It’s astonishing. Right-wing politicians, journalists and members of the public are still – still – pushing the myth that the financial crisis and recession of 2008 onwards was caused by the last Labour government overspending, being “profligate”, “not fixing the roof while the sun was shining”.
This Writer heard it twice on Thursday evening alone – from the Tory candidate at a local hustings event (although, bearing in mind that Brecon and Radnorshire’s Conservative candidate Chris Davies has all the intelligence of a farm animal, this is not surprising) and on the BBC’s Question Time, from William Hague (who was probably one of the Tories who invented this particular tall story in the first place).
Professor Simon Wren-Lewis wrote illuminatingly on the subject in his Mainly Macroblog, saying that the Coalition government wanted people to believe a myth that it rescued the economy from an impending financial crisis, but this could not be squared with the fact that the very large government budget deficit in 2010 was largely the result of the recession.
Therefore, he stated, it was important for the Conservatives and Liberal Democrats “to push another explanation for the large deficit: that it reflected the profligacy of the previous government.
“Economic journalists know full well this is a myth. Yet it is a myth repeated on countless occasions by the coalition parties, and by journalists working for the partisan press. On one occasion one of these journalists tried to rubbish a post where I wrote it was a myth, and I hope learnt to regret the experience.”
As ever, with a big lie (and here on Vox Political we have seen this very often in regard to the SNP’s claims) there is a nugget of truth. Here, it is the criticism that Gordon Brown was not as prudent as he might have been in his pre-recession budgets. Professor Wren-Lewis writes: “That memory is both correct (both the IFS and NIESR made that criticism) and the criticism is valid… This is the half-truth that sustains the myth.
“But mild imprudence is not profligacy. We can see that by looking at another chart, for the debt to GDP ratio. Profligacy would imply a rapidly rising ratio, but this ratio before the recession (37% in 2008) was below the level Labour inherited (42% in 1997), and below its fiscal rule figure of 40%. No profligacy there.”
More prudence would not have helped because, “as Vicky Pryce, Andy Ross and Peter Unwin state in their book ‘Its the Economy Stupid: Economics for Voters’ (which I happily recommend, and which in its initial chapters covers much of the ground of this series): ‘The elimination of the UK’s structural deficit [under Labour before the recession] would not have been even a sticking plaster in the face of the haemorrhaging of the finance sector’s jugular’.”
The professor also adds that the Tories argued for less financial regulation before the collapse, and opposed Labour’s measures to moderate the recession in 2009.
In addition, this blog can add a recent response to a commenter, which ran thus: Labour didn’t ‘recklessly spend money we don’t have’ [as the commenter had claimed]. Labour ran the economy very well – as reports from such leftie strongholds as Oxford University have shown.
The global economic crisis that started in the US subprime housing market affected the UK deeply, and the Labour government of the time was forced to take action to prevent a run on the banks that would have deprived most people in the UK of their bank account savings – including people criticising Labour now.
The narrative about Labour profligacy is a fairy tale made up by the Conservative Party … in order to fool voters into supporting that party so it could win the 2010 election. Even then, it didn’t work and the Tories had to go into a coalition with the Liberal Democrats. They anticipated this, and hedged their bets by making a deal with the Lib Dems in March 2010, two months BEFORE the election (this information is from Five Days To Power, a book on the subject by Rob Wilson, Conservative MP for Reading East).”
The issue is not Labour profligacy; it is Conservative (and Liberal Democrat) dishonesty.
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Speeches – especially those made by politicians – are checked by several people, not just the author or the person delivering it (these are not necessarily the same person), and even then, the speaker can decide to omit parts or include new information in the moment.
That’s why the words “Check against delivery” appear at the top of every speech issued by political parties to the press. They protect the organisation and its speaker from exactly the sort of criticism currently directed at Mr Miliband by Andrew Dilnot of the UKSA (who should know better) and business minister Matthew Hancock (who made the complaint and therefore, clearly, does not).
Miliband took his information – a claim that four-fifths of all new private-sector jobs created since 2010 are in London – from the Centre for Cities thinktank. Both have stated that they believe the claim to be accurate.
That doesn’t have any bearing on the argument, in fact. The version of the speech received by the press makes it perfectly clear that the statistic is independently-sourced, not an official figure from the Office for National Statistics.
So not only did Mr Miliband not mention it, but there is no official figure against which to compare it. Mr Hancock, Mr Dilnot and the whiners in the news media are attacking him for something he hasn’t done – and that is the only unsurprising aspect of this story.
After all, it isn’t the first time Tories have made false accusations about the Labour Party.
They’re still trying to make us believe the financial crisis was caused by Labour, rather than bankers.
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Evil eyes: Esther McVey seems to get a perverse thrill from pretending her government’s policies are helping people; it is more likely they are driving the needy to despair and suicide.
Note to Iain Duncan Smith: It is not a good idea to try to inspire confidence in a £multi-billion “money pit” disaster by wheeling out Esther McVey to lie about it.
The woman dubbed “Fester McVile” by some commentators has accumulated a reputation so bad that the only way she can hide the metaphorical stink from the public is by associating with …Smith himself, in whose stench she seems almost fragrant. But not quite.
This is a woman who has lied to the public that it is impossible to carry out a cumulative assessment of the impact on the sick and disabled of the Coalition’s ‘final solution’ changes to the benefit system.
This is the woman who, in the face of public unrest about the prevalence of zero-hours contracts, announced that Job Centre advisors will now be able to force the unemployed into taking this exploitative work.
She has previously misled Parliament over the loophole in Bedroom Tax legislation that meant the government had removed Housing Benefit from thousands of people who were exempt from the measure – including Stephanie Bottrill, whose suicide has been attributed to the pressure of having to survive on less because of the tax. Asked how many people had been affected by the loophole, McVey played it down by claiming she did not know the answer, while other ministers suggested between 3,000 and 5,000. In fact, from Freedom of Information requests to which just one-third of councils responded, 16,000 cases were revealed.
Mark Hoban stood in for McVey to trot out the lie that independent reviews of the Work Capability Assessment had identified areas of improvement on which the government was acting. In fact, out of 25 recommendations in the Year One review alone, almost two-thirds were not fully and successfully implemented.
In a debate on food banks, McVey’s lies came thick and fast: She accused the previous Labour government of a “whirl of living beyond our means” that “had to come to a stop” without ever pausing to admit that it was Tory-voting bankers who had been living beyond their means, who caused the crash, and who are still living beyond their means today, because her corporatist (thank you, Zac Goldsmith) Conservative government has protected them.
She accused Labour of trying to keep food banks as “its little secret”, forcing Labour’s Jim Cunningham to remind us all that food banks were set up by churches to help refugees who were waiting for their asylum status to be confirmed – not as a support system for British citizens, as they have become under the Coalition’s failed regime.
She said the Coalition government was brought in to “solve the mess that Labour got us in”, which is not true – it was born from a backroom deal between two of the most unscrupulous party leaders of recent times, in order to ensure they and their friends could get their noses into the money trough (oh yes, there’s plenty of money around – but this government is keeping it away from you).
She said the Coalition had got more people into work than ever before – without commenting on the fact that the jobs are part-time, zero-hours, self-employed contracts that benefit the employers but exploit the workers and in fact propel them towards poverty.
She lied to Parliament, claiming that children are three times more likely to be in poverty if they are in a workless household. In fact, according to the Joseph Rowntree Foundation, in-work poverty has now outstripped that suffered by those in workless and retired households; children are more likely to be in poverty if their parents have jobs.
She attacked Labour for allowing five million people to be on out-of-work benefits, with two million children in workless households – but under her government the number of households suffering in-work poverty has risen to eight million (by 2008 standards), while workless or retired households in poverty have risen to total 6.3 million.
She claimed that 60,000 people were likely to use a food bank this year – but Labour’s Paul Murphy pointed out that 60,000 people will use food banks this year in Wales alone. The actual figure for the whole of the UK is 500,000.
She said the Coalition’s tax cuts had given people an extra £700 per year, without recognising that the real-terms drop in wages and rise in the cost of living means people will be £1,600 a year worse-off when the next general election takes place, tax cuts included. She said stopping fuel price increases meant families were £300 better-off, which is nonsense. Families cannot become better off because something has not happened; it’s like saying I’m better off because the roof of my house hasn’t fallen in and squashed me.
Her talents won exactly the recognition they deserved when her Wikipedia entry was altered to describe her as “the Assistant Grim Reaper for Disabled People since 2012, second only to Iain Duncan Smith. She was previously a television presenter and businesswoman before deciding to branch out into professional lying and helping disabled people into the grave.”
In her food bank speech, she also said the government had brought in Universal Credit to ensure that three million people become better-off. There’s just one problem with that system – it doesn’t work.
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This is the first pic I could find of Marcus Brigstocke, as he might have looked while delivering the piece quoted below. He’s a known beardie so he probably had face-fuzz as well.
What a rare and pleasant thing we’ve enjoyed for the last few days – a Bank Holiday weekend with good weather! And isn’t it a shame that this means most of you will have been out, and therefore missed Marcus Brigstocke’s turn on The Now Show.
Here’s a guy who knows how to take the government apart; it seemed as though he’d been reading Vox Political for the last few months because he touched on some of our favourite subjects:
1. The economy
He led with the 0.8 per cent increase in economic growth, mocking the government’s celebratory tone with impressions of how ordinary people took the news, up and down the country (some of the accents were beyond belief).
“Well done, George Osborne,” said Marcus, his voice dripping with sarcasm. “You have proved your theory right, using the Grand Theft Auto model. You have successfully shown that the poor really are like video game prostitutes – if you kick them hard enough, eventually money will come flying out of them.”
Doesn’t this fit nicely with what this blog has been saying about the economy being dependent entirely on the movement of poor people’s money? Those with less spend all – or almost all – of their income and it is this money, being pushed around the system, that boosts profits and keeps Britain going.
He continued: “I know that the state of the economy matters but for the vast majority of people it is as mysterious and cryptic as the shipping forecast… What makes a difference to people is not zero-point-eight-per-cent growth; it’s actual wages and the cost of living.
“The National Institute of Economic and Social Research (NIESR) showed this week that the average worker is £2,000 worse-off since the financial crisis hit,” another common theme here on VP, except in fact it’s £2K per year worse-off. Let’s do a quick shout-out to Jonathan Portes, NIESR’s director, whose Tweets are well worth a read: @jdportes
“I say, ‘hit’. That makes it sound like the crisis swerved towards us. The reality is, the average worker is £2,000 worse-off since the financial sector arrogantly, and with galactic, hubristic stupidity, drove the economy off a cliff, yelling, ‘Does this mean I still get my bonus?’ Of course you’ll still get your bonus. Otherwise you’d leave the country and [chuckling] nobody wants that.” [Laughter from the audience – we’re all in on that joke.]
2. Employment
“More people are in work now; good. But why do employers talk like they deserve a sainthood when they have people working for them? Your company does a thing; you need workers to facilitate the doing of that thing. The workers work, and the thing is done – am I missing something here? Do you feel you need a medal?”
2a. Zero-hours contracts
“One-point-four million British workers are having to scrape a living together from cynical, ruthless, exploitative employers using zero-hours contracts. Value your employees – they are not battery workers; they are people… One in five UK workers earns less than the Living Wage.”
At this point the narrative switches to a spoof advert: “At GreatBigFacelessBastardCorp we care so little about what we do, we pay our workers the minimum wage allowed under the law! That way we can pass on their listlessness and overwhelming sense of defeated apathy to you, the customer! GreatBigFacelessBastardCorp – crushing dreams so you don’t have to!”
This relates to an argument that Vox Political has been having with Tory-supporting businesspeople for years, going back to the earliest days of the blog. Back in January 2012, I wrote False economies that leave the business books unbalanced in which I stated:
It seems to me that many employees are finding life extremely difficult now, because the amount they are paid does not cover all their outgoings and they are having to work out what they can do without. The cost of living has risen more sharply than their pay, so they are out of pocket.
This creates stress, which can create illness, which could take them out of work and turn them into a liability to the economy – as they would then be claiming benefits.
That’s bad – not only for the country but also for their company, because demoralised employees produce poor work and the company’s turnover will decrease; having to bring in and train up new workers to replace those who are leaving through ill health is time-consuming and unproductive.
Therefore, in taking the money for themselves, rather than sharing it with employees, bosses are clearly harming their own companies and the economy.
In fact, it seems to me that this is a microcosm of the larger, national economy. In order to keep more money, bosses (and the government) pay less (in the government’s case, to pay off the national deficit). This means less work gets done, and is of poorer quality (in both cases). So orders fall off and firms have to make more cutbacks (or, revenue decreases so the government makes more cutbacks in order to keep up its debt payments).
[This seems to have been borne out by subsequent events. More people are employed than ever before, according to the government, yet GDP has improved by only a fraction of one per cent in the last quarter. By rights, it should be about 20 percentage points higher than the pre-crisis peak by now, according to some analysts.]
The message to bosses – and the government – is clear: Cutting back investment in people to keep money for yourselves will cripple your earning ability. Cutting even more to make up for what you lose will put you into a death spiral. You are trying to dig your way out of your own graves.
But there is an alternative.
A reasonable pay increase to employees would ensure they can pay their bills, and would also keep them happy.
Happy workers produce better results.
Better results keep businesses afloat and earn extra work for them.
That in turn creates more revenue, making it possible for bosses not only to increase their own pay but employ more people as well.
Wouldn’t that be better for everybody?
Well, wouldn’t it?
3. Welfare lies
“Young workers are amongst the hardest-hit by the downturn, with pay falling by 14 per cent between 2008 and 2013. Well done, everybody! We pay far more from the welfare budget supporting incomes for people in work than we do for those out of a job.
“The government keep on crowing about the number of people they have in work … most of them are not so much in work as near some work, if only they were allowed to do any.
“If you’re on the minimum wage, kept on a zero-hours contract between 7am and 7pm so you can’t work for anyone else but rack up a grand total of – ooh! – just enough hours so your employer doesn’t have to pay your National Insurance [another VP theme], you get no training, no employee benefits, no hope of any promotion and you hear ‘IDS’ banging on about how he’s ‘the saviour of benefits street’, well, if you can still afford a shoe then please throw it at the radio or through the telly or at his actual face.” This is a reference to sabotage, in which workers threw their crude shoes – or ‘sabots’ into machinery to stop it working, in protest against their working conditions and developments that were endangering their jobs.
“Low pay means higher staff turnover, high absenteeism, poor morale and lower productivity.” That’s exactly as I stated in the VP article from 2012.
4. In conclusion
“I don’t know when money started making money faster than people but… It’s not helping,” said Marcus, truthfully. “So instead of running about with your shirt over your head doing ‘airplane arms’, shouting ‘Nought-point-eight-per-cent’… do something to get the people who actually work to be rewarded, recognised and remunerated for what they do.
“It’s not rocket science and, frankly, if it is, I sincerely hope they’re not on minimum wage.”
When I heard that piece, I very nearly stood up to applaud. If you want to hear it yourself (and I’ve left out enough of it to make it worthwhile, I promise you), it’s available for download here, and starts around eight and a half minutes in.
Actually, it would be better if Marcus hasn’t been reading this blog, because then he would have drawn the same conclusions, from the same evidence, thereby reinforcing my own reasoning.
Now, let’s have your opinions, please. I’ll be very interested to hear from supporters of the current “pay-’em-the-bare-minimum” policy as they almost invariably say things like “We can’t pay them any more” – it’s never “They have good reasons that mean they can’t pay us more”.
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The not-so-great dictator: It seems David Cameron’s government is now ignoring all attempts to hold it to account.
Ladies and gentlemen of the United Kingdom, your plight is worsening: The government now no longer pays any attention to the decisions of your Parliamentarians.
You’ll remember that a debate was held on Monday, in which MPs called for an inquiry into the effect of changes to the benefit system – introduced by the Conservative-led Coalition government – on the incidence of poverty in this country; the question was whether poverty was increasing as a result of the so-called reforms.
Parliament voted massively in favour of the inquiry (125 votes for; two against), as reported here.
We considered it a great victory at the time, and looked forward to the commissioning of the inquiry and its eventual report.
Now that dream is in tatters as Michael Meacher, the MP who brought the motion to Parliament, has reported that nothing is to happen and the government is ignoring the vote.
It seems he is blaming this partly on the media because “it wasn’t reported” – and he has a point; only 2,500 people have so far read the article on Vox Political, and that’s not nearly enough interest to worry David Cameron and his unelected cadre.
This turn of events raises serious questions about the role of Parliament in holding the government of the day to account, influencing legislation and taking effective initiative of its own.
Perhaps we should be glad that this has happened, because the illusion that we have any kind of democracy at all has been, finally, stripped away.
(On a personal note, this saddens me greatly as it confirms the belief of a very rude Twitter user who accosted me on that site earlier the week to inform me that democracy died many years ago, and I was deluded in trying to save it now. What a shame that such a person has been proved correct.)
Here are the facts, according to Mr Meacher – and they make bitter reading: “The chances of influencing … legislation are negligible because the government commands a whipped majority at every stage of a bill’s passage through the commons.
“Parliament can make its voice heard, but it can hardly change anything that the government has decided to do.
“The only rare exception is when there is a revolt on the government benches which is backed by the opposition, and even then when the government lost a vote on that basis last year on the EU budget, it still ostentatiously dismissed the vote as merely ‘advisory’.
“Nor, it seems from Monday’s vote, can parliament take any effective initiative of its own either.”
He said newly-instituted systems that followed the expenses scandal are already disappearing:
“The backbench business committee, which for the first time gives parliamentarians some control over what is debated in the house, is being sidelined and decisions on its motions ignored.
“The promised house business committee, which would share negotiations between government and parliament over the passage of all business put before the house, has been quietly dropped.
“Only the election of members of select committees by the house, not by the whips, has so far survived, but one cannot help wondering if that too will be taken back by the party establishments over time.”
This is, as Mr Meacher states, a major constitutional issue – especially as our current government was not elected by the people but created in a dirty backroom deal, and its actions have no democratic mandate at all; nobody voted for the programme of legislation that we have had forced – forced – upon us.
Did you vote for the privatisation of the National Health Service? I didn’t.
Did you vote for the privatisation of the Royal Mail? I didn’t.
Did you vote for the increase in student fees? I didn’t.
Did you vote to protect the bankers who caused the financial crisis from having to deliver compensation to us? I didn’t.
Did you vote to protect tax avoidance schemes? I didn’t.
There are many more examples I could list.
Mr Meacher suggests possible ways to reassert the authority of Parliament, but none of them will have any immediate effect – or possibly any effect at all.
He ends his piece by saying “the most effective way of making progress is greater awareness among the electorate of how Parliament actually performs, or fails to perform. If the public understood more transparently how the corrupting influence of patronage actually works, how the power system turns everything to its own advantage, and how the genuine objectives of democratic elections are so readily thwarted, a lot of these unedifying practices would have to be curbed.”
Considering Cameron’s attitude to the will of the people so far, this seems unlikely.
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Left-wing propaganda piece? Sir Tony Robinson (right) with Rowan Atkinson in Blackadder Goes Forth.
A new development has occurred in the story of Michael Gove’s attempt to rewrite the history of World War One as a glorious display of “patriotism, honour and courage”.
This blog took Gove to task after he attacked one of Britain’s best TV comedies, Blackadder Goes Forth, for perpetuating “myths” about the conflict.
Now Sir Tony Robinson, who played Baldrick in the much-loved series, has weighed in to warn Gove against attacking teachers.
He told Sky News: “It’s not that Blackadder teaches children the First World War.
“When imaginative teachers bring it in, it’s simply another teaching tool; they probably take them over to Flanders to have a look at the sights out there, have them marching around the playground, read the poems of Wilfred Owen to them. And one of the things that they’ll do is show them Blackadder.
“And I think to make this mistake, to categorise teachers who would introduce something like Blackadder as left-wing and introducing left-wing propaganda is very, very unhelpful. And I think it’s particularly unhelpful and irresponsible for a minister in charge of education.”
Sir Tony added that it was “just another example of slagging off teachers.” He said, “I don’t think that’s professional or appropriate.”
Gove appears not to have the wit to answer on his own behalf. Instead a spokesman plunged him even further in the mire with the following: “Tony Robinson is wrong. Michael wasn’t attacking teachers, he was attacking the myths perpetuated in Blackadder and elsewhere.
“Michael thinks it is important not to denigrate the patriotism, honour and courage demonstrated by ordinary British soldiers in the First World War.”
Oh really? It’s fortunate Gove’s own words are available to be examined then, isn’t it?
In his Daily Mail article on Thursday, he wrote the following: “The conflict has, for many, been seen through the fictional prism of dramas such as Oh, What a Lovely War!, The Monocled Mutineer and Blackadder, as a misbegotten shambles – a series of catastrophic mistakes perpetrated by an out-of-touch elite.
Here’s the juicy bit: “Even to this day there are left-wing academics” – in other words, teachers – “all too happy to feed those myths.”
Case proven. Gove is a liar, and he is trying to promote the teaching of lies to children.
Still, he has a vested interest in replacing history with propaganda. Imagine what his own entry in the history books will be. Something like: “In the wake of the financial crisis, the Conservative Party tried to win electoral victory by blaming the disaster on financial mismanagement by the then-ruling Labour Party. When this, and a pledge not to interfere with the National Health Service, failed to inspire the electorate, Tory leader David Cameron seized power in a backdoor deal with the Liberal Democrats, led by Nick Clegg – a man who was to become little more than a puppet in Cameron’s hands. Once installed in Number 10, the tyrant set his lieutenants to work: Andrew Lansley and Jeremy Hunt turned the health service over to private hands. Iain Duncan Smith made benefit claims impossible to sustain, driving thousands of claimants to destitution and death. And Michael Gove reduced the education system to a means of indoctrinating the nation’s young with pre-approved disinformation designed to make them compliant fodder for the new corporatist state.”
… and that doesn’t even begin to describe the Betrayal of Britain that started in 2010!
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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.”
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?
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.
Demonstrating for justice: Campaigners against the Bedroom Tax gathered outside Parliament while MPs debated it inside.
“I’m amazed Labour have chosen to spend their allotted day in Parliament arguing for more unfunded spending on housing benefit.” That’s what Matt Hancock, Conservative MP for West Sussex, had to say about the Opposition Day debate on the Bedroom Tax in the House of Commons on November 12.
Hancock is, it seems, author of a book entitled Masters of Nothing, which sums up his understanding of the situation rather well. He clearly has not mastered the fact that the State Under-Occupation Charge will not save money. He has not mastered the fact that emptying dwellings of their current owners will not make them available to new familes as these people are afraid they will themselves be tipped onto the street when their circumstances change – instead the premises will be left empty, at huge cost to social landlords; and he has not mastered the fact that anyone evicted because of the tax will become a burden on local authorities, who have a duty to rehouse them in bed and breakfast accommodation, even though the money provided to them for this purpose by the government is ludicrously inadequate to the task.
Hancock is not alone in having misconceptions about the Bedroom Tax. Most, if not all, of the Conservatives who spoke during the debate uttered howlers – and the purpose of this article is to name them and explain why they should be ashamed of their words.
Please take the opportunity, Dear Reader, to look for your own MP in the catalogue of calamity that follows, then use it to attack them in their own consituency. Let’s make them realise that actions have consequences.
If you don’t have a Tory MP, feel free to use what follows in order to make sure you never have to put up with one.
We begin with Tobias Ellwood (Bournemouth East) who asked of Rachel Reeves: “What does she say to the almost 400,000 families who are living in overcrowded situations when they look over their shoulders at the almost one million spare bedrooms in Britain?”
The Shadow Work and Pensions Secretary responded without hesitation: “I say that instead of presiding over the lowest rate of house building since the 1920s, this Government should get on and build some houses.”
The Minister of State, Steve Webb, came back to this point later, saying: “Who was doing the house building for 13 years?” Well, we all know who hasn’t been doing it for the last three.
Mr Ellwood said the Tax was brought in because the cost of housing benefit was rising alarmingly: “After 13 years of Labour the cost of housing benefit doubled to £21 billion. That is unacceptable. The cost to taxpayers was £900 per household. The system was getting out of control.” His failure is that he refused to accept the explanation offered by Labour’s Katy Clark – that this was due to the rising cost of rent in the private sector (private rents have indeed been rising massively and the government refuses to take action because this would interfere with the market. Bizarrely, the Conservative-led Coalition seems to believe it is acceptable to pay huge gobs of housing benefit to private landlords – who make unreasonable demands – and then blame social renting tenants for it). He also, by inference, rejected the evidence that the Bedroom Tax will not save any money.
Mr Ellwood also referred to the deficit run by the Labour government of 1997-2010. He said: “Labour lived beyond its means. In 2002-03, it spent £26 billion beyond its means. Four years later that rose to £33 billion. In its final year of office, the deficit rose to £156 billion. That always accumulates.”
This is disingenuous. As he must know, not only did Labour run a lower deficit than the Conservative governments of both Thatcher and Major (average 41 per cent of gross domestic product) from 1997 to 2007, it also made a surplus in the 2000-2001 financial year – something that the previous Conservative governments never did. This means Labour actually paid off some of the debts that had been accumulating. With that pedigree, even the 43 per cent deficit of 2008 looks respectable. The higher deficits of 2009 and 2010 were entirely caused by the bankster-instigated financial crisis, when the actions taken by Labour were entirely supported by the Conservative Party.
He went on to condemn Labour for voting against £83 billion of welfare savings; if the reasoning for them was as shaky as that for the Bedroom Tax (and it was; see previous VP articles) then Labour was quite right to do so!
It should be noted that the Secretary of State for Work and Pensions, Iain Duncan Smith, was not present at the debate. RTU (as we like to call him) was woofing it up in Paris, rather than accounting for his misbehaviour to the taxpayer.
Mrs Anne Main (St Albans) echoed a comment by Mr Webb, but did it in such an inept way that we’ll look at her words rather than his. Following Labour’s Stephen Twigg, she referred to the too-low allocation of Discretionary Housing Payment to families having to cope with the Bedroom Tax: “Perhaps he would like to speak to his Labour-run Liverpool council and ask why, when it received £892,000 in discretionary housing payments last year, it actually sent back £337,000.”
Mr Twigg put her straight: “Does she accept that the figures that she has given are from before the bedroom tax was introduced? This year, Liverpool city council will certainly spend the entire discretionary housing pot.”
His words echoed fellow Labour MP Lucy Powell, who had previously berated Mr Webb: “The Minister incorrectly gave figures for last year—the bedroom tax was introduced only in April. I was talking about money that will come back this year. I can guarantee that the Minister will not be getting any money back from Manchester this year — the year of the bedroom tax.”
Referring to the 400,000 disabled people affected by the Bedroom Tax, Mrs Reeves said 100,000 disabled people live in properties specially adapted for their disability, but the average grant issued by local authorities for adaptations to homes [when they are forced to move out by the Bedroom Tax] stands at £6,000. The total cost of doing the adaptations all over again could run into tens of millions of pounds.
At this moment, Heather Wheeler (South Derbyshire), said while seated: “They’re exempt.”
The response: “The hon. Lady said from a sedentary position that disabled people are exempt, but she would not say it when she was on her feet because she knows it is not true.” In Vox Political‘s home constituency, at least one disabled person has already been evicted because of the Bedroom Tax.
Philip Davies (also known as ‘Stupid of Shipley’) weighed in with a shocking error, in an attempt to attack his local housing association and its director, a Labour MP: “Does the Minister agree that the spare room subsidy is one reason why we do not have the right mix of housing? Social housing providers could build houses as big as they wanted, knowing that the Government would cover the full bill irrespectively. In that respect, does he deplore the social housing provider in my area, of which a Labour MP is a director? It complains on the one hand that it has too many three-bedroom houses—”
That’s as far as he got, and just as well. Let’s go through this one more time: The ‘spare room subsidy’ is a fiction. It never existed and therefore could never have been abolished by the Conservative-led Coalition government. Being entirely make-believe, it could never have affected the decisions of social housing providers. This is just one of the many reasons why Mr Davies is rightly considered to be one of the biggest twits in the Tory Party (among hefty competition). Another might be his claim that disabled people should work for less than the minimum wage.
David TC Davies (Monmouth) complained: “Opposition Members… do not want to talk about the fact that they introduced a measure like this for the private sector.”
He was among many Tories who complained about this apparent double-standard. Labour members reminded them that the Bedroom Tax is retrospective (affecting people currently in social housing) while the private-sector measure was for new tenants only. One may also ask why, if these Conservatives were so disturbed by the apparent discrepancy, they were not calling for this earlier measure to be scrapped as well.
George Hollingbery (Meon Valley) said: “We need to pose ourselves a question: what is dealing with the spare room subsidy about? Is it about reducing the housing benefit bill? Yes, of course it is. The Government propose a £500 million saving, which is important.”
It is important, because Conservatives seemed confused throughout the debate about whether they were trying to sort out overcrowding by putting people into appropriate accommodation, or trying to save money. The two are mutually exclusive. The only way to make money on the policy is for people to remain locked in housing that, thanks to the Bedroom Tax, is now too expensive for them – but this cannot last because they will soon be evicted for non-payment of rent. Moving people around, so that nobody is under-occupying, will result in a higher housing benefit bill because more people will be claiming – the original tenants in their new properties (which, if they are run by private landlords, will be more expensive) and the new tenants who will be occupying to the limit of a property’s capability and therefore may claim the full amount of housing benefit. Either way, Mr Hollingberry’s claim of a £500 million saving is pie-in-the-sky.
Margot James (Stourbridge) made a proper fool of herself. She said: “The Opposition… want to position the end of the subsidy and the creation of a level playing field between all recipients of social housing support as a modern day poll tax.” This is the least of her mistakes as some Labour members may have suggested such a thing; in fact it is Eric Pickles’ Council Tax Reduction Scheme that is the modern-day Poll Tax, because every household must now towards it.
Margot James went on to deny that the Bedroom Tax is a tax, saying: “A tax is a government levy on somebody’s income, whereas we are clearly talking about reducing a subsidy.” This is wrong on two counts. Firstly, there has been no subsidy to reduce – unless she was referring to housing benefit in its entirety. The spare room subsidy is, as already mentioned, as mythical as the “unicorns and fairies” to which Anne Main referred when she tried to dismiss the existence of the under-occupation charge as a tax on bedrooms. Both ladies are wrong, because a tax may also be defined as a government levy on property owned or used by a citizen (such as, say, a bedroom). So – not quite as mythical as unicorns and fairies. One has to wonder why Mrs Main mentioned these, as she has clearly been away with the fairies herself.
Kwasi Kwarteng (Spelthorne) breezed in from another committee to provide the benefit of his own ignorance. He asked: “Is it fair that someone on a low income who is in privately rented accommodation should pay taxes in order to subsidise someone else’s spare room? Is it fair to raise taxation from low-paid workers to subsidise other people’s accommodation?”
The answer, of course, is yes. It is fair. In fact, it is a principle of our system of taxation. Everybody pays into the national treasury, in order to allow the state to provide services – such as housing – for those in need. This may be a detail that current Tories have missed, considering the government’s vigorous attempts to write the highest earners out of taxation altogether. If he wanted to help low-waged people in private rented housing, the answer to that is also simple: cap their rents.
And doesn’t he know that the very low-paid have been lifted out of taxation by his own government, as the Coalition has been raising the threshold for payment of income tax every year, aiming to reach a target of £10,000 income per annum by 2015.
At the end of the day, the motion to scrap the Bedroom Tax was lost by 26 votes. Some have already said that Labour could have won it if all members had been present, but that was never really on the cards; the government has the numbers, even if some Liberal Democrats (like VP‘s own MP, Roger Williams) abstained.
So what are we to make of it all? Simply this: The Conservatives do not have a credible narrative to describe what the Bedroom Tax is about. It doesn’t save money; it won’t put people into appropriate accommodation; and it certainly won’t cut homelessness!
Work out what it’s really about, and you will understand why they are so desperate to keep it.
Path to prosperity? If the economy has been growing for the last nine months, why has food bank use almost tripled during the last year?
No doubt Gideon George Osborne will spend the next few days (if not weeks and months) crowing about the figures from the Office for National Statistics that say the British economy has grown for a third successive quarter.
He has already tweeted, “This shows that Britain’s hard work is paying off & the country is on the path to prosperity.”
The construction industry has grown by 2.5 per cent on the previous quarter, with house builders buoyed up by Gideon’s Help to Buy scheme, which offers (unsupported) mortgage guarantees to buyers and lenders. He has promised to divert £12 million to this, but has not said where he will find the money.
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.
Has this growth generated work for electricians, plumbers, plasterers, roofers? If so, are they being paid fairly? These are the people who will take their disposable income back into the wider economy, for the benefit of other businesses.
Production (including manufacturing) and services are both on the up as well. The BBC report says nothing about retail. But if this good news is true, why is the Department for Work and Pensions determined to expand its Workfare scheme, as laid out in a Conservative conference announcement and by an article reblogged here.
Shadow Chancellor Ed Balls welcomed the signs of growth in the ONS report but warned: “For millions of people across the country still seeing prices rising faster than their wages, this is no recovery at all.”
He is right, of course. Look at the rise and rise of food banks, which have seen a massive rise in attendances from even working people – whose wages simply don’t cover the cost of living. Benefits are, of course, being cut back by our “compassionate” Conservative-led government.
They say there’s no money for it but – if the economy is surging back into growth – where are all the tax receipts from the big corporates that are profiting?
Oh yes – they’re safely closeted in the tax havens that Mr Osborne kindly opened up for them. Ordinary, working, and poor people have to use their own limited funds to pay off a Conservative-run national deficit, presumably because Tories think the rich, who caused the problem, shouldn’t have to pay for services they don’t use.
And the Institute of Directors’ chief economist, Graeme Leach, warned that there are “strong headwinds” restricting the possibility of further growth, including “debt and inflation” which are “rising faster than earnings”.
That’s right. Only yesterday, Yr Obdt Srvt was talking with a gentleman who – despite having a full-time job – has fallen so severely into debt that he has had to cut his expenditure down to nothing but taxes, the vital utility bills (water but not heating), and rent. He has no budget for food and faces the possibility of having his belongings, such as his car, repossessed – and even eviction.
Is he on the path to prosperity, Mr Osborne? Of course not. This report is merely further proof that you were lying when you said, “We’re all in it together” – as you did (again) at the Conservative conference.
It’s prosperity for the greedy few, and austerity for the rest of us.
Maybe you have a different opinion, but ask any average worker on the street and they will tell you that continued wage depression and price inflation, the expansion of the Workfare regime that gives free employment to firms that don’t need it while the workers themselves have to survive on benefits, massive growth in food bank use, and the threat faced by thousands of eviction and the repossession of their belongings are not milestones on the path to prosperity.
Diddled into debt: A corporate tax avoidance scam is conning workers out of decent pay and the government out of tax and NI money, after causing the financial crisis.
“A bank in the UK could lend, say, $1bn to a US bank… generating tax-free income in the UK but a tax deduction in the US – and then simply borrow it back. For the second leg a different instrument could be used that generated tax-free income in the US and a tax deduction in the UK. The banks had simply swapped $1bn, to no economic effect beyond two tax breaks, while quite possibly keeping any mention of the debts off either’s balance sheet. Such tricks – the creation of debt more for tax advantages than any real business need – undoubtedly contributed to huge levels of inter-bank indebtedness that triggered the financial crisis.” – Richard Brooks, The Great Tax Robbery, p86.
If you are not deeply disturbed by the implications of the above quotation, read it again until you are. Richard Brooks is saying that the major banks of the UK, the USA, and who knows how many other countries colluded to hide massive amounts of money from the tax man by claiming – falsely – that it was debt.
The financial crisis happened because the banks could not service the debt they had created – they could not even pay back the interest on it, let alone the debt itself – and so the government was forced to step in and bail them out. So now the government had not only lost the tax it was due from the bank profits that had been hidden by the dodge Mr Brooks mentions, but it had now taken on the fake debt that had been created. The taxpayer was doubly the loser.
Who pays back the debt? Not the banks. Not the large corporations that are also avoiding tax. Not the rich businessmen and women who dreamed up the tax dodges. Thanks to changes in the law and already-existing legal loopholes that have not been closed by the Coalition government, they have been able to park their ill-gotten gains in offshore tax havens, depriving the nation of the wherewithal it needs to fix the problem they created.
Now it seems the government is also being deprived of badly-needed tax money because of the way large firms are structuring their pay packets – to the disadvantage of low-paid workers. The details were in Channel 4’s Dispatches documentary, Secrets of Your Pay Packet, broadcast on October 21.
With more people in work than ever before, the UK should be getting massive amounts more in tax and National Insurance, allowing it to provide the services we expect and pay down the national deficit. But the deficit hasn’t budged. Why?
Because the new jobs are part-time, self-employed or temporary.
Self-employed contracting means you can end up working for less than the minimum wage (you’re paid a fixed daily rate for the job, not the hours it takes to do it, so if it takes a long time to get it done, your pay-per-hour diminishes proportionately – and, as you are self-employed, you’re not entitled to the minimum wage).
Conversely, if you are employed part-time, you can end up working too few hours to qualify for tax or National Insurance (so you don’t get enough credits to pay for your pension later in life and the Treasury doesn’t get the tax money it needs to pay for services and clear debts) and on a personal level you don’t work enough hours to qualify for decent holidays. The company doesn’t pay for employees going on annual leave, potentially saving tens of millions of pounds.
If you work overtime, this doesn’t count towards annual leave, of course. So you can be employed on a part-time contract for, say, three days a week, be asked to work two more days overtime (a full five-day week) and lose out on all the benefits a full-time worker would expect.
The threshold is 20 hours per week. If you work less than that, employers do not have to pay NI contributions which would cost them nearly 14 per cent of pay. So people may work all their lives but never qualify for the state pension.
This is why more people are now in work than before the recession – it’s a cheat by bosses. They’re the ones who pay your tax and NI contributions. If you’re on pay that’s below the new tax threshold, you don’t pay tax. We have the Liberal Democrats to thank for that. It seems like a good deal but in fact it isn’t.
Meanwhile the companies say that cutting down working hours has saved jobs in a hard business environment, while the number of full-time jobs is down and wages have now fallen by 12 per cent in real terms (up from nine per cent, only a few months ago).
It is cheaper for companies to employ more people on shorter hours because they pay less to the government in tax and NI. And they say the “flexible” labour market has been a boost for the country, that having a job is better than having no job, and that it will help people progress.
That is not what we see.
We see a workforce ground down by the pressure of making ends meet on part-time or zero-hours jobs, making no NI contributions, getting very few holidays, and afraid to challenge the situation because their employers can simply let them go and hire someone else from the huge 2.5-million-strong pool of the unemployed (who are desperate for jobs because the DWP fills their entire lives will bullying and threats about losing their benefits).
We see the government completely unable to cover its costs because its own tax system – written by the ‘Big 4’ accountancy firms that have been responsible for more tax avoidance schemes than any other organisations in the country – actively promotes corporate tax avoidance; and Conservative ministers are totally indifferent to the huge losses they are piling up, because it means they can cut public services, or sell them off to (again) big corporations who will then avoid paying tax on them.
And we see the rich corporates laughing all the way to the (offshore) bank yet again.
The Coalition government has tried to tell us that it must squeeze benefits for the extremely poor, and low-paid working people must work much harder, in order to pay off the debt that – no matter what ministers tell us – neither they, nor the last Labour government, created.
In fact, this has been a story of tax avoidance by the very rich. A huge scam, running for decades, and hidden from the British people.
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