The Budget-that-never-happened exposed

When the showpiece of a Budget is that there'll be a supertax on cider, then one of two things must be true: the world is happy place since the only economic discrepancy relates to fizzy alco-apples or (and I'd suggest this is the case) there is so much wrong that the Chancellor is hiding something.

A BBC interview with Alistair Darling barely 24 hours after the Budget showed that Darling was indeed feeding us milk and honey (but not cider) until after the election.

In a Budget speech long on party political patter, but short on economic strategy, Darling attempted to setup dividing lines between Labour and the Tories. Why then collapse the next day and say actually, 'we're going to be the same'. In fact, we'll introduce cuts that "will be deeper and tougher" than those introduced by Thatcher.

As today's Morning Star report 'Darling comes clean over cuts'. The battle lines are drawn - you can vote Labour for tough and deep cuts, Lib Dems for savage cuts or Tory for early cuts. Cuts, cuts, cuts (has a consonant been omitted? - Ed)

National Minimum Wage disgrace

The uprating of the National Minimum Wage was announced today, with a meagre 2.2% . Regular readers of the LEAP blog, may want to refer back to our February post 'Inflation, the minimum wage and the TUC' and then have a look at this TUC press release.

Under-21s miss out on decent wage increase

Morning Star
by Lizzie Cocker

Below-inflation increases to the national minimum wage were branded "an insult" by equalities campaigners on Thursday.

The announcement of new minimum wage rates sparked outrage after failing to bring pay for under-21s up to the same level as their older counterparts.

But the introduction of a statutory minimum wage for apprentices was broadly welcomed despite being set at just £2.50 an hour.

The Low Pay Commission which recommend the changes announced on Thursday that the guarantee of a wage for apprentices for the first time "marks an important extension to minimum-wage protection across the UK."

British Youth Council vice-chairman Jack Rowley agreed that it was a step in the right direction but said: "At just £2.50 per hour, young apprentices will struggle to cover their basic living costs while trying to complete their apprenticeship and could earn nearly £40 more a week in a standard minimum-wage job."

From October the minimum hourly rate for over-21s will go up 2.2 per cent to £5.93, but younger workers will continue to lose out on equal pay as the rate for 18-20 year olds will rise to £4.92 and £3.63 for 16-17-year-olds.

Left Economics Advisory Panel co-ordinator Andrew Fisher slammed the changes saying: "With inflation at over 3 per cent, this derisory change to the minimum wage should be called what it is - a real-terms cut. This is an insult to people struggling on low wages.

"Inflation tends to hit the poorest harder than other groups (see the LEAP Inflation Report, September 2009). By failing to scrap the discriminatory lower rates for young workers, the Low Pay Commission has again failed to tackle low pay."

And Mr Rowley said that young people across Britain were "upset about this continued discrimination" as they face record levels of unemployment and rising living costs.

"Sixteen and 17-year-olds can get paid over £80 a week less with these rates for doing exactly the same 35-hour week as 21-year-olds," he said.

The GMB also condemned pay discrimination based on age but generally welcomed the increases.

However the union pledged to "continue to campaign for a much higher rate of at least £7 to move the figures closer to a living wage."

LEAP calls on Chancellor to Break with Cuts Consensus

PRESS NOTICE:

FOR IMMEDIATE RELEASE:

LEAP calls on Chancellor to Break with Cuts Consensus

As the Chancellor prepares to announce his Budget on Wednesday 24th March, LEAP has published its latest set of Red Papers ‘Breaking the Cuts Consensus’. LEAP is calling on the Chancellor to break with the cross-party cuts consensus and join the growing public consensus against cuts.

As well as analysing the flaws in the cuts consensus, the LEAP Red Papers offer concrete alternative policies.

John McDonnell MP, LEAP Chair, said:

“There is a consensus between the party leaderships that the people will pay, the financial system will largely remain unchanged and institutional reform will be at the margins. Bizarrely the argument goes that anything more radical than minor adjustments will lose the confidence of the very markets whose behaviour actually created the economic crisis in the first place.

“A programme of real reform is needed to take democratic control of our financial and economic institutions based upon the principles of public and common ownership.”

Andrew Fisher, LEAP Co-ordinator, said:

“Despite all the posturing, the reality is that there is very little difference between the parties. All are going into the election advocating major cuts to public services to reduce the deficit, and all are sharply critical of any group of workers who dare suggest that they should not be made redundant or that their pay or pensions should not be cut.

“We need an alternative economic agenda that puts people first. These Red Papers highlight the errors of the current orthodoxy and articulate some alternatives.”

LEAP Red Papers March 2010: Breaking the Cuts Consensus

The March 2010 LEAP Red Papers: Breaking the Cuts Consensus are published today in advance on the Budget Statement on Wednesday 24th March.

In this edition of the papers, John Grieve Smith argues that the pre-election cuts consensus is driven by misplaced obsession with the budget deficit, and that such cuts would be damage the economy. The 'misplaced obsession' could be countered by an international, government-led mechanism for pricing and trading public sector debt, argues Gordon Nardell.

An alternative to the cuts consensus, based on tax justice and public ownership, is argued for by Andrew Fisher, while Gerry Gold explains why neither the solutions offered by neoliberals nor Keynesians can solve the global crisis.

Graham Turner argues that the crisis in the UK is exacerbated by the decline of manufacturing, on contrast to other countries that have had a clear manufacturing strategy, while Jerry Jones tackles another election issue – migration – arguing that trade union rights are the solution to exploitation and under-cutting.

As John McDonnell MP concludes, no party is adequately addressing these issues because none want a more democratic system

Download the papers in full.

Don't believe the hype on unemployment!

The headline figure from today's statistics is that the number of people claiming Jobseeker's Allowance fell by 32,300 to 1.59 million in February.

But unemployed people not claiming does not been unemployment is going down. A far more alarming statistic is that the number of people in work fell in the quarter, by 54,000 to 28.86 million.

So 54,000 fewer people are earning a wage in February than in January. That is the real statistic. It means less tax revenue into the Exchequer, and less consumer demand in the economy. This is bad news. Until the number of people in work starts rising consistently talk of a recovery is premature.

Another baseline is the continued rise in the number of long-term unemployed (over a year), which rose by 61,000 to 687,000 in February. The social consequences of long-term unemployment have been well-documented by professors Danny Dorling and Richard Wilkinson.

Whose inflation?

When LEAP published its 2009 Inflation report, we demonstrated that inflation was at different levels for those on different incomes - with the poor suffering higher levels of inflation than the better off. This led to us proposing a new inflation measure: Essentials Inflation. We also called on the Government to act to ensure that the inflation on essential goods was reduced so as not to disproportionately impact on the poorest.

Essential Inflation ranged from -3% (i.e. 3% deflation) for the wealthiest 10%, to +2% for the poorest decile. It was the housing market that accounted for much of this differential with mortgage rates being cut (benefiting the wealthiest disproportionately) and rental costs rising (hitting the poorest disproportionately).

Today, the ONS has announced that it is recalculating how it assesses mortgage inflation. Today's Financial Times reports that this will make the new Retail Price Index (RPI) inflation measure "more representative of available mortgages".

This is important as RPI is used in setting much of public sector pay and the basic state pension. It is the more relevant for personal costs since it includes housing costs, unlike CPI.

However, what is less trumpeted is that recalculating last year's inflation figures on this new RPI measure shows that instead of 1.2% deflation last year, it was 0.2%, and we only had four months of deflation. So the pay freezes many suffered were even less justified than we thought.

Democracy and Capitalism

A flagrant re-post from the Roe Valley Socialist blog:

I was recently reading over an excellent pamphlet published by the Left Economics Advisory Panel, a panel of economists linked to the Labour Representation Committee. The pamphlet, 'Building the new common sense: Social Ownership for the 21st century' discusses in a series of chapters the complete lack of democracy in the workplace and the disparity between the power of capital and labour.

As the pamphlet points out, citizens spend a significant period of time in their workplaces but leave their democratic rights at the door in the morning. When it comes to making serious strategic decisions about the direction of a company, decisions which could considerably affect conditions at work and even the direction of peoples' whole lives, workers are at the mercy of the tyranny of capital. Some firms obviously have a consultation process with their workforce but this is limited in the extreme; missing are the powers for workers to initiate reforms themselves, the ability to work outside an agenda already been determined by management, and the means to effectively challenge decisions short of industrial action.

Obviously, this comes down to the nature of private ownership of the means of production. Why, ask liberals, should workers have any say in what is in effect someone else's property; why, ask social democrats, should property owners wield such unaccountable power over the great majority of the population in a so-called democratic state; why, ask socialists, should production be in private hands in the first place, as private property is the foundation of this unbalance in democratic entitlements.

Beyond the micro-economics of the individual firm, the problem runs much deeper than this of course. The outcome of the next General Election might just be made by the currency markets rather than the electorate, if a Labour victory or a hung parliament is portrayed in the media to threaten the value of sterling. It might also be decided in marginal constituencies where the Tory tax-dodger and Belize-based businessman, Michael Ashcroft, is providing the cash for glossy leaflets and phonecall canvassing. On Newsnight on Tuesday, Justin Rowlatt followed a financial speculator who saw it as his rule to dictate to the Greek government how they should solve their fiscal crisis. His solutions were predictable- massive cuts and attacks on the standard of living of the Greek people. We can argue over whether this is necessary or not to ensure the survival of the Greek economy or not under capitalism but the boundaries of the debate are severely proscribed by the actions of those short-selling Greek debt. Unelected speculators have set the agenda for democratic governments; in a democracy it should be the other way around.

On an even deeper level this poses a fundamental challenge to reformist socialism. It was once the case that the state had strict controls over its currency; now, this control is shared with the financial markets who can decide to destroy any government they don't like the look of. Within the EU, fiscal policy is subject to numerous limitations, and nationalisation is technically subject to the dictates of competition law. In other words, there are great barriers to state intervention in the economic life of the country, especially when capitalism is not in crisis and capitalists resist such intervention politically through their support for neoliberalism.

Socialists must develop realistic and workable models to force democracy into the economic realm- through workers' co-operatives, trades unions and genuine democratic organs of the people. Otherwise, without redressing this balance between those who work and those who own, the latter will successfully resist any reforms which fundamentally risk the rule of capital. We saw it at Copenhagen where states came under pressure from entrenched economic interests, and during the bailout of the financial system where it was done on the banks' own terms despite their culpability in the precipitation of the economic crisis. It is a simple question of democracy and one which needs serious answers.

Women and the recession

It's the first day of the Women's TUC conference today in Eastbourne, and to coincide, the TUC has published statistics showing that women workers would be hardest hit by public service cuts.

67% of public sector workers are women, and of part-time workers in the civil service, 87% are women. These statistics highlight the better flexibility in the public sector, which allows workers with childcare and other caring commitments, still mostly women, to work flexitime or part-time.

With all parties threatening massive public sector job cuts, it is clear that women workers would be hardest hit. Download the full TUC report.

But there's also another reason why women are more likely to be hostile to public sector and welfare cuts - they are the main service users. There are more women pensioners, more women in poverty due to unequal pay, and the disproportionate caring responsibilities they have bring them into closer contact with health and education services too.

Public sector cuts are a feminist issue!

Cuts? There is an Alternative

LEAP participated in another lively and positive Convention Of The Left meeting in Manchester on Saturday 27th February, which continued its refreshingly pluralistic, comradely and non-sectarian atmosphere.

One of the major tasks for the left in the coming period is solidarity with those in struggle. But another urgent task is, as the Convention Of The Left meeting was titled, Making It Public.

We will no doubt be fighting defensively for much of the near future, but there is also a responsibility on the left to break the consensus for cuts and argue publicly and forcefully for the alternatives.

Coming out of Saturday's meeting, the Left Economics Advisory Panel and Convention Of The Left have drafted a flyer for public distribution on why the cuts consensus is wrong and what the alternatives are. It's important we make the argument for a socialist alternative and give people hope.

Download the flyer - Keeping It Public

See also the LEAP letter in the Morning Star on 4th March, which followed Rob Griffiths' article the previous day, The Truth Behind the Cuts Orgy.

Lord Ashcroft's non-dom disclosure

No party should be comfortable with the financial backing of a peer who uses non-domicile tax status to avoid paying UK tax


Prem Sikka

Lord Ashcroft casts a long shadow on the next general election. According to the information released by the Electoral Commission, he has donated over £5m to the Conservative party and its associations. A large proportion of this money is targeted at marginal seats in order to swing the election for the Conservatives. The donations have been made by Bearwood Corporate Services, a UK-registered company ultimately controlled by Lord Ashcroft. However, the company has been making losses for years. Its most recent accounts for the year to 30 September 2008 show that the company had an accumulated loss of £3,928,665.

Ordinary folk make political donations out of income already taxed in the UK. But Bearwood did not have sufficient income to cover political donations. Most of the cash donated to the Conservative party has therefore come from Lord Ashcroft's operations in Belize. He enjoys lucrative tax breaks by basing his business empire in this Commonwealth member in Central America.

Now, ahead of a Freedom of Information statement by the Cabinet Office, Lord Ashcroft has acknowledged that he is non-domiciled in the UK for tax purposes. That means that he pays income tax on his personal income and gains arising in the UK, or foreign income and gains remitted to the UK. Unlike most other citizens, the law permits him to arrange his personal affairs in such a way that his worldwide income, subject to double taxation relief, is not taxed in the UK. Despite this, the Conservative party secured a life peerage for him, which therefore gave him a role as a legislator in the Houses of Parliament. In that capacity, he can speak and vote in the House of Lords on all legislative matters, including taxation, yet as an unelected appointee he cannot be removed, no matter how dissatisfied people may be with him.

Lord Ashcroft's statement sets out the March 2000 undertakings he gave to William Hague MP, the then leader of the Conservative party, that he would "take up permanent residence in the UK again" by the end of that year. Now, some ten years later, he says that this meant as "a long-term resident". It is time to make the entire correspondence between the Conservative party and Lord Ashcroft public.

Labour may wish to make political capital out of Lord Ashcroft's revelations, but it too has a less than unblemished record of appointing major party donors to positions of legislative power and cannot escape public censure. Lord Ashcroft is quick to see the opportunity to deflect criticism – pointing out that two of Labour's biggest givers, Lord Paul (recently made a privy councillor by the prime minister) and Sir Ronald Cohen, both long-term residents of the UK, are also "non-doms".

However, Labour donors have been known to be non-doms, while Lord Ashcroft – until now – maintained secrecy about his tax status. For years, the Conservative party also refused to make any clear statement on the issue. Labour donors have not given anything approaching £5m; nor have they targeted marginal seats to influence the outcome of the next general election. Still, the Labour party also needs to come clean. No political party should be allowed to ennoble donors in such a way that might give even the impression that political office is for sale.

The issues relating to Lord Ashcroft and other peers do not end with the acknowledgment that they are non-doms. Since they belong to a law-making assembly whose decisions govern our lives, their business affairs should be open to scrutiny and subject to disclosure. If peers are to regularise their affairs, they would need to explain the details of their business empires, offshore trusts, tax avoidance schemes and everything else that persons domiciled in the UK are required to answer for to the Inland Revenue and other authorities.

Of course, Lord Ashcroft and other peers may voluntarily release this information. But I am not holding my breath. But let there be no doubt: there will be further instalments in this saga.