Michael Meacher MP

Two big structural changes in the 1980s launched by its Tory predecessor are now coming back to haunt this Tory government.   Thatcher thought that the abolition of exchange controls in 1979 together with screwing down the trade unions in the vice of anti-union legislation throughout the 1980s would consolidate the market capitalism she so much cherished as well as crushing any working class threat to her own class dominance.   For a time they did have such an effect.   But now their long-term effects look very different and are undermining the very system she fought so hard to protect. (more…)

Osborne’s constant repetition that the Budget was fair, even “progressive”, reveals not that it was (the IFS and all other analysts show conclusively that it was not), but rather how exceedingly anxious he is that we should be conned into thinking it was.   He’s trying to learn the lessons of the Geoffrey Howe budget of 1981 which contained (till then) the biggest spending cuts since the Second World War, but made no pretence of fairness or proportionality, and provoked a huge political backlash.   Four factors however are working strongly against Osborne.

One is that a stark austerity programme now in the UK will not be compensated for, as it was in 1947 and 1981, by an expansionary international economy inviting a surge in private investment and exports.   Britain’s manufacturing industry has suffered a long-term decline, the US recovery is fading, and the Eurozone which normally takes half of all UK exports is still gripped in crisis and flat.

The second factor is simply that Osborne’s claim is downright wrong, on several counts: (more…)

There is an extraordinary silence about the really big issues now facing Britain.   We are arguably on the cusp of the biggest downturn for a generation as all the sources of growth dry up.   The expansionary momentum from ultra-low interest rates and £200bn quantitative easing is clearly wearing off, export markets are flat or falling, and now Cameron warns us we face the most drastic spending cuts which will change the way of life of the entire population and lead (according to the CIPD) to 750,000 public sector jobs destroyed and unemployment pushed up to 3 million for 5 years.   So where’s the anguished debate about this fast-approaching Armageddon and the search for alternative policies to avoid it (which there are)?  (more…)

Neither the coalition agreement nor the Queen’s Speech said anything about it.   They were  about deficit reduction, not poverty reduction.   But the latter must be one of the key tests by which we measure its performance.   Thatcher tripled child poverty and by 1997  it had reached 3.4 million (i.e. there were nearly 3 1/2 million children living in households where the income before housing costs was less than 60% of the national median).   Labour brought that down to 2.7 million by 2005, though still not half-way to meeting its target of halving child poverty by 2010.   The policy then collapsed.   Child poverty actually rose over the next two years back up to 2.9 million before falling again to 2.8 million in 2008-9.   That still left 22% of children in poverty households.

What effect can we expect from the coalition’s announced policies?   The Tory aim is to tackle poverty via strengthening marriage (tax reliefs), improving education (pupil premium for poorer children), incentives to work (cutting benefit, though JSA at £51 a week is already at rock-bottom), and sorting out the economy (with a trickle-down to the poor).   The LibDem policy is to introduce £10,000 personal tax allowances which would certainly increase the incomes of many of the poorest families, but only the first very modest tranche is being brought in this year.   The real problem however is that the size of the spending cuts to be announced in the spending review in October, let alone in the Budget in 4 weeks time, is likely to swamp any minor reduction in the poverty numbers that these indiect policies might have.

What makes this all the more galling is that Britain has become a hugely richer country over the last decade – for the elite.   New Labour has been a golden age for the super-rich.   The wealth of the 1,000 richest multi-millionaires has nearly quadrupled since 1997, and rose last year alone by £77bn to no less than £335bn.   Just 100 persons in the UK now have wealth valued at £183bn, that is 54% of all the wealth in the country.

These rich-poor inequalities are now staggering.   Yet all the talk, in a financial crisis brought about directly by many of these richest 1,000 individuals, is that between 100,000 and 300,000 public sector workers will now lose their jobs, most low-paid, to cut the deficit for which they bear no responsibility whatsoever.   Why is there no talk instead of imposing a 10% super-tax on this hyper-elite to raise some £35bn which is after all less than half of the amount by which their wealth increased last year?

When we have just read the Sunday Times Rich List showing the richest 1.000 people in Britain have increased their wealth by30% in the last year alone while real wages over the last 5 years have actually fallen, how can New Labour (which as Mandelson silkily reminded us “is wholly relaxed about people becoming filthy rich”) claim to have anything to do with the Labour Party?   Nothing could be more Tory than the obscene ballooning of inequality in the middle of the worst recession for nearly a century.   No wonder up to a third of voters are undecided – not wanting the Tories back , but feeling utterly betrayed by New Labour. (more…)

David Cameron has just produced an interesting idea – link top earnings to those of the lowest paid.   It’s just that there are three things wrong with it.

His proposed link is that no senior manager should earn more than 20 times the lowest paid person in their organisation.   Suppose the lowest paid employee is on the minimum wage which is £5.80 an hour.   That works out at £220 gross for a 38 hour week.   A salary 20 times higher would be £4,400 a week, or £228,800 a year, not far short of a quarter of a million.   A salary gap at that level when others on a mere £5.80 an hour cannot be defended.   The link between top and bottom should be no more tha 12 times, which would still offer a top salary as high as £137,300.

Secondly, Cameron suggests his idea should apply to the public sector.   Why only the public sector?    It’s in the private sector where by far the worst iniquities occur, as we learnt yesterday when it was revealed that one Bart Becht, boss of Reckitt Benckiser, pays himself (or is awarded by his remuneration committee – largely the same thing) £90 millions a year.   The target should be curbing grotesque private greed, not only Becht but others notoriously like Bob Diamond of Barclays paying himself £60o millions a year.

And Cameron said nothing about stock options, share incentive schemes, non-salary benefits, and bonuses where the real damage is done.   Becht for example got a salary of ‘only’ a million, but then cashed in share options worth £74 millions.   Not to include the massive extras which come to 10, even up to 90, times the original pay is a political sleight of hand which shows this pretence of being radical is nothing of the kind.

     Class is still a taboo word even though class differences and inequalities are now wider than for almost 100 years.   But slowly and painfully New Labour in the face of defeat is inching back from Mandelson’s infamous “wholly relaxed about people becoming filthy rich” to some inkling of fairness.   The Budget was littered with signs of retreat from the most egregious excesses of the past.   The new 50% top tax rate is targeted exclusively on those with over £150,000 a year (just 1% of the population).   The loss of personal allowances hits those above £100,000 a year (2% of the population).   Frozen inheritance tax thresholds are directed at the top 6%.   The bankers’ bonus tax is mainly focused on the top 7-8%.   And the mansion stamp duty tax will affect only homes worth more than £1 million - just 1.5% of properties.  

      Of course the rabid Tory press scream that this is a spiteful attack on hard-working middle and high-earners.   But if they thnk this is aimed at Middle Britain, what does that tell you about how out of touch they are?   The median income in Britain today is just £22,000.   One third of the population has to survive on less than £15,000, so Middle Britain is broadly those between £15-30,000 a year, whereas none of the Budget taxes will affect anybody below £70,000 a year.   This is not spite, but tell-tale signs of a switch back towards fairness.

     Of course the Budget should go further to have a serious impact on class injustice:

*  Instead of at present the poorest tenth paying 46% of their gross incomes in tax while the richest tenth pay just 34%, this gross unfairness should be reversed.

*  Instead of at present the rich being exempted from payment of national insurance contributions above 1.5 times national average earnings, this arbitrary cap should be removed so that they pay their fair share like everyone else.

*  Instead of at present the rich being able to redefine income as capital gains and this pay only 18% instead of 40%, CGT should be put back level-pegging with higher income tax at 40%.

*  Instead of at present the rich, mostly the top tenth, pocketing 91% of the nation’s wealth while the bottom tenth have no net wealth because they owe more than they earn, a new tax on wealth should be brought in, preferably a gifts tax rather than an inheritance which can be too easily avoided.

Nobody has ever heard of Linda Cook, but she’s yet another symbol, the latest symbol, of what’s sickening Britain.   She was former head of Shell’s gas and power business, didn’t get the chief exec role, so she left – but only after getting her pension pot more than doubled to nearly $25 millions (about £16.5m).   That’s the equivalent of awarding her an extra 15 years of pension contributions.   As if that were not enough, she also received a $7.6m ‘golden goodbye’. (more…)

It is truly staggering (or is it just expected?) that after nearly 13 years of New Labour the 10% richest in Britain – not a tiny group, but 6 million people – now have wealth no less than 100 times greater than the 10% poorest. It is equally staggering that a hairdresser has an income of £12,400 whilst the chief executive of a major bank or FTSE 100 company has an income (like Stephen Hester at RBS) of £1.2 million , again 100 times more, and that’s without counting the stock options, bonuses, target-based incentives, and assorted fringe benfits which escalate top executives’ salaries to £5-10 million a year. In the 1930s the richest 1% took 12.6% of total UK income, but the war and post-war Labour Governments shrunk this to 4.2% by 1976, since when the Thatcher and Blair governments have bounced their share up again to 10.0% of all income. These findings from a study published today by the National Equality Panel should be a call to arms. They are of course the inevitable and predictable outcome of the unfettered market-rules-all de-regulated neoliberal agenda pursued equally by the Tories and New Labour.

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The House of Commons public administration select committee has just called for a High Pay Commission as a solution to the outrage of runaway pay at the top. It would certainly help, but it’s no solution. That’s partly because the recommendation applies only to the public sector when the really outrageous excesses apply in the private sector. But it’s also because the proposed Commission has no ultimate sanctions. It would monitor pay trends and set reasonable top pay guidelines, naming and shaming those guilty of egregious breaches. Clearly a paper tiger is not enough. And above all this idea won’t offer an adequate solution because it doesn’t get to the real heart of the problem which lies in the asymmetric framework by which pay is determined across the classes. Pay at the bottom is fixed by benefit levels and the national minimum wage. For manual work it is settled largely by collective bargaining, for white collar workers mainly by individual pay contracts whose generosity rises sharply at the higher levels, and for the elite virtually self-awarded through private discussion with hand-picked mutually serving remuneration committees.

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What shoulod be done when in the last year company profits are down 31%, the stockmarket is down 35%, everyone else has to take a pay cut or a job loss, yet executives can award themselves a huge rise in pay and bonuses? The hot answer is that we need a High Pay Commission to deal with top pay like the Low Pay Commission supervises the minimum wage (currently £200 a week, compared with the average salary, bonuses, stock options, and other ‘incentive’ schemes of chief executive of the top FTSE 100 companies amounting currently to £71,500 a week). But fixing the minimum wage at £5.83 per hour at the bottom of the wage structure is a wholly different matter from regulating top pay. Unless it is proposed to limit top pay (including all the non-salary far more lucrative forms of remuneration) to a fixed ratio with bottom pay in the organisation, say no more than 15-20 times the lowest wage, which a High Pay Commission could certainly do and then keep under permanent review, a lot more is required than setting up a new quango.

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