‘For the privileged few’: If you’re earning the average wage of £26,500 per year, or less, then nothing George Osborne says will be relevant to you.
Why are the mainstream media so keen to make you think falling inflation means your wages will rise?
There is absolutely no indication that this will happen.
If you are lucky, and the drop in inflation (to 1.7 per cent) affects things that make a difference to the pound in your pocket, like fuel prices, groceries and utility bills, then their prices are now outstripping your ability to pay for them at a slightly slower rate. Big deal.
The reports all say that private sector wages are on the way up – but this includes the salaries of fatcat company bosses along with the lowest-paid office cleaners.
FTSE-100 bosses all received more pay by January 8 than average workers earn in a year. Their average annual pay rise is 14 per cent. Bankers get 35 per cent. These are all included in the national private sector average of 1.7 per cent, which means you get a lot less than the figures suggest.
Occasional Chancellor George Osborne said: “These latest inflation numbers are welcome news for families.” Why? Because they aren’t sinking into debt quite as fast as they were last month? They’re great news for the fatcats mentioned above, along with MPs, who are in line to get an inflation-busting 11 per cent rise; but as far as families are concerned, rest assured he’s lying again.
“Lower inflation and rising job numbers show our long-term plan is working, and bringing greater economic security,” he had the cheek to add. Employment has risen, although we should probably discount a large proportion of the self-employed statistics as these are most likely people who’ve been encouraged to claim tax credits rather than unemployment benefits and will be hit with a huge overpayment bill once HMRC finds out (as discussed in many previous articles).
The problem is, Britain’s economic performance has not improved in line with the number of extra jobs. If we have more people in work now than ever before in this nation’s history, then the economy should be going gangbusters – surging ahead, meaning higher pay for everybody and a much bigger tax take for the government, solving its debt reduction problem and ensuring it can pay for our public services – right?
We all know that isn’t happening. It isn’t happening because the large employment figures are based on a mixture of lies and low wages. The economy can’t surge forward because ordinary people aren’t being paid enough – and ordinary working people are the ones who fuel national economies; from necessity they spend a far higher percentage of their earnings than the fatcats and it is the circulation of this money that generates profit, and tax revenues.
Osborne compounded his lies by adding: “There is still much more we need to do to build the resilient economy I spoke of at the Budget.” He has no intention of doing any such thing. He never had.
Conservative economic policy is twofold, it seems: Create widescale unemployment in order to depress wages for those who do the actual work and boost profits for bosses and shareholders; and cut the national tax take to ensure that they can tell us the UK cannot afford a welfare state, opening the door for privatised medicine and private health and income insurance firms.
This is why, as has been discussed very recently, leaders of the Margaret Thatcher era including Nicholas Ridley and Keith Joseph determined that the defeat of the workers would require “the substantial destruction of Britain’s remaining industrial base” (according to ‘The Impact of Thatcherism on Health and Well-Being in Britain’). It is, therefore, impossible for George Osborne to seek to build any “resilient economy” that will improve your lot, unless you are a company boss, banker, or shareholder.
The plan to starve the public sector, as has been repeated many times on this blog, has been named ‘Starving the Beast’ and involves ensuring that the tax take cannot sustain public services by keeping working wages so low that hardly any tax comes in (the Tory Democrat determination to raise the threshold at which takes is paid plays right into this scheme) and cutting taxes for the extremely well-paid (and we have seen this take place, from 50 per cent to 45. Corporation tax has also been cut by 25 per cent).
This is why Ed Balls is right to say that average earnings are £1,600 per year less than in May 2010, why Labour is right to point out that the economy is still performing well below its height under Labour…
… and why the government and the mainstream media are lying to you yet again.
Standing in the shadow of a giant: Vox Political’s Mike Sivier (front) at ‘Cooper Corner’, with Caerphilly Castle in the background.
Vox Political was relatively quiet yesterday; although I reblogged plenty of articles from other sources, there was no new piece from the site itself because I was in Caerphilly, delivering a speech at a Bedroom Tax protest there.
Caerphilly is the birthplace of the late, great comic Tommy Cooper, and it was in the shadow of his statue that the demonstration took place. I instantly (and privately) named the location ‘Cooper Corner’.
I took the opportunity to lighten proceedings at the start by suggesting that Mr Cooper (albeit in petrified effigy) would be providing the jokes. I held the microphone up towards the statue. “Anything? No? No. I didn’t think so.” Turning back to the crowd I added: “The Bedroom Tax is no laughing matter.” Then I got into the body of the speech:
“I write a small blog called Vox Political. I started it a couple of years ago as an attempt to put in writing what a reasonable, thinking person might have to say about government policies in these years of forced austerity, and politics in general.
“As you can probably imagine, this means I knew about the Bedroom Tax, several months before it was actually imposed on us all. I was writing articles warning people against it from October 2012. The trouble was, Vox Political is a small blog that even now has only a few thousand readers a day – and the mainstream media has been almost entirely bought by a political machine with far more funding than I have.
“It is a tax, by the way. You may have heard a lot of nonsense that it isn’t, but consider it this way: a tax is defined as a compulsory contribution to state revenue, levied by the government against a citizen’s person, property or activity, to support government policies.
“It is not a ‘spare-room subsidy’. If anyone in authority tries to tell you you’re having your ‘spare-room subsidy’ removed (or more likely, imposed, they’re so confused about this), just tell them to go and find the Act of Parliament that introduced the ‘spare room subsidy’, using those words. Tell them if they can find it, you’ll pay it – but if they can’t, they must not take any money away from you. They won’t be able to find it because it doesn’t exist.
“It is more accurately described as the ‘State Underoccupation Charge’ – SUC! And it really does suck.
“It sucks money that social housing tenants need for food, heat, water and other necessities out of their pockets and forces them to send it to their landlord instead – either the local council or a social landlord like a housing association. The reasoning behind it has always been that this would encourage people to move, but in fact we know that there is no social accommodation for them to move into. When the Bedroom Tax became law, there was only enough smaller housing to accommodate around 15 per cent of the affected households. It is clearly a trap, designed to make poor people poorer.
“This is why the first advice I put on my blog was for anyone affected by the Bedroom Tax to appeal against it – and I was criticised quite harshly for it, because some people decided such action would mark tenants out as troublemakers and create more problems for them. At the time, I thought it was right to give some of the aggravation back to the people who were foisting this additional burden onto lower-income families; make them work for it, if they want it so badly. As it turns out, I was right to do so, because there are so many loopholes in the legislation that it seems almost anybody could avoid paying!
“Do you think Stephanie Bottrill would have died if she had known that she could successfully appeal against her Bedroom Tax, on the grounds that she had been a social housing tenant since before January 1996 and was therefore exempt? The government spitefully closed that particular loophole earlier this month, but that lady is already dead, due to a lie. Had she been properly informed, she could have successfully fought it off and then taken advice on how to cope with it after the government amendment was brought in.
“There is a case for corporate manslaughter against the Department for Work and Pensions, right there. If tested in court, it seems likely that the way its activities have been managed and organised by senior management – the fact that it foisted the Bedroom Tax, wrongly, on this lady – will be found to have led to her death, in gross breach of its duty of care to those who claim state benefits (in this case, Housing Benefit).
“David Cameron has wasted a great deal of oxygen telling us all that disabled people are not affected by the tax. Perhaps he could explain why a disabled gentleman in my home town was forced to move out of his specially-adapted home, incurring not only the cost of moving but an extra £5,000 for removing the adaptations and installing them into new accommodation? He appealed against Bedroom Tax decision but the result came back after the date when he had to be out of his home. Can you guess what it was? That’s right – he won. I have been trying to get him to take legal action against the council and the government about this as it would be an important test case.
“It includes a study, a utility room, a play room, even an Iain Duncan Smith voodoo doll-making room, if that takes your fancy!
“I was particularly happy to hear that you can have a study as I’ve been writing my blog from the broom cupboard – oh! That’s another room you can have!
“Check the DWP’s online forms. They ask about bedrooms, and then they ask about other rooms. The distinction is clear.”
Then I closed the speech. In retrospect, I should have finished with a few words about the fact that this was the first bit of public speaking I had ever done. I could have given them something along these lines: “I am aware that speech-making is a lucrative sideline for many people, including comedians (although I’m not aware that Mr Cooper ever made any) and also politicians. Perhaps I should use this platform to suggest that, if you know anybody who is considering booking a speaker for a special occasion – society dinner, rugby club social, wedding or party, why not ask them to get in touch with me – instead of Iain Duncan Smith!”
Vox Political stands up in public to make its point
… and we need people to stand up for us.
This independent blog’s only funding comes from readers’ contributions. Without YOUR help, we cannot keep going. You can make a one-off donation here:
Alternatively, you can buy the first Vox Political book, Strong Words and Hard Times in either print or eBook format here:
Calls for a ‘commission of inquiry’ into the impact of the government’s changes to social security entitlements on poverty have won overwhelming support from Parliament.
The motion by Labour’s Michael Meacher was passed with a massive majority of 123 votes; only two people – David Nuttall and Jacob Rees-Mogg – voted against it.
The debate enjoyed cross-party support, having been secured by Mr Meacher with Sir Peter Bottomley (Conservative) and John Hemming (Liberal Democrat).
Introducing the motion, Mr Meacher said: “It is clear that something terrible is happening across the face of Britain. We are seeing the return of absolute poverty, which has not existed in this country since the Victorian age more than a century ago. Absolute poverty is when people do not have the money to pay for even their most basic needs.”
He said the evidence was all around:
There are at least 345 food banks and, according to the Trussell Trust, emergency food aid was given to 350,000 households for at least three days in the last year.
The Red Cross is setting up centres to help the destitute, just as it does in developing countries.
Even in prosperous areas like London, more than a quarter of the population is living in poverty.
According to the Joseph Rowntree Foundation, for the first time, the number of people in working families who are living in poverty, at 6.7 million, is greater than the number of people in workless and retired families who are living in poverty, at 6.3 million.
Child poverty will rise from 2.5 million to 3.2 million during this Parliament, around 24 per cent of children in the UK. By 2020, if the rise is not stopped, it will increase to four million – around 30 per cent of children in the UK.
The use of sanctions depriving people of all their benefits for several weeks at a time, had increased by 126 per cent since 2010 and 120 disabled people who had been receiving jobseeker’s allowance had been given a three-year fixed duration sanction in the previous year.
There are now more than 2,000 families who have been placed in emergency bed-and-breakfast accommodation after losing their homes.
The per cent rise in the overall homelessness figures last year included nearly 9,000 families with children, which is the equivalent of one family losing their home every 15 minutes.
A third of families spent less than £20 a week on food and that the average spend on food per person per day was precisely £2.10. That is a third less than those families were able to afford three months before that.
The proportion of households that had to make debt repayments of more than £40 a week had doubled and the average level of debt was £2,250.
A third of families had council tax debt.
2.7 million people had lost out through the Government’s changes to council tax benefit – many of them disabled people, veterans and some of the most vulnerable in our communities.
Households were having to spend 16 per cent more on gas and electricity.
There are 2.5 million people who have been unemployed for the best part of two years, and there were 562,000 vacancies when the debate took place (Monday), so four out of five of those who are unemployed simply cannot get a job whatever they do.
Cuts to local authorities mean many home care visits are limited to 15 minutes.
The 10 per cent of local authorities that are the most deprived in the country face cuts six times higher than those faced by the 10 per cent that are the most affluent.
60 per cent of benefit cuts fall on those who are in work.
Mr Meacher said the biggest cause of absolute poverty was the huge rise in sanctioning, often for trivial reasons such as turning up five minutes late for a job interview or the Work Programme:
A dyslexic person lost his Jobseekers Allowance because his condition meant that in one fortnightly period he applied for nine jobs, not 10. He was trying to pay his way and already had work, but it provided only an extremely low income.
The jobcentre didn’t record that a claimant had informed them that he was in hospital when he was due to attend an appointment and he was sanctioned.
A claimant went to a job interview instead of signing on at the jobcentre because the appointments clashed – and was sanctioned.
A claimant had to look after their mother who was severely disabled and very ill – and was sanctioned.
A Job Centre sent the letter informing a claimant of an interview to their previous address, despite having been told about the move. The claimant was sanctioned.
A claimant was refused a job because she was in a women’s refuge, fleeing domestic violence and in the process of relocating, but I was still sanctioned.
Mr Meacher also quoted what he called a classic: “I didn’t do enough to find work in between finding work and starting the job.”
The latest DWP figures suggest that more than one million people have been sanctioned in the past 15 months and deprived of all benefit and all income. “Given that the penalties are out of all proportion to the triviality of many of the infringements, and given that, as I have said, four out of five people cannot get a job whatever they do, the use of sanctioning on this scale, with the result of utter destitution, is — one struggles for words — brutalising and profoundly unjust,” said Mr Meacher.
Other reasons for the rise in absolute poverty included:
Delays in benefit payments.
The fact that it is impossible for many poor and vulnerable people to comply with new rules – for example a jobseeker who asked to downsize to a smaller flat who was told he must pay two weeks’ full rent upfront before getting housing benefit. He does not have the funds to do so and is stuck in a situation where his benefits will not cover his outgoings due to the Bedroom Tax.
The Bedroom Tax, which applies to around 667,000 households, and two-thirds of those affected are disabled. More than 90 per cent of those affected do not have smaller social housing to move into.
The Benefit Cap, imposed on a further 33,000 households.
Mistakes by the authorities; up to 40,000 working-age tenants in social housing may have been improperly subjected to the Bedroom Tax because of DWP error (although Iain Duncan Smith claims a maximum of 5,000).
Mr Meacher said: “The Chancellor’s policy of keeping 2.5 million people unemployed makes it impossible for them to find work, even if there were employers who would be willing to take them, and the 40 per cent success rate of appeals shows how unfair the whole process is.”
Responding to a comment from David TC Davies (Conservative) that those who are not looking for work must realise there will be consequences, particularly when a million people have been able to come to the UK from eastern Europe and find work, Mr Meacher said, “Those who come to this country are more likely to be employed and take out less in benefits than many of the indigenous population.”
He asked: “Is all this brutality towards the poor really necessary? Is there any justification in intensifying the misery, as the Chancellor clearly intends, by winding up the social fund and, particularly, by imposing another £25 billion of cuts in the next Parliament, half of that from working-age benefits?
“After £80 billion of public spending cuts, with about £23 billion of cuts in this Parliament so far, the deficit has been reduced only at a glacial pace, from £118 billion in 2011 to £115 billion in 2012 and £111 billion in 2013. Frankly, the Chancellor is like one of those first world war generals who urged his men forward, over the top, in order to recover 300 yards of bombed-out ground, but lost 20,000 men in the process. How can it be justified to carry on imposing abject and unnecessary destitution on such a huge scale when the benefits in terms of deficit reduction are so small as to be almost derisory?”
Suggested alternatives to the punitive austerity programme of cuts came thick and fast during the debate. Challenged to explain what Labour’s Front Bench meant by saying they would be tougher on welfare than the Tories, Mr Meacher said: “As the shadow Chancellor has made clear on many occasions, is that we need public investment. We need to get jobs and growth. That is the alternative way: public investment in jobs, industry, infrastructure and exports to grow the real economy, not the financial froth, because that would cut the deficit far faster than the Chancellor’s beloved austerity.”
He asked: “How about the ultra-rich — Britain’s 1,000 richest citizens — contributing just a bit? Their current remuneration — I am talking about a fraction of the top 1 per cent — is £86,000 a week, which is 185 times the average wage. They received a windfall of more than £2,000 a week from the five per cent cut in the higher rate of income tax, and their wealth was recently estimated by The Sunday Times at nearly half a trillion pounds. Let us remember that we are talking about 1,000 people. Their asset gains since the 2009 crash have been calculated by the same source at about £190 billion.
“These persons, loaded with the riches of Midas, might perhaps be prevailed upon to contribute a minute fraction of their wealth in an acute national emergency, when one-sixth of the workforce earns less than the living wage and when one million people who cannot get a job are being deprived of all income by sanctioning and thereby being left utterly destitute.
“Charging the ultra-rich’s asset gains since 2009 to capital gains tax would raise more than the £25 billion that the Chancellor purports to need. I submit that it would introduce some semblance of democracy and social justice in this country if the Chancellor paid attention to this debate and thought deeply about what he is doing to our country and its people.”
Ronnie Campbell (Blyth Valley, Lab) suggested that the Government might save a lot more if its members “showed the same energy and enthusiasm for getting those who evade their taxes and run to tax havens as they do for going after the poor, the sick and people on the dole”.
Against this, David TC Davies offered insults and distortions of the facts, quoting the Daily Mail as though it provided an accurate account of current events: “Members of the shadow Cabinet might need a boxing referee to sort out their disputes at the moment, as we read today in the Daily Mail.”
He said: “We took office with a deficit of £160 billion and a debt that was rising rapidly to £1 trillion. That was after years of overspending in good times, as well as in bad, by Labour, a cheap money supply and lax banking regulation under the former Government.” Labour’s spending, up until the financial crisis, was always less than that of the previous Conservative administration; Gordon Brown and Tony Blair both ran a lower deficit than John Major and Margaret Thatcher, and at one point actually achieved a surplus, which is something that the Conservatives had not managed in the previous 18 years. While Mr Davies here complained about the “lax banking regulation”, Conservatives supported it at the time and in fact demanded more DE-regulation, which would have made the financial crisis worse when it happened.
“We had disastrous economic decisions, such as that to sell gold at a fraction of its real rate,” said Mr Davies. Yes – the UK lost around £9 billion. But compare that with the disastrous economic decision by George Osborne to impose more than £80 billion worth of cuts to achieve a £7 billion cut in the national deficit. The UK has lost £73 billion there, over a three-year period.
And Mr Davies said: “Worst of all and most seriously, we had a welfare system that allowed people to get into a trap of welfare dependency, leaving them on the dole for many years, but at the same time filling the consequent gap in employment by allowing mass and uncontrolled immigration into this country, which completely undercut British workers.” The first assertion is simply untrue; the second is a legacy of previous Conservative administrations that agreed to the free movement of EU member citizens, meaning that, when the eastern European countries joined in 2004, citizens migrated to the UK in the hope of a better life. Labour has admitted it should have negotiated for a delay in free movement until the economies of those countries had improved, making such migration less likely, but the situation was created before Labour took office.
Challenged on the Coalition’s record, Mr Davies fell back on the Tories’ current trick question, which is to counter any criticism by asking: “Is he suggesting that we are not doing enough to pay down the national debt? Is he suggesting that we should cut further and faster? If so, and if we had the support of other Opposition Members, that is exactly what the Government could do and, indeed, possibly should do. I look forward to seeing that support for getting the deficit down.” This disingenuous nonsense was batted away by Labour’s Hugh Bayley, who said “investing in the economy, creating jobs and thereby getting people off welfare and into work” was the way forward.
Mr Davies’ Conservative colleague Jeremy Lefroy took a different view, agreeing that increasing numbers of people are finding it impossible to make ends meet, and that job creation and apprenticeships were a better way out of poverty than changing the social security system alone. He agreed that sanctions were applied to his constituents “in a rather arbitrary manner”. He spoke against George Osborne’s suggested plan to remove housing benefits from people aged under 25, saying this “would have a drastic impact on young people who need to live away from home and who have no support from their families”. He spoke in favour of councils increasing their housing stock. And he admitted that disabled people faced severe problems when unfairly transferred from ESA to JSA: “A lady in my constituency says, ‘I am simply not fit for work, but by signing on for JSA I have to say that I am available and fit for work.’ She does not want to tell a lie.”
Steve Rotheram (Liverpool Walton, Labour) spoke powerfully about the effect of being on benefits: “Lots of people in my city are on benefits for the very first time. Far from being in clover — it beggars belief what we read in the right-wing press — they are struggling to make ends meet, and the problem that thousands of Liverpudlians are facing is new to them. For many, the idea that they might miss a rent payment is totally alien. They have not done that in the past 20 years, but since May 2010, their individual household incomes have been on such a downward trajectory that they now find themselves in rent arrears, seeking advice on debt management and unable to afford the daily cost of travel, food and energy. Figures suggest that 40 per cent of the adult population in Liverpool are struggling with serious debt problems.”
And he said poverty had health implications, too: “David Taylor-Robinson of the University of Liverpool and his fellow academics have highlighted the doubling of malnutrition-related hospital admissions nationally since 2008.”
John Hemming (Birmingham Yardley, LD) raised concerns about “the interrelationship between the welfare cap and victims of domestic violence, and whether there are situations that need more attention. I believe that people can get discretionary housing payment to leave a violent home, but it is important that we ensure that there is a route out of domestic violence for women. I am worried about that issue, just as I am about some wrongful sanctioning that I have seen. That does not help at all, because it undermines the whole process.” He also called for “a substantial increase in the minimum wage, because as the economy is improving the Government should look at that, rather than maintain things as they are”.
The vote gave huge endorsement to the call for an independent inquiry into poverty under the Coalition.
But with an election just 15 months away, how long will we have to wait for it to report?
Show your support for Vox Political! The site needs YOUR help to continue. You can make a one-off donation here:
Alternatively, you can buy the first Vox Political book, Strong Words and Hard Times in either print or eBook format here:
The Grimmer Reaper: If pensioners die in their thousands this winter, Iain Duncan Smith stands to profit from it. [Picture: Daily Mirror]
It is hard not to imagine Iain Duncan Smith salivating at the thought that 200 pensioners a day might die of the cold this winter.
Pensions are the most expensive part of the State benefit bill, taking up more than half of his budget. With the state pension at £110.15, he stands to save £137,467,200 per year, without having to lift a finger. The energy companies will get the blame, with soaring bills making it impossible for senior citizens to heat their homes.
This is a much better deal, even than the one he engineered with Employment and Support Allowance, in which at least 73 people have been dying every week because of poverty-related health or mental health problems brought on by DWP decisions, ; people on ESA for longer than 13 weeks get £100.15 per week, meaning a saving of only £380,169.40 per year.
Make no mistake – any pensioners who die will be counted as a “positive benefit outcome” in Smith’s twisted DWP world. The man himself has been described as a social Darwinist, meaning he expects natural selection to decide who lives. Survival of the fittest, the ones who make the smart decisions and do what they must – and the Devil take the hindmost.
The figures on pensioners come from a survey by Age UK that says more than three million older people are worried about winter heating, with nearly six million admitting fears about the rising price of energy.
“Cold temperatures can be very dangerous to older people’s health as they not only increase the likelihood and severity of flu, chest infections and other respiratory problems but they also raise blood pressure which puts people at greater risk of heart attacks and strokes,” the Age UK article states.
“This winter, 24,000 older people may not survive the cold weather – that’s 200 deaths a day that could be prevented. Contrary to public belief, about half (41 per cent) of all excess winter deaths are due to heart attack and strokes.
“Age UK’s new research reveals that whilst many older people are worried about staying warm at home, many are unaware of the severe health implications of being cold.
“Almost a quarter (22 per cent) of older people don’t realise that a number of serious health problems are made worse or brought on by the cold and this rose to 29 per cent amongst people aged 80 and over.”
Does Iain Duncan Smith know that?
“Less than one in 10 people aged 65 and over in the UK are aware that strokes can be brought on by the cold in winter, with only 14 per cent recognising that the cold can impact on heart attacks,” the article continues, so it is doubtful that he does. Iain Duncan Smith is 59.
Does he know that “living room temperatures should ideally be kept at 70F (21C) and above whereas bedroom temperatures should be kept at a minimum of 64F (18C)”? Probably not. He’s probably got someone to work these things out for him.
Besides urging older people and their friends and family to be prepared this winter, Age UK is also calling on MPs of all parties to support investment to boost the energy efficiency of older people’s homes and help them keep warm.
It would be welcome to see Iain Duncan Smith helping out here. It would also be a surprise.
That is why it is hard not to imagine Iain Duncan Smith salivating at the thought that 200 pensioners a day might die of the cold this winter.
End of an institution: We can all wave goodbye to friendly Postman Pat; the new post-privatisation Royal Mail will be run according to strict for-profit rules and rural areas in particular are likely to suffer.
Is anybody happy that the Royal Mail is to be privatised?
Personally, I see no cause for celebration. Polls show that 70 per cent of the public are against privatisation – no matter which political party they support – and 96 per cent of the workforce don’t want it either, despite being offered shares in the new company. They’re not stupid. They know that workers in other privatised services have not been able to keep their shares. Will they be able to take the shares with them if they leave?
And what will happen to workforce terms and conditions?
Other people buying shares will have to pay at least £750 to get the smallest stake in the new company – that puts the sell-off well out of the reach of most people in these depressed times. It is a privatisation for financiers, lawyers and accountants. They won’t want to share the profit pot with staff – and profits are at a record high of £400 million per year.
Meanwhile, the Conservative and Liberal Democrat coalition government recently nationalised the Royal Mail’s pension fund obligations (its debt) so that taxpayers across the country will have to pay for it. The privatisation means any profits will go to those who can afford to buy the shares. This is bad business. Don’t these two political parties always claim they are the experts when it comes to money? It seems a strange claim to make in the light of such reckless endangerment of public funds.
What of the future? We have seen where privatisation leads, with the flotation of the railways, the energy and water companies on the stock exchange – shares have ended up in the hands of foreign multinationals who have pushed prices up and up, while providing ever-poorer services, and the companies concerned have continued to demand money from the government for any investment; this is because all the profits go to shareholders, who then feel justified in granting huge pay packets to their chief officers.
So the taxpayer continues shelling out for these so-called private utilities while the new owners have the time of their lives at our expense. The workers – and the service – suffer.
This is a change that will affect everyone. I hope everyone remembers who inflicted it on us, when they come to vote at the general election in 2015.
How pleasing it is to see the Archbishop of York agrees with the view, long-held by Vox Political, that British workers should be paid a living wage, and that the taxpayer should not be subsidising big business!
Archbishop John Sentamu is to chair a year-long commission investigating the need for a living wage. In The Observer, he wrote: “The holes in millions of paycheques are being plugged by in-work support to the tune of £4 billion a year. But why aren’t those who are profiting from their workers paying up? Why is government having to subsidise businesses who don’t pay their employees enough to live on? It is a question we need to answer and act on – fast. The cost of living is rising but wages are not. In the rush for profit, and for high pay at the top, too many companies have forgotten the basic moral imperative that employees be paid enough to live on.”
Needless to say, there are also detractors. A commenter known as ‘neilcon’ pointed out: “The high cost of running a small business in this country is one of the main reasons why the hourly rates are so low. If you employ someone at £8 you then have to pay a further 13 per cent to the government in employer’s National Insurance contributions for the privilege of employing someone; you have to supply that person with suitable equipment for their work.” The commenter reeled off a few other business-related expenses before going on to “the issue of the banks utterly refusing to lend to small businesses, the high cost of renting office premises, business rates on your office premises to the government, the high cost of VAT, together with clients trying to squeeze the final price as much as possible and the very late payments by bigger companies.
“The real cost to an employer of an £8 per hour wage is calculated at about £15 to the business.”
I can sympathise with this sentiment. It doesn’t let off the bosses of larger companies, who have huge salaries and no excuse (FT 350 companies, for example) but they might have a reasonable excuse for not raising pay, if smaller companies say they’ll go out of business if the higher cost is forced on them.
But the simple fact is that the cost of living is too high and – if they had to rely on wages alone – millions of working people, up and down the country, would be unable to pay their bills…
He wrote: “More than £100 a year of an average household [water] bill, that is about 30 per cent, goes on profit, compared with 9 per cent in the energy sector which is itself known for egregious profiteering.
“In the last 10 years, water bills have risen by a massive 64 per cent, compared with an increase of just 28 per cent in average earnings. In the last three years alone, average earnings have fallen by 7 per cent while water bills have continued to rise remorselessly. There is no competition in the water industry and the only potential constraint is the industry regulator, but he has chosen to succumb to corporate lobbying in allowing water bills to continue to shoot upwards to feed fancy executive bonuses and big dividend handouts.”
The last sentence tellingly brings us back to the huge profits taken by executives. It seems that a few things are going on:
1. The privatisation of the national utilities – water, electricity, gas (and, some would say, telecommunications) – has failed in its stated aims, which were to democratise capitalism by making it possible for everybody to be a shareholder, to keep bills low, and to end government subsidies for these organisations. Instead, shares have been drawn into the hands of a very few rich investors, bills have risen far beyond wages, and government subsidies have either increased massively (rail) or companies have used the tax system to avoid paying the amount due on their profits (Thames Water and its ‘super sewer’).
2. Company bosses, keen to drive up their share prices in order to create larger dividends for their shareholders and higher salaries for themselves, have successfully held wages down in order to achieve this. As ‘neilcon’ pointed out, lower wages mean less spending on National Insurance, meaning that keeping the employee payout down by pennies per person leads to many pounds in increased revenue.
3. The government is unwilling to do anything about this because it wants to keep wages depressed as much as possible. This is the reason it has cracked down so hard on benefit payments – not because of fraud (which is minimal) but in order to create an urgent need among the unemployed to find work, and terror in those who have jobs that they could be replaced if they complain about the increasingly meagre pittance on which they are being told to survive.
There are many subtle sub-consequences as well. You may wish to raise some of them in the ‘comments’ column.
What’s the answer?
This may come as a surprise, but the best place to start might be with the private utility companies. An ultimatum to put their houses in order and charge a reasonable amount, rather than extorting money out of a captive clientele, might produce results – especially if the alternative is re-nationalisation.
This might take the pressure off the smaller private companies by actually reducing the amount calculated as the living wage; with lower utility bills, the amount of money needed for a working person’s survival will also drop.
If the government and the utility companies got their sums right, this could mean the need to subsidise working people’s pay would be wiped out, meaning a large saving on the tax bill. Feed this through to working people in the form of a tax cut and, again, smaller private companies would benefit (along with everybody else, of course). An alternative of using the money to help pay off the deficit would be unhelpful – we need more, and healthier, businesses in this country, employing more people. Get that sorted and the deficit will come down in any case.
On a completely different tack, what about Landlord Subsidy (otherwise known as Housing Benefit)? Why not put a cap on rents, thereby ensuring that the government is not subsidising the rapidly-increasing pace of (some) landlords’ greed?
Unfortunately, this is not likely to happen under the current Conservative/Liberal Democrat Coalition government – and it seems the Parliamentary Labour Party is to keen to become the Plastic Tory Party to take a stand; it will be up to its backbenchers and the party’s grassroots members to force a policy change.
At the end of the day, wages might still have to rise, due to matters unforeseen in this article.
But a plan that acknowledges the mistakes of the past and aims to redress the shocking way that the supply of money has overbalanced to favour a tiny minority – to the detriment of the vast majority – would constitute the first steps on the way to a nation that can not only provide Archbishop Sentamu’s living wage, but also help our struggling small businesses.
This is not a good time to run a retail business – the effect of the Coalition’s benefit cuts will trickle up and bite our rich retailers and industrialists hard.
According to the BBC website, business activity was hit hard by last month’s exceptionally cold weather, with the number of people visiting shops down by more than five per cent.
For one person, this will have been an extremely pleasant piece of news, because for once he won’t have to explain himself.
That person is, of course, Gideon George Osborne.
For one month, he hasn’t been in the unenviable position of having to root around in the political undergrowth for a reason the economy has tanked – that isn’t related to his own hopelessly inadequate economic policies.
For one month only!
He will not have an excuse when the figures come in for April, worse than for March, as sane economic forecasters should expect.
Instinct says he will tell us the funeral of Margaret Thatcher will have something to do with it. He used the wedding of the Duke and Duchess of Cambridge as a shield – what goes for ‘matches’ must surely apply also to ‘dispatches’.
The real reason will be the effect of the huge benefit cuts, that will take £19 billion out of the economy over the next year, if commentators are to be believed.
That’s just in money terms. Add in a conservative estimate of the fiscal multiplier (the effect on the economy) and we’re staring into the black pit of a £30.4 billion loss. That would be £500 for every person in the UK, if we were all affected.
But the richest among us won’t be. It is on the poorest and least able to defend themselves that this hammer blow has fallen. The government has been giving money back to the richest, as we all know.
In fact, this show of support for his cosseted buddies might protect them from the storm that’s coming, and may therefore prove to be a shrewd move – but we must all remember that Osborne is not an intelligent man and good fortune coming to anyone as a result of his policies is pure chance.
Because the rich will be affected by the benefit cuts. Poor people have no choice but to spend the money they receive. They have to buy things they need and pay the bills, so it goes on food, heat, light, water, the rent, repairs and other necessaries. With less money available to them, they will not be spending as much in the shops, and will be more careful about how much gas, electricity and water they use, as well.
Who owns and runs the shops? Who owns the shares in the utility companies (now that the bulk of shares have been bought up from the middle-class speculators who bought them in the 1980s)?
After a few months of this, we’ll see what happens to their profit margins. My guess is that a £100,000 tax rebate won’t help very much.
The propaganda machine keeps spewing out nonsense, of course. Only last weekend we heard Francis Maude telling Jonathan Dimbleby and the Any Questions audience in Exeter: “The Coalition government, which is two parties which have come together from a different place, in the national interest, to do something quite big and difficult, which is to address the biggest budget deficit any country in the west had.”
It wasn’t the largest budget deficit of any western country – either by size or percentage of GDP. That was a flat-out lie and I wish Jimbles would pull him up on it.
The deficit in the United States is greater than ours in percentage terms; in money terms, it dwarfs the UK.
Across the whole world, Japan has the biggest deficit.
Strangely, you don’t hear the Japanese making a big fuss about it.
The Manchester Gazette ran this striking image alongside an article on what the bedroom tax would mean for that city. You can tell that they weren’t thrilled.
The failure of government to replenish social housing means that the introduction of the ‘bedroom tax’ from April next year will lead to a huge increase in human suffering.
It was (of course) the Conservative Party that first decided to sell off council houses, at discounts that went up to 70 per cent. The first sales took place in 1980, piloted by Michael Heseltine, after the plan had appeared in the Tory manifestos for 1974 and 1979.
Even then, the Tories were obsessing about shrinking the state. This, and the now-infamous privatisation of state industrial/utility assets, were both conceived as populist moves to encourage private sector alternatives indirectly. They understood that the welfare state was popular and that a frontal assault on it would harm their own credibility.
The plan was phenomenally successful. By 1990, 1.2 million houses had been sold – one-fifth of the entire council house stock. The sales raised £20 billion.
Whatever happened to that money?
We know it did not go into new council house construction – the annual level slumped from 86,000 to 21,000 during the 1980s and this meant there was a worsening social housing shortage by 1990.
Now, more than 20 years further on, that shortage is diabolical.
Everyone who is affected will know that the bedroom tax affects anyone who has a bedroom that is going spare, according to strict rules devised by the Coalition government. I’ve gone into these rules elsewhere so I won’t rehash them.
The intended result – what the government wants – is generally taken to be that people with too many bedrooms will ‘downsize’; they’ll move into smaller homes.
The problem with that is: there aren’t any. This means people who no longer have the funds to stay where they are will have no choice but to continue doing so anyway, getting into a debt that they may not be able to repay.
Housing associations have already stated that they cannot afford to fund the deficit that is likely to build up, meaning they will throw people out onto the streets.
But don’t take my word for it. Many Vox readers are affected by this. Let’s see what they have to say.
“I’d bet money that most social housing countrywide is (or was – before the great sell-off of the 1980s and 1990s) three-bedroomed,” according to my blogging colleague Smiling Carcass. “Almost all were built as homes for families; three and four bedrooms, gardens, and flats generally had two or more bedrooms. There just isn’t, and never was, enough single accommodation to displace all the ‘under-occupied’ people from three- and four-bedroomed houses because they were conceived as family homes for life.”
How about this from Joanna Terry: “Not only is there an issue with the amount of one-bed properties available, (none where I live) but what about those just below pension age that need to sleep in separate bedrooms because of their health (I have a friend like this)? You can’t force people like this, not without causing phenomenal stress.”
“This will massively impact, mostly on the women now in their 50s who are divorced,” wrote Victoria Brown. “Chances are they are the same women who have struggled and raised children alone on either benefits or very low income jobs and because that child has flown the nest that is the reason they now have a spare room. We are alone and childless with no purpose and soon no home too. Many will kill themselves rather than live on the streets or commit a crime to at least get prison accommodation because there are no one-bedroom properties for us to downsize in to and there is no spare cash if you are on benefits to pay the Bedroom Tax with.”
Tony Bennet wrote: “There are times I feel like giving up. The more I read about these changes, the more I see it will affect us and we will be lucky to keep our home. With the changes to DLA and the UC I can’t see how I will be able to pay our bills and feed us.”
Morry: “I am going to be taxed on a box room that you might – if you’re lucky – fit a single bed in, and that would be it. I can barely manage to survive as it is and that means wearing as much clothing as possible and keeping the heat off as long as possible and living on salad and sandwiches. I have also been trying to get out of this house for the last five years.”
Graham: “We have asked for a bungalow/ground floor flat – one-bedroomed, so no stairs to climb. Guess what? There are none – not enough to go around. The Government know this, but they are intoducing a law to tax us knowing that there are not enough houses.”
There are not enough houses.
Back in 1974, the then-simply-Margaret Thatcher MP outlined her plans: “Our new policies are designed for the needs of today. A nation of home owners, who will be self-reliant, independent and able to do what they want with their own lives in their own homes.”
That was her self-professed dream. It seems modern Conservatives, propped up by the Liberal Democrats, are determined to turn it into a nightmare.
A tax avoidance loophole specially created by George Osborne, the UK Chancellor, last year means that water companies have played the system to reduce their tax bills to a trickle.
Some people just don’t know when it’s time to do the right thing.
Look at the three water companies that are paying practically no tax on their huge profits, while yanking up prices every year according to the retail price index and enjoying a monopoly in their areas – according to today’s report in The Observer.
Thames Water avoids tax by offsetting the interest payments on its debts against its tax liability and delaying it by claiming allowances on capital project spending. The company is seeking government support for a £4.1bn project to build a new “super sewer” under the Thames.
Anglian lent £1,609.1m to a subsidiary company in the Cayman Islands tax haven in 2002. This year it was able to pay £478.1m in equity dividends to investors, including its subsidiary in the tax haven.
Yorkshire Water also increased the debt on its books recently, which offsets tax payments.
In other words, all three were able to exploit a new tax loophole, created by George Osborne last year – that’s right, the Chancellor who is supposedly trying to stop tax avoidance has actually been creating more ways for big business to achieve it – to pay as little tax as possible.
In my article last Monday, I highlighted changes to the tax laws, brought in by Gideon, I mean Mr 0, that mean companies in the UK pay nothing at all on money made by their foreign branches and may claim the expense of funding those foreign branches against tax paid in the UK. That is exactly what Anglian and Yorkshire are doing, according to the Observer report.
Without knowing where the Thames debt is based, it’s hard to say for certain whether it falls into this category of tax avoidance.
Thames made an operating profit of £650 million last year, and Anglia’s was £492, while Yorkshire’s was £303 million. With Corporation Tax at 26 per cent (they should all pay the higher rate), this means the Treasury failed to collect nearly £376 million from the three companies.
The amount lost to the Treasury from these three companies alone would pay off three-quarters of what the government hopes to take away from people currently on council tax benefit, when local authorities implement their new council tax relief schemes – the ‘Pickles Poll Tax’ – in accordance with Eric Pickles’ Localism Act, next April.
Both Thames and Anglian told The Observer their tax was merely being deferred, and they would have to pay it in full at a later date. Yorkshire declined to comment.
My problem with this is that the UK is in deficit difficulties NOW. We need everybody’s tax money NOW. Not later. By exploiting a loophole in the tax system that the Chancellor irresponsibly created, they – AND HE – are extending the problem.
The absence of any significant tax bills means Thames and Anglian were able to pay out dividends totalling £1.5881 billion. I don’t have the figures for Yorkshire. Ask yourself how many of those shareholders have tax avoidance schemes of their own.
Meanwhile, those of us on PAYE have to pay the full amounts of our tax bills – and our utility bills – no matter what harm they do to our household finances. There can be no deferrals for the working-class citizen!
And what help do our bloated water companies give us?
I’ve got to share with you some words by Justine Greening,the Transport Secretary. She said them on the BBC’s Question Time, broadcast July 28, 2012: “The first thing to do is bring in a welfare cap, so we put an upper limit on how much people can get in welfare in the first place, that is fair. Let’s make sure we reform it in terms of Universal Credit, so that work does always pay.”
How does capping benefit ensure that being in work will always pay?
Whether in work or not, people are finding it hard to make ends meet because housing costs – either rented or mortgaged – are very high and nothing is being done (for example) to cap the amount of rent being charged by private landlords; utility bills are high and nothing is being done to encourage the gas, water and electricity companies to pass on any savings that come their way; and the price of groceries is outstripping people’s ability to pay for them – inflation has dropped but remains above the percentage rate of annual wage rises (unless you are a fat-cat company boss and have awarded yourself a huge salary increase).
Capping the amount available to honest people on benefits will not be fair on them, as they will have even less to live on than at the moment!
Worse still, it won’t help people who are in work! It’s ridiculous for the Transport Secretary – who previously worked in the Treasury, so she should know what she’s talking about – to suggest this. Benefit payments and wages are completely separate from each other.
In fact, while the British people continue to subsist in a low-wage economy, the government is in danger of repeating the debt crisis that created the huge deficit it is supposedly trying to pay off at the moment – the one for which it continually and inaccurately blames the previous Labour government.
It was imprudent bank lending that created the deficit. The government had to step in to save the banks, after they got into so much debt the entire western financial system was put in danger of collapse. The money to do this had to come from somewhere, and that is why it has to be paid back.
But what happens when a poor working person cannot make ends meet, because their job doesn’t pay enough? They borrow money to make up the difference – even if they know they can’t pay the money back!
What happens when too many people borrow money they can’t pay back? The banking system overbalances and we get a debt crisis. That’s where the Coalition is taking working Britain.
The only action the government can take to make work pay would be to reach not only adequate, but exemplary pay deals with public sector workers, and then take action to compel private companies to reach similar deals.
A living wage for hard-working employees – that’s what’s needed.
The cookie settings on this website are set to "allow cookies" to give you the best browsing experience possible. If you continue to use this website without changing your cookie settings or you click "Accept" below then you are consenting to this.