Category Archives: Accountability

Osborne’s giveaways come back to haunt him

Following Osborne’s triumphant releasing of pensioners to unlock their annuity contracts to spend how they will, there were many siren voices raised that that risked exposing many vulnerable elderly people to crooks and scammers selling dud investment projects as the road to riches.   The results have turned out even worse than feared.   City of London police are now having to wage a huge campaign against the use of some of the Square Mile’s most prestigious addresses as a cover for scams purporting to sell overseas land for investment as well as wine, diamonds, etc.   Police say such scams cost mostly elderly and vulnerable people at least £1.7bn last year, with fraudsters typically returning to their victims a second timein the guise of ‘asset recovery specialists’ who pursue lost money for a fee.
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The Labour leadership contest is a classic example of how it should not be fought

Sadly, but predictably, the Labour Leadership struggle has been so much mired in bluster and hysteria that its true potential significance has been largely obscured.   A contest of this kind should start, not with who it is claimed has the style and presentation to be the most plausible leader, but with what it is argued is currently wrong with the country, what policies are necessary to put those things right, what mechanisms are proposed to achieve that, and how should they be funded and delivered.

Arguably the most pressing problems for Britain at the present time can be summarised as follows.   What were the causes of the financial crash and the consequent prolonged downturn, and what lessons need to be learnt to prevent a recurrence?   Does the manifest lack of adequate reform of the financial sector make it likely there could be another catastrophic slump again soon?    Is austerity the right policy to cut the deficit?
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The hypocrisy of the Tories as the workers’ party: making it impossible to strike

Strike action, fox hunting, the BBC, Europe, migrant benefits – never underestimate the Tory capacity to identify things that aren’t problems and then attack them.   The number of days lost to strike action is on average less than a tenth of what it was during the 1980s.   It’s not even as though strikes are constant – and certainly workers themselves are reluctant to strike because they themselves suffer the most – or have an enormous impact on productivity nowadays.   Of far greater impact is the UK’s under-investment in skills, which is something that unions want to work with the government to fix.   But the government’s latest proposals will upset the balance between employers and workers, tilting it much too far in employers’ favour and many of the proposals will make it far harder to resolve disputes fairly.   Yet good employers know that the best way to resolve problems at work is to sit down with workers and talk it through, trying to find a compromise, rather than using statutory power to ride roughshod over workers’ rights to impose authority by default.

Notoriously the bill introduces a 50% turnout ballot threshold in a strike ballot, but it also requires in the case of public services 40% support from all those eligible to vote which is a benchmark required nowhere else in any section of British society – certainly not in the election of the MPs who will be voting for it.   In addition workers will have to give an employer 14 days notice of strike action, and this is more than enough for employers to legally hire another workforce to break the strike, even though these workers may be inexperienced and not properly trained, but expected to cover important roles dealing with the public at short notice.   This blatant one-sided approach is guaranteed to poison the relationship between workers and their managers.

The proposal on opting into the political fund is also wholly one-sided.   It is clearly designed to throttle Labour funding and to make the Labour party bankrupt by cutting off the main source of funds that they have relied on since the 1930s.   It is clearly also aimed at undermining political campaigning by unions on behalf of their members and communities.   It sticks out like a sore thumb however that there are no proposals to force companies to ballot shareholders or place a cap on donations from wealthy people when funding the Tory party.

The Tory proposals may also criminalise peaceful picketing such as when a seventh person joins a picket line.   Is this really how we want to use police time – arresting the seventh nurse on the picket line outside the hospital where they work?   If the Tories were really concerned about improving workplace democracy, they’d commit to on-line balloting, an easy and secure way of letting workers have their say.   But they’re not, and it exposes what an utter sham it is for the Tories to claim to be anything remotely like a workers’ party.

Brown has a nerve to lecture us on economic credibility or winning elections

It is hard to believe that Brown had the gall in his anti-Corbyn diatribe to declare that “the best way of realising our high ideals is to show that we have an alternative in government that is…neither a pale imitation of what the Tories offer nor is the route to being a party of permanent protest, rather than a party of government”.   The prime reason that Labour lost 5 million votes between 1997 and 2010 was, apart from Iraq, the fact that a very large minority of Labour voters did think precisely that – that under the regimes of Blair and Brown Labour was indeed ‘a pale imitation of what the Tories offer’.   It’s also why UKIP gained 4 million votes at the election three months ago because a huge chunk of the electorate had indeed come to the conclusion that ‘they’re all the same’.

Brown was the overseer of deregulated finance, free-wheeling market finance, the introduction of privatisation and outsourcing into health and education, and keeping the unions on a short leash to encourage foreign investment into Britain.   Those were all Tory policies inaugurated by Thatcher which Brown didn’t reverse in any significant way, but actually extended in various ways, particularly in offering huge concessions to the City of London when he hosed down the banks and hedge funds with laudatory hyperbole in his Mansion House speeches to the assembled potentates of finance.   And to give equal encouragement to Big Business, Brown enormously extended the Private Finance Initiative (PFI) which  offered government-guaranteed profits to business for the next 25-40 years at taxpayers’ expense.   This wasn’t a pale imitation of the Tories; it was the epitome of Tory ideology.

And as to Brown lecturing us on winning elections, he was the most unpopular prime minister since the second world war and lost the 2010 election with the lowest Labour vote since 1918.   He was the architect of ‘regulation lite’ (i.e. virtually no regulation) for the banks and finance sector which undoubtedly contributed to the recklessness and arrogance of the banks in all but triggering a global recession.    To that extent Brown’s support for unregulated free-market capitalism was a significant contributory factor in bringing about the biggest financial crash for nearly a century, from which the Labour party and the centre-left parties of Europe have still not recovered.

It is the arrogance of Brown and Blair in assuming that they alone, the Labour establishment, have the unique skills to win elections that actually they have proved rather adept at losing, which is so galling.   Above all they, alongside the Tories,  have insisted on endless austerity as the right way to achieve deficit reduction which is not only incredibly unpopular, but also patently failing to achieve its ostensible goal.   Jeremy Corbyn is far more aligned with what the people of Britain clearly want, while the Blair-Brownites are in a state of denial.   Brown should look to his own record: when in a glasshouse, don’t throw stones.

Anti-austerity should be clincher of Labour leadership contest

Austerity is the wrong policy on every count.   Over-spending was not the cause of the financial crash,  so austerity is not the right policy for dealing with what did cause it which was the bankers’ arrogance and irresponsibility triggering the global recession.    When the massive bank bail-outs led to huge budget deficits, austerity was the wrong policy to cut the deficits because prolonged contraction of the economy makes deficit reduction far harder to achieve than systematic growth and expansion.   And all that still leaves aside the cruel torture of impoverishment and hopelessness which endless austerity imposes on the innocent victims of the crash whilst letting the guilty perpetrators go free.

In the Labour decade before the crash the average budget deficit was 1.4% of GDP, half the average under Thatcher and Major.  Moreover Labour inherited a national debt from the Tories in 1997 which stood at fractionally under 40%, but reduced it to 36% by 2007.   So there was no Labour over-spend, though there certainly was substantial Tory over-spend.   In neither case however was austerity justified as a counter-measure when the true cause was external and the real motive for its imposition was, and still is, Osborne’s desire to shrink the State rather than primarily to cut the deficit.

The bail-outs did produce a peak budget deficit of £157bn in 2009-10.   The stimulus of Alastair Darling’s last two expansionary budgets cut this by £40bn by the end of 2011, but the Osborne austerity budgets then kicked in which slowed deficit reduction by two-thirds. That’s because continuous contraction of the economy flattens growth which then enforces a slowdown in deficit reduction, which is exactly what happened in 2012-3 and which now seems likely to recur if Osborne imposes his £12bn further cuts in benefits plus another £29bn cuts in public expenditure.

Most wicked of all is the Tory indifference to the merciless battering inflicted on the squeezed middle and the helpless 20% at the bottom of society.   Over 150,000 elderly and disabled persons no longer receive help with washing and dressing because Councils are now so cash-strapped that they can only afford help to those with the most extreme needs or none at all.   Councils now, because they cannot fund alternative accommodation, regularly every day at 700 different locations break the legal requirement that children should not be forced to stay in bed-and-breakfasts or shared hostels for more than 6 weeks at a time.   And to sidestep the opprobrium arising from austerity increasing child poverty, the Tories have cynically changed the definition of poverty to avoid any measure based on lack of money and instead to focus on ‘life chances’.

Cameron-Osborne’s vendetta against the young could prove their downfall

Osborne really has got it in for young people – unless of course they are poised to inherit their grandparents’ £1 million home or will benefit from a higher inheritance tax threshold.   It will be young people who cop it from changes to universal credit that will deduct benefits faster as they earn more.   That will cost 3 million families an average of £1,000 a year according to the IFS.   Altogether some 13 million families, over half the population, will lose an average of £5 a week as a result of extending the freeze in working-age benefits, tax credits and local housing allowance, until 2020.

Then there’s unemployment.   The largest increase between 2008-13 was among 18-24 year olds, with 210,000 more out of work.   The latest figures show nearly half a million 16-24 year olds jobless, an unemployment rate of 13.7%, more than double the national average of 5.5%.   Even if they can find a job, Osborne’s over-hyped ‘national living wage’ won’t apply to those below 25 years of age.    The rate for 18-20 year olds will be a miserly £5.30 an hour, whilst for 16-17 year olds it will be slave rates of £3.87 an hour and and even £3.30 an hour for apprentices.

University fees are ending up putting poorer students into permanent debt.    When fees tripled to £9,000 a year, the maintenance loan was means-tested to target students from poorer families.   More than half a million students in England received the £3,387 maintenance grant last year, costing £1.6bn.   Now this grant is being turned by Osborne’s latest budget into another loan, of up to £8,200 a year.   So student debt will now rise to £51,000 after 3 years.   Unsurprisingly a report by the Joseph Rowntree Foundation has recently found that the largest increases in poverty in the last decade has been among younger adults of working age.

As for housing, anyone aged 18-21 will no longer be automatically able to claim housing benefit under the new rules.   The exclusion of young renters from any State support comes as young earners are increasingly locked out of home ownership as a result of soaring prices.   The average age of a first-time buyer has rocketed from 29 to 38 over the last decade.   Nor is further education a way out.   Further education colleges face some of the biggest cuts in the comprehensive spending review due in the autumn.   Indeed the further education sector, which provides the bulk of the UK’s post-secondary training, faces possible collapse and the loss of the invaluable source of technicians and mechanics.

What have young people done to deserve these successive kicks in the teeth?   In today’s volatile political climate this Tory campaign against the young will surely boomerang against its perpetrators.

 

Tory privatisation scams (2): the Hinkley Point C nuclear payola guaranteed by UK taxpayers for Chinese investors

If you think the London super-sewer is merely the exception in Tory privatisation economics, dream on.   It’s more the norm in a whole string of colossal financial scams, all put in place secretly and never sent to Parliament for approval.   Another flagrant example of privatising the gains and socialising the losses is the nuclear power station planned at Hinkley Point C in Somerset at a cost of £24.5bn, three times the original proposal, and using the UK taxpayer to guarantee to its French builder EDF  a price per unit of output no less than double its current UK wholesale price.    The government agreed this in November 2011, yet since then wholesale power prices have fallen by 16%; nevertheless the Tories are still guaranteeing the price of £92.50 a megawatt hour, inflation-linked for 35 years and funded through household bills.   So far from being the heroes of competition as they regularly claim, the Tories are driving a pernicious, underhand contempt for market forces to subsidise State-owned foreign companies whilst refusing to offer the same aid to a UK State-owned venture for the same project.

Just how bad a deal this is is shown by the fact that Hinkley will provide just 3 gigawatts of capacity, yet for the same price gas-fired turbines could provide about 50 gigawatts, onshore wind 20 and offshore wind 10.   The plant will not open till 2023 at the earliest, well past the date of the most acute energy shortage at the end of this decade.   And it will cost as much as the combined bill for Crossrail, the London Olympics and the revamped Terminal 2 at Heathrow – beat that for the most expensive white elephant of modern times!

It’s an anachronistic behemoth from the bygone age of energy dinosaurs when the world is rapidly moving towards distributed power via renewable energy.   It’s far too costly, and is it even needed?   First there is the UK’s declining demand for power, currently falling at a rate of 1% a year as energy-saving measures steadily take effect.   Then there is the expected threefold jump in the UK’s Interconnection capacity with continental Europe by 2022 which increases the ability to import cheaper supplies.   And third there is the litany of setbacks in price overruns and huge delays that have afflicted Finland, France and China over EDF’s European Pressurised Reactor which is the same type as is planned for Hinkley Point.

However nothing distracts the Tory nose from a good old-fashioned financial fix behind the scenes, especially when in this case it plays to their abhorrence of UK State involvement in meeting a public need.   So Cameron is off to Beijing in October to sign a final deal wit the Chinese president from which only Chinese investors will gain at UK taxpayer expense.

 

Tory privatisation economics: try the London sewer, the mother of all scandals

As an illustration of what the Thatcherite privatisations of the 1980s now mean, you could not have a better example than the London super sewer.   It costs £4.2bn, and you might expect that Thames Water, the privatised company that controls the whole of its length, should obviously be expected to pay for it.   Not a bit of it.   They will fund just a third of it only, and the rest will be met by a team of investors which will own, manage and finance the projedt during construction and then supply sewerage services to Thames Water on a 125-year concession!   But that’s just the start.   Unusually for a construction project, the investors will receive an income from the first day, paid for by Thames Water’s 15 million customers.   The surcharge on London water bills is likely to be £80 a year in perpetuity.

But here’s the main point.   The risks of construction, including cost overruns, accidents or any other incidents at the project’s 42 sites, as well as any financial risks – such as another global collapse in credit – will be borne by taxpayers because the government is acting as guarantor.   This is common for infrastructure projects where traditional insurers won’t cover the risk, so once again the privatisers take the gains and the public take the potential losses which could be billions of pounds, and Thames Water walks off all the way to the banks.   There are two enormous scandals here.   One is that if Thames Water were a publicly owned company or part of a national water company, the sewer could be built far more cheaply because governments can borrow money more cheaply than anyone else.   Second, why shouldn’t Thames Water be made to pay for the project themselves when they have paid out dividends of £1.1bn over the past 5 years?

Then there are the tax implications.   Thames Water is owned by a Luxembourg-domiciled consortium which includes the (Australian) Macquarie European Infrastructure Fund as well as Abu Dhabi and Chinese sovereign wealth funds.   So Thames Water is racking up huge debts using EU-blacklisted tax havens to pay out massive dividends and executive fees, at the same time as expecting household consumers to pay a big chunk more themselves.   Alongside a one-third increase in billing to its consumers, Thames Water have seen fit to grant a 60% pay increase to £2 millions a year to its chief executive – what for exactly?    The mother and father of all financial skulduggery?

 

The ugly face of Tory callousness exposed

With the world’s biggest refugee crisis since 1945, it is perhaps predictable that the Tories’ reflex response is to sensationalise the issue, lie about the facts, and pull up the drawbridge.   May kicks it off with the falsehood that the vast majority of migrants to Europe are Africans motivated by economic self-interest, when in fact 62% reaching Europe by boat this year were escaping persecution from Syria, Eritrea and Afghanistan.   Foreign secretary Hammond portrayed them as marauders risking the collapse of European civilisation, when in fact the number of migrants who have arrived so far this year is precisely 0.027% of Europe’s total population.   Cameron himself described them as a swarm intent of getting welfare benefits, when in fact the number of migrants reaching Calais of those arriving in Europe this year is just 1% and each asylum seeker in Britain gets a measly £36.95 a week to live on, only just over £5 a day, and is not allowed to work to supplement this sum.

Nor has Britain taken anything like its fair share of refugees under the vindictive and callous standards of the Tories.   Last year 25,870 people sought asylum in the UK, but only 10,050 were accepted.   Germany took 97,275, France 68,500, Sweden 39,905 and Italy 35,180.   Calculated as a proportion to population size, Britain comes even lower.   Calculated on 2015 rates, Britain has been even meaner in its reception of asylum seekers than impoverished Greece!   Against the hysteria the government has generated, you would scarcely believe it that the number of refugees in the UK has actually fallen by over 75,000 in the last 4 years.

Then there is the deeply unsavoury Tory involvement in trafficked workers debt-bonded and forced to work in slavery conditions that has just come to light.   Noble Foods, the UK’s largest egg company, used labour provided by DJ Houghton, a gangmaster operation run by Darrell Houghton and Jacqueline Judge at Maidstone, Kent, and its chairman has been a major Tory party donor and lent Cameron a helicopter for the election.   The Lithuanian workers were held in overcrowded accommodation riddled with bedbugs and fleas, denied sleep and toilet breaks, and had their pay repeatedly withheld while Lithuanian supervisors acted as the Houghtons’ enforcers intimidating the workers with fighting dogs and threatening them with instant eviction if they complained.   So much for Cameron’s promise earlier this month to tackle modern slavery in Britain.

Now that the election is safely out of the way, other Tory acts of harshness and vindictiveness have started to trickle out.   They have shelved their manifesto commitment to cap care costs for the elderly in order to save £100m (out of a deficit still stuck at £90bn), on top of cutting by a quarter of a million the number of elderly and disabled persons receiving social care at all.   They have concealed till now that 1 in 6 of all job seekers are hit by benefit sanctions even though the independent social security advisory committee, chaired by the ex-permanent secretary of DWP, have made the case that there is no certain evidence that sanctions actually work in forcing people back into work, but they do cause hunger and impoverishment.