Osborne says he won’t take us back to Square One – We never left…

Osborne says he won’t take us back to square one. We never left

George Osborne has been coming under increasing pressure to change course of his austerity strategy. Even the IMF – who originally backed austerity – have deserted him. Osborne is sticking to his guns however and last night, in a speech at the annual CBI dinner said:

“Now is not the time to lose our nerve. Let’s not listen to those who would take us back to square one. Let’s carry on doing what is right for Britain. Let’s see this through.”

So the message is that doing anything additional to help the economy would “take us back to square one”. But how does “square one” compare to now? Assuming square one would be the situation Osborne inherited in May 2010, have far have we come since then? Here’s a few quick stats and commentary.

1) The Deficit

2009/10: £159bn

2012/13: £121bn

So the deficit down by a quarter. This seems to be the thing Osborne is most proud of, but – putting aside the fact that the deficit on its own is neither good nor bad – this reduction has been achieved primarily by cutting capital expenditure in half. From right to left, almost all commentators believe capital spending is precisely the thing notto cut, so in trying to lower that headline deficit figure, he’s actually setting us up for problems further down the road. Square one with double the capital spending actually sounds quite attractive.

2) Unemployment*

3 months to March 2010: 2.51m

3 months to March 2013: 2.52m

Yes, you read that right. Unemployment is actually higher now than in the comparable quarter in 2010. We are still at square one!

3) Employment*

3 months to March 2010: Employment rate – 72%; Total Employed – 28.83m

3 moths to March 2013: Employment rate – 71.4%; Total Employed – 29.71m

The Coalition like to say it has created 1 million private sector jobs. The net additional jobs since March 2010 though has been just under 1 million, and the working age population has risen faster than that, so the employment rate has actually fallen. Square one would actually be an improvement here.

4) Real Incomes

Median hourly earnings 2010 (constant prices): £11.92

Median Hourly earnings 2012 (constant prices): £11.21

Real incomes then have fallen since 2010, so again, square one doesn’t look too bad.

5) Interest Rates 

10 year bond yield May 2010: c3.6%                                          

10 year bond yield May 2013: c1.9%

Interest rates are another success Osborne likes to trumpet, and they have come down since 2010 (although by May 2010, they were already coming down). Whether this is a good or a bad thing depends on whether you are a borrower or saver, but assuming they are a good thing, how much credit should Osborne take for them?According to Jonathan Portes, not much.

In conclusion then, if Osborne were to change course, taking us back to square one, what would that look like? The deficit would be higher, but so would capital spending. Unemployment would be slightly lower, and a greater proportion of people would be employed. They’d also be paid more for that work. Interest rates would be higher (although on a downward trend). So the overall economic picture has barely changed since May 2010. I haven’t even mentioned the almost complete absence of economic growth since then. It looks like we never left square one. Going back there would actually be a slight improvement, and if we could go back there, but deploy our resources smarter than Gordon Brown in 2009/10, a huge one.

* Labour market figures sourced from ONS here: http://www.ons.gov.uk/ons/rel/lms/labour-market-statistics/index.html

Is Britain Short of Skills?

Is Britain Short of Skills?

By Liam R Carr

previously published here

We often hear that employers can’t find people with the right skills. This may be used as an excuse for not taking workers on. The alternative approach is to employ someone with potential then invest in their training. The austerity-only approach of the government has created a climate where even business owners who are making massive profits prefer to sit on reserves of cash rather than invest in training a future workforce.There is however, a real skills shortage. Here are a few examples where there is a need for workers.
Science and Engineering: 
Engineers are needed in the Nuclear, offshore and renewable energy industry. There is a need for geologists, geophysicists and environmental scientists. Specialist high integrity pipe welders and high voltage overhead line repairers are desperately needed to work on pylons and in the energy sector.
Creative Industries: 
2D and 3D animators for film, TV and the computer games industry are in short supply, as are skilled chefs, ballet dancers and classical musicians (even in a recession, the rich still need to eat expensive food, listen to the philharmonic and enjoy the ballet )
Medicine and Health:
There is a shortage of haematologists, psychiatrists specialising in care of the elderly, clinical neurophysiologists, radiographers and neonatal nurses.The real tragedy is that there is a skills shortage in regions of high unemployment. Skills need to be put on the agenda in schools and colleges but all we see are retrograde steps.
 Gove wants to see students doing more traditional subjects; vocational courses are seen as less valuable. This is not the case in other countries. In Germany for example vocational and academic courses are seen as equally valid. It is possible to provide students with a variety of opportunities without creating a two tier system. A Tory approach to a skills shortage is to do nothing. They wait in hope that ‘market forces’ will sort everything out. Tackling youth unemployment is far too important to be left to market forces. We need to change perceptions of vocational education and run courses in parallel to GCSEs and A-Levels. Level 4 apprenticeships which are taken after A-Levels, should be applied for through the UCAS system rather being something obscure and separate.

The reality is this: We are living in a country where the children of today will have fewer opportunities than their parents. It is our duty to equip the workers of tomorrow with the skills they need to get on. In refusing to address this issue the government is failing the next generation, they are a government of opportunity for the few and the scrapheap for many.    

 

The Mysterious Disappearance of Jobs and Skills

The Mysterious Disappearance of Jobs and Skills

When Norman Tebbit made a notorious comment that jobs could be easily found merely by hopping onto a bike, he made an assumption that it would solve unemployment because that’s father what his did, apparently. He repeated such advice this February by saying if Eastern Europeans migrate for work, why can’t the Brits?

How starkly this contrasts with what we are hearing Tory back benchers cry in the wake recent success of UKIP! Are we seeing a sudden surge to the extreme political right and 1930s divisions in society as ordinary people blame one another for high rates of unemployment, increasing poverty and unaffordable housing?

Deborah Orr (Guardian) comments: People are told EU migrants steal jobs – in truth bosses want cheap labour . People are told that immigrants stole their jobs. In truth, it was employers who wanted a ready supply of workers unused to the living conditions that it took the second world war for the ordinary people of Britain to achieve. The goal of neoliberal globalisation is supposedly a redistribution of wealth around the planet. It also, as the EU itself is discovering, redistributes poverty.

History has led to migrations of the workforce. In Cornwall, tin and copper had been mined for 4,000 years. Closure of the majority of Cornish tin mines forced whole communities to migrate in the 19th Century, leaving behind empty villages, graveyards surrounding them (Gwennap) the evidence that communities were once busy with industry.

tin_minerabove150Cornish tin miners faced

increasing competition

from alluvial mines abroad

Families were forced to move – or else starve. The simple fact was that the mine owners closed the mines, not because there was no longer a need for copper or tin. It’s because there was more money to be made elsewhere. Cheaper labour makes those looking to line their own pockets to ignore the plight on those who have come to depend on them – because they had the power to do so.

tin_mine203

In the 20th century a few mines survived, but the shortage of work put pressure on the working people. A row of differential pay rates resulted in a strike which pitched miner against miner, family against family, and only ended with the onset of WW2 and the greater demand for tin. Cornwall has never really recovered from the decline of this millennia old industry, and poverty exists there today.

  • How and when did these mine owners come to own the land and mines?
  • Why did such a few people have power over the many?
  • Who benefited from metals extracted from mines?

Removal of workers’ autonomy, their rights to sell labour for a living wage leads not only to their downfall, but that of everyone. The very rich may have the power to determine who shall have work and who shall not, yet their own very existence requires the same basic needs, provided by those workers. The race to the bottom, the search for the cheapest, poorest labour is fundamentally flawed, only a fool will argue otherwise.

Mankind’s survival has always involved work or labour – growing food, making clothes, caring for the community. Much of this work did not involve payment. Because of a division of labour, we can trade our skills, each contributing and receiving. Having a tradeable skill empowers us. If we can no longer cook a meal without a ready meal or grow our own food, we become yet more dependent on the supermarkets and their global supplies and speculation.

If we can no longer make garments, we buy-in fashion produced cheaply and unethically, thousands of miles away. In Bangladesh, cheap clothes come at human cost as health and safety of workers has no importance resulting in a deadly fire where hundreds died.

Yet, even now, the ConDemNation Coalition government aim to return UK to Victorian conditions, and have already removed workers’ right to health safety in the UK workplaces, and abolished the agricultural workers wages board. (See 114 year workers’ rights scrapped by Coalition government) Then UKIP, clearly trading on fear of unemployment and poverty, do not speak for working people. They are no party, but a bundle of individuals with extreme, bizarre attitudes, for example, Geoffrey Bloom, who advocates that employers should not employ women of childbearing age.

Deskilling a population disempowers them, to say nothing of lack of self-respect, independence and the prospects of lives in poverty. Thatcherite policies of attacking trade unions, decimating British manufacturing, closure of coal mines, ship-building, car industries, clothing and so on, led to massive unemployment, and broken communities, just as in the Cornish tin mines. Even food is being imported unnecessarily, for cheapness, and recent the recent horse meat scandal exposed the dangers of lack on control and monitoring. Lack of investment in education and training will not create a skilled workforce.

The Labour Party are setting out plans for full employment

“For Labour, that goal of full employment has always been the foundation for getting our country back on its feet. It was for Atlee’s Labour. It was for New Labour. It will be once more for One Nation Labour. Today the goal of full employment is important for a very simple reason. The faster we return to full employment, the faster we can pay down our debt. And the faster we can put the “something for something” back in to social security.

The Tories’ problem isn’t just that they are failing, but that they lost a belief in full employment many years ago, and never rediscovered it. That means more money spent on unemployment, so there is less to go around for working people and less for care.

After three years of failure we’ve got to find new ways to break out of this viscous circle. Seventy years ago, we set out a new path to full employment. Just as the Beveridge Report is a still a good roadmap for today, so too is the 1944 White Paper on Full Employment. It teaches us to be radical reformers to bring down the costs of social security; building exports; supporting public investment; fanning consumer demand – and taking determined action on jobs. It is a long road, but tackling poor places would be a big first step to getting our country back to full employment.’

From the New Statesman

If the British electorate are concerned about unemployment, they also have a very clear sense of injustice. They see bankers’ bonuses, they see politicians benefit from lobbyists, seeking to line their own pockets rather than serving the people, as they were elected to do. This week Ed Miliband’s Labour Party has pledged to address the Tax Justice.

He’s specifically committed to:

■ Pursue a new global system where multinationals must publish their revenues, profits and other key corporate information useful to revenue authorities in each country in which they operate.

■ Force multinationals to publish such information in the UK even if international agreement cannot be found on the issue, as they do in Denmark.

■ Make it a legal requirement for multinationals operating in the UK to disclose details of any tax avoidance schemes they are using globally.

■ Seek reforms to “transfer pricing” rules to stop companies from shuffling money to other parts of their firm based in tax havens in return for spurious services.

■ Open up the ownership of companies sited in Britain’s tax havens to the UK revenue authorities, but also seek to allow developing countries access to such information.

Whether the popularity of UKIP is a blip, a protest, or anger, it certainly represents an alienated electorate. Those in work feel they are working for the benefit of the rich and powerful. Those without work have little hope of finding work which pays a living wage. Women are hit hard by childcare costs, and equality with men has taken a backward step. Cuts hitting the disabled will make it more difficult, if not impossible for them to work, and those who are old or ill live in fear. It is time to do things differently, let us hope for a socialist Labour government, with policies which will unite people once again.

References and Further reading

How much longer?

Quote

How much longer?

First posted on May 16, 2013

I look to the mainstream media for some honest reporting and perspective – Ha!

I look to the Opposition for some counter-arguments, some persuasive alternatives – Ha!

And I look to the Government – yeah, that body of representatives whose wages we pay to manage our common affairs and interests on our behalf. That bunch of cretins who fought tooth and nail for the chance to be in charge and will no doubt convince themselves to try again in 2015. Ha!

For how much longer do the good people of this country have to bang on about the need for repairs and new infrastructure? I shan’t patronise with a list, for it is endless – and the number of people ready, willing and able to participate in such large and essential projects is also becoming endless. But you don’t need me to explain about the scourge of unemployment, the reasons for underemployment, the plight of our untrained and despondent youth, the complete and utter waste of brain and brawn…

How many times do the good citizens of this country need to suggest the lowering of house prices – both for sale and rent? How many times do we need to explain that the landlords are the rentiers; that the surveyors and mortgage companies determine what a property is worth?

How many people need to be made homeless before it’s acknowledged that there are not enough affordable houses? How much longer will the Government get away with this bedroom tax abomination, given that for many, that bedroom is not an extra room at all and in light of there being no alternative housing for those who would be happy to downsize?

For how much longer are the lucky employers of this country going to have their wages bill subsidised by the government in the form of tax credits? For how much longer will the taxpayers put up with their hard-earned contributions going to this curious and very uncapitalist subsidisation of wages?

When is someone going to say that paying some poor sop a pittance to look after someone else’s kid so the parent can go and work for another pittance is just plain crazy and mostly serves a cold and futile ideology? Where on earth did this obsession come from that every single adult must work in some governmentally recognised capacity for it to even be considered a worthwhile occupation?

When is someone going to tell that Iain Dontcare Smith that a few disabled people aren’t going to save the economy by being made to work at some meaningless job which still requires loads of government subsidy because employers tend to have to be blackmailed into employing them? Whose needs is IDS serving?

When is someone going to ram this empty but plainly loaded “make work pay” phrase up the ivory towers of these disingenuous MPs? We all know it’s not about getting a wage you can live on, but about reducing benefits to a level on which you obviously can’t. Given the magnificent economic incompetence of this Coalition, this is a nasty attitude at best.

But then, when is the good British public going to tell this government that all their welfare reforms are cruel, given the economic climate? That if you want to weed out the genuinely feckless or lazy, you have to provide a climate in which they become self-evident rather than merely accused as such by carping government ministers and high-horsed media stenographers. Apparently “welfare’ shouldn’t be a lifestyle choice” but who is in charge and who hasn’t provided any real alternatives? When will the public ask whose “choice” it actually is?

When will the good people remind this government and media that Brits are perfectly happy to do the jobs immigrants do, that it’s not the nature of the job but the deliberately low wages these jobs come with? When will the public realise that it’s only possible to live on such poor wages when you’re single and prepared to share your accommodation with 20 other people because you imagine and hope that this will be temporary? When will government and media acknowledge that it is policy and slack stewardship which create the climate possible for both immigrants and British citizens to be exploited and undercut in their wages, working conditions and accommodation?

And when, oh when will the good people of this country stop blaming immigrants and Europe for all the ills which plague this nation? When will it realise that Europe doesn’t just hand down some edict which can’t be questioned or modified – that governments are largely free to interpret most EU guidelines in their own ways and that that is exactly what they do. It’s called expedient political gaming when a government claims its hands are tied by Europe.

When are the good people going to tell this government that they know who makes the rules by which HMRC must operate? The likes of Amazon and Google are doing what any business would be sensible to do: maximising their profits and paying out as little in tax and other overheads as they can get away with. Who sets the rules? Who decides what ‘evasion’ is and what is ‘avoidance’?

When are the good people of this country going to rail at the government for its bigotry and ineptitude? When are the rational citizens going to declare war on short-sighted, ignorant, crass and divisive policies?

I’m not looking for answers here. This is just a rant. Like you, I already know what I want most of the solutions to look like.