Rishi Sunak: he’s squeezing you until your pips squeak. How do you like it?
UK Chancellor Rishi Sunak’s spring statement – and the pitifully few measures he announced in it to counter the cost of living crisis that he helped create – means citizens are facing the largest fall in disposable income since comparable records began in the 1950s.
That was the verdict of the independent Office of Budget Responsibility, as reeled off on the BBC’s Politics Live.
See for yourself:
Unless you are a millionaire, you’re probably going to face money trouble.
Have YOU donated to my crowdfunding appeal, raising funds to fight false libel claims by TV celebrities who should know better? These court cases cost a lot of money so every penny will help ensure that wealth doesn’t beat justice.
Remember back in April last year, when Vox Political said the Coalition government’s plan to stop children in ‘troubled’ families from playing truant, while finding work for the adults and stopping both from committing crime, was doomed to failure?
If you don’t, it’s not surprising (our readership back then was around a quarter of its current level) – and you haven’t missed much, because the scheme is back in the news as it is (again, unsurprisingly) failing.
The VP article pointed out that the government had been fiddling the figures in its bid to make it seem that 120,000 such families exist in the UK; in fact, “the number came from Labour research on disadvantaged families with multiple and complex needs, rather than families that caused problems,” according to ‘trouble families tsar’ Louise Casey at the time.
The article pointed out that local councils, offered a £4,000 bonus for each ‘troubled’ family they identified and helped (for want of a better word) were shoehorning families into the scheme – whether they qualified or not – just to make up the numbers.
It was doomed from the start.
So today we have figures obtained by Labour’s Hilary Benn, showing that around 106,500 families have been identified for the scheme (according to averages worked out from councils that responded to a Freedom of Information request). Of these, only around 35,500 were engaged by the scheme, which then failed in three-quarters of cases (around 26,600 families).
That leaves 8,878 families who actually came back to the straight-and-narrow – less than one-thirteenth of the target figure.
A success rate this low could have been achieved if the government had done nothing.
(That seems to be a running theme with the Coalition. What else does it remind us of? Ah, yes… The Work Programme. In this context it is extremely interesting that Mr Benn said the biggest obstruction to the scheme was the Work Programme’s failure “to deliver jobs to the poorest people in society”.)
According to The Guardian, “Data from 133 councils out of the 152 participating in the scheme found that almost one in seven families that had been “turned around” were either still on drugs, had children missing from school or involved in criminal acts.
“Another 60 per cent of households deemed to have been successfully helped by the scheme in March still had adults on unemployment benefits after leaving the programme.”
Bearing in mind the £4,000 ‘carrot’ that was waved in front of councils as encouragement for them to take part, you’ll enjoy the revelation that each local authority claimed to have found an average of 812 troubled families – 20 per cent more than central government had estimated.
Again, this is hardly surprising. Government-imposed council tax freezes have starved local authorities of money and £4,000, multiplied by 812, brings an average of £3,250,000 into each local authority that they would not, otherwise, have had.
So much for David Cameron’s plan to “heal the scars of the broken society”.
The Guardian also tells us that the ‘troubled families’ programme was launched by Cameron as a Big Society (remember that?) response to the riots of summer 2011.
In fact it doesn’t matter what the Coalition government does – or, indeed, what Labour plans to do if that party comes into office in 2015; schemes that are imposed on people from above will never succeed.
The problem is that the United Kingdom has become an increasingly unequal society, with money and privilege bled out of the majority of the population (who do most of the work for it) and into the hands of a very small number who have power and – it seems – no responsibility at all.
The vast majority of us are seen as disposable commodities by these exploiters – whose number includes a large proportion of MPs with interests in private business; they use us to make their huge profits and then throw us into unemployment.
Is it any wonder that such betrayal breeds families that turn away from the system and take to crime instead?
When David Cameron slithered into Downing Street he said he wanted to “re-balance” society. In fact, he over-balanced it even more in favour of privilege and wealth.
Now we need a proper re-balancing of society. The only way to solve the problem of ‘troubled families’ – a problem said to cost us £9 billion every year, by the way – is for people to be born into a society where everybody is valued and receives a fair (in the dictionary sense of the term, rather than the Conservative Party definition) reward for their contribution.
That will mean a fundamental shift in attitudes that should be taught to everybody from the cradle upwards.
You won’t get it under the Conservatives or any other right-wing government because they are exploiters by definition.
Will you get it under Labour?
Possibly. But a lot of right-wing Blairite dead wood will have to be cleared out first, and Hilary Benn is not the man his father was.
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.
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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Today Vox Political is offering a guest blog, for your edification and education. Graeme Beardwrote the following in response to ‘Millionaire’s government will make paupers of us all’. It’s far too long for me to put in the ‘Comment’ section of that article but far too interesting to let it go unpublished. Therefore I am reproducing it as an article in its own right. If anyone else has anything they want to get off their chests, I’ll happily consider other submissions as well.
Over to Graeme:
OK – well let’s get something rather nasty out of the way first. Austerity for the masses is an extremely efficient and effective macro-economic device. Absolutely counter-productive and even destructive to a consumer based economy it is the best way by far, (apart from slavery) on a macro-economic level to shift money from the pockets of the poor to the pockets of the rich.
Make no mistake, the austerity measures being introduced are moving £Billions ‘upward’. None will come ‘downward’. The national debt will be paid off by the poor and the poorer. It will not, and is not being paid off by the rich and affluent. They are untouched and seem to be untouchable. In fact the rich and affluent are seeing their personal wealth increase at an incredible rate.
The following is a global perspective but it applies just as strongly to the UK. The rich are enjoying a boom time and for this particular conspiracy theorist I am of the opinion that it is a deliberate measure. They want it all.
Secondly, let’s state the ‘bleedin obvious’: We live in a consumer society. Like it or not – want to change it or not – it’s what we got, playmates. To that end we have to play the ‘consumer game’ cards in hand. There is no choice. It is a given.
A consumer society (be it local, national or global) depends almost entirely on consumers having a disposable income. That is, money above and beyond that which they need purely to survive. If they do not have a disposable income over and above that needed to satisfy their basic needs such as food, clothing, utility bills, shelter etc then, in many ways, they become what economists call ‘non-consumers’.
For instance, they can’t spend money on what some would consider to be luxury goods like new or used motor cars, or books, or education, or to replace a cooker or fridge that’s on its way out. They make-do, make-shift and mend. Their ‘extra’ spending on consumer goods (the very goods we need to be purchased by consumers in order for the economy not only to grow, but survive) is dead in the water. If they haven’t got it they can’t spend it. The more that have no – or diminishing – disposable income, the more the economy will contract.
It’s happening now and there’s more to come. Far more. People thrown out of work, because of slowing demand or even a demand crash in consumer goods they make or services they provide, or those that become disabled and draw state benefits, are a prime example. They do little more than survive and become non-consumers above subsistence in double quick time. Ergo they are lost to the consumer society. It is a downward spiral and the Multiplier Effect takes over in negative form. See below.
Now this is not rocket science and can plainly be seen repeatedly with only a cursory glance at macro-economic history. Don’t believe me? Look for yourself! To introduce and pursue measures of austerity for the mass of the population in an attempt to ‘heal’ a consumer economy is like trying to catch hold of the world by the arse and pull it uphill.
These austerity measures are either being pursued in ignorance (which I find very hard to believe) or as a deliberate measure to engorge the rich and affluent at the expense of the poor.
For 35 years, post-Second World War, the UK had full employment. Bankrupted by the conflict and in massive national debt, the population was fully employed; the NHS was introduced; the welfare system proposed by ‘The Report of the Inter-Departmental Committee on Social Insurance and Allied Services.’ (The Beveridge Report) was adopted and applied with vigour. People had jobs with disposable income; they consumed (and in quantity – demand for consumer goods went through the roof); tax incomes to the government went up enormously; numbers of people on benefits were minuscule (they had jobs); the construction industry went off ‘bang!’; etc etc. I’m sure you get the drift. John Maynard Keynes’ ‘Multiplier Effect’ in motion and this time in positive mode.
Bit of a problem though! Full employment came with a terrible cost. It gave those in employment power – mainly the power to withdraw their labour and expertise.
And that’s the reason we will never have full employment in the UK ever again.
It gives people at the bottom power and those at the top really don’t want that. They need the sticks of unemployment and poverty for them to sustain their lifestyles. People on the breadline and/or in debt or under threat keep their heads down, live smaller and smaller, and consume less and less in the hope it will eventually, by some kind of magic, get better. It rarely does.
In concert with that, and at the very same time, those who feel insecure and threatened but are in decently-paid jobs and who could shut down their spending too and save more and more for their (maybe) ‘rainy day’ are also removed, if only in part, from the consumer society that we all depend on.
So, actually impoverishing consumers – the very consumers who could – and, history shows, would – drag this economy out of the faecal mess that the cretinous politicians and bankers put us in in the first place, means they are unable to do so – because they are struggling with ‘austerity measures’ and seeing their disposable income decrease alarmingly.
Full employment, as dangerous to those ‘above’ as it may be, is good for a consumer society. Taxes are paid alongside National Insurance contributions; welfare payments reduce exponentially because people have jobs; demand for consumer goods increases and, via the ‘multiplier effect’, more jobs come online and more money is made available to spend. It is an upward spiral.
If you want to heal a consumer economy, don’t introduce more disease. Austerity for the masses is exactly that – a disease – to a consumer society. Don’t believe me though – gawd forbid! Look around you, because it’s happening now, and happening just about everywhere apart from the more affluent areas of the UK.
And that, in part, is why our towns as a working example are full of charity shops, pawnbrokers, and people wanting to buy your surplus gold for two and a half buttons so they can get rich and you can eat or heat next week.
Today, the government was very pleased to announce, on the BBC and in all the usual right-wing rags, that the number of people out of work in the UK has fallen to its lowest total for more than a year – 2.51 million or 7.8 per cent of the working-age population.
But the claimant count – which tracks the number of people receiving Jobseekers’ Allowance and is the most timely measure of employment – rose by 10,100 last month, the largest increase since September 2011, as reported by the BBC and The Guardian.
Both figures were released by the Office for National Statistics, which seems to be treading on territory that is practically owned by the Office of Budget Irresponsibility.
Are you as confused as I am?
How can unemployment be down when more people are claiming for it?
It’s interesting that long-term unemployment has increased by 12,000, meaning those out of work for over a year now number 894,000.
Part-time employment rose by 49,000 to 8.1 million, more than a quarter of the workforce and close to a record high.
The fall in unemployment has been attributed to a reduction in youth unemployment, but that still leaves 963,000 people, aged between 16 and 24, looking for work.
Most tellingly, average incomes rose by 1.8 per cent for the year to date, while inflation measured according to CPI is now 2.7 per cent. According to RPI, it’s 3.2 per cent. That means the spending power is falling.
Economists say the job market is worsening, possibly as people who were hired for the Olympics, and other summer events, come off firms’ books.
Bank of England supremo Mervyn King said the figures suggested the labour market was “pretty strong” but said it was hard to reconcile this with the economy’s weak growth.
I’ve got a pretty good idea about that, Mervyn.
The economy is growing slowly because the vast majority of people aren’t being paid reasonably by their employers. Wages have grown by almost (or more than, depending which yardstick you use) a whole percentage point less than inflation. People don’t have the money to spend!
If the economy is to enjoy real growth, then the government needs to launch a major attack on tax avoidance and tax havens, get that money back into the UK Treasury where it belongs, and then use it to invest in British infrastructure and British business. That way, firms can get back on their feet and will have no excuse not to pay a living wage to workers. Then working-class people – the vast majority of the population – will have a higher disposable income and therefore more spending power (they’ve hardly got any to spare at the moment). They will use that money; it will go around the system again, and the economy will grow again.
If I can see that – and I’m no economist – why can’t you? Why can’t Gideon George Osborne?
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