All mandatory pension scheme contributions should be cancelled right now: this is not the time to pour good money after bad

Published by Anonymous (not verified) on Mon, 23/03/2020 - 8:07pm in

As I am writing stock markets in London have opened and are 5% down on Friday’s closing prices. The tumble goes on. The awareness that markets are failing and that large parts of the economy will not survive this crisis is growing. I have already made it clear that I think that conditions must be attached to the bailouts that will inevitably follow, but this blog is about something else.

Despite the market now very obviously failing the government has not stopped the mandatory requirement that most employees in this country contribute to their pension fund this month, even though the contributions that they will be making from now and for a long time to come will probably simply be making good the funds lost over the last few weeks.

I have long opposed the mandatory imposition of support for the City of London and its financial markets at cost to most employees in this country, which is what enforced pension enrolment has represented. Because pension funds have almost no imagination on how to save the funds entrusted to them, most still goes into shares, with smaller parts going into corporate bonds (which are also suffering), government bonds (which are overall sustaining themselves) and property (which is bound to crash sometime soon at current rates of progress). The unfortunate point to note is that government bonds have for some time represented a very small part of most normal pension portfolios. The result is that right across this country the retirement income of tens of millions of people is being threatened by this downturn.

The most immediate, and obvious thing to the government to do at this moment is to protect the cash flow of companies and workers by immediately stopping the enforced payment of contributions into mandatory pension funds: this is not the time for good money to be thrown after bad. The sooner this is announced, the better.

But then there is an absolute obligation on the government to consider how pensions will be funded in future. One of the many parts of the economy that will require fundamental review following the exposure of the fundamental weaknesses that this coronavirus crisis has made clear will be the funding of peoples incomes in old-age in the future.

About ten years ago I wrote a paper on this issue with Colin Hines, my partner in the Green New Deal Group and Finance for the Future. This was called Making Pensions Work. In it we wrote about what we called the ‘fundamental pension contract’:

This is that one generation, the older one, will through its own efforts create capital assets and infrastructure in both the state and private sectors which the following younger generation can use in the course of their work. In exchange for their subsequent use of these assets for their own benefit that succeeding younger generation will, in effect, meet the income needs of the older generation when they are in retirement. Unless this fundamental compact that underpins all pensions is honoured any pension system will fail.

As we then argued of private pensions:

This compact is ignored in the existing pension system that does not even recognise that it exists. Our state subsidised saving for pensions makes no link between that activity and the necessary investment in new capital goods, infrastructure, job creation and skills that we need as a country. As a result state subsidy is being given with no return to the state appearing to arise as a consequence, precisely because this is a subsidy for saving which does not generate any new wealth. This is the fundamental economic problem and malaise in our current pension arrangement.

Nothing has changed my mind on this issue since then: I believe that it is this contract which our future provision for pensions must respect. In other words, saving in the secondhand shares of companies, which provides no direct benefit to those companies, and which delivers no investment of any real sort at all, and which does not create a single job as a consequence, is a wholly futile exercise at the macroeconomic level, at which this issue has to be considered if the well-being of society as a whole is to be our priority, which it should be.

I am not going to discuss details for future pension arrangements now: that is for another time. But what I will say is that we must never again force people to put their money into the casino-style lottery of the City of London Ponzi scheme called the stock market and then tell them that this will guarantee them a secure retirement, with nothing could be further from the truth.

That's why all mandatory pension scheme contributions should be cancelled now.

NB: I have no idea why there are bugs in this post and I will try to sort them out

Strikes Against Pension Reform in France

Published by Anonymous (not verified) on Thu, 05/03/2020 - 8:29pm in

image/jpeg iconfrench_pension_reform.jpg

Governments and bosses have divided the class, between “national” and “foreign” workers, young and old, public and private, all in the name of the so-called national interest. But workers in France have given an inspiration to workers everywhere.

read more

Is Boris Planning to Force Poor to Take Out Loans instead of Unemployment Benefit?

Published by Anonymous (not verified) on Sun, 26/01/2020 - 5:29am in

I realise that this may strike some people as a somewhat petty and ill-tempered overreaction to a passing comment someone made, but it’s been annoying me ever since I heard it. And I’m afraid, if it’s true, it could mean further devastating cuts to our already underfunded and dysfunctional welfare state. And it is also a revealing insight into the mean-spirited, jealous mindset of the working class Tory voter.

I was on the bus coming home yesterday when I happened to overhear the conversation from the couple on the seats immediately behind me. From the tone of their voices and their conversation, it seems they were an older couple. The man talked about how families no longer properly looked after their elderly relatives, except in places like Scotland. He said, quite rightly, that retired people also stimulated the economy by going out and having meals or a cup of coffee. That didn’t annoy me at all. What did – and it made so furious I was tempted to turn around and put the old fellow right – was his comment immediately before those. He announced that he agreed with Boris Johnson that workers like brickies – at least, that’s what I think he said – shouldn’t be given benefit when they were unemployed. They should have to take out a loan. He then went on to explain that he’d worked for a certain time without claiming his holidays. Then he was laid off. When he tried to sign on, however, he was told that by the clerk that they had received information about him which meant that he wouldn’t get any money for three weeks. Since then, he said, he always took his holidays.

I don’t know if this remark of Johnson’s is true, or where it was reported. It might be garbled rubbish, or it might be solid fact as reported by the Scum or some other Tory rag. But if it’s true, then it’s dangerous.

It should immediately be apparent how weak the man’s own argument is. Builders, like other workers, contribute to their unemployment benefit through National Insurance and their taxes. They therefore have every right to claim such benefit when they’re unemployed. The fact that the man complaining about it wasn’t is unfortunately, but irrelevant. From the sound of it, when he was laid off he was paid in lieu of the annual leave he didn’t take, and this amounted to three weeks’ worth of money. Or at least, that’s what the Jobcentre was informed or chose to assume.

This country is also suffering under a mountain of debt. The book The Violence of Austerity has an entire chapter devoted to the ‘violence of debtfare’. This debt, from student loans for education, payday loans, mortgages and so on, is not only keeping people poor, in some cases the repayments are actually making them unable to pay for necessities like food and heating. The very last thing this country needs is for more of it. But this is what this gentleman thought Johnson was advocating, and with which he agreed.

I remember the Social Fund and the way it operated in the Benefits Agency in the 1990s. Thatcher’s and Major’s governments decided to replace the system of grants that had been in place to allow claimants to buy certain necessities with a system of loans. It’s not a scheme that worked well. Some long term claimants, I’m sure, would have been better served with grants, not least because the loan system meant that money was deducted from benefit that was already supposed to be the minimum an individual could live on. The current system of loans in the welfare system has exacerbated this, so that with the repayments some people have notoriously been left with only a few pounds to last them the week. But Johnson and this idiot believe that this is acceptable.

I am also disgusted by the attitude behind these comments, though not surprised. When I was at school I remember reading letters in the local paper, The Evening Post as it then was, by people of a certain age supporting Thatcher’s cuts to unemployment and other benefits. The attitude there was that they had never had the benefit of state aid in their youth, and so the younger generation shouldn’t either. And the same attitude and argument crops up again and again whenever the Tories announce yet another round of cuts. I also think that part of the problem is that some of those with this attitude still believe that suitable work is available for everyone, somehow. They’ve benefited from the period between the Second World War and the Thatcher’s election as Prime Minister, when the government was committed to a policy of full employment. And even after that policy was abandoned, there was still the illusion of plenty of employment opportunities. I can remember trying to tell one of my co-workers how difficult I had found it to get a job after graduating university. There didn’t seem to be anything to fit my qualifications. This was also at a time when jobs were so scarce, that there were so many applicants for particular jobs that frequently prospective employers didn’t even inform you if you had been unsuccessful. But nevertheless, my coworkers were sceptical, saying ‘There are plenty of jobs in the paper’. This man clearly assumed that anyone who was laid off would find themselves new work in a relatively short space of time. But that’s no longer guaranteed.

But it’s through such selfishness and the resentment of a certain section of the working class to anyone they feel is getting more state benefits than they are, which the Tories are using to generate support for their welfare cuts.

There is no other justification. The benefit cuts and consequent tax cuts to the rich haven’t boosted the economy. Even right-wing economists now deny that trickledown – the process by which the wealth accrued to the high earners would pass down through society to those at the bottom – works or that it was even a major part of neoliberal economics in the first place. And so they try to justify their cuts with spurious morality.

And to do this, they play on the worst parts of human nature. They encourage a resentment of those they brand less deserving – Blacks and Asians, the disabled, the unemployed, and the poor in a vicious strategy of ‘divide and rule’. And the logic is used to cut benefits to their supporters. I’m sure this man would have been outraged if someone told him that his pension would now be stopped for short periods, during which he would have to take out loans. Much of the Tories’ voting constituency is over 50, and so they have been reluctant to cut their benefits and pensions. This has happened nonetheless. Austerity has already claimed the lives of thousands of senior citizens.

But this will get worse, so long as the Tories are able to utilise that selfishness, fear and resentment to turn the working class and other marginalised groups against themselves. In the end, under the Tories, they will all lose.

It’s just idiots won’t see it, so long as the Tories are able to distract them by a false claim that the benefits system is treating someone else better.


When the reform of capitalism is essential so too is the reform of its accountability

Published by Anonymous (not verified) on Sun, 19/01/2020 - 9:41pm in

Ann Pettifor had a very good article on Black Rock in the Guardian late last week. As she rightly pointed out, its newfound commitment to green investment looks horribly like greenwash when the true nature of its activities in shadow banking is understood. I’m not going to repeat what Ann said: I suggest a read.

There is, however, something to add. And that is that companies like Black Rock have another enormous significance. This is that they add yet another layer of opacity between companies and their suppliers of capital. And that opacity is really dangerous.

Time and again we hear companies justifying their behaviour by saying they must act in the interests of shareholders. And time and again I go to events where shareholders are supposedly represented. And yet they almost never are. They may be represented by pension funds or insurance companies, which organisations used to put their names on the investments that they supposedly managed on behalf of clients. But now that those pension funds and insurance companies themselves invest through organisations like Black Rock, tracker funds and ETFs then it is not even the pension fund that has its name on the investment. The fund does.

Most people know remarkably little about these various types of fund. Those funds like it that way. The greater the degree of separation they enjoy from their clients the more they like it. That’s simply because although these funds know the funds that they manage are not really their own, given the convoluted ownership structure that links the actual saver to these funds the chance of anyone really challenging their use of them, or holding them to account for it, is minimal. That's compounded when they undertake the types of activity Ann describes.

And this matters, enormously. The whole essence of shareholder capitalism is that there should be appropriate checks and balances so that the shareholder's interests are protected. But when the real owner of an entity is literally unidentifiable by the entity itself, and also by that real owner - and that is now the norm- then this logic fails, completely. Not only is there no accountability by corporations, but the real shareholders do know that they can, or should, hold the entity to account. The whole logic of shareholder capitalism fails.

In its place Blackrock becomes, at best, accountable to fund managers. And fund managers look like, think like, maybe earn like, and certainly want to behave like Blackrock managers. They're all in the City. So there is a singularity of view that in no way represents shareholder interests.

This permits the out-of-control capitalism we have seen.

It lets auditors report on accounts for shareholders that they know are not the real beneficial owners of the entities on which they are reporting.

And it gives rentiers free rein.

So, what to do about it?

That's hard. But there are three opti0omns. One, of course, is to reform pensions along the lines I suggest for the Green New Deal: force funds to invest in infrastructure that can be identified by those saving so that they can see what they are doing with their funds. That seems profoundly attractive to me.

The second is to require all pension funds to prepare accounts that they must send, in full, to their members explaining exactly where and how their funds are invested, with a list by name, type and activity of all the companies likely to have materially (which is measured at a very low level) to have contributed to their fund in the year. It is ludicrous that pension funds are at present an accounting black hole that is almost impenetrable to most in those funds when so much effort is put into making companies accountable.

And third? The reporting requirements of these funds needs to be improved as well.

When the reform of capitalism is essential so too is the reform of its accountability. And we have a long way to go on that one.

A spiral of costs? Is the USS pension scheme doomed? – Sean Wallis

Published by Anonymous (not verified) on Sun, 19/01/2020 - 9:18pm in


pensions, brexit


The Universities Superannuation Scheme (USS) was set up in 1975, replacing a stocks-and-shares Defined Contribution scheme called FSSU.

For forty-four years, from 1975 to 2011, USS paid out a Final Salary pension based on a 1/80 accrual rate. This meant that if you paid in for forty years you would retire on half your annual salary. Far from being unaffordable, the scheme grew. Only in 2011 did we begin to see the introduction of ‘Career Average Revalued Earnings’ (CARE) replacing Final Salary. Contributions for employees until 1997 were 8%, on the basis of covering historic problems created by the FSSU, reduced to 6.35% from 1997. Employer contributions fluctuated over the time period (10% initially, rising to 18.55% in 1983, 14% from 1997, 16% from 2009).

But for over forty years the scheme was essentially very stable. As a ‘last man standing’ multi-employer scheme in a growing HE sector funded by government spending, the risk of default was considered to be very very low.

In 2011 we began to see the beginning of ‘reforms’ that have increased income to USS and, apparently paradoxically, led to ever increasing claims of deficits. These included closing Final Salary to new entrants (but increasing costs to 7.5%), dividing the workforce and increasing the retirement age from 60 to 65. At the time, these changes were justified on a number of grounds: the 2008 recession had hit pension assets, staff were living longer, etc. As we know, 2011 was not the end of the ‘reform’ programme but the start of the dismantling of USS Final Salary and now Defined Benefit.

Our first response to the alleged ‘crisis’ in USS funding has to be, why was it that USS was able to pay out a higher-value Final Salary pension scheme for 44 years? How can this be possible when we are told that a lower-value CARE scheme — with a higher 8% employee contribution — is now ‘unaffordable’ and destined for deficits?

What has changed?

First Actuarial’s analysis, Progressing the valuation of USS (Salt and Benstead 2017) projected forwards to show that the shared 8%/18% contribution rates were sufficient for the scheme to pay pensioners for the next thirty years without touching the assets (£60bn by that point). So in fact, in its own terms, USS should be in a steady-state, its assets growing through investments returning levels of 5-10% pa, well in excess of CPI inflation at around 3%. Not only is there no deficit, but the scheme has a healthy working balance — on most recent official figures, £67.5bn in 2019!

Made in Westminster

The central assumption underpinning the health of the pension scheme – the very low risk of default – has been undermined by Central Government. The chaotic expansion and competition of the tuition fee market ‘reforms’ launched in 2011 with the £9k undergraduate fee have been devastating for the sector. But it has also undermined USS.

The Willets Plan was implemented in stages, starting with undergraduate tuition fee hikes to £9k and the curtailment of block grants in 2011; the removal on restrictions on student recruitment in 2014; and reduced regulation in the Higher Education and Research Act of 2016. This last reform allows universities to go bankrupt overnight. It abolished the Higher Education Funding Council for England (HEFCE) and replaced it with the Office for Students, whose boss, Sir Michael Barber notoriously commented that ‘Universities are not too big to fail’.

Prior to 2010, universities survived on £6.5-7k per student, mostly paid via local authorities. For the universities, the ‘£9k fee’ (now £9,250 a year) represented a profit margin of some 25% per student, with higher rates of profitability found in teaching departments that did not need laboratories or large numbers of research active professors.

This created huge financial incentives to universities to direct their activity towards recruitment of students onto courses that could be taught cheaply. It also drove up expansion. Last year the BBC reported figures from the Higher Education Statistics Agency (HESA) that show that between 2007 and 2016, Exeter University increased undergraduate student numbers by 74%; University College London (UCL) grew by 65%; York by 48%, and so on. But London Met lost 62% of its students over the same period; West London, 44%; Cumbria, 42%, and so on.

This market impact is not limited to England. Scottish universities are not permitted to charge £9k undergraduate fees to Scottish and EU students. But faced with booming competitors south of the border, they sought to increase their income in other ways, especially in overseas undergraduate recruitment. Glasgow Caledonian set up a New York campus with almost no students. Like many English counterparts, Scottish universities have also been accused of dodgy recruitment practices in international markets, using agencies earning £1-2k commissions per student, along with a concomitant reduction in academic standards to resist any decline in applications. Scottish universities have also developed ‘foundation’ years with private providers such as INTO and Oxford International.

From boom to bust

Universities have been rapidly transformed from publicly funded bodies whose surpluses were tiny compared to turnover (i.e. had low profit rates), into aggressive corporate competitors engaging in massive building programmes and building up large surpluses to pay for them. Competition is both external, between universities, and internal, as departments vary in the level of potential surplus they can gain from selling courses and degrees. Lab-based courses with intensive personal teaching are more expensive to provide than those taught in lecture theatres alone. Medicine has been exempted from this market, with student numbers still capped.

The university ‘winners’ in this market chaos have poured vast amounts into new campuses and taken out huge loans to pay for them. The ‘losers’ have closed campuses, departments and courses down.

Market competition has been devastating and vicious. Most of the first victims are in the post-92 sector, where there has been massive job losses and increased casualisation. Alongside a job cull, we have seen permanent jobs increasingly replaced by insecure hourly-paid staff on casual contracts.

But it is not just post-92 where universities are threatening bankruptcy, cutting courses and closing campuses. The University of Reading, a pre-92 campus university, had to report itself to regulators in February 2019 after selling £121m of land it was given in trust. Leaving this £121m aside, its debts total some £300m and it is running an operating deficit of around £20m a year.

Reading is a ‘USS university’. Whereas it has captured the headlines because it has been forced to open its books, it is an open secret that several other pre-92 universities are in a similar position.

‘Peak student’

Meanwhile student recruitment has levelled off. Despite the hype, we have reached ‘peak student’. HESA reports that students taking a first degree increased by 61,310 between 2008/9 and 2017/18. Current growth is at most 1% a year. Worse, this headline increase has been more than offset by a decline in students taking a second or third degree, which collapsed by 233,140 over the same period. Despite this, in 2019 universities were warned by the Office for Students for projecting a 10% increase in student numbers over four years!

We can expect the market to wreak more havoc in the context of Brexit. The pool of government-backed fee-paying students will inevitably shrink. EU students will be reclassified as ‘overseas’, most will find themselves ineligible for UK government support, and charged higher fees. It is possible that universities will be put under pressure to cut overseas student fees, which will be welcome. But there will likely be a contraction.

The current funding system is unsustainable for another reason. There is now an off-the-books ‘debt mountain’, underwriting student loans of £121bn (as at March 2019), of which the Treasury expects at most half will be repaid. Labour’s 2016 Election Manifesto committed them to abolish tuition fees. In response, the Tories commissioned a report, the ‘Augar Report’, which made a number of recommendations, cutting the fee to £7.5k and bringing back some of the direct funding of the block grant. But as we have seen, universities are now mortgaged to the hilt, and such tinkering could drive universities over the edge of bankruptcy. Indeed, senior management teams fear speculation about reduced fees in the future putting off students today.

Like very many of my colleagues, I am completely in favour of abolishing undergraduate tuition fees. It is just and equitable. Society gains from education. It was sustainable for decades in the past, and is sustainable again. The Robbins Principle that ‘if you can benefit from education you can come’ should apply.

Fundamentally, education is the gift one generation bequeaths to the next: the fact that some young people are wealthier than others due to luck or inheritance should be immaterial.

But in abolishing fees, we have to demand that the huge capital projects launched by universities in the last decade are brought under control, otherwise the employers will simply engage in massive job losses.

What does this mean for USS?

The USS pension scheme’s strength is that it is a mutual scheme, a ‘last man standing’ multiple-employer scheme.

The first political problem concerns the risk of default. If the scheme remains a mutual scheme, that risk should remain low, despite the risk of some universities going bankrupt.

Ironically, thanks to the growth of university estate, the market capacity of the sector has grown, so it may be easier for rival universities to absorb students and take on extra staff. As long as income stays within the pre-92 USS universities, the damage to USS of a university bankruptcy might be quite limited. This is of course not to justify the terrible impact that this might have on individuals’ lives. But it is to say that the risks to USS as a multi-employer scheme are likely to be exaggerated.

But this depends on whether USS stays a mutualised multi-employer scheme. Already there is discussion about breaking the scheme up into ‘sectors’. This idea arises from the logic of market competition. It must be utterly opposed.

An example should suffice. Take University College London (UCL) and Kings College London (KCL), two pre-92 universities in Central London. Both have taken out large loans to pay for huge capital investment programmes, which may, or may not, be covered by student fee income over the next decades. UCL does not know whether KCL has overreached; KCL does not know whether UCL’s gamble will pay off. Either way, the question increasingly becomes, why should KCL cover the pension risk of UCL, and vice versa?

Whereas these particular universities have not made statements of this kind public, others have. In 2017 Oxbridge colleges lobbied for the scheme to be de-risked and potentially broken up. Trinity College Cambridge since left the scheme. These institutions are not the most expansionist of colleges! Rather they were, in an orchestrated act of lobbying, expressing the view that they did not trust the other universities over their balance sheet reporting and were not prepared to pick up the cost of market failure by reckless competitors.

Quite simply, university senior management teams are attempting to reduce their exposure to ‘the employer covenant’, the guarantee that the pension fund will pay pensioners if, at some point in the future, the scheme itself goes bankrupt. In essence the employers insure the scheme’s investment strategy, offering financial support to manage short-term investment risk.

Undermining this covenant is a betrayal of future generations of pensioners by current employers locked into a current competitive expansion for market advantage.

‘De-risking’: what it is, and how it undermines the scheme

This is what lies behind the decision to ‘de-risk’ the pension scheme. ‘De-risking’ means two things:

  1. selling off assets currently invested in stocks and shares, and buying government bonds and gilts instead, and
  2. planning to hold all assets in gilts long-term for the entire life of the pension scheme.

In 2017 some 70% of assets were invested in stocks and shares, and the November 2017 plan, which has begun (see below), was to disinvest over a 20-year period.


Figure 1. Two alternative de-risking plans considered in 2017. The ‘Nov 2017’ plan reduces the proportion of assets held in stocks earlier, slows growth, and imposes a greater penalty on the likely long-term scheme value of assets. It is far from the only option however.

Despite the name, ‘de-risking’ does not reduce risk. It trades short term investment risk at the expense of the long-term risk of default. It makes scheme default much more likely, and so causes contribution costs (to employees and employers) to rise.

To see the likely consequence of this change, consider inflation.

  • The current ‘CARE’ scheme, and the now-frozen Final Salary scheme, are revalued annually by CPI (this is subject to a cap at 5%).
  • Therefore, to avoid default, USS must ensure that its investments beat CPI.

Currently, stocks and shares invested by USS yield returns conservatively estimated at around 4% above CPI, while gilt yield rates have been below CPI by around 0.8 percentage points.

In his excellent video on USS with Matthew Malek, Sam Marsh explains how USS’s projections of asset performance have been extremely conservative in the past, and compares actual and projected growth rates. I reproduce one of his graphs below, primarily to illustrate the impact of ‘de-risking’.


Figure 2. Plot of total value of scheme assets over time, due to Sam Marsh (2017). The solid line is the history of how the assets performed to 2017. The dotted lines are the 2011 and 2014 projections, based on ‘prudent assumptions’ (employing a confidence interval and taking the lower bound, i.e. the lower bound of projected performance). The dashed lines represent the 2017 lower-bound projections of the performance of the scheme at that time.

In simple terms, ‘de-risking’ the scheme increases the risk of default. It is like selling a house, keeping the cash in a low-interest-bearing account for twenty years and then trying to buy back the same house. You don’t have to be a property speculator to realise that there is a very high likelihood you will have to pay considerably more!

This is true if you model for an imaginary investment strategy in the future — it is why, for example, the November 2017 valuation obtained a much higher projected deficit (£7.5bn) than the September 2017 one (£5.4bn). See the graph above.

But it is also true if you actually begin to ‘de-risk’ the scheme. According to USS this process began in 2017.

Note that ‘de-risking’ is not a temporary sale of assets (e.g. due to short-term concerns about Brexit), losing some possible income for a period, and then re-investing again in the future. It is based on expecting a permanent one-way transfer of assets to gilts. (Hence the red line on the right hand side of Figure 1 continues on at 0%!) But since gilts are expected long-term to yield a return substantially below CPI, de-risking will inevitably bleed the assets dry.

Unless we can change this equation, we are locked into a pattern of diminishing assets and spiralling costs.

In 2017 this was a projection. Now de-risking is being implemented. And buried in USS’s latest Summary Funding Statement published in December 2019, are admissions that confirm UCU’s analysis:

  • De-risking is voluntary. “With the right economic conditions, we believe that opportunities should be taken over the years ahead to reduce the amount of risk – specifically investment risk taken in the funding of defined benefits – so it is consistent with the level of financial support employers have told us they are willing to provide in the long term, should experience prove to be worse than our expectation.” (‘Our funding plan’, p3)
  • De-risking has begun. “At the 2017 and 2018 actuarial valuations, we incorporated this long-term, gradual de-risking into our funding approach, with the intention of reducing the amount of investment risk over a 20 year period.”
  • ‘De-risking’ trades one risk for another. The scheme becomes heavily dependent on long-term projections of gilt yields. “Liabilities increased by 8% as falls in interest rates led to decreases in future expected returns at 31 March 2019.” Since these are low, this further increases the risk of default.

USS report the assets of USS grew between 2017 and 2019 from £60bn to £67.4bn, but liabilities grew by 7.8% from £67.5bn to £72.8bn. (The £7.4bn of asset growth breaks down as £7bn from investment growth and £0.4bn in surplus contributions).

By contrast, increasing contributions have a limited impact on the balance sheet. Total contributions in 2018 brought in £2.2bn, which (assuming it reflects a stable employee demographic) allows us to perform some back-of-envelope estimates:

  • The total income generated by increased contributions between 1 April 2019 and 30 September 2021 will total less than £1bn, even allowing for future wage increases.
  • Increasing contribution rates to 11% for employees and 23.7% for employers from 2021 would bring in at most £0.75bn a year.

USS say that “based on this approach and our assumptions we expect the USS Income Retirement Income Builder deficit to be removed by 31 March 2028,” by which time the scheme will be half way to being fully de-risked (see Figure 1).

Although USS is demanding much higher contributions from staff and employers (at a level likely unaffordable for both), the actual benefits to USS’s future balance are tiny: each year it amounts to about one tenth of the loss of income created by ‘de-risking’.

‘De-risking’ can be reversed

Now for the good news. Precisely because a de-risking valuation depends on long-term yields of assets, there are multiple options available to the scheme.

One might

  1. slow the rate of de-risking, currently with a target of 100% de-risked in 20 years,
  2. plan to stop at a partially de-risked scheme, say 20 or 30%,
  3. pause de-risking now and maintain the current balance of assets and gilts,
  4. reverse de-risking, returning to the 2017 ratio.

Options (2)-(4) wipe out the projected deficit. See Figure 3. The first option would probably eliminate it, depending on the degree to which the rate were reduced.


Figure 3. Sketch of alternative de-risking plans, all capable of implementation from the current time, and all of which would reduce the projected deficit.

These attacks on our pension scheme are wholly reversible.

Striking back

In 2018, UCU members took industrial action because the employers pushed for closure of the USS Defined Benefit scheme. The union grew by 50% in those universities that took action, illustrating the popularity of the action and the seriousness of the task. In 2019 members resumed that action, with some 80% of members in USS universities striking for eight consecutive days in November-December.

In 2018, the actions of ordinary members changed the narrative and forced the employers back. That strike produced a Joint Expert Panel, which pointed out rightly that de-risking was a choice and even at that point, the scheme need not project a deficit.

But whether it is by USS or UUK exaggerating the risk to the sector by market failure to encourage employer panic, or whether it is university managers’ own poor business choices, what is clear is this: left to their own devices, between them they will inevitably take the line of least resistance by weakening the employer covenant, and progressively shifting risk onto employees.

This is why I proposed the sector explore a Government Guarantee in 2017: seek agreement from the Treasury that they will act as lender of last resort.

We have seen that the Treasury has allowed the student loan book to inflate to £121bn to promote the market in Higher Education, half of which is unlikely every to be repaid! They have created the market chaos that has undermined our university sector — and the pension fund. Arguing they should be part of the solution is like arguing that private railways need a nationalised Railtrack.

The latest funding statement confirms what critics from First Actuarial to Sam Marsh and Mike Otsuka and the JEP had said throughout. ‘De-risking’ is a choice, and bears no relationship to the actual performance of the invested pension fund. It is a decision that can be altered or reversed.

We are at a turning point in the future of USS and the sector.

A Brexit sting in the tale

There is one further reason why a rational USS investment strategy would not plan to de-risk the scheme at the present time, even were one ideologically disposed towards this in the longer term.

Making assets dependent on future gilt yields exposes the fund to new risks. Chief among these are that Brexit may undermine USS’s recovery plans.

The reason why long-term gilt yields are so low (currently around 1%) is post-2008 Quantitative Easing. But the latest indications from Boris Johnson are that he intends to float through Brexit by printing more money. This can only hit gilt yields, and cause USS to project an ever-growing ‘deficit’.

In the Summary Funding Statement, USS glibly states that ‘the right economic conditions’ are part of the decision to de-risk, yet it is difficult to think of a post-war period when de-risking would be more likely to create a problem for the pension scheme!

See also

The NI Fund's reserves don't pay down the National Debt

Published by Anonymous (not verified) on Tue, 14/01/2020 - 4:56am in

The NI Fund discussed in this post covers England, Wales and Scotland only. Northern Ireland has a separate NI Fund, which is excluded from the figures given in this post. However, it works in exactly the same way as the Fund discussed here. 

Sometimes the government is its own worst enemy. HM Treasury's hamfisted response to this Freedom of Information request from Trudy Baddams of the pension rights campaign group "We Paid In, You Paid Out", has caused a very silly storm.

Ms Baddams asked this question:

Can you confirm that the National Insurance Fund (NIF) is presently in surplus and by how much? Can you also please confirm how much has been paid from the fund into the National Insurance Investment Fund in the last 10 years?

In response, HM Treasury pointed her to the NIF accounts, which are produced yearly. But then it added this paragraph (my emphasis):

The latest NIF Accounts show that the balance of the NIF increased by £2,286,469,000 in 2017-18. In addition to the previous balance, this resulted in a closing balance of £24,221,220,000, which was paid into the NIF Investment Account and, in practice, used to reduce the national debt.

This final statement (highlighted) was seized upon by opponents of women's state pension age rises as evidence that women born in the 1950s were being deprived of their pensions because of government mismanagement or even downright fraud. Since then, numerous articles, blogposts, tweets and Facebook posts have insisted, sometimes hysterically, that the NIF has been "plundered" by successive governments to "pay off the national debt", and that women were "robbed" of their pensions to plug the gap.

The independent fact checking organisation Full Fact attempted to debunk the claim that the NIF was being used to pay down the National Debt. But its conclusion unfortunately reiterated HM Treasury's confusing statement:

Claim: National Insurance Contributions are being used to reduce the national debt. 

Conclusion: Some are. This doesn’t mean anyone isn’t getting paid what they’re currently due in pensions or benefits—the UK government invests the NICs that don’t go towards paying pensions and benefits on reducing the national debt.

Oh dear.

Full Fact then muddied the waters still more by discussing the slightly incestuous relationship between the NIF and general taxation (of which more shortly) and the NIF's looming insolvency. This was to my mind unnecessary and only increased the confusion. Poor effort, Full Fact. Not up to your usual standard.

Before I dive into the misleading FOI response myself, let me first debunk two contradictory myths, both of which are widely believed (often, bizarrely, by the same people):

  • The NIF is a pension fund whose assets have been raided by the Government
  • NI contributions go into a general pot and are used for whatever purpose the Government wants

Both of these are untrue.

Firstly, the NIF is not, and never has been, a pension fund. It does not have "assets under management" belonging to contributors and invested for a future return. It is a clearing house which receives NI contributions (net of a 20% contribution to the NHS) and immediately disburses them to state pensioners and other beneficiaries. Thus the NI contributions of working people pay the pensions and benefits of people who are unable to work due to old age, sickness, unemployment or maternity: in their turn, when those who have previously paid NI become unable to work, their pensions and benefits are paid from the NI contributions of other people. NI contributions are not in any sense "savings". They are more correctly regarded as tax.

However, although they are tax, NI contributions do not go into the general "pot" of government funds. The NIF is ring-fenced for the payment of certain welfare benefits including the state pension. The full list of benefits paid from the NIF is here. Nothing else can legally be paid from it.

Despite repeated claims from campaigners that the NIF has been used to, inter alia, bail out banks, bribe Tory fat cats, finance wars, fund space programs in developing countries, provide housing for immigrants, give generous benefits to idle young people and pay off the national debt, there is zero evidence that the NIF has ever paid for anything other than the things it is legally required to fund. The accounts show that the single biggest item of expenditure from the NI Fund - by far - is the state pension, which swallows up almost all NI contributions, leaving virtually nothing for other benefits. If it were not for the rises in state pension age and the ending of SERPS/S2P in 2016, the NIF would now be insolvent.

That said, the amount of state pension and benefits paid out does not depend on NI receipts, but on Government policy as agreed by Parliament. The Government guarantees to maintain pensions and benefit payments at the agreed levels even if NI receipts fall. To ensure that as far as possible the NI Fund can meet its obligations without Government help, the NIF is legally obliged to keep reserves amounting to a minimum of 1/6 of outgoings. The "surplus" to which Trudy Baddams alludes in her FOI request is made up of these "statutory reserves" plus accumulated yearly excesses of receipts over income (if any).

Obviously, if outgoings exceed income - as they typically do in recessions - reserves fall. If the NIF's reserves fall below the statutory minimum, the Government tops them up from general taxation. Between 2014 and 2016, it provided a total of £14.2bn to the NIF to rebuild its reserves, which had been depleted by the deep recession of 2008-9, the slow recovery and a sharply rising number of pensioners due to longevity increases and baby boomer retirements. So, far from "raiding" the NIF, the Government actually bailed it out.

Since then, the NIF's finances have improved, though without the Government's bailout its reserves would still be below the statutory minimum. In the tax year ending 31st March 2019, the NIF's income exceeded its expenditure by £5.7bn, raising its total reserves from £24.2bn at the time of the FOI response to £29.3bn. And this brings me to that sentence in the FOI response.

The sentence is correct to say that the way these reserves are managed has the effect of reducing the national debt. But this does not mean that the reserves are being diverted to "pay down" the existing national debt. Rather, it means that their existence enables the government to borrow £29.3bn less than it otherwise would need.

This has not always been the case. Prior to 2007, the NIF's reserves were invested in existing gilt-edged securities (government debt), which is the safest and most liquid sterling investment available in the marketplace. This was rather like the Bank of England's QE: the NIF owned government debt, but the debt still existed. This meant that although the reserves were effectively borrowed by the government to fund other spending, the total stock of government debt did not reduce.

However, in 2007 the Government moved the NIF's reserves into an Investment Account at the Debt Management Office (DMO). The DMO is the Government's internal bank, responsible for issuing government debt, accepting tax receipts and other income, and managing the government's financial balances. The NIF's Investment Account is one of several accounts managed by the Commissioners for the Reduction of the National Debt (CNRD), which is part of the DMO.

The NIF's Investment Account is similar to an "instant access" bank savings account. The DMO pays interest on the account, which forms part of the NIF's income: in 2018-19, interest paid by the DMO on the investment account was £178.4m. The funds are "on demand" and can be withdrawn by the NIF at any time.

Like any other bank, the DMO uses deposits to fund its lending and spending. Doing so reduces its need to issue public debt. The NIF's reserves thus reduce the public sector borrowing requirement (PSBR). In this sense, they can be viewed as "reducing the national debt". But this does not mean the funds are being "diverted" to other purposes. They are simply being lent out for a return. As the House of Commons briefing paper on National Insurance contributions explains:

It is worth emphasizing that these funds are being held in this account on loan… there is no question of the Government being in a position to use this facility to extract money from the Fund as an extra source of revenue.

The NIF can draw on its reserves to meet its obligations, just as you or I can draw on our "rainy day" savings if our boiler breaks down or our income isn't quite enough to cover Christmas. When the NIF does this, the DMO covers the gap by issuing more public debt. Thus, when the NIF draws on its reserves, or its reserves fall below the statutory minimum, public debt rises. And this brings me to my conclusion.

There have been various proposals to pay 1950s-born women some form of compensation for state pension age rises. Many of the proposals involve paying out some or all of the NIF's reserves. But those reserves are legally required as a buffer against short-term variations in income and outgoings. If they were paid out to 1950s-born women, they would have to be topped up from general taxation. Therefore, if the the NIF's reserves were used to pay compensation to 1950s women, public debt would rise.

Whether 1950s-born women should be compensated for their state pension age rises is a political question that I do not propose to address here, though my views on the subject are well known. But there is a desperate need for honesty about the cost. There is no solution to the WASPI problem that doesn't involve much higher public debt. The campaigners have to make the case for this being a price worth paying. I'm afraid the election result shows that so far, they have failed to make that case.

Related reading:

The real victims of the "Rape of the National Insurance Fund"
The Fund that isn't a fund
Dangerous assumptions and dodgy maths
The past, present and (uncertain) future of a Government pension scheme - Forbes
The Myths and Legends of Hypothecated National Insurance - GIMMS

Jeremy Corbyn Denounces Universal Credit at Bangor University in Wales

Published by Anonymous (not verified) on Mon, 09/12/2019 - 5:12am in

Please hold your noses for this, as it’s a video from the Torygraph. It’s of part of speech Corbyn made at Bangor University in Wales in which the Labour leader denounces Universal Credit, pledges not to sell off the NHS, make Social Care universally available, bring the utilities back into public ownership, give remote communities broadband internet, and compensate WASPI women. And the pride with which he describes his announcement that the Labour party would end Universal Credit in Iain Duncan Smith’s own constituency is a direct challenge to the wretched policy’s architect. The Labour leader begins

In 2010 a political choice was made. They could have invested for the future. Instead, they decided to cut for the present and damage the life chances of a whole generation of people all across the UK. And that austerity started off with Universal Credit being rolled out. Universal Credit, which is cruel in the way it operates, brutal in the way it does PIP assessments, Work Assessments, the way in which it does not give support to children in larger families…

I was very proud to go to Chingford and Woodford Green in the northeast of London, a constituency represented by Iain Duncan Smith and announce a Labour government will end Universal Credit. This is greeted with applause.

You can’t cut your way to prosperity! You invest your way to prosperity! And there’s no more important investment than investing in young people, children and the next generation. And that is what – applause – and that is what I want our Labour government to do. More applause.

Under Labour our NHS is not for sale to anybody… I want Social Care available for everybody all across the UK and I’ll save this today(?) to make that available. Applause.

Our manifesto here, this wonderful red book, I’ve got two red books, one in which I write my memoirs, notes and speeches,  and this one is the manifesto – they’re actually much the same thing really….

We, the Labour government, will compensate the WASPI women. Applause.

I’ll give you an example. Less than 18 hours after he’d become Prime Minister he came to parliament to make a statement and announced there were going to be 40 new hospitals. I was very impolite and asked him where they were going to be. Corbyn then imitates Johnson’s blustering manner, saying there’s no answer to that, old boy, it’s not possible, how can I possibly know…

A Labour government will be one that will empower people but will also ensure that public ownership comes back for rail, mail and water, the national grid,  and that we will – applause – we will invigorate poor and remote communities by broadband to every part of the UK within 10 years. 

These are great policies which will make this country a better, more prosperous and more equal place. A place were it’s people will get the health and social care they need and deserve, women the pensions they should have had, if it weren’t for the Tories, and an end to the austerity that has killed 130,000 people at minimum.

And against that the Tories are offering just more poverty, privatisation, starvation and misery, but are trying to deny this with smears and lies.

Get them out, and Corbyn in!

Sixty UK Universities Are on Strike

Published by Anonymous (not verified) on Sat, 30/11/2019 - 1:46am in



Former D&S collective member, Jim Phillips, who is a lecturer on social and economic history at the University of Glasgow, wrote to us about the 60 UK universities on strike for the past week, over pensions, pay, and working conditions.  Here is the press release from University and College Union from just before the strike. 

University strikes ON after universities refuse to deal with pensions, pay and working conditions

21 November 2019 

Eight days of strike action at 60 UK universities will begin on Monday as UCU accused universities of being ‘all spin and no substance’ in their response to disputes over pensions, pay and working conditions.

Earlier this week, UCU accused universities of playing games after their representatives refused to even discuss pay. The union said things were no better at talks yesterday  over changes to the Universities Superannuation Scheme (USS), where their representatives failed to make a serious offer.

UCU said it feared that universities had learnt nothing from last year’s dispute, when campuses were brought to a standstill by unprecedented levels of strike action.

Last month, UCU members backed strike action in two disputes, one on changes to the USS pension scheme and one on universities’ failure to make improvements on pay, equality, casualisation and workloads. Overall, 79% of UCU members who voted backed strike action in the ballot over changes to pensions. In the ballot on pay, equality, casualisation and workloads, 74% of members polled backed strike action.

The union called on other vice-chancellors to follow the example of Professor Anthony Forster at the University of Essex, who recently acknowledged employers can afford to pay more for USS and should be doing more to avoid widespread disruption.

The union warned that if universities failed to make improved offers then further waves of strike action could follow in the new year, with even more staff taking part. UCU has said it is currently consulting with its branches at other universities about being balloted again to join further action.

As well as eight strike days from 25 November to Wednesday 4 December, UCU members will begin ‘action short of a strike’. This involves things like working strictly to contract, not covering for absent colleagues and refusing to reschedule lectures lost to strike action.

UCU general secretary Jo Grady said: ‘It is quite staggering that the employers have allowed things to get to this stage and done so little to avoid the upcoming disruption. Instead of engaging seriously with us over the various elements of the disputes, they have been all spin and no substance.

‘Universities appear to have learnt nothing from last year’s USS dispute, and are once again showing a dangerous level of complacency that completely underestimates the scale of anger amongst staff. Instead of wasting time playing games, they would do well to listen to people like Anthony Forster who have acknowledged that universities can afford to pay more to address these issues. It is time for university leaders to show some actual leadership.

‘Students should be asking serious questions of their vice-chancellors and putting pressure on them to get their representatives back to the negotiating table with serious offers that address all the issues at stake. If universities don’t change their tune, then next week’s action could just be the start with further waves of strikes involving more staff in the new year.’

* UK universities affected by strike action from Monday 25 November

Both disputes (42):

1.     Aston University

2.     Bangor University

3.     Cardiff University

4.     University of Durham

5.     Heriot-Watt University

6.     Loughborough University

7.     Newcastle University

8.     The Open University

9.    The University of Bath

10.  The University of Dundee

11.  The University of Leeds

12.  The University of Manchester

13.  The University of Sheffield

14.  University of Nottingham

15.  The University of Stirling

16.  University College London

17.  The University of Birmingham

18.  The University of Bradford

29.  The University of Bristol

20.  The University of Cambridge

21.  The University of Edinburgh

22.  The University of Exeter

23.  The University of Essex

24.  The University of Glasgow

25.  The University of Lancaster

26.  The University of Leicester

27.  City University

28.  Goldsmiths College

39.  Queen Mary University of London

30.  Royal Holloway

31.  The University of Reading

32.  The University of Southampton

33.  The University of St Andrews

34.  Courtauld Institute of Art

35.  The University of Strathclyde

36.  The University of Wales

37.  The University of Warwick

38.  The University of York

49.  The University of Liverpool

40.  The University of Sussex

41.  The University of Ulster

42.  Queen’s University Belfast

Pay and conditions dispute only (14):

1.     Bishop Grosseteste University

2.     Bournemouth University

3.     Edge Hill University

4.     Glasgow Caledonian University

5.     Glasgow School of Art

6.     Liverpool Hope University

7.     Liverpool Institute of Performing Arts

8.     Queen Margaret University, Edinburgh

9.     St Mary’s University College, Belfast

10.  Roehampton University

11.  The University of Oxford

12.  Sheffield Hallam University

13.  The University of Brighton

14.  The University of Kent

USS pensions dispute only (4):

1.       Scottish Association of Marine Science

2.       The University of Aberdeen

3.       The University of East Anglia

4.       Institute for Development Studies

Michael Brooks Applauds Labour’s Election Video

Michael Brooks is the titular presenter of an American left-wing internet news and comment show. He’s also a co-presenter with Sam Seder on the latter’s Majority Report. In this video, Brooks looks at and gives his approval to Labour’s election video.

Before going into the video, Brooks says that he thinks the election video is fantastic, that the initial polls look good and that Labour’s Brexit strategy is pretty smart. It’s smart from a tactical perspective of dealing with the competing demands from within their own party. He says of the Liberal Democrats that they are ‘utterly exposed’. They had an opportunity to form a government purely on the basis of making sure there wasn’t a no-deal Brexit. They rejected it because they care infinitely more about corporations and austerity and right-wing economic policies than stopping Brexit.  Brooks then attacks the Tories, stating that Boris Johnson is the UK’s own contribution to the global embarrassment list – Trump, Netanyahu, Duterte and so on. Of Labour’s video, he says that he watched a conversation earlier that day between Alistair Campbell and John McDonnell, Corbyn’s no. 2.  Brooks says that they’re really good politicians, because they’re putting so much on the table from the perspective of healthcare, workers’ cooperatives for a 21st century democracy, ‘that it’s not an opportunity to pass up.’ The video also shows they’re taking the campaign seriously, strategically and ‘presentationally’.  They then show the video.

Labour’s election video begins with Corbyn’s election as head of the Labour party in 2015. It then moves through his career, and shows how he has forced the Tories to backtrack on some of their horrendous policies, while seeing off Prime Ministers David Cameron and Tweezer. In front of the relevant scenes are the following captions, beginning with Corbyn’s election. Corbyn’s shown saying ‘Poverty isn’t inevitable, things can and they will change. And they already have, says another caption. Tweezer is shown walking on, and then walking off backwards with the caption ‘Tories forced to backtrack on’ – dementia tax, winter fuel cuts, fox hunting ban, – ‘and many more’. A list of other policies blocked rolls up the screen too fast to catch, but they include grammar schools, police funding cuts, diesel tax, solar panel tax, tampon tax, Brexit deal vote, National Insurance, Brexit impact reports, Saudi prison contracts, Sunday trading hours,  and triple lock on pensions.

There’s then footage of a reporter stating that polls show the Tories on 48 per cent, and Labour half that. Which is followed by John Snow saying ‘We, the media, the pundits, know nothing’. The captions then states that Labour had the biggest campaign growth since polling began. And that Corbyn bid farewell to two prime ministers, showing Tweezer and Cameron. It says he defeated May’s Brexit deal once, twice and then three times. He blocked Johnson’s disastrous no-deal Brexit. It then shows footage from the Labour conference of Corbyn saying that the party ‘will commit to unleash the biggest people-powered campaign we’ve ever seen in this country and in this movement.’ A caption then appears and says ‘To totally transform our society from grass roots upwards. To radically change our rigged economy so that it works for everyone.’ At this point there’s an image of Johnson meeting various people and Rees Mogg lounging on a Commons’ bench. The caption goes on ‘To urgently respond to the climate crisis with our green industrial revolution. To get Brexit sorted by giving the people the final say.’ It goes back to Corbyn against, who says, ‘We achieve all of these things by being a party and a movement totally and absolutely united to our common cause and purpose.’

The captions then appearing, saying ‘This is our chance, once in a generation  to rebuilt Britain and put wealth and power in the hands of the many not the few. It’s time for real change’. And there it finishes with the Labour Party logo.

Brooks remarks, ‘That’s a good ad. They’re on point. I would really recommend if you’re in the UK you do absolutely everything you can for Labour. I’m incredibly excited to see what they put forward.’ He and the crew then discuss which date the election is on, before concluding that it’s the twelfth December. Brooks ends that section of the video by saying that he thinks it’s fantastic they have such a short election cycle.

The reason why the election cycle is so short, is because all the Tory governments have collapsed ever since Cameron’s wretched decision to call the Brexit referendum.

I think it’s brilliant that Michael Brooks thinks the video is so great, and gives his unqualified support for Labour. Brooks and Seder are both supporters of Bernie Sanders and his campaign to bring about the radical change America needs to empower its ordinary working people, and give them jobs and prosperity instead of more neoliberal lies, poverty and despair from the Republicans and corporatist Democrats. And what America most desperately needs is medicare for all. It’s a disgrace that a massive economic and geopolitical giant like America does not provide properly funded medicine to all of its people. The claims by the Republicans and right-wing Democrats like Hillary Clinton that the country can’t afford to is a flat-out lie. Bernie’s serious about correcting this glaring injustice in American healthcare, just as Corbyn’s determined to revive and regenerate our National Health Service.

We need and deserve Corbyn to win over here, and Bernie to win in America. And then we can make a better world by destroying four decades of Thatcherism and Reaganomics.

Short Guardian Video of Corbyn’s Election Promises

Labour launched its manifesto yesterday, as did the Tories, and the newspapers and TV were full of it. The Guardian, however, produced this little video in which Corbyn presents the party’s manifesto promises in just a minute and a half.

The Labour leader says

‘Labour’s manifesto is a manifesto for hope. That is what this document is. We will unleash a record investment blitz. And it will rebuild our schools, our hospitals, care homes and the housing we so desperately need. Every town, every city and every region. So a Labour government will ensure that big oil and gas corporations that profit from heating up our planet will shoulder the burden and pay their fair share through a just transition tax. We’ll get Brexit sorted within six months. We will secure a sensible deal that protects manufacturing and the Good Friday Agreement. And then put it to a public vote alongside the option of remaining in the EU. And yes, be clear, we will scrap university tuition fees.’ 

At this point there is massive cheering from his audience. He goes on

‘We are going to give you the very fastest, full fiber broadband for free. That is real change. And Labour will scrap Universal Credit.’

More cheering and applause. Corbyn’s speech ends with

‘It’s time for real change. Thank you!’

The crowd rises to give him a standing ovation.

Okay, so this is a very short, very edited version of Corbyn’s speech, just giving the briefest outline of the party’s policies. But it shows that Corbyn’s policies offer real change after forty years of Thatcherism, which has decimated our schools, NHS and public services and destroyed people’s health and lives through savage welfare cuts intended to punish the poor so that the rich could profit. All of which was also carried out by the smarmy face of Blair’s New Labour, who tried presenting themselves as some kind of caring alternative to the Tories, while taking over their odious policies and actually going further.

And as Corbyn says, this is a manifesto of hope. Zelo Street has written a post comparing it with the radical changes that set up the welfare state by Clement Attlee’s 1940s Labour government and their manifesto, Let Us Face the Future. The Sage of Crewe describes how Attlee’s reforms, which set up the post-war consensus, were destroyed by Thatcher, leaving nothing but poverty and run-down, struggling public services, including the NHS, so that the rich 1% can get even richer.

But he writes

Today, Labour brought something to the General Election campaign that recalled the message of 1945, and that something was hope. Hope that students of whatever age would not be saddled with tens of thousands of Pounds of debt for years after graduating. Hope that the punitive benefit sanctions régime would no longer target the sick and disabled. Hope that a living wage really would be enough to live on.

Hope that those out-of-towners without cars would not be effectively trapped in their homes at weekends and in the evening because of public transport cuts. Hope that the NHS would be able to cope without leaving emergency admissions on trolleys in corridors. Hope that someone would, at last, take the Climate Emergency seriously. Hope that the scourge of Universal Credit would at last be consigned to the dustbin of history.

Hope that the victims of press abuse would finally see the long-overdue completion of the Leveson Inquiry, so shamelessly ducked by the Tories in exchange for favourable coverage. Hope that bad housing, and bad landlords, would finally become a thing of the past. Hope that the Police and Fire services will be able to cope, giving security and peace of mind to everyone. Hope of an end to homelessness.

Hope that education will be resourced properly, that teachers will be supported in their work, that pupils will not have to ask parents or guardians to help pay for what should be classroom essentials. Hope of real action to challenge racism in all its forms. Hope for 1950s women that pension injustice will be acknowledged – and tackled. Hope that the divisions caused by the 2016 EU referendum can finally be healed.

He goes on to predict how the people, who have profited from the poverty and misery Thatcherism, and particularly the austerity imposed by the Tories and Lib Dems over the past 9-10 years, will fight to prevent these hopes being realised. He points out that

that alone tells you whose interest is served by the decade of decay that has ravaged so many towns and cities across the country.

And concludes

‘Labour has promised us hope. Let Us Face The Future Once More.’

This is all precisely what we need, which is why the establishment will do everything they can to prevent ordinary people getting the government, a Labour government, that they deserve. Because, as the Galaxy’s dictator Servalan once said in the BBC SF series Blake’s 7, ‘Hope is very dangerous’.