Ed Balls: He wants to put £30 billion worth of infrastructure funding into the hands of local government.
Today’s most interesting election announcement comes from Labour, which is promising to deliver “the biggest devolution of economic power and funding to England’s city and county regions for generations”.
Plans to devolve £30 billion of funding over five years – including funding for housing, transport, business support, employment and adult skills – will be at the heart of the next Labour government’s Spending Review, if elected in May.
A Labour Treasury will allow city and county regions which come together in combined authorities to keep 100 per cent of extra business rates revenue generated by additional growth. They will then be able to invest this to support further business growth in their regions.
All areas will be able to access these freedoms and areas which choose not to have an elected Mayor will not get a second-class deal.
It’s a clear attack on George Osborne’s plan for a “northern powerhouse” – Labour is asking, why just concentrate on ‘The North’ when so many other areas outside London need help due to Tory economic mismanagement?
It is to be hoped that Labour has not forgotten its support base in this business-friendly frenzy. Will this funding be used to promote the Living Wage, for example? Will it be used to create the new work demanded by its jobs guarantee – and will they be permanent, well-paying careers?
“Local areas will be in the driving seat on key decisions affecting their local economies – with new powers over back-to-work schemes, to drive house building, and to integrate, invest in and plan transport infrastructure,” said shadow chancellor Ed Balls, ahead of today’s announcement. It seems Labour has picked up a trick from the Tories – if this scheme fails anywhere, they will be able to blame it on local government. Hmm.
“And we will also let city and county regions keep all the additional business rates revenue generated by growth… We will not only back our great cities, but our towns and county regions too. Not just urban areas, but also rural areas.”
So there is much to recommend this plan – if a Labour government in Westminster can co-ordinate successfully with local authorities, of all colours, in the regions.
Rachel Reeves: Look on the bright side – at least she isn’t Liam Byrne.
Was anyone else underwhelmed by Rachel Reeves’ speech in this years Labour conference?
Not by the promise to take the Bedroom Tax off the statute books, obviously. That has been a settled part of Labour policy since, well, since it landed on the statute books back in 2012. We should not take it for granted, though – and we must always remember that the Bedroom Tax won’t be going anywhere if the Blue Meanies manage to hang on to control after May next year.
But is anybody really convinced by her ‘Jobs Guarantee’? Is it really likely to work, or is it just another ‘make-work’ scheme? What difference will it make if private companies running the current work programme/mandatory work activity/workfare/whatever-they’re-called-today schemes are replaced by local councils and communities? Vox Political is based in Powys and the council here wouldn’t know how to help anybody get back into work off the back of any such scheme. Why should it be different elsewhere?
Do we really need a ‘Basic Skills Test’? Isn’t that an indictment of our education system – and shouldn’t that be where the skills gap ought to be tackled?
Did chills go up anybody else’s spine when Reeves mentioned a “pensions market“? Do we need a pensions market? Do you want to have to shop around for the best pension for you? Don’t you pay your National Insurance for the government to sort out that side of things and not make a mess of it?
And what did she mean by “tailored support” for disabled people who can work? By whose standards?
What did you make of her comments about the work capability assessment? “We need real reform”, she said. No! We don’t need reform! We need to scrap it altogether! It has never been fit for purpose; it never will be. The very word “assessment”, linked to a person’s sickness or disability, is tainted beyond reform. All that is necessary – all that has ever been necessary – is written confirmation of a person’s condition from – guess who? – a doctor. Work capability assessments are a waste of money and a risk to the health of sick and disabled people.
She said: “I give you this commitment: as Secretary of State I will come down hard on any contractor that gets these critical assessments wrong, or fails to treat disabled people with the decency and respect they deserve.” Do you think any such contractor was quaking in their boots at the thought of that? No.
What is she going to do about the Tories’ vindictive ‘mandatory reconsideration’ system? Will she agree to pay benefits to claimants while they await a decision, or will she forget them like the Tories forgot the ex-Remploy workers she mentioned in her speech?
She said Universal Credit was “stuck in first gear” – but made no promise to get rid of it. Its aim, under Tory control, is to ensure the government doesn’t have to spend as much money on benefit claimants. Even if Labour changes that – after it has been made to work at all, which is a hard battle in itself – there will be no way to stop the Tories changing it back into a weapon if the public ever becomes stupid enough to vote them back into office again. It would be far better to devise a scheme that the Tories could not pervert – difficult though such a task may be.
There was more good material than the Bedroom Tax, and it would be wrong to gloss over that. The plan to increase the Living Wage is good, and so is the plan to increase the minimum wage. But critics say the minimum wage provides employers with an excuse to reduce all pay to that still-paltry amount, so why isn’t she saying Labour will combat that? Labour could encourage companies to become employee-owned co-operatives; as co-owners, workers could ensure equitable rates of pay. These measures would go a long way to eliminating the “in-work benefit” element of the social security bill.
Labour should be going further, though. It should be renationalising railway firms that aren’t performing well enough, either by overcharging passengers, failing to invest in the service or simply demanding too high a subsidy from the taxpayer. These firms are supposed to be private – if we are still supporting them, we should still own them. At least, that way, we’d get the profits rather than some faceless shareholder.
Also on the nationalisation list should be power companies and water firms. The energy business seems to be a cartel, organised to screw customers out of as much money as possible – on pain of losing the power necessary to heat and light their homes, and cook their food. That must end. Whatever contract they were given when they were privatised, they have reneged on the deal and should be brought back under public control.
As for the water firms – they’re just tax avoidance schemes, aren’t they? Also, Yr Obdt Srvt seems to recall that one firm sold around 25 reservoirs to France, so they get the benefit of our water during hot summers while we have to suffer drought. That’s not why these firms were sold off. They should come back under public control, with stiff penalties for the shareholders who have abused the public trust.
Come to that, what about the construction industry? We need hundreds of thousands more homes – especially one- and two-bedroomed dwellings – to be defined as social housing, in order to stave off more Tory “captive victim” schemes like the Bedroom Tax. Why won’t the government employ the builders to carry out this work, starting on brown-field sites and avoiding green belt land, for the sake of the future?
Investment in work of this kind could revive the UK’s fortunes in a stroke – and would infinitely improve Labour’s offer to the public. The Attlee government did far more, starting from a far worse financial position so there is no reason to hesitate.
Iain Duncan Smith: He opens his mouth – and the world screams. [Image: Steve Bell]
It seems redundant to start an article by saying Iain Duncan Smith is a filthy liar, because it is a fact that we all know too well already.
The latest offence – and the word is used very deliberately – took place during Work and Pensions Questions in Parliament yesterday (October 14) and means that he has lied to Parliament – not for the first time, either!
It is interesting that he phrased his words in a particular way. Responding to Andy Sawford’s call for clarity on whether, under the new claimant commitment, benefits officers will sanction jobseekers for refusing zero-hours work, he said this referred to “people’s obligations under the existing terms… Once they are offered a job they must take it… Right now, zero-hours contracts are legal.”
You will note, Dear Reader, that he did not simply say, “Under the claimant commitment, they must take zero-hours work or be sanctioned,” even though that is clearly the meaning of his words. It seems likely he was looking for leeway if questioned about it afterwards.
Well, he shouldn’t get any. A reasonable person, looking at the statement, will draw the obvious – intended – conclusion.
It is a conclusion – and a statement – that runs against current DWP policy.
The DWP responded to a Freedom of Information request in July this year, which also called for clarity on zero-hours contracts. The response contains the very clear statement: “Jobseeker’s Allowance claimants are not required to apply for zero hours contract vacancies and they will not face sanctions for turning down the offer of a zero hours contract.”
So Iain Duncan Smith was lying to Parliament yesterday – a very grave offence for a Secretary of State to commit.
Smith said, responding to Mr Sawford: “People will lose benefits for three months for a first offence, six months for a second offence and three years for a third offence.” When it comes to Parliamentary lies, he has committed multiple offences, and yet he gets away with it every time.
Another person who seems to have had trouble saying what they mean is Rachel Reeves. This blog – and many other people – took her to task last weekend, after The Observer published an interview in which she reportedly made many ill-advised comments, giving the impression that Labour policy on social security was lurching to the right yet again.
Yesterday a statement appeared on the Labour Party website in which the new Shadow Work and Pensions Secretary put forward a much more reasonable plan for social security reform under a Labour government. Particularly attractive are the parts where she says Labour will work with the disabled to design services and benefits that will help them play their part, and where she promises to repeal the Bedroom Tax, which has penalised vulnerable people, many of them disabled.
It is a much better statement of intent and indicates that Ms Reeves has been from one end to the other of a very steep learning curve with extreme rapidity.
Does it mean she was misquoted in the Observer article, and should she receive an apology from those of us who leapt down her throat? No.
There has been no suggestion that the article was inaccurate or unfair. The logical conclusion is that she said those words, and it is also logical to deduce that, had we not reacted so strongly, she might not have released the new statement.
It is unfortunate that, for many, the damage has been done. The Observer article was the first chance we had to see what the new Shadow Work and Pensions Secretary was thinking – and first impressions last. Her new statement seems like to go largely unreported. It should be noted that Tristram Hunt also made a fool of himself by supporting Michael Gove’s wasteful and elitist ‘Free Schools’ scheme. Hopefully Ed Miliband has accepted the need to make sure all of his Shadow Cabinet stay on-message from now until the next election. Reeves and Hunt should count themselves lucky to still have their new jobs.
But let’s not dwell on that. The new statement by Rachel Reeves has much to commend it, and is reproduced in full below. Your responses are invited.
Leading the debate on employment, poverty and social security.
Families facing a cost of living crisis want to know we have a social security system that is fair and sustainable, with costs kept under control but there for them when they need it.
The Tories seek to use every opportunity to divide this country and set one group of people against another. But their approach is failing – with the result that people are left out of work for year after year and costs to the country continue to rise. The Work Programme isn’t working, the roll-out of Universal Credit is in disarray, the Youth Contract has been a flop and there is mounting anger at the degrading and disgraceful treatment of disabled people by ATOS.
The complacent Tories are congratulating themselves about a long-delayed recovery. But almost a million young people are out of work. For those in work, increasing numbers of them aren’t being paid a living wage, are stuck on zero hours contracts or working part time when they want to work full time, and are being hit by soaring rents because levels of house building are so low – all of which drive up the benefits bill.
Labour will control the costs of social security by getting more people into work, rewarding work and tackling low pay, investing in the future, and recognising contribution. We’ll strive to make the right to work a reality for people with disabilities, working with them to design services and benefits that enable them to play their part.
A One Nation social security system will be one with responsibility at its heart – people receiving benefits who can work have a responsibility to look for work, prepare for work and take jobs that are available to them, but government has a responsibility to treat benefit recipients fairly and decently, help and support them and work with employers to ensure there are real job opportunities available.
Our compulsory jobs guarantees for young people and the long term unemployed, funded by repeating the tax on bank bonuses and limiting pensions tax relief for those on more than £150,000, would ensure there is work for under 25s out of work for more than a year and adults out of work for more than two years. These would be proper paid jobs – and people would be expected to take them or face losing benefits.
And unlike the Tories, we’ll put an effective cap on structural social security spending by getting tough on the causes of unemployment and rising benefit bills: low pay, lack of economic opportunity, shortage of affordable housing.
We would repeal cruel and counterproductive measures like David Cameron’s Bedroom Tax. I see constituents week in and week out with heart-breaking stories about how this policy is hitting them and their families. Around the country hundreds of thousands of vulnerable people, many of them disabled, are being penalised by this perverse policy which could end up costing more than it saves because of the distress and disruption it’s causing.
And we’ll keep up the campaign for the living wage, and for the economic reforms we need to ensure that prosperity is fairly shared and welfare is not a substitute for good employment and decent jobs.
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.
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.
The end of austerity should be Labour’s flagship policy, according to Michael Meacher MP. Don’t get too excited – Labour has to get into office first, and we’ve no idea how bad the Conservative-led Coalition will wreck the systems of government before May 2015.
This is turning into a very bad weekend to be a Conservative.
The Nasty Party has lost control of 10 councils, with hundreds of councillors unseated. Its claims about people on benefits are falling flat when faced with the facts. It has fallen foul of UK and EU law with its fake psychometric test, which turned out to have been stolen from the USA. Its claim that Labour has no policies has proved to be utterly unfounded.
… What was that last one again?
Yes, you must have heard at least one Tory on telly, rabidly barking that Labour can’t criticise the Coalition if it doesn’t have any policies of its own. Those people were not telling the truth – even though they probably thought they were (poor deluded fools).
Repeal the Health and Social Care Act (otherwise known as the NHS privatisation Act)
Build 125,000+ homes
Regulate private rents
Promote a Living Wage for public sector workers and shame the private sector into following that lead
Offer a minimum 33-40 per cent cut in tuition fees
Limit rail fare increases to one per cent
Reimpose the 50p rate of income tax for the super-rich
Impose a mansion tax on the rich
Repeat the bankers’ bonus tax
Reverse the bedroom tax
Scrap Workfare and replace it with a ‘compulsory’ Jobs Guarantee (I’m not too keen on this one but it’s been promised)
Offer a VAT cut or a ‘temporary’ VAT holiday
Implement the High Pay Commission report in its entirety
Scrap Ofgem and bring in proper energy price regulation
Break up the banks and set up a National Investment Bank, and
Support mining communities and clean coal technology.
In his article, Mr Meacher suggests that Labour needs to go further, with a really strong hook on which to hang all these policies. He suggests the following:
We will end austerity.
Yes, I thought that might stun you. Let’s have it again:
We will end austerity.
Now that you’ve had time to get used to the idea, I hope you’re applauding as much as I was when I read the article. Why not end austerity? The squeeze on public spending and services that David Cameron and his Boy Chancellor imposed in 2010 has not worked at all. There is now no basis for it – I wrote to Mr Osborne, requesting information on the other foundations of the policy after it was revealed that his main justification contained a huge error, and he has not replied, so clearly he has nothing to say. Its loss will be unlamented and can’t come soon enough.
There’s more in the article so I invite you to visit Mr Meacher’s site and read it yourself.
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