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The Great Escape: How a City Exodus is Creating New Housing Crises in Satellite Towns

Published by Anonymous (not verified) on Thu, 19/05/2022 - 11:41pm in

Sam Bright and Sascha Lavin explore how the ‘Zoomtowns’ phenomenon is putting a burden on local property markets


London’s housing crisis is a well-documented feature of national life, with extortion now an accepted part of the capital’s property market.

In the year to March, asking rents in London increased by 14.3% – the largest annual increase anywhere in the country since records began. According to Rightmove, the average cost of renting in the capital is now £2,193 a month. This trend is tracked in other major cities, with Gráinne Gilmore from Zoopla saying that the firm has seen the “flooding of rental demand back into city centres”.

However, a simultaneous process has been occurring in the capital, in the form of relatively subdued growth in property purchasing prices. In the year to February 2022, for example, London experienced the slowest growth in purchasing prices of any English region – 8.1% – compared to 12.5% in the east and the southwest, and 12% in the wider south east.

Average London house prices still stand at some £530,000, exceeding the southeast by £150,000 and the southwest by £215,000, but this gap appears to be closing – triggered by the pandemic.

With home working normalised, many London property owners decided to liquidate their assets and break from the confines of the capital – buying larger homes, with more indoor and outdoor space, in less expensive areas of the country. While Manchester had a dwelling density of 20.3 per hectare in 2021, Kensington and Chelsea logged 73 dwellings per hectare, and Tower Hamlets had 65.4 per hectare.

As we have been brought into closer contact with the homes and communities in which we live, people have naturally sought to escape the crammed living quarters offered by the capital.

However, this exodus from London – people previously living in the capital spent a record £54.9 billion on properties outside London in 2021 – has not seen the scattering of Londoners to far-flung areas of the country.

“Places absorbing in-migrants from cities seem to be sparsely populated areas within commuting distance from large employment centres, particularly London,” says Francisco Rowe, senior lecturer in Quantitative Human Geography at the University of Liverpool. “People leaving large cities tend to work in high skilled professional occupations which do not necessarily require face-to-face contact.”

However, as Rowe identifies, face-to-face contact has not been dispensed with entirely, even among highly-skilled occupations. Hybrid working is now the norm, with people splitting their time between the office and home and keeping them within the orbit of major cities – albeit allowing them to move further away from the city centre.

And so, while the pandemic has liberated workers to some extent – potentially aiding the regional redistribution of the economy, as identified by Gaby Hinsliff recently in the Guardian – it is also incubating a range of new problems for the satellite towns that feed big cities.

Feeder Towns

Primary among these problems is the inflation of local property prices, with London’s housing crisis now stretching beyond the confines of the city. From 2020 to 2021, house prices increased by 14% in England while earnings fell by 1% and, by 2021, full-time employees could expect to spend around 9.1 times their workplace-based annual earnings on purchasing a home – up from 7.9 in 2020.

These affordability issues are concentrated in the south of England – particularly in areas that flank London. The worst housing crises outside the capital – in terms of the ratio of house prices to annual earnings – are suffered by the Cotswolds, Chichester, Waverley, Tandridge, Epsom and Ewell, Elmbridge, Tunbridge Wells, Windsor and Maidenhead, St Albans, Hertsmere, Epping Forest, and Brentwood. All of these places are either in the east of England, the south east or the south west.

A number of these places – the Cotswolds, Chichester, Tunbridge Wells, Windsor and Maidenhead, and Brentwood – have only entered this leaderboard since 2018.

Of the local authorities that have experienced the largest increase in house prices in the year to February 2022, all are relatively small conurbations – small towns and rural districts – with low housing density compared to bigger cities. More than 60% of these areas are in the south of England and the biggest increases have been seen in North Devon (a 24.1% jump) and Lewes (20.7%) in the south east.

“The impacts on these areas are expected to be noticeable,” says Rowe. “In the short-term, migration to small towns or rural areas is likely to exert pressures on the housing market, causing rises in local house prices and greater demand for local services, such as transport and consumer products... In the long-term, if migration from cities to the same places continue, the pressures identified above are likely to result in gentrification displacing some of the less affluent communities.”

Gentrification, the transformation of working-class areas by more affluent residents seeking cheaper properties, has been taking place in London for some time – and now looks set to be carried beyond the capital. Torbay, for example, which has seen house price increases of 16.4% over the last year, has concurrently experienced a 150% surge in people seeking temporary accommodation due to being made homeless since 2018.

COVID and changes to working habits has “led to worsening in Torbay’s housing crisis,” says local Liberal Democrat Councillor Swithin Long, “with many people being evicted from their rented homes so that their properties could be sold.”

According to the estate agency Hamptons, several areas experienced a marked increase in Londoners purchasing local properties in 2020, including Sevenoaks, Windsor and Maidenhead, Oxford, Rushmoor, and Eastbourne. In 2020, 62% of homes in Sevenoaks – a small town on the south-eastern periphery of the capital – were bought by a Londoner. Sevenoaks is just a 25-minute train journey from London Bridge on the southern bank of the Thames.

“The attractions of moving to the more remote parts of Kent become compelling if it means moving from London with a hefty profit from a house sale,” Professor Richard Scase of the University of Kent wrote last year. “But there is a price that has to be paid, and it is by local young people and their housing needs. The number of ‘affluent’ workers moving from London puts homeownership out of their reach. It means a life of rented accommodation or relocation from one town or community to another because of the availability of cheaper housing.”

He added that: “Perhaps importantly, house moves of this kind remove young couples with their children from their family support systems... often leading to stress and family breakdown, with the state having to pick up the costs and the pieces.”

An Uncertain Future

Cornwall knows these problems better than most. The county’s picturesque seaside towns have long been overrun by despondent city dwellers seeking a new life near the beach. In 2016, the average house price in picturesque St Ives was £324,000, reported the Guardian, 18 times the typical local salary.

“I’ve got people in my area who are living in cars because they’ve been booted out of their houses so that the landlords can put them on Airbnb over the summer,” says Kate Ewert, a Labour councillor for Rame and St Germans in east Cornwall. “It’s heart-breaking. These are people who just want to live in the community where they were born. They want to live close to their mum and their gran, but they’re being told they basically can’t live here.”

However, the Centre for Cities does caution that we don’t yet know the full impact of the pandemic. Its chief executive, Andrew Carter, told Byline Times that, “The recovery from the pandemic is still in its early stages so we cannot be certain that any developing trends will have a long-term impact on the housing market.”

This is echoed by Dr Frances Holliss, emeritus reader in Architecture at London Metropolitan University, who says that we’re in “completely unknown territory”. However, Dr Holliss added that “having researched this for 20 years”, she anticipates rises in property prices in satellite towns.

“This is bad for people in the lowest 40% of the income brackets, only 10% of whom are property owners,” she says. “And so it will make ownership of property less reachable for those people. But having said that, it will bring wealth into the community and with it will come employment.”

New research from the Centre for Economics and Business Research anticipates that the 10 fastest growing places in the country by 2023 will be in the south east and the east of England. This will create a lot of economic heat, potentially creating new job opportunities, but also invariably, it seems, inflaming local property markets.

This article was produced by the Byline Intelligence Team – a collaborative investigative project formed by Byline Times with The Citizens. If you would like to find out more about the Intelligence Team and how to fund its work, click on the button below.





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Happier Employees, Higher Profits: Covid’s Surprising Lesson for Restaurants

Published by Anonymous (not verified) on Thu, 19/05/2022 - 6:00pm in

This story was originally published in The Counter. It is part of the SoJo Exchange from the Solutions Journalism Network, a nonprofit organization dedicated to rigorous reporting about responses to social problems.

Like many restaurant operators over the past two years, Greg and Daisy Ryan, co-owners of the French-inspired bistro Bell’s in Los Alamos, California, sweated over how their business would survive a global pandemic. All around them owners were turning to takeout, to retail, or to closing their doors indefinitely.

The Ryans, meanwhile, decided to spend more money — actually, a lot more money — on their staff. They hiked wages to an average of $27 an hour. They added on a bevy of new perks, including fully paid health care coverage and 80 hours of paid time off.

Increasing costs is risky business even in good times for restaurants, where profits margins are sometimes thinner than mandolined potatoes, and the industry was on life support even before government-mandated shutdowns were part of the conversation. But the Ryans made their drastic changes back in June 2020, after a two-month in-dining closure to regroup, deciding to spend big when most independent restaurants were scrambling to meet existing costs.

It worked. Bell’s revenues and staff have more than doubled since that pivotal summer day, and now the Ryans are talking about how to add a retirement program with four percent matching funds, a longstanding goal that will also bring them in line with state-mandated legislation.

“We said, ‘If we’re going to change, this is our time to change,’” Greg said. “If we are not trying to be a better business, and a better business for our staff and the people that work with us, we are going to be so upset with ourselves.”

Even before Covid upended the restaurant landscape, operators large and small were staring down the growing burdens of dwindling foot traffic and poor staff retention. The pandemic, however, turned those concerns into crises.

Revenue shrunk, debt mounted, and employees, fed up with the industry standard of shoddy pay, grueling hours and nonexistent benefits — not to mention having to risk their health for poor compensation and rude customers — hung up their serving aprons and chef’s whites for good. With the food service industry still down 819,900 jobs as of this March compared to February 2020, according to the Bureau of Labor Statistics (BLS), and any future federal aid uncertain, restaurant owners like the Ryans were left to find their own alternatives to the old, dysfunctional model.

Many operators have seen a chance to experiment and lay the foundation for a more sustainable industry, which means starting with the individuals who keep it afloat: A healthy staff — physically, mentally, financially — will be far more likely to contribute to long-term success than a team running forever on fumes.

The Ryans built a formula: They figured out how much they’d have to bring in from each seat, down to the penny, to break even, while they guaranteed all their employees more than a living wage along with benefits.

The Ryans figured out how much they’d have to bring in from each seat to break even, while they guaranteed all their employees more than a living wage along with benefits. Credit: Carter Hiyama

The couple performed back-of-the-envelope math while plugging into a Google spreadsheet hard costs like real estate, and more flexible ones like food and labor. They consulted with an industry brain trust of former and current management from Union Square Hospitality Group and the Thomas Keller Restaurant Group, as well as the restaurant operations support group Oyster Sunday, about what the ideal model would be. And they arrived at a surprisingly simple solution that many restaurants have turned to throughout the pandemic: a pre-fixe dinner menu.

At $65 for five courses, plus a 20 percent overall service fee in lieu of tips, the price and format felt like a deal that guests could swallow. And, Greg said, it meant that “I’m at least breaking even or I’m not losing a ton of money every second.” The pre-fixe operation not only has helped the team better manage their food costs, but the consistency means they can regularly plan to source salad greens or uni from local producers they’re confident in, versus buying commodity vegetables to accommodate a constantly rotating menu. The service fee, while carrying a significant drawback in that it is reported as income, meaning Bell’s has to pay taxes on it, was a major boon because it removes customers from having any power over their staff’s wages and ensures a guaranteed — and more transparent — revenue stream to help pay for employee costs.

As of October 2021, the menu now runs $75 per person — the $10 increase due to inflation and growing food costs, with 65 to 75 covers a night. Greg says that the menu price is effectively their break even point, while add-ons like wine, caviar and bread all help to ensure profitability. The new model looks like a success: As the staff — and the total restaurant’s costs — have tripled, the number of customers per night has jumped from the ballpark of 40 in June of 2020. Revenue more than tripled as well: Before Covid, in 2019, the restaurant was clearing $1 million a year. In 2021, despite an on-going pandemic, that number surged to about $3 million. And employee retention has been above 95 percent.

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Greg regularly points out that privilege and good fortune have played a part as well. Early on, he and Daisy purchased the building housing Bell’s instead of buying a home, essentially locking in their real estate costs; their decision to live with Daisy’s parents in the meantime has also helped reduce their overhead costs. The publicity from Daisy being named a Food & Wine Best Chef and Bell’s earning a 2021 Michelin star has helped ensure a continued demand for their food while also allowing them to expand their revenue. And a $93,000 Paycheck Protection Program loan as well as a $150,000 Economic Injury Disaster Loan, along with private funding, helped provide the cash flow to implement these huge workplace overhauls.

“If someone’s like ‘What’s the blueprint?’ I’m like, it’s a lot of luck, it’s a lot of hard work and it’s just being in the right place at the wrong time, but also the right time,” Greg said.

Still, it’s possible to innovate on more of a shoestring. Stella Dennig, co-owner of Daytrip, a restaurant and wine bar that opened in Oakland, California last October, listed several experiments the restaurant has incorporated to expand its revenue streams, including beverage clubs curating natural wines, beer and aperitifs and a pop-up nighttime wine bar with a menu of easily preparable snacks. She may start a coffee and pastry service as well, which won’t require a full back-of-house team to prepare the food.

At Daytrip, non-salaried staff have a starting base wage of $16 to $18 an hour, slightly higher than the $15.06 minimum wage in Oakland. This wage is bolstered by a 20 percent service fee that is pooled and evenly divided among hourly staff. Credit: Jeremy Chiu

“A dinner restaurant sit-down table service is one of the highest labor versions of what we could be doing, and we want to, as we grow and expand, think of things that can keep labor tight,” Dennig said. “Every five hundred dollars, every thousand dollars all makes a huge difference, so the more revenue streams that we can pull in, that can do that for us every week, every month, it all adds up.”

Dennig estimated that Daytrip’s employee costs range from 40 to 48 percent of the restaurant’s total costs on a good week, greatly exceeding the conventional industry figure of 30 percent. The non-salaried staff starting base wage of $16 to $18 an hour, slightly higher than the $15.06 minimum wage in Oakland, is bolstered by a 20 percent service fee that is pooled and evenly divided among hourly staff. The restaurant also provides access to quarterly financial workshops and a scaling health care stipend, which totals $300 a month for an employee working 40-hour weeks. Retirement plans are a possibility down the line.

“There’s so much more that I would like to do and that I know that we will get to,” Dennig said. “All I’m doing right now is what feels like the bare minimum to me, and it’s revolutionary only because the bar is so low in this industry, and that’s not OK.”

Investing in staff wages and benefits can result in a virtuous circle effect: People are more likely to stay at their jobs, which then decreases the costs that result from replacing them. Tim Taney, co-owner of the burger restaurant Slidin’ Dirty in Troy, New York, estimated that training new employees cost him at least $500 a month. A year after expanding his staff’s benefits package to include employee-covered health insurance and a membership to the YMCA, among other perks, staff retention has improved drastically, with only one employee leaving during that time.

“It’s a significant savings,” Taney said. “It certainly doesn’t pay for everybody’s health care for the year, it’s not like that alone covers that, but it’s a part of it.”

Jason Berry agrees. Earlier this year, the co-founder of the Washington D.C.-based restaurant group Knead Hospitality + Design, began a six-month experiment at its Mi Vida and Succotash National Harbor restaurants, allowing managers and chefs to work four-day, 12-hour shifts per week and finish up any lingering tasks like staff scheduling or menu planning outside of the restaurant, versus five 11- to 12-hour shifts per week, all on site.

Berry estimated that the new program at Mi Vida will necessitate adding three new managers, each at an annual salary of about $80,000. Improving employee retention, however, would mean cutting down on training costs and recruiter commissions, which run 15 percent of each new hire’s salary. And keeping people around has other benefits, like preserving a chef’s institutional knowledge — dialing back the amount of seasoning in October, for example, when chiles are spicier.

Channeling his inner Henry Ford, Berry suggested that investing in employees will ultimately lead to better service and, hopefully, better revenue.

“They’re less exhausted, they’re more focused on their teammates, they’re training better,” Berry said of a staff with a better work-life balance. “Does that translate into more revenue? I think it does.”

Indeed, workers at restaurants that recently have invested in their staff — from better wages to paid time off to retirement plans — say that these changes have not only improved their physical and mental health, but also their entire relationship to their job.

Micah Fendley, a server at Bell’s, has been in the industry for about 20 years, and thanks to the changes there has a health insurance card for the first time. That’s affected not just his physical well-being but his outlook on his job and employers, too.

“I’m proud more than anything that I have a job that respects me enough that pays for my health insurance,” Fendley said. This past February, while the restaurant staff was on a paid winter break, Fendley traveled to Six Flags with his girlfriend, washed his car, had lunch with coworkers, even played disc golf. Returning to the restaurant post-break, he said, “I was able to have an out-of-body experience at work because I was so well rested.”

Anne McBride, vice president of programs at the James Beard Foundation, noted that not all improvements for workers require employers taking on immense additional costs. Citing findings from a recent report by the organization, McBride said that a number of people left the industry in recent years because there were not clear career paths laid out for growth at restaurants. By simply instituting structures for employees to progress to higher hourly wages or positions, restaurants can turn jobs into careers and reduce turnover.

“It’s something that restaurants should pay much closer attention to because, not that it’s free, but it’s something that you can do without having to change anything to the financial structure of your restaurants,” McBride said.

Greg Ryan is encouraged by how the restaurant’s transformation has bettered the lives of Bell’s staff, but he’s already thinking about what more he can do.

“We hope to get to dental and vision, we’re finally working on our 401(k) program,” Greg said. “It’s all these things that make people feel and hopefully see that there is a reinvestment going back into them as people and not some cog in the machine.”

The post Happier Employees, Higher Profits: Covid’s Surprising Lesson for Restaurants appeared first on Reasons to be Cheerful.

Thatcherism Revived: Johnson’s ‘Right to Buy’ Plan is a Desperate Political Ploy

Published by Anonymous (not verified) on Thu, 19/05/2022 - 6:00pm in

Thomas Perrett unpicks why the Conservative Party is considering rebooting the long-discredited housing policy


The Government is considering a re-imposition of Margaret Thatcher’s ‘Right to Buy’ scheme, offering 2.5 million housing association tenants the opportunity to buy their properties at discounted prices of up to 70%.

The plan, which aims to help ‘Generation Rent’ onto the housing ladder, is intended to alleviate the staggering disparity between house prices and incomes. According to figures from the Office for National Statistics, a home in England in 2021 cost on average 9.1 times more than earnings – up from a figure of 7.9 the previous year.

Indeed, while the average annual salary in Britain has only risen from £10,000 to £30,000 since 1990, the average house price has increased from £50,000 to £260,000, culminating in 28% of young adults living with their parents.

This is made significantly worse by the increasing proportion of income taken up by rent payments – it has been estimated that, during 2021, tenants in the private rented sector across the country spent an average of 42% of their incomes on rent, a figure which rose to 54% with the inclusion of household bills.

It is unlikely that the discounts offered by Boris Johnson’s reheated Right to Buy scheme will bring down housing costs or prevent exploitative practices within the rental sector, such as landlords using buy-to-let mortgages to buy up existing housing stock, thus reducing supply and pushing prices up even further.

The plan has been criticised by Polly Neate, chief executive of the homelessness and housing charity Shelter. Arguing that the “hare-brained” policy was “the opposite of what the country needs,” she said: “Over one million households are stuck on social housing waiting lists in England, and with every bill skyrocketing, the Government should be building more social homes so we have more not less.” 

A Property-Owning Democracy?

The Government’s new housing plan builds on the vision articulated by previous Conservative prime ministers – including Anthony Eden and Thatcher – of creating a ‘property-owning democracy’ in which private citizens, owning appreciating assets, would be dissuaded from engaging with radical politics, instead gradually assimilating into the ranks of the aspirational middle class.

In much the same way as the original Right to Buy Act of 1980 attacked the institution of council housing, promising that working families would have greater control over their futures – inculcating the individualistic ethos of Thatcherism – Johnson’s revival of Right to Buy can also be interpreted as a political ploy.

Despite Conservative victories in recent general elections, the party has a significant obstacle in voters under the age of 40. A 2017 YouGov poll which surveyed 13,000 voters found that, among women under 40, Labour led the Conservatives by 15%. Among men under 40, 32% of those surveyed backed Labour, compared with 31% supporting the Conservatives.

Sustained by an ageing population, and enjoying significant support among home-owners, the Conservatives could be looking to expand their electoral base.

Home-ownership is traditionally associated with the adoption of right-wing politics, as voters seek to protect their investments. Indeed, in the 2019 General Election, 57% of owner-occupiers and 43% of mortgage-holders voted for the Conservatives; compared with just 22% and 33% respectively who voted for Labour. 

Boris Johnson’s crucial gains in former industrial ‘Red Wall’ constituencies were also starkly correlated with home-ownership. In only three constituencies that voted Conservative in 2019 (Chelsea and Fulham; Kensington; and the Cities of London and Westminster) did less than 50% of the population own their homes.

As the party’s popularity shows signs of waning in these areas, with polling from the beginning of the year demonstrating that the Conservatives trailed Labour by 16 points in key Red Wall seats – exacerbated by the loss of more than 400 seats in this year's local elections – the attempt to expand the party’s voting base seems a desperate, drastic move.

The Legacy of Thatcherism

The causes of the current housing crisis can be traced back to the original Right to Buy plan of 1980, which enabled council tenants to buy their homes at discounted prices of up to 50%.

This, however, led to a severely depleted national housing stock, as local councils were effectively prevented from reinvesting the proceeds of sales into new social housing. Consequently, there are just two million public houses in Britain today, compared to 6.5 million when the scheme was first introduced. Even plans such as those by the 2007 Labour Government to build 240,000 new homes per year by 2016 fell woefully short of addressing the scale of the problem.

The effects of the original scheme were compounded by the deregulation of the financial sector, which caused commercial banks to lend excessively to mortgage holders, ensuring a flood of speculative investment from which a bloated asset bubble emerged.

Households were encouraged to take out larger and larger mortgages, making mortgage-lending one of the most lucrative forms of investment. Today, domestic mortgage-lending has expanded to 60% of GDP, as the economy at large is dependent upon a buoyant housing market. 

The bloated housing market has been bolstered by erratic monetary policy strategies pursued by successive Conservative governments since the Thatcher era, which have directed funds into this unproductive, speculative area of the economy, in lieu of productive investment.

Historically low interest rates, intended to stimulate growth in the aftermath of the 2008 financial crisis, in fact further incentivised mortgage borrowing, culminating in a 43% rise in house prices over the past decade. 

Similarly, after 2008, quantitative easing became a mechanism by which central banks buying up government bonds from the financial sector could further inflate house prices, while austerity ravaged the real economy. According to the Bank of England’s own analysis, real house prices in 2014 would have been 25% lower than they actually were, if the first round of quantitative easing had not been implemented back in 2009.

Meanwhile, real wages have stagnated to for the longest period since the Napoleonic Wars, as even families earning middle incomes are beginning to fall prey to the cost of living crisis. An extra 2.2 million people will have to sacrifice essentials such as food and clothes this year, including families earning as much as £33,000 per year before tax, while housing speculation continues unabated.

The Government’s revival of Right to Buy demonstrates not only a sense of desperation driven by the Conservatives Party’s precarious electoral position, but an unwillingness to grapple with the multifaceted causes of skyrocketing housing costs.

The far-reaching, substantive measures required to help successive generations priced out of the housing market, which may include state-led housebuilding initiatives and a land value tax to encourage developers to build new homes, would be unpopular with the Conservatives’ asset-owning supporters, damaging their electoral hopes.

A significant subsection of the party’s supporters rely on artificially-restricted supply and high land prices to drive up housing costs and protect their investments. Political expediency and protective economics is damaging the prospects of the millions caught outside this system.

Right to Buy formed a key part of Margaret Thatcher’s war on Britain’s working class. Framed as a plan to allow council tenants to develop a greater sense of autonomy and independence through property ownership, the plan led to mass financial speculation and the inflation of property prices. The current Government, by proposing the revival of this policy, has demonstrated a similar inability and unwillingness to help those who lack access to affordable housing.




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Raising interest rates is like blowing up the garden to weed it

Published by Anonymous (not verified) on Tue, 17/05/2022 - 6:00pm in

By Dirk Ehnts, PhD in Economics, affiliated researcher at the Institute for International Political Economy Berlin

Sten Grahn, Technical Doctor in Production Engineering

Peo Hansen, Professor of Political Science, Linköping University

Jussi Ora, Director of Positive Money and Board Member International Movement for Monetary Reform

and Patrik Witkowsky, Founder of the Centre for Employee Ownership


This article was first published in Swedish on May 15, 2022, at Göteborgs-Posten.

The Riksbank (central bank of Sweden) only sets the interest rate. And interest rates have no impact on the energy prices that are driving inflation today. But higher interest rates lead to higher unemployment and lower output – and that can push inflation even higher. But there are other ways to curb inflation, write Dirk Ehnts, Sten Grahn, Peo Hansen, Jussi Ora and Patrik Witkowsky.

Stefan IngvesStefan Ingves, Governor of the Riksbank. IMF Photo/Cory Hancock via Flickr, Creative Commons 2.0 license

The (Swedish) inflation rate in March was 6.1, per cent, compared with 4.5 per cent in February. This is largely due to higher energy costs. The oil price, which was negative in April 2020 when there was a surplus, has risen to around $100 per barrel. Gas prices have also soared.

Is there anything we can do about the price increases? Today, we give responsibility for inflation to the Riksbank, which has an inflation target of 2%. According to accepted economic theory, inflation can be brought down by raising interest rates. As the Riksbank writes on its website: “A rise in interest rates also makes it more expensive for firms to finance investment. As a result, higher interest rates normally curtail investment. If consumption and investment fall, total demand also drops and there will be less activity in the economy. When activity is low, prices and wages usually rise at a more modest rate.”

Blunt tool

However, a slowdown in economic activity also leads to an increase in unemployment. The Riksbank thus fights inflation by increasing unemployment. The idea is that higher unemployment weakens the bargaining position of wage earners, as the threat of unemployment is now more acute.

Raising interest rates is therefore both a blunt and harmful tool. It can be likened to blowing up a bomb in the garden to get rid of the weeds. The job of weakening the economy gets done, but at a very high price. In addition to the economic and social damage done to those who lose their jobs, unemployment further divides society.

A second problem with raising interest rates is that it is unlikely to reduce inflation at all. Energy prices today are largely imported and therefore have nothing to do with Swedish wages. In other words, even if we blow up the garden, it is highly likely that weeds will continue to flourish. Moreover, we can expect higher interest rates to increase business costs. Swedish companies are very indebted today. Therefore, if interest rates rise, companies can raise their prices, and thus inflation, to stabilize the profits they need to pay off their debts.

In other words, even if we blow up the garden, it is highly likely that weeds will continue to thrive.

An interesting example is the situation in the Czech Republic and Slovakia, two countries with similar economies. While the Czech central bank started to raise interest rates last summer from zero to the current five per cent, in the eurozone country of Slovakia the rate has remained at zero. Last summer, inflation was the same in both countries. Today it is higher in the Czech Republic than in Slovakia.

Sweden produces more electricity than we consume, but since Swedish energy operators operate in the integrated European energy market, this means that, under current legislation, they will raise their prices if market prices rise. Our current energy prices, therefore, do not reflect a change in production costs, or in supply and demand in Sweden. Higher energy prices are transmitted via the international energy markets. They create profits for Swedish energy operators as a result of events outside Swedish control.


Investments in public transport

So, are there any alternatives to raising interest rates? One option is to subsidize petrol and diesel, as the government did by cutting the fuel tax and paying a transfer to car owners. However, this only adds fuel to the fire by throwing money at it, which will end up as profits for the energy companies.

Another option, which curbs both inflation and climate impact, is to invest heavily in public transport, electric vehicles and other solutions that reduce energy demand. Germany is an interesting example. There, citizens can buy tickets for the national public transport system (everything except long-distance trains) for just 100 crowns (about 8 pounds sterling) a month this summer. This fills empty trains and encourages people to park their cars, reducing energy consumption.

In the longer term, a more strategically robust price stabilization policy is needed. Instead of raising interest rates, we need to transform our energy and transport systems. This means massive public investment in renewable energy, public transport, fossil-free vehicles and energy efficiency. This also includes a major investment in local renewable energy production. To achieve this goal, the fiscal framework needs to be reformed, as it currently hinders public investment, weakens our infrastructure and makes Swedish consumers and industries vulnerable to foreign energy markets.

It is easy to blame the Riksbank for inflation. But this is completely the wrong way to go. Blowing up the garden by raising interest rates is associated with major social costs and it also risks increasing inflation further. The best way to fight inflation is to rebuild and rethink our energy and transport systems.











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The post Raising interest rates is like blowing up the garden to weed it appeared first on The Gower Initiative for Modern Money Studies.

‘Addicted to Exploiting Migrant Labour’: The Hidden Hostile Environment in the Fishing Industry

Published by Anonymous (not verified) on Mon, 16/05/2022 - 7:22pm in

Post-Brexit immigration rules are pushing more and more foreign fishermen to the margins of an already exploitative system, reports Frankie Vetch

When Emmanuel* came to work in the UK, the conditions on the boat were the worst he had ever seen. Having grown up around fishing in Ghana, for him it was a way of life. But when he came to Northern Ireland in 2018, his positive perception of the industry was shattered. Emmanuel has since been registered as a victim of modern slavery. Now he can tell his story of how the UK immigration system drove him into human trafficking.

Like so many other fishermen, Emmanuel entered the UK on a transit visa; a loophole used by employers to bypass strict migration laws. When he flew the more than 3,000 miles from his home in Ghana, he was picked up at Belfast airport and taken straight to work on a boat. An experienced fisherman, Emmanuel was shocked to find the boat was not fit to go out to sea. He was even more surprised to learn that this is where he would have to live, eat, and sleep.

Despite his contract stating that he was assigned to one specific vessel, Emmanuel was quickly transferred to another. And then another. And then another. At times he would be transferred at midnight, not even knowing the name of the new vessel he was working on. Back home in Ghana, Emmanuel says he would have been given proper accommodation. Constantly living under the threat of being sent home or having his passport confiscated by his employer was psychologically damaging.

“You feel like you have been trapped on a boat where you don’t have any means to even say you want to leave,” he says. “You and your skipper only know what really happens on the boat.”

Fishing After Brexit

The UK’s strict post-Brexit immigration system is increasing the risk of exploitation for foreign fishermen. As part of the point-based system, most foreigners working in the UK must come on a skilled worker visa. Following lobbying from the industry, last April the Government opened up the visa to fishermen. But Byline Times can reveal that so far not a single visa has been granted to a fisherman.

Due to poor working conditions, long hours and low pay, fishing has become an unattractive occupation for young people in the UK. According to Alison Godfrey, deputy chief executive at the Fishermen’s Mission, “For a number of years, it has been hard to find Brits who want to fish. It is the most dangerous peacetime occupation. It doesn’t pay well and has long hours.”

With a decline in domestic and EU fishermen, the industry has become increasingly reliant on non-EEA workers like Emmanuel. According to a survey by the organisation Seafish – a government-funded body – around 35% of fishermen are not from the UK. Ghanaians and Filipinos represent the largest proportion of this figure.

Without access to skilled worker visas, fishermen enter the UK on a transit visa. These largely unregulated visas force workers to operate outside the UK’s territorial zone – meaning that any boat carrying transit visa workers should fish at a minimum of 12 nautical miles (the equivalent of around 14 miles) from domestic shorelines.

Sea conditions this far out are harsher, making it more dangerous for crews. And for fishing vessel owners in places like the west of Scotland, the shape of the coastline can make it difficult to even access these waters.

According to a new report by the International Transport Workers’ Federation (ITF), the transit visa is not designed to be used for fishermen, but for seafarers transiting through the UK to board vessels operating in international waters. But the report says that for the last 15 years, the transit visa has been used to systematically exploit foreign labour.

Exploiting Migrant Labour

Byline Times spoke to several other Ghanaian fishermen who recounted similar experiences of exploitation.

Some of them worked for a company with a well-documented history of exploitation. The fishermen described being verbally abused, underpaid, and threatened with deportation while working off British coastlines. They say captains used racist abuse against them and described feeling threatened. Some were even physically attacked.

In the UK if you are over the age of 23 and are working 40 hours a week, the minimum wage is £1,520 a month. The fishermen, who were usually working well over 40 hours, had contracts for as little as £700 a month – but in practice they were sometimes paid even less. 

One fisherman, called James*, who still works in the UK, has been employed on vessels where there were no toilets or showers. Sometimes he has gone five days without a shower. Often the boats are small and dangerous to operate in bad weather. Despite these conditions, because he can only enter the UK on a transit visa, he must sleep and live on the boats that he is contracted to work on. The only time he can go ashore is to shop. With a family to feed back home, James has no choice but to continue working in the UK.

“It is so cold on board it can be minus one or two degrees, and you are living without a heater. If I had a visa, I could rent a house or a room and have heat,” he says.  

These experiences substantiate the concerns of experts that the immigration system is driving workers into exploitation. Due to the Government’s ‘hostile environment’ policies, the risk of being deported is significant for migrant fishermen. This plays into the hands of exploitative employers who wield the threat of deportation. According to the ITF report, by criminalising fishermen violating immigration rules, the Government is increasing their vulnerability to exploitation.

It was recently reported that P&O ferries had replaced 800 UK staff with a crew of foreign seafarers who are to be paid £1.80 an hour. It is this same under-regulated system that allows fishermen to be exploited.



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Vessels inside the territorial zone are meant to be regulated by the Maritime and Coastguard Agency (MCA). Even within this area, there is confusion among public authorities about who is responsible for regulation. Those vessels fishing outside the zone are subject to International Maritime Law and in this largely unregulated environment, fishermen are at even greater risk of exploitation.

“Any suspected employment issue on a vessel will be investigated fully by the MCA and a surveyor will conduct checks on any vessel that reportedly holds victims of human trafficking,” the MCA says. “If there is evidence which supports the suspicion of modern slavery or human trafficking, the MCA will work with other enforcement agencies (the police, Border Force etc.) to ensure action is taken. The MCA is strongly committed to halting human trafficking and being a part of the solution to prevent modern slavery.”

Skilled worker visas should ensure employees are paid properly. Workers over the age of 25 are guaranteed a minimum salary of £25,600, which is more than double the £12,000 or less the Ghanaian fishermen we spoke to were earning.

The biggest barrier facing fishermen seeking to obtain a skilled worker visa is the English language test. Harry Wick, CEO of the Northern Ireland Fish Producers’ Organisation, believes the test is unnecessarily hard as it requires fishermen to write to a level that does not match the requirements of the job. Many foreign fishermen can speak good enough English and have enough specialist language knowledge to safely work on vessels. But to pass the test can take years of learning English. This is time and money many fishermen do not have.

A Culture of Silence

It is because of the experiences suffered by the likes of Emmanuel and James that Chris Williams, from ITF, is advocating for skilled worker visas to be opened to more fishermen and for the transit visa loophole to be closed.

Williams has worked with several fishermen who have been exploited and says, “UK legislation is enabling conditions for forced labour and modern slavery.” He added: “The fishing industry is addicted to exploiting migrant labour and underpaying them.”

Freedom of Information data obtained from the Home Office by Byline Times reveals that a minimum of six fishermen were referred to the UK’s modern slavery referral mechanism in 2021. Data obtained from Scottish and Northern Irish police forces indicates that there were five cases in those countries.

In 2022, there have been four cases referred to the Northern Irish police. The true scale is hard to gauge because of the dangerous repercussions facing those willing to speak out. Not many people are willing to take the risk that Emmanuel has for fear of being blacklisted by the industry or even physically attacked.

Representatives of the UK fishing industry were reluctant to acknowledge there is a problem with exploitation. One Democratic Unionist Party MP, who represents a constituency with a large fishing community in it, when asked if there was a problem with exploitation of non-EEA fishermen said: “No not at all. Definitely not. Not even hinted at.”

Emmanuel believes that he was lured into trafficking through the transit visa system. A skilled worker visa would have ensured that he was paid above the minimum wage, received paid leave, and that he was assigned work he was contracted to do.

Because of his experiences, Emmanuel has given up fishing to work in the construction industry. He is not alone. Others back in Ghana are reluctant to work on UK fishing vessels at a time when the industry desperately needs skilled foreign labour.

“This experience has changed my perception of fishing, which back home is a noble profession”, Emmanuel told Byline Times. “I learnt my trade in fishing, so everything about me is fishing. But since coming to the UK and going through this I don’t want to go back to fishing. The people that work in the fishing industry in this country only think about profit, they don’t think about you.”

*Not his real name




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Journey to the heart of Argentina

Published by Anonymous (not verified) on Mon, 16/05/2022 - 6:00pm in
By Carlos García Hernández

Originally published in Spanish in El Común on 13th May 2022


Women and a child walking past ouses in La boca Buenos Aires, ArgentinaImage by Fernando Hidalgo Marchione on Flickr. Creative Commons 2.0 license

Between May 2nd and 5th, 2022, I had the opportunity to join economist Warren Mosler’s visit to Buenos Aires organized by Pymes para el Desarrollo Nacional and Grupo Bolívar.

In this way, the interest in modern monetary theory has allowed Mosler’s analysis to be oriented towards the specific case of Argentina. It has been a fascinating experience that has taken us to the bowels of the country’s economy.

The organizers asked Mosler to focus his proposal on two things: the possibility of achieving full employment without inflation (an economic state I have dubbed the Lerner point) and Argentina’s latest agreement with the International Monetary Fund.

Mosler presented his proposal at several public events, to managers of the Central Bank, to the leaders of the public financial institution Banco Nación, at the University of Moreno, in a visit to the Río Santiago shipyard and on the radio program Teoría Monetaria Moderna Presenta. His conclusion is that Argentina’s problem is primarily of a fiscal nature, since Argentina currently spends 8% of its GDP on interest payments derived from public debt securities and Mosler estimates that this figure will soon rise to 20%. On the other hand, the official unemployment figure is not very high (7%), but youth unemployment is over 30%. In addition, the real unemployment rate is much higher than the official one and poverty reaches 37.3% with a marginal poverty rate of 8.2%. Added to this is the enormous problem of inflation, which currently stands at 55.1% per year, but is expected to exceed 60% by the end of the year.

The specific measures he proposed were threefold: the adoption of floating exchange rates, a permanent 0% interest rate policy, and the implementation of job guarantees based on employment buffer stocks.

The adoption of floating exchange rates is the measure that would make it possible to carry out the other two, since only floating exchange rates allow for permanent full employment policies and 0% interest rates decided by the central bank. Currently, Argentina has a fixed exchange rate of the peso against the dollar. The reason for this is that there is a belief among the leadership and the general population that Argentina’s main problem is external constraint. Therefore, it is believed that the Argentine peso is worthless and that it is necessary to maintain large foreign exchange reserves in order to import and grow. This puts the Argentine economy at the mercy of financial speculators, since Argentina has to defend the exchange rate by buying Argentine pesos through its dollar reserves. The consequence is that Argentina periodically suffers debt crises and the risk of running out of reserves, which drives up interest rates, inflation and unemployment. Mosler’s proposal is to adopt floating exchange rates so as not to have to defend a fixed exchange rate by means of foreign exchange reserves and for the Argentine economy to function exclusively through the national currency. He gives as an example the debt crises of Mexico in 1994 and Russia in 1998. Both countries adopted floating exchange rate policies in the face of explosive debt crises resulting from fixed exchange rates. The consequence was that after the introduction of floating exchange rates, there was a sharp adjustment in which the Mexican peso and the ruble lost 66% and 75% of their exchange value against the dollar respectively. Thereafter, the value of the currencies stabilized and then gradually recovered. According to Mosler, something similar would happen in Argentina because the Argentine economy is similar to that of Russia and Mexico. Currently, the official exchange rate of the Argentine peso is 116.25 pesos per dollar and the exchange rate in the black market (the so-called blue dollar) is 202 pesos per dollar. Therefore, the devaluation resulting from the floating exchange rates would bring the value of the official peso to approximately the value of the blue dollar. After this adjustment, the value of the peso would stabilize and then recover progressively, as occurred with the Mexican peso and the ruble.

In response to this proposal, Argentine leaders argue that such a devaluation of approximately 60% would increase the price of imports and that the poorest classes would not even be able to buy food for subsistence. However, Mosler argues that this problem would be solved by means of subsidies in pesos to those who need them and an indexation of salaries that require it. In addition, Mosler also points out that the price of Argentina’s exports would become cheaper and therefore the devaluation would increase the country’s exports. In addition, annual inflation is already at about 60% or so, forcing periodic wage indexations. Therefore, floating exchange rates would require a new and final indexation before entering the period of stability.

This leads us to the second proposal, permanent 0% interest rates and the renunciation of issuing any public debt. Currently, Argentine interest rates are 47%. This reflects a self-defeating attitude similar to that of fixed exchange rates. Argentines believe that without very high interest rates like the current ones, the Argentine peso would lose all its value and therefore high interest rates are the only incentive for the currency markets to accept the peso. This generates a constant flow of pesos directly into the international currency markets where pesos are exchanged for dollars. This dynamic floods the foreign exchange markets with pesos and causes the peso to devalue constantly. This, according to Mosler, is the main source of inflationary pressures in Argentina.

Currently, Argentina spends 8% of its GDP on interest payments, but according to Mosler’s estimates, this figure will soon be 20%, mainly due to interest payments on inflation-linked debt securities, real monetary time bombs that already represent 20% of the total public debt and amount to 70 billion dollars. Mosler proposes to eliminate the issuance of public debt securities, since Argentina is a country that enjoys monetary sovereignty and therefore does not need to either collect taxes or issue debt to finance its public spending. He also urges Argentine policymakers to stop talking only about the primary fiscal deficit (which does not include the interest payments derived from the debt) and suggests that when dealing with the fiscal deficit, they should do so taking into account the enormous and unnecessary amount of pesos that are permanently going to the foreign exchange markets to be exchanged for dollars. In response to the unfounded expressions of fear about the value of the peso, Mosler pointed out that the value of the peso corresponds to the Argentine GDP and to all the products that can be purchased with pesos. To maintain that the peso would lose all its value if interest rates were 0% is as absurd as saying that meat, soybeans, grain, gas, oil, tourism and all the products produced by the Argentine economy would lose all their value. That is simply not going to happen, especially at a time when Argentine exports are reaching record levels. As long as taxes have to be paid in Argentine pesos, the value of the peso will never be zero. Only in an unimaginable case in which no taxes would have to be paid in Argentina would the value of the peso be zero.

With floating exchange rates, interest rates would no longer be determined by the markets, but by the Central Bank. Therefore, once floating exchange rates are adopted, the level of interest rates in Argentina should be 0% and the Argentinian government should renounce the issuance of debt securities.

All of the above brings us to Mosler’s last proposal, job guarantees based on employment buffer stocks. This proposal is only sustainable over time with floating exchange rates that avoid having to adopt fiscal austerity measures to defend fixed exchange rates. In addition, the job guarantee would eliminate any inflationary pressures that may have subsisted from floating exchange rates and the elimination of positive interest rates, since guaranteed labour acts as a wage anchor in both downturns and upturns.

As Mosler tirelessly repeated in his expositions, the price level of an economy, and therefore its level of inflation, can only be explained by the price that the State is willing to pay for the goods and services it needs to supply itself. This especially concerns the price of labour reflected in wages, since the origin of all goods and services is socially embodied human labour. According to Mosler, the wage level is not the cause of inflation in Argentina. Therefore, the State would have no difficulty in setting up a program similar to (but broader than) the so-called Plan Jefes y Jefas, which until a few years ago served as a job guarantee in Argentina. Under this model, anyone who wants and is able to work, but cannot find work in either the private sector or the permanent public sector, should receive a transitional job until he or she can be incorporated into work in the private sector or the permanent public sector. The purpose of the job guarantee is not production per se but to demonstrate the beneficiaries’ work capabilities, since the private sector generally only likes to hire people who are already working. Therefore, guaranteed work should be implemented after the government has decided on the desirable size of the public sector to ensure good quality public services.

The job guarantee wage would become the minimum wage of the economy and would act as an automatic price stabilizer in both expansionary and recessionary economic periods, while eliminating poverty and unemployment.

Before going into the IMF agreement, Mosler also pointed out that in Argentina there is a problem with market regulation. According to Mosler, this is due to a high concentration in strategic productive sectors that leads to oligopolistic practices. His proposal is to regulate these oligopolistic markets to limit their excessive profit margins and avoid speculative practices, especially in the banking and primary sectors.

Finally, he delved into the tempestuous field of the agreement with the IMF. This agreement includes a loan of $45 billion and numerous conditionalities that are very harmful to Argentina, such as the issuance of long-term debt securities and fiscal austerity measures. Mosler proposes to replace this agreement with one that is more beneficial to both Argentina and the IMF. His proposal is to repay the loan through a 3% tax on Argentina’s gross exports. These exports amount to a total value of approximately $100 billion per year. Dedicating 3% of that figure to loan repayment would be beneficial to the IMF because it would ensure that it would receive dollars from the only source of dollar inflows into the country, exports. This means that no currency exchange would have to take place to make payments. Moreover, the IMF would no longer have to worry about imposing any kind of conditionality on Argentine policies. For its part, the Argentine government would be able to exercise its political sovereignty without any constraint from the IMF in the form of conditionalities. Moreover, the 3% tax could be deducted from exporters’ other taxes if it deemed it appropriate, so that there would be no mandatory increase in the tax burden.

I believe that the Argentine government should listen to Mosler’s message and implement the measures he proposes. The achievements of an Argentina with full employment, price stability and well-regulated markets would be beyond imagination. If such a situation were sustained over a prolonged period of time, I am convinced that Argentina could once again become the great world economic power it once was and regain its rightful place of relevance on the international scene.

Euro delendus est











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Splendour of the Queen’s Speech brings no relief for hungry people

Published by Anonymous (not verified) on Sun, 15/05/2022 - 5:47am in

Prince Charles sitting alongside the Imperial State Crown in the House of Lords at the State Opening of ParliamentCopyright House of Lords 2022 / Photography by Annabel Moeller. Creative Commons 2.0 license

The good we secure for ourselves is precarious and uncertain until it is secured for all of us and incorporated into our common life.
Jane Addams, US social reformer and suffragette (1860-1935)


How best to describe the state opening of Parliament this week? An anachronism in the 21st Century, bearing no relationship to the reality of people’s lives? Or, as Raphael Behr suggested in a Guardian article, ‘it was a reminder that much of what passes for a British constitution is actually fancy dress’. A King in waiting, dressed up in his military uniform, sporting medals and seated next to his mother’s jewelled crown, delivering a speech not actually written by her at all. You couldn’t make it up.

In terms of the reality of people’s lives, in these difficult and uncertain times, it proved as predicted, to be all show and no substance as the very real hardships being faced by people were scarcely acknowledged. No further solutions were offered to the growing financial insecurity caused by the ongoing fallout from the pandemic, global supply issues and rising inflation, along with the Ukraine war, which are all affecting the global economy with concomitant knock-on effects on individual nations.

The Spring Budget brought forth little relief, and the Queen’s Speech reinforced it. We have to bear the pain now to enjoy jam tomorrow! Michael Gove was adamant in ruling out an emergency budget during a televised interview earlier this week and blamed the current situation on global inflation, as if somehow the government had no tools to alleviate the growing pressures on families across the country.

The cure for this economic mess is, according to Boris Johnson, to ‘revive Britain’s economic growth’, as if that could be achieved by next week. He told parliament on Tuesday that whilst his government would make every effort to help those struggling with rising prices, ‘however great our compassion and ingenuity, we cannot simply spend our way out of this problem, we need to grow out of this problem’.

Aside from the fact that compassion and ingenuity seem to be in very short supply when it comes to the economic strategies and spending policies of Johnson’s government, the focus on repairing the public finances, instead of maintaining sufficient spending (in good times and bad) to keep the wheels of the economy turning, will most likely drive the economy into recession. The signs are already there. Data from the Office for National Statistics shows that the UK economy contracted by 0.1% in March, after flatlining in February, with retail sales down, production falling, and spending on cars decreasing by more than 15%. The British Retail Consortium, backed up that data in its latest reporting, noting that retail sales had dipped in April, and figures from Barclaycard also showed credit card spending on entertainment and eating out, slowing. The cost-of-living crisis is beginning, predictably, to crush confidence and put the brakes on people’s spending. And whilst Boris Johnson pledges that the government will, ‘do things in the short term to ease the squeeze on living standards’, (no sign as yet), they will likely go the same way as all the rest, into the wastepaper basket of empty promises. It must be getting pretty full by now.

It beggars belief that The Telegraph published an article this week suggesting that, according to top economists, people should save less and borrow more to save the economy and prevent a recession. Martin Beck, who is the chief economic advisor at the EY Item club claimed that it was, ‘incumbent on households using their strong financial position to keep spending’, and that ‘the pandemic has left households very well prepared for this period of turmoil because they were able to save more and pay down their debts.’

Where do they find the economists who write this drivel? Aside from the fact that it is only government that can enact the spending policies able to stabilise the economy, the truth of the matter is that not everyone was in the fortunate situation of being able to save and pay down debt during lockdown, and in times of economic uncertainty, whether you have the money or not, spending, or borrowing (unless they are driven to the latter) is the last thing that is on people’s minds. Furthermore, an analysis of Bank of England data by the Debt Justice, revealed that the number of UK households struggling with high levels of debt had increased by a third in 2021, even before the rise in energy prices and the removal of the £20 uplift in universal credit payments. And indeed, as mentioned above we are seeing the signs that people are retrenching in the face of that uncertainty. Lack of confidence begets a reluctance to spend.

Furthermore, the mantra of growth, as promoted by Johnson as the route out of this impasse is based presumably on the promotion of the false logic that a healthy economy drives tax revenue and gives government fiscal space to spend on public and social infrastructure. Just more of the same garbage churned out daily by those who know exactly how government really spends, but use the myths of scarcity to serve a purpose and deliver their ideologically-driven narratives. A political choice at the expense of the health of the economy and those who underpin its success – working people.

A healthy economy doesn’t depend on government tax revenues or borrowing capacity, it depends on a government having the political will and the real resources to deliver it.

A healthy economy also depends on the public and social infrastructure being in place, FIRST, to support the people and the businesses who rely on it. That is the job of government and represents the vital components of a functioning economy, and is certainly not dependent on monetary affordability.

It also fails to acknowledge that in the light of the climate crisis, Johnson’s focus on growth per se, without a clear plan or a strategy to deliver a sustainable and fairer, more just society, will just keep the capitalist juggernaut hurtling towards its destruction. And in this respect, we don’t seem to be making much progress in addressing this emergency. COP 26 is but a distant memory, and growth at any cost seemingly the name of the game.

At the same time as Black Rock warned this week that it would not support shareholder resolutions on climate change this year because they were ‘not consistent with their clients’ long term financial interests,’ a new forecast by scientists led by the World Meteorological Association, found that the probability of one of the next five years temporarily exceeding the 1.5 global heating limit was now 50% up, from 20% in 2021.

As the climate crisis warnings become ever more insistent and visible in our daily lives, banks continue to fund investment in fossil fuels and governments allow them to, without censure. The mission to save humanity from planetary degradation is on the rocks, as governments put fighting wars and growth as a top priority, trumping a future for our children.

It is distressing that the idea that government spends like our own household budgets has tainted any public discussion about the way forward, whether it is dealing with the fall-out from the pandemic, the effects of poverty and inequality on economies particularly, but not confined to the Global South, and the affordability of addressing the climate crisis. The tools are there through an understanding of monetary reality to deliver a healthy economy within the context of available resources, which we emphasise again are the real constraints to government spending.

However, the effects of government austerity policies which have dominated the economic narrative for over a decade, and also led to the idea that cuts to the public sector were necessary to get the public finances back into order, have not only created an increasing burden on the working population and their families, but also have driven the process of stripping out the last vestiges of our publicly paid for and delivered public services, on the lie of its unaffordability. The price we are paying today is unacceptable

It fits very nicely with the neoliberal ideology which has prevailed for decades; that the state’s role should be minimal, that it exists solely as a cash cow for the private sector, that the charity and voluntary sector should step into the government’s shoes for the provision of services that are not profitable, and that the individual should be promoted over the now dying concept of collective action.

At the same time, that same government (and others before it) have dedicated themselves to serving their own interests and those of their wealthy and corporate supporters, as well as pouring public money into private profit, from arms dealers to healthcare. And there it is, the vital clue, that money is not a scarce commodity. Public money for the corporate beggars leaching on the state while the public sector begs for adequate funding.

The consequences of this long-standing toxic ideology are before us. The growth of a low wage economy, in hunger, food banks and homelessness, and the widening gap in wealth distribution, are just a few of its damaging manifestations, all the result of government choices.

The Food Foundation released data this week that shows that in the last three months there has been a rapid jump in the proportion of households cutting back on food, or missing meals altogether. It noted that in April, 7.3 million adults live in households that said they had gone without food or could not physically get it in the past month. That compared, it said, with 4.7 million in January. There had also been a sharp increase in the proportion of households with children experiencing food insecurity in the past month, at 17.2%, up from 12.1% in January 2020. That represents, the Food Foundation noted, a total of 2.6 million children under 18 who live in households that do not have access to a healthy and affordable diet, putting them at high risk of suffering from diet-related diseases. It has called on the Government to take urgent action to prevent further escalation of this crisis, to include increasing benefit levels in line with inflation, expanding access to Free School Meals and the Healthy Start Programme.

The National Institute of Economic and Social Research, following its analysis for Channel 4 last year, reported this week that more than 250,000 households will ‘slide into destitution’ next year, which will bring the total number in extreme poverty to around 1.2 million. The think tank, echoing the Food Foundation, said that without government action, more than 1.5 million will face a rise in food and energy bills, that will outstrip their disposable income and force them to use savings (if they have any) or borrow to get through.

Professor Adrian Pabst, who is NIESR’s deputy director for Public Policy, commenting in November last year said: ‘Britain’s broken economic model shows no signs of turning into a high-wage, high-productivity, high-growth economy anytime soon.’ Regardless of Johnson’s promises.

While government fails to deliver, people will continue to struggle. It is distressing to note that while people’s lives are being ripped apart by a government that has no solutions but book balancing, Tories remain in their ivory towers sitting in judgement on those who cannot feed themselves or their families adequately. Not because they lack cooking or budgeting skills as a Tory MP suggested this week, but because they don’t have enough money. First up, we had the Ashfield MP, Lee Anderson, speaking in the Commons debate on the government’s Queen’s Speech, claiming that there wasn’t a widespread need for food banks, and that hunger was rather down to the fact that too many people ‘cannot cook’ and ‘cannot budget’. Tell that to the Trussell Trust and the myriad food banks serving their local communities. It was an insult to those who are forced to use food banks through no fault of their own, and to suggest that one can cook a wholesome meal for 30p a day by cooking from scratch. Perhaps he should be issued with a challenge to do so. It shows completely how out of touch some MPs are with the lives of their constituents.

Secondly, the Metro reported this week on Dartford Conservatives tucking into a buffet of cakes and sandwiches, after cutting the ribbon for the opening of a new food bank, as if that were something to celebrate. Whilst, in the same church building, desperate families have to queue there for food.

In 2017, Tory MP Jacob Rees-Mogg called the support given to food banks ‘rather uplifting’ and ‘shows what a compassionate country we are’. Of course, it is human to feel compassion for others who have fallen on hard times and want to help, but the existence of food banks, whilst not a new phenomenon, is a stain on a government which has the fiscal tools to ensure that people have the dignity of well-paid, secure work, either in the public sector, or in the form of a publicly run Job Guarantee scheme, to support those caught in the inevitable ups and downs of the economic cycle, and extraordinary events such as the pandemic or war, from which now stems an increasing tide of hunger and poverty, to add to that already perpetrated by prior lack of adequate government action.

Nicholas Hair, a Labour council candidate, commenting on the event said,

‘Food banks are not heart-warming. They are evidence of a failure of government and of a society to seek social justice’.

That gets to the heart of the matter. A government which knows it has the tools, as the currency issuer, to support people through this difficult time, but has chosen not to. A government that fails to spend sufficiently to support an economy and its citizens, transfers the burden to those who can least afford it. The human cost of this failure to act now will be devastating for working people and their families.

The solution, however, is not as the Chairman of Tesco has suggested this week, to impose a windfall tax on energy companies, as if collecting that money would give the Treasury the funds to alleviate the cost-of-living crisis. And, in the same vein, neither will a windfall tax on North Sea oil and gas operators, ‘rake in’ money for the Treasury to soften the pain of rising energy bills as predictable analysis by the Labour party continues to suggest. Just more of the managed illusions politicians rely on to keep the public on side from the valid point of view of fairness. The government, as the currency issuer, could create that funding tomorrow by authorising its central bank to do so. And it neither needs to tax nor borrow to keep the economy functioning. Again, its only constraint is the availability of real but finite resources, and how they are managed to deliver government priorities and avoid inflationary pressures.

However, on the other hand, a big yes to taxing the energy companies whose profits have gone through the roof, along with executive pay, and whose business is polluting and contributing to the climate crisis. Tax them to force change and drive sustainable energy solutions, or tax them out of existence if they fail to comply, but not because it provides funds for the Treasury to spend. It doesn’t.

On one further point, one could not disagree with the Tesco Chairman’s view that Rishi Sunak should not have raised National Insurance. He gets it! He understands that removing even more of people’s income leaves less for essentials. His remarks may have been driven by clear concern for those who are rationing the amount of food they eat, but also, no doubt, by the effects of that on the business as less money circulates through the economy and into company profits.

On that basis, it also makes a nonsense of Boris Johnson’s announcement this week that the government plans to cut 91,000 civil service jobs, claiming that it will free up cash to tackle the cost-of-living crisis. Or as Larry Elliott suggested in an article this week that ‘harder choices will need to be made, and at a time when ageing populations are intensifying pressures for higher spending. What nonsense!

Aside from the fact that government, as the currency issuer, doesn’t have to rob Peter to pay Paul, and paints a picture of scarce monetary resources which have to be divvied out, it demonstrates blinding economic illiteracy. Again, involuntary unemployment is not only harmful to those affected by it, but under current benefit arrangements, people would be left with less money to spend which, ultimately, would also have a knock-on effect on businesses such as Tesco, in an economy already facing serious problems.

If the government can create funds for its wars, or to bail out banks with no problem, then the question we must ask urgently is why can’t it do the same to help people, and why can’t it invest in the vital public and social infrastructure it has destroyed in the last decade?

When a Treasury spokesman claims, as was reported in The Telegraph this week, that since ‘public debt is at its highest levels and rising inflation is pushing up debt interest costs, the government has to manage the public finances sustainably to avoid saddling future generations with further debt’, there is only one response. It is a damaging lie.

And when Steven Millard, an economist at the NIESR think tank commented that, ‘The Chancellor had the chance to help poorer households, to do something about this. But he chose not to. He chose instead to pay for the Covid Assistance, the added fiscal support, by running down the deficit’, he has understood the potentially catastrophic consequences of that political decision, even if he chooses, like many in his profession, to ignore the monetary reality of how government spends.

The crossroad is before us, there is an alternative. But the question is, which direction will we take?



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The post Splendour of the Queen’s Speech brings no relief for hungry people appeared first on The Gower Initiative for Modern Money Studies.

Wages and the cost of living

Published by Anonymous (not verified) on Sat, 14/05/2022 - 4:59am in


Economy, Politics

An increase in the wages of the lowest paid employees, so that they can keep pace with the cost of living, is unlikely to lead to higher unemployment. Instead, it may well help improve overall economic outcomes. Wages have emerged as the critical difference between Labor and the Coalition in the cost-of-living debate. Recently Albanese Continue reading »

Food Bank Britain

Published by Anonymous (not verified) on Fri, 13/05/2022 - 9:04pm in

Rachel Morris considers the malaise of modern Britain as the Conservatives initiate Austerity 2.0


“The rule is, jam tomorrow and jam yesterday but never jam today”, said the Mad Hatter. Perhaps he wrote this year’s Queen’s Speech, as delivered by golden calf Prince Charles, and subsequent tweets by Her Majesty’s Government.

Chancellor Rishi Sunak suggested that the Government could help you with the cost of living crisis, if you start a small enterprise first. A jam stall, perhaps.

Business Secretary Kwasi Kwarteng shared his passion for nuclear power plants – not exactly a short-term fix – in the week when it was revealed that we’re set to receive glowing veg from Fukushima.

Most ministers repeated the bit from their propaganda manual about being laser-focused on “the people’s priorities”. Nothing like a bit of alliteration to drown out those noises emanating from your stomach.

While French people got a state-delivered energy price cap limiting increases to 4%, our 54% rises can surely only be deliberate.

There’s no question that we’ve embarked upon Austerity 2.0. But the ‘A’ word can’t be said out loud, because according to the Institute for Public Policy Research, Austerity 1.0 caused 130,000 preventable deaths.

That’s one in every 517 people. COVID has now killed one in 347, if you divide the 2020 Census population by deaths with COVID on the certificate (193,713 at 11 May).

Austerity has therefore been rebranded. The Conservatives have driven the more comfortable classes into needing food banks, so has started calling them ‘pantries’. This was exactly the approach of Trade Minister Penny Mordaunt who on 22 April declared a partnership with Hive Portsmouth, setting up ‘food pantries’ in her constituency to save households an “average £800 a year in food bills”.

The accompanying video makes the food bank look like Waitrose, with more gorgeous veg and eggs than I’ve seen anywhere in France. Mordaunt appeals for generous individuals to run them, off the Government pay-roll.

In an article for the Daily Express earlier this week, Mordaunt said that anti-Brexit “doomsters want Britain to fail”. If she doesn’t understand that Britain is already failing, perhaps the minister should spend an afternoon in the food ‘pantry’, when it’s open for business.

According to Mordaunt, Remainers must instead become Tinkerbells: they must close their eyes tight and believe in Brexit hard enough, so food banks – sorry, ‘pantries’ – will vanish. For most people, however, closing their eyes just makes the hunger more apparent.


Closing his eyes is something well-known to Brexit Opportunities Minister Jacob Rees-Mogg, who spends his days lounging on the green benches of the House of Commons.

Ultimately, the people in charge see widespread hunger and poverty as a game: an exercise imagined in public relations school – or perhaps a question on the Eton entrance exam – designed to prove how they can wriggle out of a tight spot.

And the latest frontier of this PR campaign has focused on Labour Leader Keir Starmer having a beer and a curry during a work event. The nation’s attention has been diverted away from yet more Downing Street party fines, a catastrophic Conservative local election performance, and the High Court ruling that the Government consigned elderly people to death during the early stages of the pandemic.

It is also deeply ironic that this ‘scandal’ focuses on food, when 4.7 million adults are currently suffering from food insecurity.

Indeed, there are fewer McDonald’s (1,358) in the UK than food ‘pantries’ (more than 2,200). But, according to Conservative MP for Ashfield, Lee Anderson, it’s poor people who are to blame for their growling bellies.

Meanwhile, Prince Charles can still utter the phrase “levelling up” in Parliament while sitting in front of a gold-encrusted wall on a gold-encrusted throne wearing gold-and-medal-encrusted clothing – saying that regional rebalancing will be achieved by “ensuring everyone can continue to benefit from al fresco dining”.

There’s a reason why the Government has run out of ideas about how to fix the country. Primarily, because fixing the problems would involve a recognition that they created the problems in the first place and – secondly – because the Conservative Party takes its instructions from its paymasters in the private sector.

Everywhere you look, the Government is privatising – or threatening to privatise – whatever hasn’t already been sold-off. Passports, driving licenses, Channel 4, alongside our crap-filled waterways. But this asset-stripping goes much further. The state’s role itself has been privatised.

If you want to challenge the lawfulness of a Government action, you must crowdfund it yourself. If you want veterans to have something to sleep on, you must support a charity like Forgotten Veterans UK, whose ambassador is – Penny Mordaunt.

There will come a time when too few can afford to support privately-funded efforts by the third sector, with time or money, and some of these needs simply won’t be met at all. What happens when there are more GoFundMe pages than people who can donate to them? When there are more charities than the charitable?

Up to 14.5 million people lived in poverty before the pandemic – one in every four or five – which is projected to rise to 16 million by 2023. And the Government’s response is indifference.

Last October, the Prime Minister told businesses that it wasn’t his job to fix their every problem. The Chancellor said he “can’t do everything” after criticism of his Spring Statement. Other ministers are saying similar.

We’re on our own now, shivering in a corner with the Trussell Trust. Only £3 million crowns get a lift in a Rolls Royce. The Government makes no bones about it: you’ll have to figure it out on your own. Perhaps you could use those bones to make a tasty broth? If you can afford to put the cooker on. But don’t think there’ll be jam with it. Not today.




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Albanese and minimum wages. Should the government support a 5.1% increase ?

Published by Anonymous (not verified) on Fri, 13/05/2022 - 4:59am in


Economy, Politics

There has never been a better time to increase minimum wages than now. And there has never been a bigger need. Anthony Albanese’s comment that he ‘absolutely’ would support a wage increase of at least 5.1%, so that workers could keep up with inflation, led to predictable controversy on the campaign trail. He and his Continue reading »