The leader of Birmingham City Council said “regrettably” his council would probably have to impose the increase, but that it was “just a sticking plaster over something that needs major surgery”.
This is a Labour councillor saying he can see no choice other than to impose a tax on the poor, due to the machinations of the Conservative Government.
I know some readers believe that councils in this situation should bite into their reserves, or borrow the money. This Writer believes that is just kicking the can down the road – and the worms will come out sooner or later in any case.
Whatever they do, it seems some people will want to blame Labour for this Tory-imposed tax.
How can they be made aware of their mistake?
Ministers are expected to announce on Thursday that local authorities will be allowed to raise council tax 6% over the next two years to raise cash for elderly and disabled care.
It would see the average bill rise by nearly £100 over the next two years: a 3% increase to the average band D property amounts to an extra £45.80 a year.
John Clancy, leader of Birmingham City Council, told Sky News that it was “just a further tax on the poor” in his city.
He added: “Margaret Thatcher had her poll tax, Theresa May is introducing a poor tax.
“Using council tax as a way to raise money for adult social care is a way that actually the poorest people in our big cities pay more.”
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Everybody seems to have had fun with yesterday’s analysis of the Coalition Agreement and its provisions on ‘Jobs and Welfare’ – so let’s have a look at another part of it:
1. BANKING
The banking crisis, coupled with incessant propaganda from the Conservative Party and the right-wing press, brought down the Labour government in the 2010 general election. The incoming Coalition government promised reform – but did it deliver?
In recent years, we have seen a massive financial meltdown due to over-lending, over-borrowing and poor regulation [Conservatives were lobbying for less regulation, right until the crash happened]. The Government believes that the current system of financial regulation is fundamentally flawed and needs to be replaced with a framework that promotes responsible and sustainable banking, where regulators have greater powers to curb unsustainable lending practices and we take action to promote more competition in the banking sector. In addition, we recognise that much more needs to be done to protect taxpayers from financial malpractice and to help the public manage their own debts.
We will reform the banking system to avoid a repeat of the financial crisis, to promote a competitive economy, to sustain the recovery and to protect and sustain jobs [flannel – but it is just an introduction; setting out the stall, if you like].
We will introduce a banking levy and seek a detailed agreement on implementation [The levy, as eventually imposed, was effectively a tax break for the banks, whose share prices actually rose when it was announced].
We will bring forward detailed proposals for robust action to tackle unacceptable bonuses in the financial services sector; in developing these proposals, we will ensure they are effective in reducing risk [The Coalition’s bank levy was devised to raise no more than £2.5 billion per year, while bonuses for the year of its introduction were believed to total around £7 billion. No effective effort has been made to curb excessive bonus payments in banks].
We want the banking system to serve business, not the other way round. We will bring forward detailed proposals to foster diversity in financial services [diversity has fallen off], promote mutuals [these plans were criticised as having ‘no legs’] and create a more competitive banking industry [no sign of this yet].
We will develop effective proposals to ensure the flow of credit to viable SMEs [by the end of 2013, more than 70 per cent of small business owners said they believed the government had produced little or no effect in this regard]. This will include consideration of both a major loan guarantee scheme and the use of net lending targets for the nationalised banks.
We will take steps to reduce systemic risk in the banking system and will establish an independent commission to investigate the complex issue of separating retail and investment banking in a sustainable way; while recognising that this will take time to get right, the commission will be given an initial time frame of one year to report [current situation: banks have until January 2015 – nearly the end of the Coalition’s term in government – to detail how they propose to manage this separation].
We will reform the regulatory system to avoid a repeat of the financial crisis. We will bring forward proposals to give the Bank of England control of macro-prudential regulation and oversight of micro-prudential regulation [some reform appears to have taken place but have not yet been tested].
We rule out joining or preparing to join the European Single Currency for the duration of this agreement.
We will work with the Bank of England to investigate how the process of including housing costs in the CPI measure of inflation can be accelerated [this has not happened].
We will create Britain’s first free national financial advice service, which will be funded in full from a new social responsibility levy on the financial services sector.
We take white collar crime as seriously as other crime, so we will create a single agency to take on the work of tackling serious economic crime that is currently done by, among others, the Serious Fraud Office, Financial Services Authority and Office of Fair Trading [plans for this agency will not be published until the end of 2014 at the earliest].
Conclusion: Where the Coalition has made decisions, they have been weak, meaning banks have enjoyed business as usual for the last four+ years instead of enduring the promised crackdown. Many measures – like the separation of retail and investment banking that we were told was absolutely vital to protect our savings – have not happened at all.
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Yesterday (February 11) we had a chance to see what the Tories – or at least some of them – want to do to state benefits.
Charlie Elphicke, Tory MP for Dover, launched a debate in the Westminster Hall in which he called for the axing of maternity pay – and other in-work benefits – to make way for a new insurance system into which employers and the self-employed would pay, and from which the costs of maternity leave and other benefits would be met. He suggested that participating employers would see a corresponding cut in their National Insurance contributions.
He said he wanted this system to pay out at minimum wage levels, rather than at the current £137 per week maternity rate. The state would back the scheme, but it would be entirely funded by businesses.
The taxpayer would not fund any of this scheme – at least, not the way the visionary Charlie put it during the debate. It would be “paid for by the workplaces of the nation”.
This is how (some) Tories want the system to be: Insurance schemes-a-go-go, with people and businesses standing or falling on their ability to meet the requirements of the system.
Obviously he has not considered the drawbacks of such a scheme. One is very simple: If employers are paying everything towards in-work benefits, why not simply pay the Living Wage, whether a person is working, on maternity, or whatever? The cost would be the same or lower – because there would be no government administrative burden.
Liberal Democrat Work and Pensions minister Steve Webb put some more of them into words.
“As the system currently works… 93 per cent of the cost of statutory maternity pay is refunded to employers. In fact, more than 100 per cent is refunded to small firms,” he said.
“If an employer is reluctant to take on a woman who might have a child, therefore, the pure finances should not make a huge difference.
“I am not therefore sure that having a collectivised… system of insurance is any different substantively for the employer. Either way, employers are getting reimbursed — the costs are being met and are not in essence falling on the employer.”
In other words, there would be no benefit to employers.
He continued: “Whenever we set up a new scheme, we have new infrastructure, bureaucracy and sets of rules. If we had the levy—the at-work scheme that he described — we would have to define the new tax base, have a new levy collection mechanism, work out who was in and who was out, have appeals and all that kind of stuff. There is always a dead weight to such things. Simply setting up new infrastructure costs money. I would have to be convinced that we were getting something back for it.”
In other words, the scheme proposed by the intellectual Mr Elphicke would be more expensive than the current system.
“He then says that he wants the rate not to be some £130 a week, but to be £200 and something a week,” said Mr Webb.
“I was not clear where that extra money would come from. If we pay women on maternity leave double, someone must pay for it. If he does not want that to be an extra burden on firms, paying for it will simply be a tax increase.”
In other words, the scheme might be doubly more expensive.
In addition, he said the proposal created issues around whether it distorted the choice between becoming an employed earner or a self-employed person.
And he pointed out that Mr Elphicke’s proposal was based on a belief that women taking maternity leave would not return to their previous employment – but this is no longer true. Mr Elphicke’s proposal is based on an outdated understanding of the market.
Mr Webb said: “The norm now for an employer who takes on a woman who goes on maternity leave is that — four times out of five — he will come back to the job for which she was trained, in which she is experienced and to which she can contribute.
“We now find that three quarters of women return to work within 12 to 18 months of having their baby… We need to educate employers about the fact that, if they do not employ women of childbearing age, they are depriving themselves of talented people who contribute to the work force. Not employing such women is clearly a bad thing, not only from a social point of view, but from an economic point of view.”
There you have it. Mr Elphicke’s proposal was defeated by a member of his own Coalition government; it was archaic, it was expensive, and it offered no profit for the people who were to pay for it.
That won’t stop him pushing plans like this. You will have noticed that a keystone of his scheme was that businesses would pay for in-work benefits – not the state. Charlie Elphicke is a Tory, and Tories cut taxes for very rich people like themselves. He’ll go on pushing for it in one form or another, for as long as he remains an MP.
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How long has it been since Labour was deemed the party with no policies and no direction? Now it seems the Conservatives have taken up this undesirable label and applied it to themselves (excuse the choice of words) liberally.
Labour’s stand on energy prices sent the Tories scurrying away to find an answer, after they finally realised that baldly claiming nothing could be done was not going to cut any ice.
When they finally came up with something, their answer was to “Cut the green crap” and reduce the environmental levy on energy firms – a u-turn within a u-turn for the party that once proclaimed to the nation, “Vote Blue – Go Green”.
This week they have also u-turned on cigarette packaging – for a second time within a matter of months. Before the summer, the Conservative vision was to safeguard children from smoking by removing packaging for cigarette packets. Then – after coincidentally hiring fag-company lobbyist Lynton Crosby to run their campaigns for them – they decided that the packaging could stay. Now – in the face of a possibly Lords rebellion – they are reversing their position yet again.
This is the context in which Boy Chancellor George Osborne will make his Autumn Statement – and he has already put himself on a sticky wicket before going in to bat.
Remember David Cameron’s massive error of judgement at the Lord Mayor’s banquet a few weeks ago, when he stood behind a gold-plated lectern that could easily be sold off or melted down to help pay of the interest on his government’s ever-increasing borrowing burden, and said austerity was here to stay?
It seems Gideon was eager to follow in his master’s footsteps, stumping up £10.2 MILLION (including VAT at the 20 per cent level that he imposed on us all in 2010) on new furnishings for his Whitehall HQ, from exclusive designers Panik, Ferrious and Senator. One Treasury insider, according to the Daily Mirror, wondered “why we couldn’t have just bought new furniture from Ikea”.
Good question! It is also one that is especially pertinent after it was revealed that Osborne has been calling for last-minute spending cuts from the Home Office and the departments of Justice, Defence, Business and Work and Pensions (yet again), because he will not be able to fund the £2 billion of giveaways announced during the conference season without them.
These include scrapping a rise in petrol duty of almost 2p per litre, free school meals for pupils aged five-to-seven and rewarding marriage in the tax system.
It seems clear that these measures were all unfunded when they were announced, putting the lie to Conservative claims that they have any kind of plan – and ruining their claim that Osborne’s schoolboy-economist austerity idiocy has done anything to improve the UK economy.
Like him or loathe him, Will Hutton in The Guardian had it right when he wrote: “The recovery is the result of the upward swing of the economic cycle finally asserting itself, aided by policies informed by the opposite of what Osborne purports to believe.”
Hutton went on to state that Osborne decided to “borrow from the Keynesian economic locker… never admitting the scale of the philosophic shift, and then claimed victory”. In other words, Osborne is the biggest hypocrite in Westminster (and that’s a huge achievement, considering the state of them all)!
Result: “The public is misinformed – told that austerity worked and, as importantly, the philosophy behind it works too… Thus the Conservative party can be protected from the awful truth that Thatcherism fails.”
Labour MP Michael Meacher is much more scathing (if such a thing is possible). In a Parliamentary debate, quoted in his blog, he told us: “We do have a recovery of sorts, but one that has been generated in exactly the wrong way. It has been generated by consumer borrowing and an incipient bubble, and it is not — I repeat, not — a real, sustainable recovery.”
In other words, the – as Hutton describes it – “eclectic and spatchcocked Keynesianism” employed by Osborne, while superficially useful in the short-term, will cause immense damage over a longer period because he doesn’t understand it and only used it in desperation.
Both Hutton and Meacher agree that a sustainable recovery can only come from what Meacher describes as “rising investment, increasing productivity, growing wages and healthy exports”, none of which are supported by Osborne’s current behaviour.
And yet, according to the Daily Telegraph, Osborne will fulfil another of this blog’s long-standing prophecies on Thursday by telling us all that “Britain can no longer afford the welfare state”.
From a member of the most profligate snout-in-trough overspenders ever to worm their way into public office and then inflict a harm-the-defenceless agenda on the nation, that will be the biggest lie of all.
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“It’s my policy and I’ll cry if I want to” – or is Jeremy *unt simply responding to criticism of his bid to climb on the anti-immigration bandwagon?
A speech by Iain Duncan Smith is immediately reminiscent of a wasp negotiating its way through a bulldog’s digestive system; there’s a lot of droning and implied pain, but through it all you know exactly what the outcome will be.
From this starting point, one may liken a speech by Jeremy Hunt to a hippo having an unhappy bowel movement as a result of an unwise dietary choice; much clumsy blundering in the wilderness and a fair amount of distress – which may be transferred to any poor creature unlucky enough to get in the way.
It seems that migrants and visitors from abroad who use the NHS are now facing the full onslaught of the Health Secretary’s metaphorical indigestion, with nary a bucket of Rennie in sight – except in this case the cure would be a set of reliable statistics covering the use of NHS services by our foreign-born friends.
Armed with new reports by independent firms Prederi and Creative Research, the Health Secretary (and well-known misprint) believes ‘health tourism’ is costing the NHS £2 billion every year – and has announced that he plans to claw back around £500 million of that money.
A BBC report states that ministers believe some of the spending is unavoidable but “it would be realistic to save a quarter. Savings would come from deterring so-called health tourism, recovering money owed by other countries and a levy on non-European temporary residents”.
But the cost of health tourism, as set out in the report, is tiny – at a maximum of £80 million it would be four per cent of the estimated total loss – and this is based on evidence which even one of the reports’ authors, Prederi, have admitted is incomplete. On its own, it could not possibly generate the saving demanded by the new policy, nor could it justify the claim that £2 billion is currently being lost.
That is not the point, though. This is about getting the NHS on the anti-immigration bandwagon.
The study has been released to coincide with the Immigration Bill, which (surprise, surprise) includes plans for a £200-per-person-per-year charge for temporary migrants to use the NHS during any stay lasting between six months and five years.
The Conservative-led Coalition government says this could recoup around £200 million per year, but this is clearly nonsense.
Put yourself in the position of a person from abroad, considering an extended stay in the UK. If an extra cost of up to £1,000 for a five-year stay was added to the trip, out of the blue, would you go ahead with it? Or would you consider other destinations?
Alternatively, if the trip could not be avoided, would this not make you more likely to use the NHS, in order to simply get your money’s worth? The trouble with this is that such a person would not know the cost of a consultation. According to Dr Chaand Nagpaul, chairman of the British Medical Association’s GPs committee, the cost of a single hospital outpatient appointment would equal the £200-per-year levy.
And then there is the administration cost. New Statesman revealed that the chair of the Royal College of GPs, Claire Gerada, has warned that the cost of administrating the new system could outweigh the savings, while also increasing public health problems such as TB by deterring temporary migrants from seeking treatment when they first fall ill. This gives rise to the possibility that we are facing another Tory policy that could have deadly consequences for the population.
This is not a plan to deal with health tourism at all. This is an attempt by an increasingly-desperate Conservative Party to claw back some of the voters who have (themselves) migrated to UKIP because of fears that have been planted in their minds by political spin-doctors, rather than any real threat – the phantom problem of immigrants getting benefits they haven’t earned.
Health tourism is not costing the UK £2 billion a year, and the measures outlined by the government will not stop it, or save any lost money. If anything, it will cost the country millions of pounds.
But then, when has Jeremy Hunt bothered with the facts, when he can have his way simply by playing on people’s fears and manipulating their beliefs?
This is why reference was made, at the top of this article, to Iain Duncan Smith – another Tory minister who won’t let thousands of possible deaths interfere with his beliefs.
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