Social Security

We need to break free from the notion that a country’s health is measured by a balanced budget. Value is not judged by money, but by human and planetary flourishing.

Published by Anonymous (not verified) on Sun, 02/02/2020 - 5:48am in

Mind the gap warning painted on a railway station platformPhoto by Pixabay

Five years ago, responding to a letter from one of his constituents about food banks, MP John Whittingdale wrote that he thought food banks ‘provided an incredibly valuable service beyond the support provided by government’ and he ‘paid tribute to the hardworking volunteers involved.’ He added in conclusion that ‘work was the best way to lift outcomes’ and that ‘Universal Credit would ensure that it always pays to work.’

Five years on, the Secretary of State for the DWP, Therese Coffey, made it clear this week that nothing had changed. When she was challenged by a Labour MP who said it was a ‘gross injustice that nurses are forced to use food banks while fat-cat bosses receive obscene pay-outs, her response was that food banks were ‘the perfect way’ to meet the challenges posed by poverty. She, too, praised the volunteers saying that ‘Marrying the two is a perfect way to try to address the challenges that people face at difficult times in their lives. She also referred to those using foodbanks as ‘customers’. Yes, you read that right.  People who are hungry as a result of deliberately forged government policies, cuts to public spending, low wages and insecure employment are now ‘customers’ as if they were simply off to the supermarket to do a weekly shop! 

In her first speech at the Conservative Party Conference, Coffey also said of the increasingly discredited Universal Credit that it: ‘provides a safeguard for the most vulnerable in our society. It supports strivers, who are not content living a life on welfare…We know that work is the best route out of poverty.’

These are government ministers who show complete indifference to the reality of people’s lives and deny that their austerity policies have created poverty and inequality. These are government ministers who spout platitudes about making work pay when the evidence is to the contrary. These are ministers who sincerely believe that charitable donations are to be commended and that volunteers are doing valuable and selfless work supporting the needy. Ultimately these are people blinded by a cruel ideology; perfectly happy to consign the poorest and most vulnerable in our society to miserable lives with their inhumane policies in the belief that this is the normal order of things and that people, not government, are responsible for their fate however much government policies are skewed against them

They also achieve this public acceptance by reducing the health and wellbeing of the nation to whether we can afford it monetarily, promoting the idea that public services depend on a strong economy which in turn increases tax revenue and allows the government to spend on public services.  It disseminates the lie that a strong economy depends on wealthy entrepreneurs who are benefiting from low taxes and are not hamstrung by regulations and in order that wealth will trickle down by default.  And, regrettably, with the constant repetition of such messages, many people have been seduced by such arguments.

The evidence of the last 10 years in terms of cuts to public spending and reforms to the social security system belies the reality as distressing reports in the media portray this week.  Aside from the huge rise in the numbers of food banks across the country and the increasing numbers of people using them, which GIMMS has covered in previous blogs, almost on a weekly basis we read the harrowing stories of people who have died as a result of government policies related to cuts to public sector spending.

Just this week Errol Graham who was 57 and suffered from severe social anxiety starved to death just months after the DWP stopped his out of work and housing benefits.  Barry Balderstone who was suffering from advanced Parkinson’s disease and was deemed not ill enough to qualify for free, full-time social care died the day after he received the news that his claim had been rejected. He weighed just 7 stone.  According to a media report, health bosses said that the decisions were made following ‘faithful application of nationally-set criteria’. Helen Boughen, who has a rare genetic disease which has left her barely able to speak, eat or breathe had her benefits cancelled after assessors deemed her fit to work. A spokesperson for the DWP said ‘We are committed to ensuring that people get the support they are entitled to.’ Such statements ring hollow in the light of the indignities heaped upon disabled and sick people.

How would any of us feel if our care, or the care of our loved ones, were reduced to obeying a set of rules to meet financial tests or financial affordability?  The deaths of Errol Graham and Barry Balderstone are just two cases in a long line of deaths which have occurred, to put it bluntly, at the hands of the State as a result of government policy decisions forged in line with discredited market-led economic orthodoxy and combined with the untrue claim that such public spending is down to financial affordability or the health of the economy.

Having to undergo gruelling work capability assessments to determine whether one is eligible for support causes indignity and fear. The indignity of being rejected and having to appeal and in the meantime lose one’s benefits.  The humiliation of having to rely on food banks to feed oneself or one’s family as a result of a cruel and dysfunctional Universal Credit, a system being rolled out across the country. And the nation shaming poverty, hunger and starvation in one of the richest countries in the world. Clearly, work does not make you free.

So, when government officials express their sympathies at such deaths referring to them as tragic or complex as they did in the case of Errol Graham, the reality is that it is sham sorrow; words chosen from their box of suitable ready-made responses in a cold-hearted, cynical attempt to gloss over the human realities.

And yet, whilst it continues its brutal assault on some of the weakest and most vulnerable in our society it has no problem finding tax cuts for the wealthy, serving the interest of big corporations, pouring vast sums of public money into vanity projects like HS2 or saving a failing company like Flybe.

We seem to be regressing into another era. An updated version of the Dickensian novel Oliver Twist in which a starving Oliver pulls the short straw to put his empty bowl out and ask the well-fed Beadle for more. The era of the workhouse where the Poor Law Boards, believing that they were doing their Christian duty, sat in judgement; dishing out charity to the deserving poor whilst leaving the rest to rot.  The system perpetuated misery, poverty, malnutrition, starvation and not to mention untimely death as in the case of Oliver Twist’s mother who died alone in the workhouse.  Those very same situations are being repeated daily in many thousands of homes across the country.

We have come a long way from the Beveridge Report published in 1942 which eventually shaped the Britain we know today and created a system of social insurance to protect people from ‘cradle to grave’.

Today that welfare system is being dismantled piece by piece. We have been told by politicians that we can no longer afford this comprehensive system of support and protection which shields us from the raw realities of naked capitalism and provides security and safety when we need it most.  We are now living in a time where we are being conditioned to believe that such systems are no longer affordable, that the private sector is the only option left and that the future lies in public charitable donations or volunteering to deliver those services that are not profitable to big business. These things are being normalised in society. From food and clothing banks to food collection points in supermarkets whose bosses shamelessly promote their good works and collude in the big lie. Our goodwill and empathy are appealed to and being abused to serve the market and cut costs.

The State is dissociating itself from its role as an institution serving the public purpose by providing the public and social infrastructure to create a healthy nation and by association a healthy economy.  It is instead creating an environment of fear as it chips away at our system of social security through instigating punishment, tightening criteria for eligibility and stigmatising people with accusations that they are lazy scrounging shirkers hiding behind the curtains. It is also pushing ahead ever faster with the fragmentation and privatisation of our public services in the belief that the markets can deliver public services better, even though the evidence is clear that they do not.

We don’t have a government in denial; we have a government pursuing policies designed to hurt people and create misery all wrapped up in the ideological cloak of ‘there is no alternative’.  Whilst Boris Johnson promised a post Brexit ‘golden age ‘and his Chancellor declared that the government had ‘turned the page on austerity’ those pledges in a post-election period are now beginning to unravel.

That promised golden age and abandonment of austerity apparently doesn’t apply to northern cities. Over the last 10 years, the poorest areas in the north have borne the brunt of Conservative austerity. And now, just this week, the Local Government Association has predicted that the new government formula will impose further cuts to already battered northern cities from 2021 onwards as government reallocates council funding to Conservative-controlled, mainly southern shire councils.

Also, this week in the biggest turnaround, the Chancellor announced that he had written to cabinet ministers asking them to draw up cuts of up to 5% of their spending plans saying that they had been elected with a clear fiscal mandate to control day to day spending. He went on to say that there will need to be savings made across government to free up money to invest in the government’s priorities. Austerity was framed as a necessity in the wake of the Global Financial Crisis, with government having emptied its coffers by bailing out banks, so the population had to take a knock, dig deep, “we’re all in it together”. Lies. A lie that has taken thousands of lives, vandalised our public services and communities

So yet again, as already mentioned by GIMMS a couple of weeks ago, we have government couching its spending plans in household budget terms, claiming they have to make difficult choices to release money to spend elsewhere as if there were a shortage of it when there isn’t. The commitment by government to implement a spending programme to revitalise the economy at a time of great upheaval are vanishing into thin air.

In effect, the Chancellor is leading the public down the garden path claiming, quite untruthfully, that he will have to rob Peter’s and Paul’s departments to fund the government’s promised capital spending or infrastructure projects.  As the UK is a sovereign currency-issuer, he has no need to do this in order to spend. He could, assuming the resources to deliver the government’s policies exist, quite simply spend; vote the necessary funds into existence.  One should ask oneself how the Chinese authorities could build a hospital in six days to deal with the coronavirus emergency playing out in China, whilst our Chancellor scrabbles around for departmental savings. The Chinese government certainly weren’t checking whether enough tax had been paid or worrying about where they could find the money, they just authorised their central bank to make the necessary transfer into the accounts of an appointed construction company via a few keystrokes on a computer.

Cutting day to day spending, on the other hand, will reinforce the last 10 years of austerity which has already caused so much damage to public services, welfare provision and staffing levels in public sector environments. Essentially, that means you can build a hospital, but you might not be able to pay for a nurse to work in it. At a time when the NHS, for example, needs more nurses this would be folly indeed. Our politicians, whilst telling us there is no money to spend on public sector service provision which is fundamental to the UK’s social and economic health, will continue to pour public money into private profit, funding large infrastructure projects like HS2 to serve the corporate purpose instead.  The state as a cash cow for big business and a reinforcement of the capture of government by globalised forces.

The only way for such misrepresentations to be challenged is for a grassroots movement to get informed about the art of the possible by challenging the notion that there isn’t enough money to create a better, safer, more equable and sustainable world for those we love, our children and future generations.

As Howard Zinn, the great author and socialist thinker wrote:

‘Truth has a power of its own. Art has a power of its own. That age-old lesson – that everything we do matters – is the meaning of the people’s struggle in the United States and everywhere. [….] When we stand up and speak out together, we can create a power no government can supress. We live in a beautiful country. But people who have no respect for human life, freedom, or justice have taken it over. It is now up to all of us to take it back.’

 

 

Events

We are holding events in London, Manchester and Northampton in the next couple of months. Please see our events page for details.

Join our mailing list

If you would like GIMMS to let you know about news and events, please click to sign up here

Support us

The Gower Initiative for Money Studies is run by volunteers and relies on donations to continue its work. If you would like to donate, please see our donations page here

 

 

Share

Tweet

Whatsapp

Messenger

Share

Email

reddit

Viber icon
Viber

The post We need to break free from the notion that a country’s health is measured by a balanced budget. Value is not judged by money, but by human and planetary flourishing. appeared first on The Gower Initiative for Modern Money Studies.

The time has come to talk of many things; of taxing and spending and an economic system that needs mending. 

Protest placard with a picture of the Earth in space and the slogan "One World"Photo by Markus Spiske on Unsplash

In the news, the Prime Minister tells millions of  WASPI women affected by the changes to the state pension age that he couldn’t promise to magic up the money for them despite having found lots in the magic money pot for Tory manifesto pledges; the Home Secretary, Priti Patel, whilst visiting a food bank, claims that the Tory government was not to blame for poverty in the UK and, shifting the blame onto local councils, forgets to mention that central government funding has been cut by nearly 50% since 2010/11.

After 9 years of austerity, the consequences couldn’t be starker for our public and local government services, however, it is UK citizens, families and their children who have borne the distressing costs of cuts to social security benefits, both on their health and financial well-being. It cannot be clearer that the steep cuts to tax credits, child and disability benefits, ESA and Incapacity benefit and housing along with the introduction of Universal Credit have been behind the increases in child malnutrition, food bank use, homelessness and suicide.

The IPPR this week published its report ‘Divided and Connected’ which reveals that the UK is more regionally divided than any comparable advanced economy.

In the same week, the Resolution Foundation published its report ‘The Shifting Shape of Social Security’ It notes in its analysis of the manifestos of the main parties that child poverty is set to continue rising under the Conservative Party’s social security plans, whilst Labour’s £9bn of extra spending would mean 550,000 fewer children in poverty, it would not reverse the effects of the £5bn benefits freeze and could still see more children living in poverty in 2023 than do today. It noted that major policy changes have reduced support for working-age households since 2010 resulting in overall spending in 2023-24 being around £34bn a year lower on current plans than if the 2010 benefit system had remained in place, and that the cuts in support had fallen almost entirely on low-to-middle income working age families. It also noted that the Conservatives’ 2019 manifesto makes no changes to existing policy and as a result child poverty risks reaching a 60-year high of 34%.

Although the conservatives are promising more spending on health and education, it seems clear that they intend to carry along the same policy paths they have followed since they came to power in 2010 which have involved cuts to benefits, conditionality, sanctions and welfare to work. Clearly, they have no intention either of reversing the already implemented cuts or reforms which have done so much damage and left a trail of devastation in many people’s lives. Priti Patel’s remark about who is to blame for poverty is indicative of Tory neoliberal credentials of denying governmental responsibility and passing the buck along to others, whether local government who have been firefighting for lack of funds or indeed shifting the blame onto citizens themselves. Her position has not changed much since 2015 when she said, ‘There is no robust evidence that directly links sanctions and food bank use.”

In the light of the very real consequences on people’s lives of government spending decisions and policies, it is all the more depressing to read the two analyses of the party manifestos by the Resolution Foundation and the IFS which instead of looking at the real effects of government spending policies on the lives of real people, examine them in purely financial terms and arbitrary fiscal rules which as we may now be realising bear no relationship with how money really works.

Hunkered down in household budget explanations, the IFS, rather than considering the spending promises of all three parties from the perspective of potential outcomes for the economy and its citizens, examines them in relation to the prospect of raising taxes or borrowing and the likely impact on the deficit and national debt.  As usual, the question, if not asked directly, is how will the parties pay for their spending plans? When, instead, they should be acknowledging that the real question is how will a future government manage existing resources to meet government goals? This will be the real constraint that any future government will face, however progressive that government may be. The resource balancing act will be key to maintaining spending within the productive capacity of the nation to deliver public purpose.

The Resolution Foundation summed it up depressingly in its conclusion in saying that:

‘The priority that both main parties have placed on credible fiscal frameworks in this campaign is laudable. Such rules are hugely important for the government’s overall economic priorities. In setting out new fiscal rules, it is vital that they provide a clear framework for sustainable public finances, constraining the temptation for policy makers to promise unfunded giveaways.’

Such institutions unsurprisingly have focused on the notion that it is the role of government to balance its budget rather than serving citizens and improving their economic and social well-being. It is regrettable that a recent poll has suggested that many people doubt whether such spending plans are affordable and yet given the reality of the consequences of not spending adequately how could we possibly afford not to?

The nation is now paying the price for politicians pedalling the lie of the last forty years that money is scarce, that there is no such thing as public money and that good government is about fiscal discipline. Even if changing that notion in the public consciousness will take time, in the light of the urgency of the challenges to address climate change and social inequality we need an urgent step change in economic thought on a planetary scale since it is our survival on this planet which is at stake.

This is not, however, a time to make compromises with an economic system which has already done such huge damage. The seeds of an alternative model are already being hijacked by companies cynically promoting their green credentials with one aim in mind: to create more growth to keep the profits rolling. Reducing our plastic use and buying electric cars will scarcely make a dent in the scale of the changes we need to implement. We may have a broad vision, but that now needs to be developed into concrete realities. It may be still a work in progress, but it is a vital one we must not ignore.

This is a time to reimagine the world. A fairer and more sustainable approach to replace the one of endless growth which currently defines our capitalist economic system and puts profit before people and the planet.

Progressives on the left are beginning to initiate a much-needed conversation about what we need to do to reverse the decades of social injustice and challenge the idea that we can maintain the engine of growth on a finite planet.

However, and most regrettably, politicians on the left are still trying to have that conversation stuck in old economic paradigms of how money works. When they are asked how they will pay for these vital programmes the response is always one of tax and spend or borrowing to invest. Raising corporation tax, bringing back the magic money tree from the Cayman Islands, taxing the rich until the pips squeak or borrowing on the markets because interest rates are low. Instead of talking about taxing the wealthy to redistribute wealth by removing their colossal purchasing power and ability to influence politicians, they talk about funding our public services with the proceeds.

Again, on the left some politicians are suggesting that the government is akin to a business and that renationalising transport, our utilities, mail and the NHS will allow the government to plough back the profits back into public services. Yes, we need to end the rip-off of privatisation which has not benefited citizens and has allowed public money to flow into private pockets for profit motives, but let’s not buy into the idea that the government resembles a large corporation with a profit and loss sheet. It doesn’t.

The government is the currency issuer and neither needs to tax nor borrow in order to spend and nor does it need the profits of renationalised industries for us to have public services.  It just needs the political will to deliver them.

The role of government is to create the framework for markets to exist and dictate through legislation how they will function and in whose benefit. It taxes the populace, not to fund its spending but to manage its economic policies, from the redistribution of wealth to expressing public policy and is one of the key tools it can use to manage inflationary or deflationary pressures.

Government not only has the power of the public purse to improve the lives of its citizens it also has the power to legislate to drive its political agenda. All a question of choices which are not dependent on the state of the public accounts. Indeed, not only does it have the power to spend for the public purpose, it has the power to change the rules of the game. For example, it might regulate the financial sector to ensure that when people’s savings of whatever kind are put to work it is done to shift our negative and damaging behaviours towards creating a positive impact on society and our environment instead.

Outcomes are the measure of any government’s success. With the political will it could:

  • create the framework for good quality universal public services provide a social security system which is both not punitive in its functioning but also ensures a decent standard of living for those unable to work through disability, sickness or old age,
  • pay for a just Green transition,
  • offer a Job Guarantee as standard to create price stability and act as an automatic stabiliser for the economy to give people the dignity of proper, well-paid employment when needed.

All of these things are fundamental to the good functioning of society.

What are we so afraid of? A better future for our children? A more sustainable and fairer economy for all? Indeed, a planet for us to live and breathe on? What is not to like? So, when you hear interviewers berating left-wing politicians (who have not quite made the leap into monetary realities) about how they will pay for their progressive agenda ignore those questions and remember instead that a government’s economic record will be defined by how it serves the nation’s economy as a whole, improves the lives of its citizens and how it uses the resources it has at its disposal to achieve its agenda – not whether it balanced the budget.

 

For more in-depth information about how money really works, you can find all you need on our GIMMS website.

https://gimms.org.uk/

 

Join our mailing list

If you would like GIMMS to let you know about news and events, please click to sign up here

Share

Tweet

Whatsapp

Messenger

Share

Email

reddit

Viber icon
Viber

The post The time has come to talk of many things; of taxing and spending and an economic system that needs mending.  appeared first on The Gower Initiative for Modern Money Studies.

Universal Credit – Moralistic social policy that destroys lives

Published by Anonymous (not verified) on Fri, 29/11/2019 - 11:00pm in

Universal Credit is the flagship social policy of the
Conservatives launched with the Liberal Democrats in 2010, which after nine
years of spending and chaotic waste of resources, with numerous glitches, is
still in the process of being ‘rolled out’. The Conservatives’ manifesto for
the General Election pledges to “continue the roll out of Universal Credit”,
without a hint about why it has taken nine years to implement so far.

Labour is committed to abolishing Universal Credit initially
by simplifying its complex behavioural and other tests for obtaining state
benefits. Labour is also committed to piloting basic income, i.e., a flat-rate
benefit paid to all legal resident citizens, coupled with needs-based payments
for those with disabilities and with other special needs, such as maternity,
accidents, frailty or old-age. The Green Party is also committed to abolishing
Universal Credit and to replacing the core with a basic income, with housing
and disability benefits retained.

Voters and commentators should realise what Universal Credit
purports to do and what it does. It is the most strategic policy of modern
neo-liberalism, more important in its ambition than most people realise. By the
early 2020s, according to the Child Poverty Action Group, half of all children
in Britain will be enmeshed in it. Every candidate and every voter should
regard it as a central issue in the election……and yet the Conservatives and its
media supporters want to keep it away from public debate.

Basically, Universal Credit combines six means-tested
benefits into one. A means-tested system is one that aims to give benefits only
to the deserving poor. That requires administratively complicated tests to
prove somebody is poor and administratively complex tests to determine that
their poverty is not their own fault.

Universal Credit (UC) subjects vulnerable desperate people to
such invidious tests, which are stigmatising, arbitrary and often hard to
understand. Observers should realise that in every country where means-tested
benefits have been applied low take-up rates have resulted, i.e., many of those
who should receive benefits do not receive them. In Britain today, according to
the government itself, about two in every five people who should receive
benefits do not obtain them. The Treasury even budgets on the basis that many
who should be receiving benefits will not do so. This is unfair, and is
deliberate.

Then there is the Catch-22 trick played on claimants. They
are required to apply for benefits online. But many do not have computers or
access to one or even know how to use them. They are told that they should use
public libraries to apply online. But the Conservatives’ austerity policy (long
backed by the Liberal Democrats) has resulted in the closure of over 750 public
libraries. Even the designers of UC can work out what happens.  

To compound the failings of means-testing, if benefits are granted
only to those who are poor, then somebody who makes an effort to obtain a
low-paying job faces loss of benefits – known as a poverty trap – that makes
any gain from taking it small. The Department of Work and Pensions (DWP) admit
that such a person faces a marginal tax rate of about 80%. That is ridiculous.
Yet the Conservatives are committed to continuing this policy.

The situation is worse, because of what I call the precarity
trap
. The problem starts with the government’s mean-spirited rule that someone
who becomes entitled to a benefit must wait for five weeks before claiming it (it
was six weeks until evidence of hardship became overwhelming). Actually, according
to the National Audit Office, a quarter of all claimants do not receive their
benefits for over nine weeks. Could someone explain to the designers and
supporters of this policy how impoverishing this practice must be. It can only
be deliberate.  

Now we come to the precarity trap. If someone loses a job,
she must wait for at least five weeks without money. Suppose that after
eventually obtaining benefits she is offered a short-term job. She would face
not only the 80% poverty trap but also the prospect of being out of a job again
shortly, having to wait for another five weeks or more before receiving
benefits again. It would be irrational to take that job. Yet if she refused to
take it, she would be ‘sanctioned’ and lose all her income.

This is where we come to the worst feature. Under Universal
Credit a claimant must be ready to be interviewed and assessed regularly, at
short notice, and must prove they are ‘working’ indefatigably looking for a job.
If a local bureaucrat says they have not been looking hard enough or are late
for an interview, the bureaucrat – usually poorly trained, inexperienced and
working for a private company paid by how much they can save the system – can just
sanction the claimant, by suspending payment.

This contravenes a basic principle of common law – due
process.
In effect, they are deemed guilty until they prove themselves
innocent. They can appeal, but that takes about nine months, during which they receive
no money. Extraordinarily, most people who do appeal win. This is not justice,
since they have suffered the penalty for months. Many drift into homelessness
and ill-health, many commit suicide or attempt to do so.

The Conservatives claim the threat of sanctions improves work
motivation and social integration. There is not a shred of evidence to support
that. On the contrary, research has shown it has the opposite effect. But even
if there were evidence an instrumental justification for an immoral illegal act
is itself abhorrent.

Another amoral feature of UC is that benefits are only paid
for the first two children, which obviously penalises any third or fourth child
in a family. What has the child done to face such discrimination? Again, the
policy is moralistic, rationalised as deterring childbearing by “the poor”
(unless the mother can ‘prove’ she was raped). This is toxic utilitarianism.

Then there is the rule that anybody dismissed from a job for
alleged misconduct is denied benefits for at least 13 weeks. This rule fails to
respect due process. The DWP should not presume one party or the other is
telling the truth. A woman may have been dismissed for some petty action but in
reality have earlier refused a sexual advance. Or a worker could have objected
to having to do menial tasks that were not in his job description. The point is
that it is unfair to presume guilt and subject the person to a very
harsh punishment – loss of an only source of subsistence.

One of the most telling statistics is that so far the number
of claimants who have been sanctioned and lost vital income exceeds the number
of people properly convicted of crimes or misdemeanours in magistrates and
sheriffs’ courts and the penalties have been more severe. Every legally trained
person should be protesting at this legal inequity.             

Universal Credit is morally repugnant. Any Party advocating it deserves contempt. It is that wrong.  Every leader should use the last few days of the campaign to expose what Universal Credit will do to poverty, insecurity and inequality in Britain over the next five years. Where it has been rolled out so far use of food banks by the precariat and social underclass has risen fourfold. The dystopia is here and will grow much, much worse.  

Photo credit: Flickr/HelenCobain.

The post Universal Credit – Moralistic social policy that destroys lives appeared first on The Progressive Economy Forum.

Writing millions out of our pensions system will hit the poorest hardest

Published by Anonymous (not verified) on Sat, 23/11/2019 - 7:00pm in

News has leaked that Boris Johnson is to write millions of people out of making national insurance contributions. This would be the result of increasing the minimum contribution threshold to the weekly equivalent of £12,500 a year, which Sajid Javid has stated that is an ‘ambition’ which would ‘not necessarily’ be reached by the end of a parliament.

The gains to those making payments will be small. I am not
saying nearly £500 a year is insignificant when you’re earning £12,500 a year:
it very clearly is. But let’s be clear, it’s not only they who will gain. This
benefit will, unless compensated for, go right up the income order to those who
clearly have nothing to do with reducing a charge on those least well off in
our society. It’s certain that most gains will, then, go to those not in
greatest need.

And what matters at least as much as any gain to those on
the lowest incomes is the state pension and other benefit consequences of this.
These are massive, and all at cost to those who Johnson says should gain from
this proposal.

Our state pension entitlement is still based on the number
of years of earned income a person has national insurance contribution made.
Technically this is not quite the same as making national insurance
contributions, but the limits used for appraisal are closely linked to the
national insurance system. And whilst I know there are compensatory benefits
such as pension credit, but that’s not the point. Such benefits come and go. So
far no one has been trying to get rid of the state old age pension, even if its
value has been eroded. And now large numbers of people might have their
entitlement substantially curtailed if, as I would expect, the pension
entitlement threshold increase along with those for national insurance
contributions. How convenient is that for a government wishing to curtail
benefits and shrink what they think to be the welfare state?

And this is not the only issue. It now seems that many
entitlements are based on being able to prove work has been done. Even the
right to stay in the UK can now be based on this. And now many people will not
need to be on payrolls, at least as far as their employers are concerned,
 and may well not have contribution records as a result and so will have
no recourse to this evidence in the event of disputes on such issues. Where
does that leave the vulnerable? More vulnerable is the very least of the
answers to be provided.

I do not have a problem with reducing NIC on those on the
lowest pay. But I mean reducing it and not eliminating it until such time as
dependence on a payment record is also removed and proof that a person has
worked as a measure of a contribution to society is eliminated.

And I do have a problem with this being lauded when very
large tracts of income – from investment sources – attract no national
insurance at all and so provide ample opportunities for tax avoidance for those
recategorising their earnings.

There is a fundamental flaw in Johnson’s plan and that is it
is designed to attack those most vulnerable in our society. That’s typical. It
also needs to be said. This plan stinks of privilege with an indifference to
need. That’s why I oppose it as he’s presented, and as he’s likely to present
it.

Photo credit: Flickr/George Grinsted.

The post Writing millions out of our pensions system will hit the poorest hardest appeared first on The Progressive Economy Forum.

Generation X Retirement Options

Published by Anonymous (not verified) on Fri, 01/11/2019 - 5:47pm in

Members of Generation X have almost no retirement savings whatsoever. They don’t have defined benefit retirement packages. 401(k) savings programs are a joke. If they’re counting on Social Security, forget it. Political pressure to get rid of the program will certainly screw them before they get to collect it. And anyway, Social Security itself claims that it will be bankrupt in less than 20 years.

Rethinking Britain – How to build a better future

Published by Anonymous (not verified) on Mon, 09/09/2019 - 5:40pm in

Of the nineteen UK governments since the Second World War, only two have torn up the rule book and tried to build a better future, instead of simply recycling the tired slogans and policies of the past. The two governments that did try radical change – not always successfully – were those of Clement Attlee in 1945 and Margaret Thatcher in 1979.  We are therefore well overdue for another major policy rethink, aimed at solving the problems we have now – largely as a consequence of Thatcher’s legacy – rather than endlessly trying to reignite the ideological battles of the past. That’s why we concluded it was high time for Rethinking Britain: Policy Ideas for the Many.

Rethinking Britain is not only for the many – it’s also written by the many. As a result, it doesn’t set out the vision of one or two people, but instead offers the assessment of a wide range of experts, who are working in or studying the areas we cover. We not only set out the problems and suggest policy solutions to address them. Our aim is to help improve life for people living in today’s Britain. Between each set of policy ideas, you’ll also find interludes.  These draw upon real-life stories of people in Britain who are experiencing unresolved difficulties that should be considered unacceptable in any developed economy or civilised society – and we suggest how these problems could be solved, too.

Although some depressing situations are described, our overall approach is extremely positive. Instead of denying that there are problems – or ignoring them, as many politicians have done – we take a much more “can do” approach to building the society that most of us would want to live in. That leads to another significant point: Whilst Attlee’s 1945 government put people and society at the centre of its policy ideas, less than forty years later, Thatcher’s administration reversed this, focusing on the individual, privatization and the wealthy. This raises the question: “In whose interests should the economy be run”?

The shift to individualism, private profit maximization and an obsession with “free” markets resulted in serious wealth for the few – and runaway inequality and poverty for the many. It’s therefore not hard to guess where those contributing to Rethinking Britain are coming from!  We strongly believe that a society that produces healthy, well educated, strongly motivated people – who have, or can realistically hope for, a good standard of living – will also help to generate a powerful and dynamic economy.

The post-1979 dogma – that the British government should play as
small a part in the economy as possible – is also misguided. Far too much
capital is being used for short-term, speculative purposes, whilst not enough
is finding its way into the development of sustainable businesses that provide
long term employment and pay decent wages – not the hand to mouth existence of
a zero hours contract. In other words, the economy should work for the many,
not just the few.

Another theme that runs through Rethinking Britain is the concept of citizenship – where sets of rights and obligations mean that you are indeed part of something bigger than yourself. This is the polar opposite of Thatcher’s point of view, that there is “no such thing as society”. Many of her policy ideas were developed in the context of the Cold War – which came to an end thirty years ago; and it’s time for her policy ideas to do the same.

By investing in Britain’s people, we can build a stronger, more cohesive society – which will underpin a more vibrant economy. Rethinking Britain shows how.

Photo credit: Flickr/Christian Reimer.

The post Rethinking Britain – How to build a better future appeared first on The Progressive Economy Forum.

Strange bedfellows

Published by Matthew Davidson on Sat, 26/08/2017 - 4:43pm in

Via MacroBusiness, here's the TL;DR of the Business Council of Australia's submission to a 2012 Senate inquiry into social security allowances:

  • "The rate of the Newstart Allowance for jobseekers no longer meets a reasonable community standard of adequacy and may now be so low as to represent a barrier to employment.
  • "Reforming Newstart should be part of a more comprehensive review to ensure that the interaction between Australia’s welfare and taxation systems provides incentives for people to participate where they can in the workforce, while ensuring that income support is adequate and targeted to those in greatest need.
  • "As well as improving the adequacy of Newstart payments, employment assistance programs must also be reformed to support the successful transition to work of the most disadvantaged jobseekers."

Not only did the BCA's confederacy of Scrooges suffer unaccustomed pangs of sympathy, the Liberal Party senator chairing the inquiry also agreed that Newstart is excessively miserly. However, he failed to recommend raising the allowance, saying:

"There is no doubt the evidence we received was compelling. Nobody want's [sic] to see a circumstance in which a family isn't able to feed its children, no one wants to see that in Australia. But we can't fund these things by running up debt."

Sigh. (Here we go…) There is no need to "fund these things", whether it be by "running up debt" or any other means. The Federal Government creates money when it spends. We, as a country, run out of the capacity to feed our children when we run out of food. We cannot run out of dollars, since we can create the dollars without limit.

The government does however, at the moment, have a purely voluntary policy of matching, dollar-for-dollar, all spending with government bond sales. There's no good reason for this; as Bill Mitchell says, it's just corporate welfare. Even so, selling bonds is not issuing new debt. Bonds are purchased with RBA credits (or "reserves", if you prefer). The purchasing institution simply swaps a non-interest-bearing asset (reserves) at the RBA for an interest-bearing one (bonds), still at the RBA. It's just like transferring some money from a savings account to a higher-interest term deposit account at a commercial bank; do we say that this is a lending operation? Of course not.

There is no fiscal reason why the government should punish the unemployed to the extent that they become an unemployable underclass. Even if we are generous and assume the good senator and his colleagues on the inquiry are just ignorant about how the economy works, we are still bound to conclude that there must be some (not so ignorant) people in government, who do want to see people suffering for no just reason.