Child poverty increases for second year running

Last week it was announced that child poverty increased by 100,000 in the last year. In the past two years, according to the Government's own figures, child poverty has increased by 300,000. When Labour came to power it promised to "end child poverty within a generation" – by 2020 - and to halve it by 2010.

After 11 years of New Labour, there are still 3.9 million children living in poverty. The Government is still to succeed in making a one-quarter cut in child poverty, which it had aimed to do by 2005. Three years on and things are going into reverse.

The LEAP Red Papers of March 2008 contain a feature on child poverty (page 16) written in advance of the latest release of figures.

It shows how just by increasing child benefit by £14 per week for the eldest child, child poverty would be reduced by 400,000 - meeting the Government's one-quarter cut target immediately. This is the equivalent of raising corporation tax by just 3.5% - which would still be a lower rate than it was in 1997, since New Labour has cut corporation tax from 33% in 1997 to 28% this year.

Of course there are others way too - increasing the minimum wage by more than inflation being one. The other feature in the LEAP March 2008 Red Papers was on inflation and pay (page 12). It showed that this year's increase in the National Minimum Wage (to come into force in October 2008) was just 3.8% - when inflation is 4.3%.

The public sector pay cap - affecting many low paid workers in local government and the civil service - will also hinder future child poverty targets. And as we know, public sector pay has no effect on inflation - so it won't solve our economic problems either.

If New Labour wants to have any chance of saving itself, it should look to these two flagship policies from its first term: the national minimum wage and cutting child poverty. Re-concentrating on those policies might be a good idea for a party floundering at the moment.

Meanwhile, new London Mayor Boris Johnson has his first RMT industrial action on the London Underground as cleaners paid just over £5.50 per hour campaign the London living wage of £7.20 - which Ken promised to introduce as he brought contracts back when Metronet collapsed. Find out how you can support their campaign. Bear in mind that the minimum wage of £5.52 equates to just £10,764 per year full-time. Try living on that in London.

Government mustn't punish workers for inflation incompetence

Inflation figures released today show that CPI has risen to 3.3% due to rising food and energy prices. RPI inflation hit 4.3% as prices continue to rise. CPI inflation is now at its highest level since 1992.

John McDonnell MP, LEAP Chair, said:
"This isn't about pay, and its not solely about the credit crunch, it's about short-term decision making over the last 11 years as New Labour has done nothing to move the UK from a fossil fuel based economy to an economy based on renewable technologies".

Professor Prem Sikka said:
"The government now only have blunt tools for managing the economy. The government should use the regulation of gas, electricity and water to impose a price freeze, and also claw back monies through windfall tax on utilities and oil companies to support pensioners and increase tax free personal allowances, so that people at the bottom of the pile have more cash"

Andrew Fisher, LEAP Co-ordinator, said:
"Inflation is rising due to the Government's failure to plan for 'peak oil'. Punishing public sector workers for international oil and food prices is economically misguided and will cause further resentment among dedicated public sector workers. It is politically and economically inept."

Defending pay, pensions and jobs in a global economy

Professor Gregor Gall reports from the sub-plenary of the Beyond the Market Economy conference

It might be remembered that Mick Rix, former ASLEF general secretary and the original ‘awkward squad’ member, coined the acronym FUWL – ‘fed up with losing’ – at the turn of the new millennium to describe what people like himself in the union movement felt. This should now be updated to something like ‘fed up with not taking advantage of the opportunities presented’ – whatever that unwieldy acronym would be.

Last year saw the palpable declining popularity of ‘new’ Labour, increasing public anger at the effects of neo-liberalism on the public services – even if the beast was not called neo-liberalism – and opportunities for joint union action over public sector pay, foundation hospitals and so on. But no advance was made because an insufficient number of major unions and their leaderships were prepared to stand up to the argument that if you resist ‘new’ Labour all you do is let the Tories in. Few were taken by the counter-argument that ‘new’ Labour cannot be as good as it gets.

Indeed, last year all but one of the unions affiliated to Labour played their part in making sure Gordon Brown was coronated as Labour leader, and thus prime minister, without an election. Although many of them agreed with the policies of John McDonnell MP, they would not use their weight to get him on the ballot paper to force a contest. Instead, they thought it would be better to be onside with Brown and influence him from inside his tent rather than from outside.

Many, including the RMT, FBU and PCS unions, argued that these affiliated unions made a grave error given Brown’s continuation of neo-liberal policies, most graphically but also ironically exemplified by his state intervention to bail out of Northern Rock to the tune of tens of billions of tax payers’ money. Others said if Brown was the answer, the unions were asking the wrong question.

Now a new opportunity to exercise real influence is being afforded to the unions. It is made up of four components.

First, a visibly weakened government – almost regardless that it is a nominally Labour government - is now more open to acceding to the politics of pressure. The £2.7bn tax refund has set the stage for this but already Brown has made concession to longstanding union demands on agency workers, flexible working and social housing. Having strenuously resisted these for many years, suddenly Brown has allegedly and under pressure re-found the social democratic pulse in his body. The unions should sense that a door is slightly ajar and they can force it fully open.

The second is that Labour is now more reliant on union funding than it has been for the last ten years. Not only is it in severe debt, but the donations from business and rich individuals have dried up. Indeed, the debt is so bad that the two GMB members of Labour’s NEC have been indemnified against personal liability for their share of the debt because the banks want their money back now. Moreover, a general election has to be fought soon and this requires a war chest. This means that the unions can quite legitimately ask for ‘best value’ for their funding – this being the term the government uses for its funding of the public sector. So they would say ‘Here are our policies and you must act on them if you want our money’.

The third is that backbench Labour MPs, worried about their re-election prospects and having lost their reverence for Brown, are now open to supporting a whole array of private members bills that previously they would not touch because of the whipping system. Last year, the Trade Union Freedom Bill was talked out and defeated by ‘new’ Labour. This year, it could be reintroduced and taken right through the Houses of Parliament to end up on the statue book.

Fourth, inflation is set to become a really big issue. Historically, unions have made some of their biggest membership gains when workers realise that they need unions (and industrial action) to make sure that the real value of their wages keep up with the rising cost of living. With bigger and more assertive memberships, the unions could park their tanks of the government lawn at Downing Street and the mere threat of striking could be wielded to great effect.

But this opportunity is the proverbial window of opportunity because it will not remain open forever. May 2010 is the time when the window will close because the Tories, as expected, will win the next general election. They will be less open to the union agenda because of their politics and the strength of their new mandate. In the meantime, other pressure groups will realise that the window will close soon and will ratchet up their lobbying so the unions need to move fast if they are to have a clear run at bouncing Brown into doing what they want.

So will the unions be bold enough to take the opportunity? We’ll start to find out pretty soon as most of the big public sector unions are balloting on widespread strike action against the public sector pay restraint.

The answer to this question ultimately revolves around seeing the 7m union members as a resource to mobilised, and the need to re-energise and expand the activist base in the union movement as a cog to turn this bigger union membership wheel and link up in joint campaigning work with the organisations of those users of public services. In other words, the issue is really one of mobilisation, and ideas are needed to inspire and motivate – particularly when actual struggle is at a low level. So to inspire and motivate, the cutting edge of ideas must be based on a left critique of neo-liberalism and a sense of what the socialised alternative is. Whatever variety of thought there is on these ideas, the central theme is nonetheless a socialised economy where intervention in the market – by the state or some other popular body – is needed to moderate and ameliorate market mechanisms and market outcomes.

In the sub-plenary and in relation to fleshing out issues and ideas that are contained within the challenge of building a fightback against neo-liberalism and to go beyond the market we discussed:

• Global unions – while participants were in favour because of the need to face capital on equal terms, the key issue was what kind of global union. Several aspects emerged; what national and regional workplace foundations would these unions be based on, and how would members participate in and control these unions. The fear was that these unions would be mergers of head offices or bureaucracies, adding little to bargaining leverage.

• Closing the gender pay gap – participants highlighted the myriad of ways in which structural factors under capitalism lead women to be congregated in low paid occupations (even if equal pay is enacted) and subject to breaks in career or incremental progression.

• Public sector pay – this was seen to be the key battleground for unions to show their mettle in and for unions to make a breakthrough on. Joint, coordinated action was agreed to be critical.

• Final salary pensions – it was agreed that these should be defended where they still exist because employers can afford them but recognition was made of the situation where many are not party to such schemes. Consequently, the idea of a social pension was discussed which would be based on need not earnings to take account of those that carry out domestic and caring responsibilities in particular.

Co-ops under threat by Big Business EU

The European Commission, prompted by private enterprises, is considering changing tax laws for all co-ops. This is a serious threat to the co-operative movement across Europe.

Co-operatives Europe states that private business has complained that laws recognising co-operatives in individual nation states give co-ops "privileged tax status" and "preferential tax regimes" and "are disguises for State Aid". Twenty-five of the EU's 27 member states have legislation recognising co-ops.

Please support the petition to defend the co-operative model.

Private companies in France, Italy, and Spain, want the European Commission to change the national tax rules for co-operatives. With these changes, they could reduce competition and steal the co-ops' business.

A co-operative's tax liabilities are calculated after the payment of dividend to its members. Currently the law recognises that co-op dividends are entirely different to company dividends. The spirit of their distribution is one of thanks, and recognition of its members' efforts; returning money that they have spent on the society.

If this were found to be uncompetitive, more than 250,000 co-op enterprises, employing 2.3 million people across Europe would be placed under heavy financial strain.

European co-operatives have bonded together to fight these accusations, and ask for your help. They do not want special privileges, only the right to exist, under a model that recognises their distinct and important role in the social economy.

As the Vivian Woodell, Chief Executive of the Phone Co-op states "Let's do all we can to prevent the attempts of private share-holding companies to reduce consumer choice, and end the ethical challenge of the co-operative market.

"Let's force them to realise the unique relationship of co-operatives with their members will ensure that their claims are dismissed!"

There Is An Alternative

To its credit, the conference provided a rare opportunity for a good number of concerned people – mostly politically active already - to raise a broad range of different ideas and proposals in response to the rapidly escalating crisis. Many, but far from all, saw the urgent need to end corporate power and establish 21st century models of social ownership. Some were for a return to Keynesian economics looking for ways to get the economy back in control through improved systems of regulation.

But it seems that ordinary people understand the immediacy of the global economic crisis of capitalism better than many political activists because working people are struggling every day with rising prices for food, shocked every time they fill up with a tank of petrol or heating oil, with mounting debts, lower wages and redundancies. Evidence is mounting of a new imminent implosion in the financial system, beginning with the biggest US mortgage lender Countrywide, that will reverberate throughout the world, whilst in the UK, Bradford & Bingley heads the sick list. Its effects could be many times greater then the 2007 credit crunch which broke the property market leaving millions here and abroad facing repossession. The coincidence of all these facts of daily existence with a mounting political crisis in Britain adds up to an even greater test for political campaigners.

It can seem difficult to identify immediate “practical” solutions to recession plus inflation, especially when the market state and client governments like New Labour have neither the capacity nor the political will to intervene. Any action they take in one area makes things worse elsewhere. Providing tax breaks for North Sea oil producers, for example, can only deepen the ecological crisis. The environmentalist Jonathon Porritt summed it up pretty well in his blog earlier this month. “So, food security is back on the political agenda. Climate change is omni-present. Peak Oil is rising. The credit crunch is the new player on the block. Resource wars are looming. Rainforest destruction just won’t go away. Species loss is as bad as ever, but no one cares – for now. Water shortages are chronic. But much, much more worrying are the linkages between all these notionally ‘separate’ phenomena. The synergies, feedback loops, interdependencies. At long last, people are starting to make the connections – and are even beginning to link all those separate symptoms back to their root cause: today’s literally insane notion of getting richer by trashing the planet and screwing the poor.”

We’re in a period of history in which no amount of tinkering can solve the big questions. So we’re obliged to work on the development of ideas that link to immediate problems but raise the spectre of radical socialist transformation.

For example, on the energy crisis, the case for social ownership of power generating and oil corporations increases daily. This essential resource should not be left in private hands or market forces. In the interim, the state could slash prices and subsidise energy through the scrapping of Trident and foreign wars. To save energy, public transport fares could be reduced drastically and services reorganised so that people could get to and from work without using their cars. Rail and bus networks would then be taken back into public ownership.

Food prices could be frozen and steps taken towards bringing the supermarket chains into co-operative ownership, ending their profiteering at consumers’ expense. People threatened with repossession should be allowed to stay in their homes pending plans to convert everyone’s mortgage debt into something more affordable and less of a long-term burden. Speculating in commodities and currencies should be blocked and a programme of turning private sector finance into mutual, co-operatively owned enterprises launched.

The big question of questions looms: Who on earth is going to implement such a programme? New Labour? You can’t be serious. The Tories or Lib Dems? To ask the question is to answer it. The apparent political impasse only poses in a sharper way the spectre already mentioned, that of a break with the capitalist present and a leap into a socialist future. It’s difficult to conceive of but it’s an eminently practical solution given the prevailing view that There is No Alternative. The real challenge out of the Leap conference is to create the leadership and organization needed to bring such policies to fruition. The urgency of achieving this cannot be overstated.