff on an election.  Duncan Smith has been at the frontline of British politics for years and he has nothing to show for it.

He was the most incapable leader of the Conservative party in recent memory. He was inadequate in PMQs and his conference flourish that "the quiet man is turning up the volume" is still the butt of jokes a decade later. His comment to the mutineers in his own party was just as weird, but a little darker: "My message is simple and stark, unite or die". They chose to do neither.

Expelled from the leadership, he seduced the easily seduced by using the words 'social justice' while promoting an aggressive Victorian-era programme which had more to do with a glorified notion of the Protestant work ethic than practical solutions to poverty and welfare-dependency. And now he smears his opponents, whether they be MPs, young women trying to find work or the massed ranks of the unemployed recast as feckless scroungers.

We might worry less about his own personal failings if they were not being replicated with such uncanny precision at his department. But the refusal to hear bad news, the siege mentality, the waste of funds, the arrogance and bullying with which welfare reform is being pursued are all indistinguishable from the character of the man presiding over it.

Ian Dunt, Talking Politics, Yahoo News

The NHS under David Cameron

Since coming to power in May 2010, the Coalition has axed 14,650 health workers, at a cost to the taxpayer of £395 million. One couple received almost £1m in redundancy payments, only to be re-hired by the NHS three months later. The Tories blame the contracts put in place by the last Labour government. That's the Tories who, at any other time of the year, break the rules and change the law as and when it suits them • Mirror 

More than 10,000 NHS managers have seen their pay rise by 13 per cent in four years, with increases last year at three times the rate for nurses, official figures disclose • Telegraph 

How the new NHS boss has helped ruin health services on two continents • Morning Star 

"I love our NHS, and I never want to do it any harm." David Cameron, July 2013

Conflict of incest: Energy minister Ed Davey and the brother who advises the energy industry

In 2012, upon being appointed to the Cabinet, Energy Secretary Ed Davey declared his brother's close links to the energy industry. Henry Davey is a partner at the energy department of leading London law firm Herbert Smith and has handled huge deals for the likes of Petrobas, Centrica and EDF. He has also been involved in briefing reports on Feed-in Tariff cuts for solar power and UK electricity market reforms.

Henry Davey is a corporate partner at Herbert Smith, where he leads the oil and gas team and has been advised on multi-million pound deals for corporations such as Petrobas. His website biography reads: “Henry has over 20 years' experience in the international energy industry, where he has advised on mergers and acquisitions. His practice encompasses energy mergers and acquisitions including electricity generation, distribution and transmission assets.”

The law firm, based in the City of London, claims it specialises in the acquisition and disposal of both upstream and downstream assets in the oil, gas and power markets. Henry Davey is credited for the following deals:

• Macquarie Bank on its acquisition of Wales & the West Gas Distribution Network from National Grid Transco in the UK for £1.2 billion

• EDF on the trading contracts relating to the acquisition of British Energy

• MidAmerican/Northern Electric on the £1.2 billion swap of its UK electricity and gas supply and metering businesses to Innogy for the acquisition of Yorkshire Electricity's distribution business

• Seeboard on the sale of their UK metering business to Invensys

• OFGEM on the establishment of the UK's offshore electricity transmission network

Other clients listed by Herbert Smith include BG Group, BP, Chevron, EDF, ENRC, Essar Group, Gazprom Neft, Mitsubishi Corporation, Mitsui, Rio Tinto, Sojitz and Tata Group.

Department of Energy and Climate Change officials insist that the relationship will not compromise Ed Davey's work on energy issues in the Cabinet. A spokesman said (in February 2012): "He has provided his Permanent Secretary with a full list of his interests, including details of his brother’s employment, which will be published in the List of Ministers’ Interests. Appropriate safeguards are being put in place to avoid any conflicts of interest."

Click Green/Mail Online/BBC News

Dr Martens for sale

The family owners of Dr Martens are on the verge of a £300m windfall as part of a deal to sell the famous boot brand to a private equity firm. Permira, which already owns high street names including New Look and Hugo Boss, is understood to be in advanced talks with the Griggs family, owners of Dr Martens since 1960.

Brighton 1986

Sources close to the deal said it could be completed within a month and it would be the second time the company has been put up for sale in the last two years. R Griggs Group held an auction last year but failed to attract high enough bids, despite interest from major investors and businesses.

Bill Griggs took control of the business in 1960 after reading an advertisement placed by Germans looking for investment in their air-cushioned sole. Originally the boots were designed as workwear for men but the comfortable soles made them a big hit with housewives. The first Dr Martens boots in the UK came out on 1 April 1960 and were popular with uniformed workers. They soon found their way into youth subculture and have become synonymous with skinheads, mods and punks. Over 100 million pairs of Dr Martens shoes were sold between 1960 and 2010.

Profits are expected to hit £30m this year with boots, shoes and accessories sold in 63 countries across the world, a decade after the company almost went bankrupt. It was saved by moving work to China and shutting down UK factories, leading to hundreds of job losses.

Ministers u-turn on slimmer standards regime

Ministers have been accused of politicising the standards regime after trade union members were singled out in a u-turn on the recently slimmed down standards regime. The Department for Communities & Local Government has issued new advice to councils emphasising that codes of conduct should require members to declare if they are members of a trade union just over a year after it scrapped the same legal requirement.

Announcing the new advice, local government minister Brandon Lewis (Con) said that “for too long residents have been kept in the dark about what union affiliations their councillors hold”. However, standards experts have pointed out that a requirement to declare trade union members existed as recently as 14 months ago but were scrapped by Mr Lewis’ government.

Paul Hoey, a standards adviser and the former head of strategic relations for the Standards Board for England, said it was incorrect for the government to herald this as a “new requirement”. He said: “It was actually a requirement under the previous code of conduct which the government got rid of last year.”

The national code of conduct which did require councillors to declare trade union membership, among other things, was scrapped last year along with the Standards for England board after ministers battled to introduce a lighter touch standards regime.

The government’s new guidance and illustrative code of conduct indicates a rethink on the part of ministers, although Mr Hoey warned that councils could ignore the latest advice. He added: “The government can say what it likes in guidance but people don’t have to do it. In fact, some councils did keep that requirement [about trade union membership] in and that was the sort of thing that Bob Neill was criticising as gold plated just a few months ago.”

DCLG’s official update aimed squarely at trade union members comes shortly after it lost a legal battle with the Public and Commercial Services union. The advice was also published two days before the opening of the Labour conference where the party’s links to trade unions are expected to come under scrutiny. 

One local government standards and legal expert who did not want to be named said the government was politicising the standards regime. Ministers were “compounding the standards mess with more confusion based again on political prejudice, rather than evidence based discussion”, he said. “This is simply bad governance from central government. Even to only the most mildly cynical, it suggests that this government is only interested in ethical standards if it suits their politics.”

A department spokesman could not tell LGC if there was evidence of councillors hiding their trade union membership. The spokesman said there was no link between the timing of the publication of the guidance and the Labour conference and he dismissed suggestions that the publication indicated a politicisation of the civil service.

Unions have criticised the government but also argued the move is meaningless because councillors were proud of their links to trade unions. Heather Wakefield, Unison’s head of local government, described the singling out of trade union members as “outrageous” and said it should apply equally to members of any trade body or pressure group.

Brian Strutton, GMB national secretary for public services, said it was a “damp squib” as it was “requiring councillors to declare their trade union membership seemingly oblivious to the fact that they already do. While this is clearly meant to be another Tory attack on trade unions it will achieve very little because trade unions and councillors have nothing to fear from openness and transparency, unlike the Conservative party who won’t even admit how few members they have.”

A spokesman for the DCLG described the standards board as a “a discredited regime that cost taxpayers millions and was the refuge for malicious trouble makers. The new guidance on councillors’ interests makes clear that trade union membership should be declared to avoid conflicts of interest when councils consider issues directly affecting trade unions, such as reviews of taxpayer-funded subsidies”.

Local government minister Brandon Lewis said residents had been “kept in the dark about what union affiliations their councillors hold” for too long. “All councillors should disclose all their personal and financial interests on a public register, including registering union interests. Given the public debate about ‘facility time’ and ‘pilgrims’ in local government, it’s vital that conflicts of interest are avoided. These transparency reforms will give local people the confidence that their councillors are putting residents’ interests before their own.”

Ruth Keeling, Local Government Chronicle

22 Reasons for the Bedroom Tax

Because the Badgers are moving the goalposts.
The Ferrets are bending the rules.
The Weasels are taking the hindmost.
The Otters are downing tools.

The Hedgehogs are changing the game-plan
The Grass-snakes are spitting tacks.

The Squirrels are playing the blame-game.
The Skunks are twisting the facts.

The Pole-cats are upping the ante.
The Foxes are jumping the gun.
The Voles are crashing the party.
The Stoats are dismantling the Sun.

The Rabbits are taking the biscuit.
The Hares are losing the plot.
The Eagles are kicking the bucket.
The Rats are joining the dots.

The Herons are throwing a curveball.
The Shrews are fanning the flames.
The Field mice are sinking the 8-ball.
The Swans are passing the blame.

And the Pheasants are draining the oil from the tank-
but only the Bustards have broken the bank.

Carol Ann Duffy

Labour reshuffle - the new shadow cabinet

Labour has just released details of Ed Miliband's shadow cabinet reshuffle. A spokesman says Miliband is keen to point out that he is promoting talented young women. Here are the details:

• Rachel Reeves becomes shadow work and pensions secretary. She was shadow chief secretary to the Treasury.

• Gloria De Piero becomes shadow minister for women and equalities.

• Emma Reynolds becomes shadow housing minister. She will attend shadow cabinet. She was shadow Europe minister.

• Tristram Hunt becomes shadow education secretary. He was a shadow education minister.

• Stephen Twigg, the former shadow education secretary, becomes a shadow minister in the justice team, responsible for constitutional affairs.

• Chris Leslie becomes shadow chief secretary to the Treasury. He was a shadow Treasury minister.

• Vernon Coaker becomes shadow defence secretary. He was shadow Northern Ireland secretary.

• Jim Murphy becomes shadow international defence secretary. He was shadow defence secretary.

• Ivan Lewis becomes shadow Northern Ireland secretary. He was shadow international development secretary.

• Maria Eagle becomes shadow environment secretary. She was shadow transport secretary.

• Mary Creagh becomes shadow transport secretary. She was shadow environment secretary.

• Michael Dugher becomes shadow Cabinet Office minister. He also takes charge of political and campaign communications.

• Douglas Alexander, the shadow foreign secretary, also becomes chair of general election strategy. He will be responsible for election strategy and planning.

• Spencer Livermore, a former aide to Gordon Brown, has been appointed general election campaign director. He will start work later this year.

• Liam Byrne, the former shadow work and pensions secretary, joins the shadow business team, with responsibility for higher education and emerging markets.

• Lord Falconer, the former Lord Chancellor, will advise on planning and transition into government.

A Labour spokesman said that of the 32 people who now attend shadow cabinet, 14 (or 44% are women). And around a third of those attending shadow cabinet are from the 2010 intake.

Guardian

Planetpmc on Flipboard

There's now a new way to keep up with the stories that have grabbed my attention: DECORUM is my 'magazine' on Flipboard, a picturesque journey through the headlines with links to the original articles. It replaces all your Saturday supplements and Sunday magazines but doesn't quite cook you brunch. On the front page is a link to the app for tablets and mobiles which produces a neat little plaything. It's not perfect but will come in useful when time is short. Enjoy!

Planetpmc on Facebook, Twitter and now Flipboard

Also on Flipboard:
The U-turns of David Cameron's government

DWP looking at making it harder for sick and disabled to claim benefits

Iain Duncan Smith is examining how to make it harder for sick and disabled people to claim benefits, according to leaked documents from the Department of Work and Pensions.

The powers being discussed also include forcing sick and disabled people to take up offers of work. If those with serious but time-limited health conditions refuse the offer, DWP staff would then have the power to strip them of their benefits.

The revelation comes as the DWP told the Guardian it had indefinitely postponed a week-long staff "celebration" of a new, tougher sanctions regime for more than a million job seekers.

Guardian

DWP attempt to obtain NHS data rings 'alarm bells'

The Department for Work and Pensions attempted to obtain access to confidential patient data so that it could be linked to information about employment, tax credits and benefits claims, the Health Service Journal has learned.

Privacy campaigners said news of the abortive attempt “should be ringing alarm bells”, and warned that such activities by government departments could undermine public trust in the NHS. The DWP, however, insisted that it had intended to use the data only for “research purposes”, and to anonymise it “at the earliest possible opportunity”. 

The DWP application, unreported until now, was rejected by the then NHS Commissioning Board’s ethics and confidentiality committee in December. Minutes of the committee meeting, uncovered by HSJ, said: “This application detailed the linkage of DWP, HM Revenue and Customs and National Treatment Agency data. This linkage would enable analysis of the effect that drug use has on employment [and] understanding of the role that employment plays in the recovery journey, and would help build a cost benefit case for further investment in employment support for this group.”

Access to “confidential patient information was requested to allow National Drug Treatment Monitoring System data to be transferred to DWP with an identifiable unique reference attached,” the minutes added. The minutes said this would allow the data to be linked to specified HMRC and DWP data relating to employment, tax credits and benefit claims. Committee members expressed concern that the medical purpose for the requested access was “not sufficiently defined”, and the request was turned down. 

Phil Booth, coordinator with privacy campaign group medConfidential, said: “That government departments are already seeking to access highly sensitive patient information for non-medical purposes should be ringing alarm bells.” He added that such activities could undermine trust in the NHS and could lead to patients “withholding information or simply not seeking the care they need”.

A DWP spokesman said: “To better understand the recovery journeys of people with a drug or alcohol dependency, we draw on all available information, ensuring that legal and ethical procedures are followed at all times. Our plans were for the data to be anonymised at the earliest possible opportunity and only used for research purposes to understand the benefit and employment journeys of people in treatment.

“The DWP continues to work closely with organisations including Public Health England and drug and alcohol treatment providers to ensure our policies are based on the most robust evidence possible and we can help transform the lives of the most disadvantaged people, including those with a drug or alcohol dependency.”

James Illman, Health Service Journal

Osborne has now been proved wrong on austerity

The UK economy is recovering. The government is vindicated. Its critics should crawl into a hole. This, in essence, is what George Osborne, the chancellor of the exchequer, claimed in a rousing speech delivered earlier this month. In particular, he argues, Plan A has worked. Those who have been advocating a Plan B – slower fiscal tightening – have proved to be wrong. Here, then, is my response.

Yes, the economy is recovering. But the performance since Mr Osborne took office in May 2010 has been dismal. Over three years, the economy has grown by a cumulative total of 2. 2 per cent. In June 2010 the Office for Budget Responsibility forecast that the economy would expand by 8.2 per cent between 2010 and 2013. The real figure may end up being a third of that. In the second quarter of this year, gross domestic product was still 3.3 per cent below the pre-crisis peak and 18 per cent below its 1980-2007 trend – the slowest British recovery on record.

Financial crises do cause havoc. That explains some of this awful performance. But Spencer Dale and James Talbot of the Bank of England have shown that UK performance is dismal even by the standards of other crisis-hit, high-income economies. The eurozone has performed as badly as the UK. But, given the mess there and the UK’s control over all policy levers, that is hardly something to boast about.

Mr Osborne can (and does) point to a strong labour market performance. This has been a saving grace for Britain. Had the UK enjoyed normal productivity performance, unemployment might now be more than 15 per cent. Unemployment has remained low because labour productivity has now fallen back to 2005 levels. That is hardly something to boast about.

Mr Osborne responds that fiscal policy did not cause the dismal under-performance. That was due to inflation shocks and the eurozone. Since Mr Osborne was a cheerleader for the eurozone’s austerity, he cannot wash his hands of all blame. But the more important point, as Simon Wren-Lewis of Oxford University has pointed out, is that the debate is not about what caused the unforecast slowdown. What matters is whether the economy has been weaker with austerity than without it.

Little doubt exists over the answer to this question. With interest rates at the zero bound, austerity weakened the economy relative to what might otherwise have happened. The question is only how much it has done so. It is impossible to know counterfactuals. But Oscar Jordà and Alan Taylor of the University of California, Davis, concluded that in 2013 UK GDP will be about 3 per cent smaller than it would otherwise have been. Is that right? Nobody knows. But it is in the right direction.

Oh no, it is not, proponents of austerity respond. This ignores the fact that the programme delivered credibility and lower interest rates. In the febrile circumstances of 2010, when people thought, foolishly, that the UK might become Greece, that view might have made some sense. But it soon became clear it did not. In June 2010, the OBR forecast cumulative net borrowing of £322bn between 2011-12 and 2015-16. In March 2013 this was up to £564bn. In June 2010 the structural current budget was forecast to be in surplus by 2014-15. By March 2013 this had slipped two years. In June 2010 the ratio of public sector net debt to GDP was forecast to start falling in 2014-15. By March 2013 this had moved back to 2017-18. The peak level of net debt also jumped from 70.3 per cent to 85.6 per cent of GDP. Yet the impact of this slippage on long-term interest rates was zero. Only improved prospects for recovery and so of earlier rises in short-term rates raised longer-term rates.

So the chancellor had other options. As I have argued before, he could have stuck to the same plans for current spending, while temporarily lowering rather than raising value added tax. He also could have taken advantage of low borrowing rates to increase rather than reduce public investment. In fact, he is too hard on himself. He has allowed the fiscal position to slip and used the public balance sheet to support investment and the housing market. Call it Plan A minus. But he could certainly have been more deliberate and aggressive about it.

To this the chancellor would reply that none of this matters because the economy is recovering strongly anyway. Moreover, he insists, his critics thought this was impossible. But nobody thought recovery would never happen under austerity, merely that it would be damagingly delayed. The politics of this policy may not be too bad for Mr Osborne if the unnecessarily slow recovery becomes a faster bounceback in the run-in to the 2015 election. But it is hard to see an economic case for it.

One thing ought to be quite clear: the fact that the economy grows in the end does not prove that needlessly weakening the recovery was a sound idea. This has been an unnecessarily protracted slump. It is good that recovery is here, though it is far too soon to tell its quality and durability. But this does not justify what remains a large unforced error.

Martin Wolf, Financial Times

'Captain Invisible' replaced: Sir David Higgins named as new HS2 chief

HS2’s chairman Doug Oakervee has been dumped in favour of the knight who led the construction of the London 2012 Olympic Park. Sir David Higgins, who will earn almost £600,000 a year, will take up his new role in January. The Australian is currently chief executive at Network Rail, which looks after Britain’s existing rail infrastructure, and has been praised for restructuring and commercialising what has been viewed as a cumbersome, costly organisation. 

Sir David said: “HS2 is vital for both passengers and the economy and will put the UK in a different league in terms of infrastructure. My first priority will be to rigorously scrutinise costs to ensure they remain under control.” His appointment suggests that Cameron and Osborne are determined to win over the doubters. Sir David was awarded a knighthood for bringing in the Olympics under budget and on time following a difficult start that had seen costs wildly underestimated.

HS2’s current chairman Doug Oakervee, dubbed “Captain Invisible”, will leave at the end of the year. He has endured a dreadful summer in which it has been claimed that the project could end up costing £80bn, while one-time supporters including former Chancellor Alistair Darling have had second thoughts about its merits. Mr Oakervee, 72, has dismissed HS2’s hundreds of thousands of opponents as a “quite vociferous small minority”.

Rachel Reeves didn't say 'people on £60,000 aren't rich' - The Telegraph did!

Rachel Reeves has reason to feel hard done by this morning as hundreds of people take her to task  for saying that people who earn £60,000 a year aren't rich. However, Reeves didn't quite say that.

Following an interview with The Telegraph, Tim Ross, Mary Riddell and James Kirkup came up with the headline "People on £60,000 aren’t rich, says Labour's Rachel Reeves". But that's not what Reeves said at all. What she tried to explain was that you'd have a hard time trying to convince people in London and the south-east on salaries of £50-60,000 that they were rich, given the amount of money they had to pay out every month. And that people earning this amount were just as angry as lower-paid workers about the highest earners getting a tax cut. Reeves's problem, however, is that she didn't put it that effectively and her statement has been deliberately misconstrued by The Telegraph - and then repeated all over the media.

Here are the appropriate paragraphs from the interview:

“I think the focus should be on those privileged few right at the top, and that’s not people earning £50,000 or £60,000 a year,” Miss Reeves said in an interview with The Telegraph. “We don’t have any plans or desire to increase taxes amongst people in that band of income.”

The Liberal Democrats have said they would find the money by taxing the richest, which a leaked party document suggested meant anyone earning more than £50,000. 

Miss Reeves said that it was wrong to consider such people as “rich”. [?]

“If you’re a single-earner family in London or the South East on £50,000 or £60,000, you don’t feel particularly rich and you’d be equally aggrieved that people earning between £150,000 and £1 million are getting a tax cut at the same time your taxes are going up.”

Not quite the same as 'people on £60,000 aren't rich'.

A Labour government would scrap Osborne's shares-for-rights scheme

The much-criticised shares-for-rights scheme, and effective tax cuts for hedge funds, would be scrapped under a Labour government, Ed Balls will say on Monday as he attacks George Osborne for “standing up for a privileged few”. The shadow chancellor will seize on these – as well as touching on the 45p tax rate – as evidence of how the chancellor and David Cameron are out of touch with ordinary people and too cosy with those who have the most in society.

“David Cameron and George Osborne have been happy to write cheques on behalf of the taxpayer to their friends and Tory party donors. They’ve been standing up for a privileged few while ordinary families have struggled with a cost of living crisis,” Mr Balls will say when he takes to the stage at the Labour party conference in Brighton.

Mr Osborne has made great play of the shares-for-rights scheme, which he unveiled to great fanfare at the Tory conference last year. But the scheme, which allows workers to receive shares in return for giving up some employment rights, has come under fire from businesses and think-tanks which have warned that it could end up as little more than a tax dodge for private equity companies.

“The shares-for-rights scheme also seems to have become a tax avoider’s charter. As the OBR has pointed out, it could end up costing the Treasury up to £1bn. We should be cracking down on tax avoidance, not opening new ways for it to happen,” Mr Balls will say.

Earlier this week, the Financial Times reported that managers of Whitworths, the century-old supplier of dried fruits and nuts, had become one of the first adopters of the scheme. Eight of its executives were offered “shares for rights”, worth up to £50,000 each, by its new private equity owner Equistone.

The Liberal Democrats, meeting for their conference in Glasgow, said they, too, would campaign to scrap the scheme at the next election. One Lib Dem minister called it “half-baked nonsense”.

Mr Balls also plans to cut the £145m tax cut offered to hedge funds in the last Budget and will tell delegates that he plans to use the “hundreds of millions of pounds” in savings to “focus resources on our priorities”.

The party is also expected to announce a reversal of the so-called “bedroom tax”, which reduces benefits to those living in council homes with spare rooms.

Elizabeth Rigby, Deputy Political Editor, Financial Times

RMT: It's Tory cuts ruining the tracks, not Network Rail

The National Union of Rail, Maritime and Transport Workers (RMT) has reacted angrily after a government minister tried to shift the blame for failing track renewals away from Tory cuts and onto Network Rail. During an interview on BBC Radio 4's Today programme, transport minister Norman Baker said that Network Rail was failing to carry out regular repairs. His comments followed the release of a report from the Office of Rail Regulation (ORR) which found Network Rail had failed to deliver on government funding plans to renew Britain's railways.

"They've taken their eye off the ball on the day-to-day maintenance of the network, which is leading to an increased number of overruns on engineering works and unnecessary delays for passengers as a consequence of minor failures in the network," Baker said. "The rail regulators have set out very clearly their concerns. They can require Network Rail to adjust their programme and that's what they are doing."

RMT rubbished the claims that Network Rail had paid "inadequate attention" to areas such as embankment and drainage systems, blaming funding cuts imposed by the government. "RMT has been warning for some time that we are facing a major crisis on rail maintenance and renewals with lethal consequences, driven by the demand for cuts from the government and their agents the ORR, who are both regulator and budget holder," said RMT general secretary Bob Crow. "More cuts are planned under the government's McNulty rail review and the latest financial settlements. With staffing levels and capacity already hacked to the bone this is a crisis set to get worse."

Baker said the government thought the solution was to "have much greater co-ordination between Network Rail and the train companies." However, he ruled out the creation of "vertically integrated" companies responsible for both trains and tracks in the different regions of the country. Meanwhile, Crow called for another way to end the crisis: "The solution is simple: call off the staffing and capacity cuts, end the fragmentation and profiteering of privatisation and renationalise our railways as a single entity."

In response to the ORR report, Network Rail said it had experienced "increased congestion due to growing demand for travel."

Ryan Fletcher, Morning Star

Government proposals spell the end of a universal postal service

Responding to the announcement that the Government intends to push ahead with the privatisation of Royal Mail, Mario Dunn, campaign director of Save Our Royal Mail, said:

“This is a good day for city bankers and share dealers but a bad day for Royal Mail’s customers. People in rural areas, small businesses and the elderly are all particularly vulnerable to what will be the inevitable price rises and rural service reductions.

“Privatising Royal Mail fires the starting gun on the race to end the universal postal service as we know it. A privately owned Royal Mail will not want to maintain loss making rural deliveries. The 2011 Postal Services Act allows it to opt out of delivering loss making services.

“With price caps removed the consumer protections in place are extremely flimsy. It will not be long before we begin to see the worst excesses we have come to associate with other sectors such as banking”.

Latest polling shows that 70% of the British public oppose the sale of Royal Mail. The Government should listen to the public and halt this.

Save Our Royal Mail press release - 12th September 2013

Compulsory national service to be debated in Parliament next year

A bill to reinstate compulsory national service for 18 to 26-year-olds is set to be debated in Parliament early next year.

Kettering’s Conservative MP Philip Hollobone, who sponsored the bill, is convinced that some form of service for youngsters, be it charitable work, care for the elderly, work linked to the NHS or participation in the armed forces, would help instil a greater sense of ‘self-respect, personal reliance, discipline and behaviour’ into society. “I believe that the introduction of a modern form of national service would prove popular with the public and be of immense benefit to the young people who take part,” he explained.

The scope of the scheme would include ‘instruction in personal financial budgeting, household bills, nutrition, cooking, time-keeping, life skills, tolerance towards others, treating elderly and disabled people with dignity and respect’ and teaching in basic aspects of the law relating to the most common offences involving young people. Those with severe mental or physical disabilities would be exempt from the one year full-time scheme, to be undertaken before the age of 26 in order to avoid committing an offence.

Hollobone, who is also arguing for facial coverings such as burkas to be banned in public, was due to have his National Service Bill debated in Parliament last Friday, but this was rescheduled to late February. Acknowledging that his Bills are highly unlikely to become law, Hollobone said: “Unfortunately, the arcane nature of parliamentary procedures surrounding private members’ bills and the lack of time they have for debate will mean that the merits and demerits of the Bill are unlikely to be debated and voted upon.”

Nevertheless, a Change petition to stop the Bill progressing through Parliament has been set up by Falmouth activist Debbie Sayers. Arguing that young people ‘should be able to choose their own futures’. An extract from her statement reads: “It is unacceptable to force any person to engage in training that has mandatory residential elements, military training or actual service in the military without the ability to refuse. We do not want our children and grandchildren to fight and die in wars, or in training that they or we have no control over.”

The Independent

Ministers face revolt by Tory MPs over Army cuts

Ministers are facing a revolt by Conservative MPs over plans to cut the size of the regular Army by 20,000 while boosting the numbers of reservists.

• Tory MP John Baron claims the plans were motivated by cost and not by an awareness of the challenges troops will face in the future.

• MPs say in a letter that ministers have failed to give them “comprehensive answers” and have called for full details of planned cost savings.

Telegraph

Cameron's attempt to put an end to "benefit tourism" undermined by lack of evidence

• A House of Lords committee points out that despite several requests the government has failed to offer anything more than anecdotal claims.

• The European commissioner for employment and social affairs said: "It is important that policy ... is based on facts rather than gut feelings or perceptions."

• A further report concludes that any measures restricting the free movement of migrants would have a devastating effect on the British economy.

Guardian

See also Channel 4's FactCheck report ‘Benefit tourism scare sent packing' from September 2011.

21,000 NHS jobs lost over the last three months

Commenting on the latest labour market figures published today by the Office for National Statistics, TUC General Secretary Frances O'Grady said:

'These figures show how government cuts are continuing to hit vital front-line services with 21,000 jobs lost in the NHS over the last three months alone. Despite the Chancellor's boasts this week, austerity is continuing to cause damage and we are far from a strong and sustained jobs recovery.

'While the headline figures show small improvements, youth employment has fallen sharply and long-term unemployment is still rising. There are also still record numbers of people trapped in involuntarily part-time work with underemployment continuing to soar.

'Across the economy ordinary people are yet to feel the benefits of tentative growth, with wages rising around three times slower than prices.'

What were Iain Duncan Smith's 'welfare reforms' really about?

Whatever Iain Duncan Smith meant by his assault on benefits, it has failed – and the government's rhetoric has frightened the most vulnerable in the process.

But no welfare reform is failing more damagingly or harming more vulnerable people than the national rollout of employment and support allowance (ESA) and the now infamous Atos work capability assessment.

Sue Marsh assesses the Secretary of State for Work and Pensions and finds him unfit for purpose.

• Guardian

Danny Alexander accused of protecting constituency from austerity

By Kiran Stacey, Political Correspondent, Financial Times

Treasury chief secretary Danny Alexander has been accused of protecting his own constituency from the austerity that the coalition is enforcing elsewhere in the country. The Liberal Democrat has helped ensure that his Highland constituency has benefited from tens of millions of pounds’ worth of government help since he became chief secretary. Opponents say that amounts to pork barrel politics.

A Financial Times’ investigation has found many examples of public support for schemes and projects helping Mr Alexander’s Inverness seat, where Labour is expected to mount a strong challenge at the 2015 election. They include funding for a tourist railway, a bailout for the London-Scotland sleeper train, tax breaks for ski lifts and a generous allocation from the pot to fund exemptions from the so-called “bedroom tax”.

Labour attacked the cabinet minister on Sunday for protecting his own seat from the effects of austerity being felt elsewhere. Chris Leslie, Labour’s shadow financial secretary to the Treasury, said: “This is very fishy indeed. It seems to be more than a coincidence that, at a time of austerity, funding has gone from the Treasury to so many specific projects that just happen to benefit Danny Alexander’s constituency. The chief secretary seems to be happy pushing through deep tax rises and spending cuts across the rest of the country, so long as his backyard is protected.”

Treasury money has been put into pots that directly benefit Mr Alexander’s local area twice in the past week. The first was the fund given to councils to allow them to exempt some residents from paying the so-called bedroom tax. Highland council, which represents an area whose three MPs are all Liberal Democrats, received £735,000 from the fund aimed at rural authorities, equivalent to 15 per cent of the total pot, which was shared among 21 councils. The next highest award was to Aberdeenshire, which received £412,000.

David Alston, Liberal Democrat deputy leader of Highland council, made it clear Mr Alexander had played a personal role in the allocation. Mr Alston told his local paper: “This 400 per cent increase in support follows our meetings with Highland MPs Danny Alexander, John Thurso and Charles Kennedy.”

In the second case, Mr Alexander said he wanted to extend a fuel rebate scheme for people living on British islands to remote inland areas, including the Highlands, despite concerns that this might break EU rules. The two incidents continue a pattern of Treasury giveaways for Inverness and the Highlands since the coalition took power.

The government last year announced an extra £32m for superfast broadband in rural areas in Scotland. Another example was found in the 2012 Budget, which included a 5 per cent rate of value added tax for “cable-based transport systems carrying fewer than 10 people”. The ski lifts taking passengers up the Cairngorm mountain near Inverness were one of the few recipients of this tax break. Mr Leslie said: “When everyone else is paying higher VAT, is it really a priority to give a big VAT cut to ski-lift operators?”

A tourist train running up the same mountain also benefited in 2011 when the Treasury exempted any “non-public service rail operators” from the climate change levy, despite concerns that this might break EU state aid rules. One Whitehall official said the Cairngorm tourist train had been the only project which fitted that definition. In the same year, the government also pledged £50m to save the overnight sleeper train from London to Scotland, which terminates at Inverness.

The Treasury said: “It is right that the government recognises the significant challenges for those living in rural communities up and down the country and does what it can to support them.” A senior Liberal Democrat said: “This is the pay-off. Danny is loyal to George [Osborne, the chancellor], and this is what he gets in return.”

Financial Times

Andy Burnham: UK's finest asset the NHS is in sick hands

On July 5, 1948, the great Nye Bevan opened his National Health Service at Trafford Hospital. Sixty-five years and six days later, his successor Jeremy Hunt, who is not fit to lace his boots, scurried to the House of Commons to announce the closure of its A&E in a major downgrade, without having the courtesy to inform the local MP Kate Green.

Hunt’s advisers found time to give the Murdoch empire market-sensitive information but he could not be bothered to tell Kate about the closure. Not only does that tell you everything you need to know about the man, there can be no clearer sign of this Government’s disregard and disrespect for the NHS and those who rely on it.

While Labour cherished and nurtured the NHS, this ­Government carves it apart. And it is patients who are paying the price for the monumental mismanagement of hospital reconfiguration.

This Government pledged a moratorium on hospital closures. That promise must go down as one of the most cynical and dishonest of modern times. The biggest crime of all is robbing a community of a successful A&E to solve the ­problems of the Government’s own making.

Where changes can be shown to save lives Labour will always support them. But we will never allow communities to be picked off by an arrogant government that is hellbent on the destruction of our country’s finest asset.

Andy Burnham MP, Shadow Health Secretary

An open letter to our overpaid, under-worked, trough-snuffling MPs

Dear MPs,
How are you? What’s it like up there? I do hope the cuckoos and clouds aren’t bothering you too much. Down here on Planet Earth things are a bit different. Everyone has less money than they used to, will be working for longer, and all our services – health, schools, roads, councils – are being cut back. It’s generally accepted that we are, in fact, on our arse.

It has now come to our attention that you have been recommended for a pay rise. Not the 1% which is the most any other public servant could expect (and most of them get nothing), but 10%. This would be offset, very slightly, by a reduction in the golden goodbyes you get when booted out of office so they are in line with what mortals receive, a downgrading of your platinum-coated pension scheme and stricter rules about free dinners. 

All this has been recommended by the Independent Parliamentary Standards Authority that was set up in the wake of the expenses scandal of 2009. You remember, that time when you all looked really bad.

Now, the Prime Minister says the pay rise is ‘unthinkable’, Nick Clegg says he won’t accept it, and Ed Miliband says it should be no more than 1%. Funnily enough none of them have called for a vote on the issue, or ordered their MPs to refuse it. Some MPs have insisted they should be paid more than their current £66,396, others think it’s electoral suicide, and no fucker has mentioned the fact you had a pay rise only three months ago.

As your employer, it falls to us to decide your pay. Allow me to explain our thinking:

• Your existing pay puts you in the top 3% of earners in the UK. This means 60 million people would describe it as ‘a shitload’. If ‘a shitload’ is not enough for you, you might want to try the belt-tightening you have recommended for the rest of us.

• Last month the 2:1 history graduate in charge of the nation’s purse-strings capped pay for public servants at 1%. He said automatic rises were ‘antiquated… deeply unfair… the private sector has to pay for it.’ If that applies to teachers, nurses, police officers and prison staff then it also applies to you.

• You would merit a similar 1% pay rise if you were doing a good job of steering the ship of state through choppy waters. Instead you behave like a bunch of argumentative teenaged drunks with the munchies driving a clown car through a minefield, while ignoring the 62 million people on board all screaming at you to stop.

• It is part of your role to promote democracy and uphold the rule of law. In recent weeks you have threatened to pull out of the European Convention on Human Rights, which was drafted by Churchill and largely based on British law, failed to deport a hate preacher who left of his own accord after being invited to stay here by Michael Howard in 1994 (advised at the time by one David William Donald Cameron), welcomed a military coup in Egypt and shown yourselves, regardless of party, to be up for sale to whoever wants to purchase your tainted souls.

On top of this you have such a reputation for corruption and venality that only 65% of us could be bothered to not really vote for anyone at the last election.

• It is also your job to pass the laws which we, your employer, would like to see enacted. The idea of gay marriage enjoys greater public support than a single politician, yet still you argue over it. Most of us have no wish to penalise the disabled or their carers by whose devotion the nation saves, for each, £5,000-a-week in health costs, yet still you do so. Most of us want to know what Prince Charles thinks and keep a rough eye on the Queen’s spending, yet you pass laws that say we cannot.

• Everyone else who has to work after 7.30pm buys their own sandwiches. You can do the same.

• To claim that losing automatic payments of up to £65,000 is a cutback is somewhat cheeky, seeing as it is merely being cut back from ‘excessively disgusting’ to ‘standard for everyone else who loses their job’.

• Furthermore, with a pension scheme that has 29% contributions from the taxpayer compared to 14% for the rest of the public sector, it can probably stand a little trimming without losing any of its soft and privileged belly fat.

• Many of you moonlight. This is not on.

• Finally, your ‘independent’ standards body was set up by MPs, consists of people employed by MPs, and has its budget set by MPs. The MPs are in turn overseen by the Speaker of the House of Commons, who is also an MP. It is about as independent as David Cameron’s thought patterns.

All in all your performance is not what it could be, and you are subject to a personnel appraisal just once every five years. No matter how appalling you are at your job, you generally lose it only if your line manager is more unpopular than the other line managers. In short you have a fairly cushy job and to complain you might lose the associated free dinners is, frankly, insulting.

There is an argument that we would have better politicians if we paid you more. Seeing as enriching you by means of an enormous salary, generous pension and a free house has not achieved this, it is difficult to see how extra cash would help. We do however need politicians, so here are a few suggestions for your future pay and conditions which, if agreed, could bring you year-on-year salary increases.

• Sleep in a dormitory like every other public servant who has to live away from home. You expect the military, nurses, doctors and care workers to do the same; perhaps if you have to endure state housing you would ensure it wasn’t a death trap. We’d call yours The Ivory Tower.

• A salary, pension and redundancy package which is precisely the same as the national average. If you want this to improve, you will need to raise the national standard of living which is what we voted you in to do in the first place.

• Commit to a yearly public meeting with your constituents, open primaries so that anyone of merit can be selected as a party candidate without the need for financial backing from their own pockets or those of a union, and give voters the power to recall MPs when they have been disgraced. This would finally end the outrage of a politician being booted, resigning or losing the whip but clinging on to their MPs’ perks for years to protect their party from a by-election. Patrick Mercer, Tom Watson, Mike Hancock , I am looking at you.

• You would be expected to work for a rise in voter turnout, have holidays reduced to six weeks a year, take on no other employment, and spend one day a month doing community work in your constituency in order to keep your feet on the ground. Food bank, picking up litter, teaching assistant – we don’t care what, so long as you talk to actual human beings whose lives are different to yours.

Of course like every other public servant if you do not accept your employers’ pay offer you have the right to either go on strike or seek better-paid work in the private sector.

We look forward to you either manning the braziers or trying to get proper jobs. Some of you are entirely unqualified – the Chancellor used to fold towels, the Prime Minister was a PR man, Clegg used to lobby for Libya and Miliband’s never done anything else. Still, with a skill set which includes avoidance, evasion, immorality, blatant criminality, and hypocrisy there should be a role for you in the financial industry.

We hope that you see sense, and as IPSA are asking for public feedback on their suggestions through their website, Twitter and by email  you can rest assured that we will be urging them to do the same.

Otherwise, there is a strong chance of a lynch mob marching on Parliament armed to the teeth with rotten vegetables if you continue on your present course of snuffling right down to the bottom of the trough.

Yours sincerely,

Red Street Fox
Daily Mirror 

Michael Gove and his well-commissioned research

In March, in an article for the Daily Mail, Michael Gove wrote: 

'Survey after survey has revealed disturbing historical ignorance, with one teenager in five believing Winston Churchill was a fictional character while 58 per cent think Sherlock Holmes was real.' 

A Freedom of Information request revealed the sources of the surveys referred to were:

• UKTV Gold;

• a survey of 2000 11-16 year olds by Premier Inns;

• a study commissioned by Lord Ashcroft of 1000 children aged 11 to 18 to mark the unveiling of the Bomber Command Memorial in London;

• a report by Professor Robert Tombs for think-tank Politeia;

• an article by London Mums Magazine;

• research carried out by the Sea Cadets to mark the anniversary of the Battle of Trafalgar.

All that's missing is Family Fortunes.

'Michael Gove revealed to be using PR-commissioned puff-polls as evidence' - New Statesman (13 May 2013)

We need a new deal on wages to kickstart a true UK recovery

Frances O'Grady writes for The Observer:

Back in the 1950s Henry Ford took the US union leader Walter Reuther on a tour of a highly automated new factory. Ford gleefully asked Reuther how he would get robots to pay union dues. Reuther shot back: "And how are you going to get them to buy your cars?"

It is a classic dilemma. Employers want to keep their workers' wages and bargaining power to a minimum, but need their customers to have money to spend. And that can only happen if they can negotiate decent pay.

Decent wages are good not only for those who get them, but for economic growth, too. Yet the business-friendly policy of recent decades has favoured the selfish, short-termist employer keeping wage costs down.

The minimum wage set a welcome floor, but poverty wages just above the minimum were considered fine. Indeed the state has subsidised low pay through tax credits. In-work benefits should be defended, but it is right to query why the taxpayer should subsidise so many low-paying employers. Deliberate policies of labour market deregulation continued to send the signal that workers' wages should fall.

The result has been a steady decline in the share of the economy going to wages – a drop from 60% in 1980 to 54% in 2011. It is probable that the decline is continuing, as around four in five new private sector jobs are in low-paid sectors. This job creation may be better than unemployment but still leaves households struggling to make ends meet and is no recipe for economic recovery.

Not only has there been a decline in the wage share of the economy, but those in the middle and at the lower end have been getting a smaller share of this shrinking pie. The Resolution Foundation has forecast that a typical low-income household in 2020 will have an income 15% lower than they would have had in 2008.

But many orthodox economists have seen nothing to worry about. The slide in the wage share was inevitable. Technological change meant that the economy needed fewer skilled workers; and globalisation reduced real wages in advanced economies as developing countries industrialised.

Labour market deregulation was a core belief of the 1980s free-market consensus. It was meant to remedy the squeeze on profits and investment caused by union-bargained wages and the costs of "welfare capitalism". Everyone would win as profits drove new investments and innovation, which eventually would trickle down to all. Even today, the coalition claims that it is necessary to squeeze the working-age social security bill, even though the share of GDP going to these benefits has barely changed.

But the theory did not work. Profits grew as the wage share declined, but the increase in the profit share went entirely into the finance sector and personal fortunes, with no greater benefit for anyone else. Growth and productivity increases were a third down on the level achieved in the postwar decades. Unemployment was higher and recessions longer and deeper. Instead of the saving made on the wages bill being invested in new plant, skills and equipment, it funded a big increase in remuneration for those at the very top, plus financial engineering and mergers and acquisitions. Borrowing rocketed as consumption became increasingly dependent upon personal debt, and the seeds of the financial crisis were sown.

That is why I am making a call for a new deal to boost growth and rebalance the economy – as pressing a problem today as the price-wage spiral was in the 1970s. Improving the wages of those who have been left out of the finance sector bonanza makes sense all round. Higher wages would help rebalance our economy, increase the tax take and reduce the benefits bill. Even the OECD and the IMF now say that inequality has gone too far.

Such a new deal would have at its heart a national consensus that if companies making a good return on investment are to create decent, properly rewarded jobs, government, business and labour must work together. Increasing demand for productive skilled workers should be the key aim of industrial policy, and it should be linked to the capital investment that can help kickstart growth. Economic policy should have achieving full employment as an explicit priority, and this in turn is good for pay.

Wage restraint will have a place too, but applied to those at the top: this can release resources for better pay and more jobs lower down. And with even the IMF and OECD recognising the importance of reducing inequality, a new deal would promote the extension of responsible collective bargaining.

A modest increase in the minimum wage would have a minimal effect on employment. We should also expect companies that can afford it to pay a living wage. While there is a trade-off between jobs and the wage floor, many sectors and companies could pay more while continuing to increase employment. Modern wages councils could set new minimums in some sectors. The government has just abolished the Agricultural Wages Board which did just that.

This adds up to an ambitious agenda for a new government, with some quick wins that can help build longer-term support. Britain needs a pay rise or we will be stuck in a damaging low-wage, low-productivity spiral where economic prospects remain bleak.

Frances O'Grady is general secretary of the Trades Union Congress

The glamour that is Brighton

 

100 days of the bedroom tax in Merseyside

The National Housing Federation has released a report highlighting the impact of 100 days of the bedroom tax in Merseyside:

• 26,500 households in Merseyside are affected by the bedroom tax, only 155 managed to downsize due to shortage of smaller homes. 

• 19,055 disabled people in Merseyside are losing over £13m a year due to the bedroom tax. Some grants are available but for three months only. 

• 14,000 Merseyside households fell into arrears with their rent in the first four weeks. 

“The bedroom tax is hurting the most vulnerable people in Merseyside. It is time to face the facts and repeal this unfair policy now.” David Orr, Chief Executive of the National Housing Federation 

Read the National Housing Federation's summary here (includes a link to the pdf report)

Bedroom tax breaking up communities, says damning Church of England report

Communities are being cruelly broken up by the Bedroom Tax, according to a damning Church of England report. The policy has forced “people to move away from areas where they have roots and informal structures of support”. Meanwhile “harsh” treatment of the poor has seen more people turn to the Church for charity while Prime Minister David Cameron’s flagship idea of “The Big Society” is exposed as a fantasy.

The report, Welfare Reform and the Church, states: “Three years on, we have seen very little of The Big Society in policy or practical terms.” Instead, the voluntary sector has seen government funding cut while donations fall in the economic crisis.

The paper has been drawn up by the Church’s Mission and Public Affairs Council for this weekend’s General Synod. It reserves its strongest flak for the Bedroom Tax — which charges tenants an extra £14 a week for having a spare room — saying it has “destabilised” communities. The cap on housing benefit is also forcing people to move away and the report points out: “In hard times, people rely on their neighbours as much as on the state.”

Labour MP Gareth Thomas, the shadow charities minister, said: “This is damning about the state of charities after three years of David Cameron.” The Department for Work and Pensions said: “Reforms are restoring fairness to the welfare state. We’re making sure work pays while ensuring support for the most vulnerable.”

Miliband pledges to repeal the Health and Social Care Act

Labour leader Ed Miliband promised today to repeal the Government's NHS reforms and restore the Health Secretary's legal duty to provide a comprehensive health service.

Last year's Health and Social Care Act stated that the Health Secretary had the responsibility to "promote" the delivery of health services in England, but removed a previous duty to "provide or secure the provision of services". Mr Miliband said the move was part of a "deliberate strategy" by Conservatives to allow them to deflect blame for any failings in the NHS on to doctors, hospital managers and commissioning groups.

Writing in the Daily Mirror, the Labour leader said the Government was operating an "ABC of blame" when anything went wrong - passing the buck to "Anyone But Cameron".

"The crisis in A&E? Blame the GPs. Ambulance queues doubled? It must be the fault of the local hospital. Rationing of vital treatments like cataract operations and hip replacements? It's a matter for your local commissioning group," said Mr Miliband. "This is the Government's ABC of blame - Anyone But Cameron."

Mr Miliband said there were "growing signs that our NHS is in deep distress", with lengthening waits at A&E, growing queues of ambulances outside and a worsening "postcode lottery" in services. But he said: "The response from David Cameron's Tory-led Government has been to shrug its shoulders and blame everybody else - doctors, nurses, even the NHS itself. This is no accident. It is a deliberate strategy by the Tories."

"When Labour created the NHS, in the face of austerity and Conservative opposition, we placed on the statute book a legal duty requiring national government to provide a comprehensive health service free at the point of delivery for all British citizens. It was a foundation stone of political accountability. And it was abolished by the very first line of David Cameron's Health Act last year."

Mr Miliband promised that, if Labour returned to power, "we would repeal David Cameron's Health Act and reinstate the Secretary of State's duty to provide a comprehensive health service".

Cruel and stupid: the trademarks of this government

Impact of housing benefit changes 'worse than feared'

The consequences of the housing benefit cut introduced in April are worse than feared, the National Housing Federation has said. Rent arrears have soared in some areas while larger houses are lying empty as people refuse to move into them. Ministers say the impact of the benefit cut is being monitored closely. The government wants to end what it calls the "spare room subsidy" for social tenants, but critics have dubbed the move a "bedroom tax".

"The impact is at least as bad as we had anticipated, in many respects even worse," says David Orr, chief executive of the National Housing Federation. "What we've seen are really bad effects on individuals, people whose lives have been turned upside down, who are very frightened about the future," says Mr Orr.

One of the government's stated aims for cutting housing benefit for people with spare rooms was to get them to move, thereby freeing up homes for families living in overcrowded properties. Ministers say this is starting to happen but two housing associations have told BBC News that since the welfare change, they have large family homes lying empty because tenants cannot afford to move into them.

Coast and Country Housing, which owns more than 10,000 properties on Teesside, says it is struggling to rent out some properties. "The numbers of empty homes we've got to let are increasing significantly," says Iain Sim, chief executive of Coast and Country. "People are now telling us that because of bedroom tax, they can no longer afford to move into the bigger family homes, and as a consequence of that we're getting fewer lettings and more empty houses."

Across the country in Merseyside, it is a similar story. Cobalt Housing, which owns nearly 6,000 mainly family homes in Liverpool, says the benefit change is putting "terrible pressure" on tenants. "We have perfectly good, three-bedroom homes that people are telling us they can't afford to live in, because of the bedroom tax," says managing director, Alan Rogers.

In a statement, the Department for Work and Pensions said: "The removal of the spare room subsidy [ie the addition of bedroom tax] is returning fairness to housing when in England alone there are nearly two million households on the social housing waiting list and over a quarter of a million tenants are living in overcrowded homes. As with any major reform, we are monitoring the changes to housing benefit closely - including possible arrears levels and how councils are spending the extra £150m in funding for vulnerable claimants."

Source: BBC News