Tag Archives: Bank of England

Vote Tory for a tiny economy, terrible jobs and no welfare state

No doubt some of you will scream that this post is overdramatizing, but the consequences of further fiscal consolidation (that’s austerity to most of us), as laid out in Professor Simon Wren-Lewis’s latest Mainly Macro article, seem undeniable.

He tells us the National Institute has used the model NIGEM to analyse the macroeconomic impact of the different political parties’ fiscal plans post-2015, which is published in the latest Review. (Chris Giles has a FT write-up.) The result: The more fiscal austerity you undertake, and if monetary policy fails to perfectly offset the impact on demand, the lower output will be.

You don’t need a crystal ball to see what this means, if we get another Conservative, or Tory-led, government. Lower output means a lower tax take, therefore less money to spend on the NHS and welfare benefits (areas like Defence and International Development will always have funds – we can’t let ourselves go defenceless and we must continue our programmes of cultural imperialism, after all).

So further Tory austerity instantly implies the imposition of even harsher standards of qualification for state benefits, pushing even more vulnerable, sick and disabled people off the books and into their graves. We’ve all known that voting Tory is an endorsement of state-sponsored suicide but it’s time we all owned up to it.

It means the sale of the National Health Service in England to private companies will be accelerated, with consequent impacts on the amount of grant funding for the health service in the other UK countries; the service will continue to worsen and even more deaths will be the result.

But the Tories will want to pretend to the media that all is well, which means an increased push to get people into part-time, temporary or zero-hours work, and an increased number of benefit claimants being funnelled into work activity programmes that, in fact, reduce the number of available jobs. The resulting low-pay economy is exactly what the Conservatives want; the workers will be kept down and the employers can pocket the profits.

Nobody in the government or even the Bank of England will tell you this because, it seems, they haven’t done any analysis and won’t make any such forecasts.

The Office for Budget Irresponsibility is not allowed to look at alternative fiscal policies in the short term and must therefore put the bravest possible face on what is offered to it – that is why every single forecast to come out of that organisation has been hopelessly optimistic.

We’re back to evidenceless policies again. The Tories are saying “everything will be okay”, because – for them – it will be. They and their rich friends will have loads of cash. Who cares that the entire infrastructure of the United Kingdom – and the British way of life – will be dismantled and disappearing from under them?

Think this is overexaggerating? Let’s go back to Prof Wren-Lewis and examine the Tories’ record. He writes: “If you go back to 2010, the OBR’s main forecast didn’t look too bad: the recovery was continuing, and interest rates were able to rise as a result.

“But good policy does not just look at central projections, but it also looks at risks. Then, the risks were asymmetric: if the recovery became too strong, interest rates could always rise further too cool things, but if the recovery did not happen, interest rates would be stuck at their lower bound and monetary policy would be unable to keep the recovery on track.

“In 2010 and beyond that downside risk came to pass [bolding mine], and the recovery was delayed. Fiscal policy put the economy in a position where it was particularly vulnerable to downside risks, which is why it was an entirely foreseeable mistake.

“Exactly this point applies to 2015 and beyond. The problem with further fiscal consolidation while interest rates remain at their lower bound is that it makes the economy much more vulnerable to downside risks.”

In other words, it seems Conservative policy, as set down by History graduate and towel-folder George Osborne, deliberately weakened this country’s ability to recover from the crash of 2008 and afterwards.

How secure is you job? How safe are your savings?

Do you really want to risk them on more Tory bungling?

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A high-skill, low-wage recovery – Flip Chart Fairy Tales

Here are a few facts to remember during the Conservative Party conference, when they will undoubtedly be determined to ram their myths about higher employment down all our throats. Over to (in this case, the very appropriately-named) Flip Chart Fairy Tales:

“Labour economics used to be easy,” lamented David Blanchflower in Monday’s Independent. He continued:

All you had to do was watch the unemployment rate and that told you most of everything. As it went up things were bad and pay weakened. When the unemployment rate fell that meant the economy was getting better and that meant pay rises. Low unemployment meant big pay rises. High unemployment meant smaller rises. Simple.

But, over the past few years, falling unemployment hasn’t led to higher wages in the UK or the US. If anything, wages have continued to fall as employment has picked up.

The picture is even stranger when you look at skills. Employers have been talking about skills shortages for some time now. Earlier this week, the UK Commission for Education and Skills (UKCES) published a paper saying that Britain is already facing a skills challenge and that the country will need 2 million more highly skilled workers by 2022.

UKCES expects the skills profile of the workforce to polarise over the course of this decade, as there is an increased demand for jobs at the high and low skill end while demand falls in the middle.

That’s not what seems to have happened since the recession though. The ONS data on skills indicate that the employment recovery has been largely a highly skilled one. This chart in the Bank of England’s inflation report shows that, while a lot of the very recent job growth has been in lower skilled occupations, most of it since 2010 has been among the higher skilled. (Definitions are based on the Labour Force Survey categories.)

I wondered how much of that might be due to the self-employed bigging themselves up in the Labour Force Survey. As the ONS said:

The nature of self-employment is such that many people manage their business and are therefore likely to state they are in a managerial role despite the level of responsibility they may have.

Using at the ONS data and applying the definitions the Bank used, I broke the same period down between employed and self-employed.

Among the employees, even more of the increase is accounted for by those in the highest skill groups, so bang goes that theory.

Take the figures over a longer period, since the start of the recession, though, and things look even more skewed.

Almost all the increase in employment since the recession has been among the more highly skilled groups. There are still fewer medium and low skill employee jobs than there were six years ago.

There’s something else funny going on here, though. We’ve just had the longest decline in wages for half a century. It looks even worse if you include the self-employed.

Since the recession, pay has fallen by about 12 percent yet, over the same period, almost all the net gain in employment has been among the most highly skilled occupational groups. So we have a more highly skilled workforce earning a lot less.

Some of this may be due to the hours people are working, or not working. All the net increase in employment since the recession has come from self-employment or part-time jobs. Last week’s figures showed a slight fall in the number of employed full-time jobs for the second month running. There are still fewer people in full-time employment than there were in 2008.

There’s more – and you’ll have to visit Flip Chart Fairy Tales to read it.

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Was the crash really ‘all Labour’s fault’? – Flip Chart Fairy Tales

Of course it bleedin’ wasn’t.

It was the result of far too much blind optimism by financial institutions that should have known much better, as this Flip Chart Fairy Tales article shows.

If you want the full details, read that article, but to whet your appetite, here are a few snippets.

For a start, the Organisation of Economic Co-operation and Development (OECD) was useless. In June 2007 it suggested that, if there was a downturn, the UK’s deficit might rise above three per cent of GDP; two years later it was at 11 per cent.

The OECD’s idea of the UK’s structural deficit in 2007 was around 2.5 per cent, but it now says the actual level was five per cent, and it didn’t realise. Nice!

Almost all our financial institutions, as the following graph shows, believed the economy would grow (by up to five per cent!) in 2008 and 2009. Outturn: Minus six per cent.

In May 2008 the Bank of England said it expected conditions to improve gradually.

The International Monetary Fund had already said, in April that year, that growth in the UK would slow to 1.6 per cent in 2008, with a moderate recovery (!) in 2009.

And what was Labour’s perspective? At the end of August 2008, Alistair Darling told The Guardian we were facing economic times that were “arguably the worst they’ve been in 60 years. And I think it’s going to be more profound and long-lasting than people thought.”

Most people didn’t believe him.

So – all Labour’s fault? It seems Labour’s Chancellor was the only one who saw it coming! For many, that won’t absolve Labour of the imagined crime; they’ll say Darling – and Brown before him – should have tightened up regulations to head off the crash and protect the UK from what happened in the rest of the world.

But with everybody else and their mother arguing that there was no need, clearly they should take some of the blame as well.

That’s all this blog is saying.

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Tories and Lib Dems engineer fastest fall in wages since Victorian times

Damning: The graph by the House of Commons Library, showing how earnings have plummeted since Cameron’s Coa-lamity government came into office.

David Cameron must be so proud. He wanted a return to the Victorian era and that is exactly what he has achieved.

Wages have nosedived, meaning the gap between the richest and poorest is larger than it has ever been; we already know that diseases once thought long-gone are stalking our streets once again while the National Health Service has been bled to the point of death; and the welfare state is in critical condition, with people who have paid into the system all their lives bullied out of claiming benefits when they are needed and sent back to die in their homes.

This is David Cameron’s brave new Britain.

The figures on wages are the latest blow against the public-relations Prime Minister’s credibility – they come from the respected House of Commons Library.

The graph (above) uses figures from the Office for National Statistics, the Bank of England and forecasts from Coalition poodles the Office for Budget Responsibility.

It shows that real earnings are expected to have fallen by 2.3 per cent between 2010 and 2015 – the first fall since 1922-3 when wages fell by 1.8 per cent – and the largest since 1874-80, under Conservative Prime Minister Benjamin Disraeli, when they fell by 2.6 per cent.

Firm figures for 2010-13, from the ONS, paint an even worse picture – they show a 4.6 per cent drop during the three-year period.

So, Dear Reader, if you have been doubting Labour’s claim that wages have dropped by £1,600 per year, in real terms, since the Tories and the Liberal Democrats sidled into office, doubt no more!

This factual evidence has thrown into chaos Conservative claims that the UK has returned to prosperity because our Gross Domestic Product has finally exceeded its pre-financial-crisis peak.

Vox Political was right to say GDP might be up 3.1 per cent on last year but it has nothing to do with most of the population.

What is our part-time Chancellor going to do about it? He’s done quite a lot of nose-diving himself and, considering what he has managed from his office…

Let’s hope the song isn’t ‘Gold’, because the irony would be too much to bear.

George Osborne might as well go back to prancing around a prostitute’s boudoir to a soundtrack by Spandau Ballet.

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UKIP uncovered: More hidden policies revealed (part one of a possible series)

[Image: alecshelbrookeblog.com]

Yesterday’s article (UKIP: They don’t like it up ’em) delved into the facts behind a controversial meme that has been doing the rounds on the social media.

The image claims to be publicising UKIP policies, and seven out of the 10 policies claimed for the party have been verified, as demonstrated in the VP article.

Vox Political has been doing a little digging into the others.

The claim that UKIP wants to cancel all planned house-building on Green Belt land appears to have been based on the party’s 2010 general election and 2013 local election manifestos, which are no longer available to the public. Party members have stated many times, recently, that Nigel Farage has rubbished the 2010 document and its contents are not to be taken as UKIP policy. The party’s attitude to its manifesto from last year is less clear.

The relevant line, as quoted in this Property Newshound blog, is: “by controlling immigration, large areas of British countryside will not need to be destroyed by house building.” The rest of the article is well worth reading too.

UKIP’s South Buckinghamshire website discusses plans to build on the Green Belt, with a reply to a summary document by the Conservative Party:

“Conservatives say: ‘So we need to find places to build more homes…’ (page 2)

“UKIP reply: Not on green belt land!”

The strange thing is that preventing development of Green Belt land should not be a controversial issue, yet I have just – as I have been writing this blog – received a comment from a UKIP supporter stating: “Every bullet point [on the meme] is a fiction, written by a Green Party activist.”

Where does that leave UKIP policy? Does the party now want to build on Green Belt land, because the Green Party (apparently) opposes it?

Personally, I’m against that. My former home in Bristol was on the edge of the city, next to Green Belt land which became threatened by the South Western regional assembly (whatever it was called). Residents had a terrible time fighting off the proposed development, which seemed to be motivated solely by a desire to build a new road to Bristol Airport, enabling faster journeys from it to the city and back.

Building on the Green Belt – of any kind other than what is absolutely necessary for agricultural purposes – should be banned, in the opinion of this writer. It is land that has been set aside in the national interest, and proposals to develop it should be seen for what they are – money-grubbing by disinterested corporates who live in mansions on estates that will never be disturbed by such environmentally-damaging raids.

The claim that UKIP wants to cancel bank regulations “to make banks safer” was a commitment on the party’s policy website, according to this article in The Yorker (which is simply the first I found in a Google search). The Yorker is a student-run media site, based at the University of York, which claims no political affiliations at all.

It states: “According to their policy website UKIP… wants [to] further de-regulate the city… Indeed their primary reasons for leaving the EU relate to the need to cut such rights and regulations in the name of The City and big business.”

This would appear to be corroborated by Nigel Farage himself, who wrote in an Independent article in January this year: “And let’s look closer to home for where the fault lies with the banking crisis. I know it might still be trendy to “bash the bankers” but this crash was entirely predictable. It was Gordon Brown handing over regulation of the banking industry from the Bank of England who, since 1694 has done a pretty good job, and handed it over to the tick-box bureaucrats in Canary Wharf.”

It seems the case for UKIP wanting bank deregulation is also proven.

Unlike the Green Belt issue, bank deregulation would be a huge mistake for the UK. Farage is wrong in his claim that Gordon Brown was at fault for re-introducing regulation to the banking sector; it is the fact that he didn’t introduce enough regulation that let us down. The banks all told him that they were perfectly capable of policing themselves, and he took them at face value. Meanwhile the Conservatives, who have been blaming Labour for being too loose with regulation ever since they got back into office, despite doing nothing about the issue themselves, were calling for even less regulation at the time of the banking crash.

The UK requires more banking regulation, not less. Less regulation would encourage further abuses of the banking system and would inevitably lead to another disaster. This time the consequences could be appalling, for millions of low-paid British citizens. Farage does not clarify why he wants to court this.

More revelations may follow.

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Labour must turn and fight now – or give up its electoral hopes altogether

Struggling to make an impact: Ed Miliband must reject the Tory Party’s narrative about the need for austerity and bring forward a vision for the future that really does make us ‘One Nation’ again, rather than hanging on David Cameron’s neoliberal coat-tails, as many former Labour voters believe.

The political debate is all about the Labour Party again today – as it has been since the Budget.

The newspapers and websites are full of advice for the party, which is now clearly seen to be struggling to gain any kind of a foothold with electors who have become disillusioned at what might best be called the Party of Very Little Opposition.

Labour “must adopt new principles” according to an alliance of thinktanks and party intellectuals who have written to The Guardian; Ed Miliband has been told “don’t play safe” with the party’s manifesto according to an article on the same paper’s site.

The BBC News site has words from left-wing MP John Mann, calling on his party leader to stop trying to be “too clever” and be “much clearer” in setting out his policies.

We can probably discount the Telegraph article by Dan Hodges, claiming that Labour is “closed for business”. It plays to right-wing readers’ prejudices just a little too much.

Will Ed pay any attention to these pleas? Evidence suggests he will not.

I should clarify from the outset that, as a Labour member, I want the Party to win in 2015 (and also to gain the lion’s share of the vote in May’s European elections).

But Miliband seems to be living in a world of his own, insulated from the rest of the Labour Party – not to mention supporters of Labour ideals who are not members – by a small group of (not-so-special) advisers who, it’s claimed, intercept any decent ideas before they get to the party leader and spin them until they turn to drivel. Whether this is true or not seems immaterial as this is the perception of the general public.

And perception is everything.

As I write this article I have just received a comment stating that “Miliband’s strategy for the next election seems to be a) to accept the Tory frame of reference for any given argument and b) to then concede the field of battle on that issue, whatever it is, without a shot being fired.” This is a common complaint, and Labour has no answer to it.

Why do Miliband, Balls, Tristram Hunt (notably), Rachel Reeves (lamentably) and all the other Labour frontbenchers blithely accept the Coalition’s terms of reference on any issue, against the wishes of their own backbenchers, their party as a whole and the public at large?

Are they really just a gang of greedy moneygrubbers, determined to screw the country for whatever they can get? That in itself would be a betrayal of Labour Party ideals and their constituency parties should deselect them if members believed that to be the case for one moment.

Are they a gang of neoliberals, their political philosophy so close to that of the Conservatives that you can’t get a credit card between them? This rings threateningly true in the cases of Oxford PPE graduats Ed Balls and Yvette Cooper, ex-Bank of England employee Rachel Reeves and Tristram Hunt. But Ed Miliband is (famously) the son of a Marxist. He, above all, should know better.

The trouble is, David Miliband is the son of the same Marxist and he was as much a part of the neoliberal New Labour Red Tory deception as Tony Blair and Gordon Brown.

Oh look – another comment has just arrived. “More people don’t bother to vote because they feel that we as a people have moved on and all we really want is people who will represent us honestly, by majority and with no hidden agendas, backhanders or lobbyists pulling the strings. I don’t see any evidence that the present government or the Labour Party are capable or willing to do just that… They should have the courage to change and become the voice of the people.”

Become the voice of the people. The meaning is clear – Labour is not currently representing anybody at all.

Is this true? Let’s look at some of the other comments on my (left-leaning, let’s not forget) blog. These are from people who are generally sympathetic to Socialism and who should, therefore, see Labour as the natural home of their vote. What do they say?

“[Is it] any wonder [that] 1. People don’t vote because they are seen as “all the bloody same”? and 2. The perceived differences have become so minuscule?”

“Until Labour wakes up and realises it is the welfare cuts that are a major concern to most of us and to anyone who has a conscience, they will lose the next election due to apathy.”

“Labour have to do something different to what they have up to now but they don’t seem to want to. Are they scared of being in government over a country in the state it is?”

“Labour have had four years to do something – anything – to fight against the welfare cuts, and to help the people they are supposed to be the party for! They’ve really done nothing when all is said and done.”

If Ed Miliband was reading this, I would be asking if he was getting the message yet (are you, Ed?) and what he proposes to do about it. You think not? Let’s have some more comments from people who should be supporting Labour – I’ve got plenty of them!

“There has been absolutely no fight in this opposition and I am ashamed of them.”

“People need a reason to apply their votes to Labour and Miliband-Balls are not providing them with one. They are sleepwalking into another hung Parliament and a very real risk of the Tories teaming up with UKIP. Then we’ll really see Nazism grip this country.”

“The would-be voters demand change and need bold new policies to blunt the Tory cutters. If the Labour Party cannot come up with policies which are radical then they don’t deserve to be in power at the next election, or ever.”

“Ed Balls worries me because he seems intent on copycatting Osborne. For example Osborne says he will run a surplus by the end of the next Parliament and Balls promises the same. Osborne say he will be introducing a Benefit Cap on social security spending on working age benefits (which could have devastating effects and lead to real terms cuts in benefits for years on end) and Balls says that Labour will vote with the Coalition to introduce it.”

“Surely we need some clear red water between Labour and the Tories? Surely Labour needs to differentiate itself more from the policies of the Coalition?”

“I sent an email to the Labour Party asking for its policy on TTIP (the rightly-feared Transatlantic Trade and Investment Partnership that will force employment standards down to third-world levels, or below), amongst other things. They were decidedly equivocal and I felt no reassurance at all. I think it’s about we faced facts, Labour aren’t being coy in a pre-election year to avoid frightening the horses, they really are just another pack of neoliberals.”

This is how left-wing voters (and the squeezed-middle waverers to whom Ed Miliband keeps trying to pander) see the modern Labour Party: Carbon-copy Tories with no fresh ideas who aren’t worth the effort of voting.

If any of Ed’s shadow cabinet is okay with that description, he needs to sack them and bring in someone with a clue. And he needed to do it last year.

If the Conservatives win in 2015, it seems clear that responsibility will lie as much with Labour’s failure to provide any clearly-visible alternative.

We have already seen carnage inflicted on the poor, the sick and disabled, and a Conservative-only government (or in collaboration withUKIP) would increase that bloodshed tenfold (senior citizens take note: the bribe you were given last week was a trick and if you vote Conservative, many of you will not live to rectify your error at another election).

Unless Ed Miliband sorts out his party – pronto – that blood will be on his hands as well, and the people will not forgive him.

Note that I did not say they won’t forgive Labour. I said they won’t forgive Ed Miliband.

Words cannot describe the way people feel at what has been done to them by the Coalition. If Labour reveals even the slightest element of complicity, I wouldn’t give a farthing for Miliband’s safety.

That goes for the rest of the shadow cabinet too.

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The Coalition is creating serious problems and distracting you with phantoms

According to the beauty industry, women must now start deodorising under their breasts.

I kid you not – it was in The Guardian.

Columnist Jill Filipovic hit the nail on the head when she wrote: “I can already hear your objections: ‘But the area under my boobs doesn’t stink!’ or ‘What kind of marketing genius not only came up with the term “swoob,” but actually thought half the world’s population might be dumb enough to buy into it?’ or simply, ‘This is a dumb product aimed at inventing an insecurity and then claiming to cure it.’

“You would be correct on all three points.

“In fact, inventing problems with women’s bodies and then offering a cure – if you pay up – is the primary purpose of the multi-billion dollar beauty industry.”

The simple fact is that you don’t really need to worry about smells down there – a good old soapy flannel will cure any such problems.

That’s not the point, though. The aim is to get you thinking about it and devoting your energy to it, rather than to other matters.

Now let’s translate that to politics.

We already know that all the scaremongering about Romanian and Bulgarian immigrants storming the country from January 1 was a crock. That bastion of good statistics, The Now Show, told us last week that the total number of Bulgarian immigrants in the last couple of weeks was “around two dozen so far”, according to their ambassador. In the first three months after our borders were opened to Croatians, 174 turned up.

Yet the government wanted you to believe they would flood our immigration service in their millions, “taking benefits and yet simultaneously also taking all the jobs”.

My use of language such as “storming” and “flood” is not accidental. By far the more serious threat to the UK in the early days of 2014 was the weather – and, guess what, not only was the government unprepared for the ferocity of the storms that swept our islands, the Coalition was in fact in the process of cutting funding for flood defence.

This would have gone unnoticed if the weather had behaved itself, because we would all have been distracted by the single Romanian immigrant who was ensnared by Keith Vaz in a ring of TV cameras at Heathrow Airport.

Now the Tories are telling us that our take-home pay is finally on the rise for all but the top 10 per cent of earners, with the rest of us seeing our wages rise by at least 2.5 per cent.

The government made its claims (up) by taking into account only cuts to income tax and national insurance, using data leading up to April last year, according to the BBC News website.

This kind of nonsense is easily overcome – New Statesman published the above chart, showing the real effect of changes to weekly income for people in various income groups, and also provided the reason for the government’s mistake (if that’s what it was).

“The data used … takes no account of the large benefit cuts introduced by the coalition, such as the real-terms cut in child benefit, the uprating of benefits in line with CPI inflation rather than RPI, and the cuts to tax credits,” writes the Statesman‘s George Eaton.”

He also pointed out that other major cuts such as the bedroom tax, the benefit cap, and the 10 per cent cut in council tax support were introduced after April 2013 and were not included in the Coalition figures.

Once all tax and benefit changes are taken into account, the Institute for Fiscal Studies has shown that almost all families are worse off – and the Coalition also appears to have forgotten the five million low-paid workers who don’t earn enough to benefit from the increase in the personal allowance.

Skills and enterprise minister Matthew Hancock compounded the mistake in an exchange on Twitter with Jonathan Portes, director of the National Institute of Economic and Social Research (NIESR). Asked why his analysis “ignores more than four million people in work (the self-employed)”, Mr Hancock tweeted: “Analysis based on ONS ASHE survey of household earnings data”.

Wrong – as Mr Portes was quick to show: “Don’t you know the difference between household and individual earnings?”

Apparently not. ASHE (Annual Survey of Hours and Earnings) is a survey of employed individuals using their National Insurance numbers – not of households or the self-employed.

So the Coalition – and particularly the Tories – were trying to make us all feel good about the amount we earn.

That’s the distraction. What are we supposed to be ignoring?

Would it be David Cameron’s attempt to bribe councils into allowing shale gas companies to frack their land? Councils that back fracking will get to keep all the business rates collected from the schemes – rather than the usual 50 per cent.

He has also claimed that fracking can boost the economy and encourage businesses into the country, in a further bid to talk down dissent.

Or is it the growing threat of a rise in interest rates, which may be triggered when official unemployment figures – which have been fiddled by increased sanctions on jobseekers, rigged reassessments of benefit claimants, a new scheme to increase the number of people and time spent on Workfare, and the fake economic upturn created by George Osborne’s housing bubble – drop to seven per cent?

It seems possible that the government – especially the Tory part of it – would want to keep people from considering the implications of an interest rate rise that is based on false figures.

As Vox Political commenter Jonathan Wilson wrote yesterday: “If the BOE bases its decisions on incorrect manipulated data that presents a false ‘good news’ analysis then potentially it could do something based on it that would have catastrophic consequences.

“For example if its unemployment rate test is reached, and wages were going up by X per cent against a Y per cent inflation rate which predicted that an interest rate rise of Z per cent would have no general effect and not impact on house prices nor significantly increase repossessions (when X per cent is over-inflated by the top 1 per cent of earners, Y per cent is unrealistically low due to, say, the 50 quid green reduction and/or shops massively discounting to inflate purchases/turnover and not profit) and when it does, instead of tapping on the breaks lightly it slams the gears into reverse while still traveling forward… repossessions go up hugely, house prices suffer a major downward re-evaluation (due to tens of thousands of repossessions hitting the auction rooms) debt rates hit the roof, people stop buying white goods and make do with last year’s iPad/phone/tv/sofa, major retail goes tits up, Amazon goes to the wall, the delivery market and post collapses… etc etc.

“And all because the government fiddled the figures.”

Perhaps Mr Cameron doesn’t want us thinking about that when we could be deodorising our breasts instead.

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Are the Tories planning to bury us in debt when interest rates rise?

Don’t look so smug, George – we know what you’re trying to do.

It is surprising that they don’t seem to think we can make the connections.

Two articles have leapt from the national media to trouble us this week. The first, in the Telegraph, states that the economic recovery that has made George Osborne so proud is built on mounting consumer debt and a housing bubble.

(This is something that has been known to us for several months, in fact. Osborne’s ‘Help to Buy’ scheme is the principle cause of the bubble, and it was recently revealed that there is no way to slow it down. Let’s not forget that the taxpayer is underwriting the scheme – so when the bubble bursts we will have to pay both as individuals and as a nation!)

The second article is on the BBC News website, which tells us that up to 1.4 million extra households could face “perilous” levels of debt when interest rates begin to rise – in addition to the 600,000 families already in that situation.

(It adds that mortgages are the largest source of household debt.)

Vox Political has long held the belief that the Conservatives have been trying to increase personal debt. Whether the plan was to decrease the national debt in this way is debatable as the deficit has plateaued at around £120 billion for the last few years.

When Mark Carney became governor of the Bank of England, he said he would not raise interest rates until unemployment falls below seven per cent – which might provide a bit of breathing-room for those having to deal with mounting debt.

However a few months ago, at the Conservative conference, we heard that George Osborne wants to falsify unemployment figures by putting the long-term unemployed on Workfare indefinitely.

If a person is put on Workfare, they are removed from unemployment statistics, even though they only receive social security payments for the work they do.

We already know that figures show a larger fall in unemployment than commentators had anticipated, so it now stands at 7.4 per cent, according to official statistics. Putting hundreds of thousands more people on Workfare should cut that figure below Mr Carney’s benchmark.

Meanwhile, household debt is due to rise to 160 per cent of income by 2018, partly because wages are dropping in comparison with inflation. The number of households using half their disposable income to repay debt could rise from 600,000 to 1.1 million if interest rates rise to three per cent (according to the Resolution Foundation, as quoted in the BBC piece) – and to two million if rates hit five per cent.

In the light of this information we must ask ourselves: Is this a Tory trap? Are they trying to create conditions in which more people on low or middle incomes become indebted to the rich, just by fiddling interest rates?

What do you think?

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Windbag Cameron is afraid to give us the facts

Leading us down the garden path: Cameron wants us to believe the economy is growing but, like a bad gardener, he hasn’t fertilised it, and has allowed it to be overrun with weeds. [Image: Andy Davey www.andydavey.com]

“The week before the autumn statement, and the right honourable gentleman [Ed Miliband] cannot ask about the economy because it is growing. He cannot ask about the deficit because it is falling. He cannot ask about the numbers in work because they are rising. People can see that we have a long-term plan to turn our country around.”

Strong words – uttered by David Cameron during Prime Minister’s Questions yesterday (November 27).

What a shame he chose to give Parliament bluster instead of facts.

Does he think that the economy is growing because of the housing price bubble engineered by his deranged Chancellor via his ‘Help to Buy’ scheme? It is massively increasing the cost of housing in London but will inevitably lead to a crash and the loss of serious amounts of money for both buyers and the government (as mortgage underwriter). The Bank of England has revealed that it has no power of veto and can only advise on whether the scheme should continue – it is for the Conservative-led government to decide how long it will last.

Gideon’s ‘Help to Buy’ offers unsupported mortgage guarantees to buyers and lenders. He has not said where he will find the money for it. Critics have warned that this is simply creating another housing-fuelled debt bubble that will burst in a couple of years’ time, leaving even more people in debt than after the financial crisis hit us all.

Michael Meacher has read the £130 billion scheme right – as we can see from his blog: “Where does that sort of money come from when the public accounts are under extreme pressure to make enormous cuts? State-subsidised mortgages for the well-off (houses valued at up to £600,000) seems, even for Osborne, a strange decision when some of the poorest tenants in the country are at the same time being expelled from their homes by the bedroom tax.

“It can only be explained by Osborne panicking at the time of the March budget this year that the economy showed no sign of recovery in time for the 2015 election, made worse by his mistaken increase in VAT and big cuts in capital spending. He chose a big artificial stimulus of the mortgage market to kick-start the moribund economy, repeating the mistake of every previous boom triggered by consumer borrowing and a pumped-up housing market, an inevitable forerunner eventually of yet another round of boom and bust.”

Does Cameron really think the deficit is falling fast enough to revitalise the nation’s economy? In October, borrowing (excluding the cost of interventions like bank bailouts, so we’re already in the realm of made-up figures) fell by two one-hundred-and-thirds, from £8.24 billion in the same month last year to £8.08 billion.

We are told the aim is to keep borrowing for 2013-14 at £120 billion or below. In his ‘Emergency Budget’ of 2010, Osborne predicted that borrowing this year would be down to half that – at £60 billion, and estimates have been rising ever since.

The 2011 budget had the 2013-14 deficit at £70 billion; in 2012 it was expected to be £98 billion; and now £120 billion – double Osborne’s prediction when he became Chancellor.

As for the numbers of people in work, let’s ask Cameron: If more people are working, why has productivity fallen back to the level it reached in 2005? Is it because employers are taking on workers in part-time, zero-hours or self-employed contracts, rather than full-time, in order to take advantage of the opportunity to get out of their holiday pay, sick pay and National Insurance obligations? This seems most likely.

Average wages have been cut by nine per cent since 2010, in real terms, and are still falling. Should Cameron really be boasting about this?

Now German-owned energy firm Npower is cutting 1,460 British jobs. It seems customer service and back-office functions will be outsourced to those well-known friends of the UK government, Capita and Tata.

Kingfisher, the owner of DIY chains B&Q and Screwfix, has suffered a five per cent drop in share values after profits dipped.

And Hibu, the company that owns Yellow Pages, has gone into administration with £2.3 billion of debts. Another old friend of the UK government – Deloitte – will profit from this as administrator – but who knows what will happen to Hibu’s 12,000 employees?

These are just today’s business headlines on the BBC News website – the day after Cameron boasted that the economy was on the rise, the deficit dropping and employment was soaring.

What we’re seeing is not a Prime Minister and Chancellor leading the country back to prosperity.

It’s time we realised that these two chancers have been leading us down the garden path.

Sort out the tax dodgers, Labour, then the benefit bill won’t be a problem

Off-message: If Rachel Reeves had promised to get as tough on tax avoidance in her previous job as she is promising to be on benefits now, Labour might have had more credibility.

A lot of people have been getting their knickers in a knot about Rachel Reeves’ interview in today’s Observer – and rightly so.

In it, she tells us (wrongly), “We are not in an environment where there is more money around,” and says that Labour will be tougher than the Tories when it comes to slashing the benefits bill. She stressed that she wanted to explode the “myth” that Labour is soft on benefit costs.

There are a few myths feeding into these statements. Firstly, the myth that millions upon millions of British citizens are living a life of luxury on benefits, which is, quite frankly, infantile nonsense. Benefits do not pay the ordinary claimant enough to afford huge luxuries and never did. They were always intended to cover the cost of survival while the recipient looked for something better. Anything else is a lie concocted by unscrupulous politicians, that you would be a fool to believe.

Then there’s the myth that the British taxpayer is being defrauded out of a fortune by benefit cheats who are (again) living a life of luxury at our expense. One look at the figures dispels that idea! The fact is that only seven people in every thousand commit benefit fraud – at a consequently small cost to the overall budget – and the amount they receive simply would not support the lifestyle our politicians are suggesting for them.

Let’s move up to a bigger myth – that people prefer to live on benefits than get a job. We’ve now moved from infantile nonsense to dangerous nonsense. The current situation, engineered by the conservatives in both Coalition parties, means there are very few jobs available – around 500,000 at any one time, with 2.5 million people chasing them.

And what kind of jobs are they? How many are zero-hours contracts? How many are part-time? These jobs do not pay more than benefits (“Making Work Pay” – another Tory lie) so anyone taking them will be out-of-pocket.

Meanwhile, the Tories in power have rigged the system so that anyone who does not spend the entire working week pestering local businesses for jobs that they aren’t offering will be sanctioned and will lose their benefit for a period of up to three years! It is entirely disproportionate, considering the state of the economy, and may cost jobseekers a lot more than a few quid a week in the long run.

But this is how the benefits bill will be slashed – by the Conservatives and by Labour, if Rachel Reeves is to be believed. Ministers of any party, living in the la-la land of made-up statistics, will sanction people for failing to work hard enough at securing jobs that don’t exist!

Ms Reeves says Labour’s jobs guarantee will ensure that those jobs do exist but we don’t know that for sure. We do know that she intends to continue Tory policy on sanctions – blindly.

Finally, we have the biggest myth of all – that there isn’t enough money. HM Revenue and Customs just released estimates for the last-but-one tax year (2011-12), suggesting that it failed to collect £35 billion in evaded or avoided tax during that year.

That’s seven times more than the national bill for JSA, and more than 29 times the estimated cost of all benefit fraud. But wait – it gets better! This is only an estimate and it has long been believed that the true cost of the so-called “tax gap” is £120 billion – equal to each year’s national deficit, 24 times the cost of JSA or 100 times the cost of benefit fraud.

Why isn’t our government going after these criminals? Why hasn’t Labour promised to go after them if the Tories won’t?

Simple: Both main parties have been re-writing tax law to make it easier for rich individuals and large corporations to avoid paying tax, and ignoring flaws in tax laws that make avoidance possible.

So for example: In the late 1990s, the then-Labour government removed the tax on dividends that meant companies had to pay tax on profits if they wanted to pay them out to the owners. So for example Arcadia boss Philip Green’s wife Tina, who is technically the owner of the company and lives in Monaco, received a tax-free £1.2 billion dividend in 2005; if this tax had been in place, £300 million of that would have gone to the UK Treasury.

Gordon Brown slashed Capital Gains Tax from 40 per cent to 10 per cent in 2000, meaning income that his friends in private equity managed to engineer into capital gains would be taxed at a lower rate than was paid by their cleaners. Not the finest hour for the Party of the Worker!

And towards the end of its term, New Labour started dismantling the rules that guarded against industrial-scale tax avoidance by British multinationals, meaning profits returned to the UK from overseas subsidiaries would be exempt from tax. This created a substantial incentive for firms to send their income offshore.

Before the 2010 election, our old friend David Gauke made a lot of noise about stopping the limitless tax deductibility of interest payments, that had been used by Boots (the chemist) to slash its tax bill. Six months after the election, when he was in a position to do something about it, he was telling everybody the rules would not be altered because business considered them a competitive advantage.

The Coalition brought in tax exemptions for companies’ tax haven branches and for profits parked in tax haven subsidiary companies. Meanwhile, tax breaks for the cost of funding these offshore set-ups, from the UK, are also provided.

Corporation Tax will drop to 21 per cent by 2014, even though there is no evidence that cutting the rate will make the UK any more competitive in world business.

The Treasury’s mission is now to adjust the framework of tax laws to suit big business. The ‘Big Four’ accountancy firms are now well-entrenched in writing our tax laws for us – and they run the most popular tax avoidance schemes. Consultations have descended into a process of agreeing laws demanded by big businesses.

There are clear and irrefutable arguments that reversing these legislative idiocies and closing every other tax avoidance loophole will do far more for the economy than flogging the unemployed to death, looking for jobs that don’t exist.

But I don’t think former Bank of England economist Rachel Reeves will be interested in that. In 1975, an appalled taxpayer wrote to then-Chancellor Denis Healey, complaining that an employee of the Bank (which is supposed to work on preventing tax avoidance) had been giving advice on how to avoid tax. “I wonder if this is really part of the Bank of England’s duties,” the correspondent wrote.

The behaviour of Ms Reeves, the former Shadow Chief Secretary to the Treasury, suggests that she believes it is.

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