Labour’s approach to the cost of living

Labour’s economic policy in opposition has been through two phases so far. In the first Labour attacked the Coalition for cutting too far too fast. They predicted that the UK economy could not recover given this policy. In the second Labour switched their attack to the “cost of living crisis” saying that the recovery wasĀ  not delivering any rise in living standards.

Labour’s “too far too fast” critique was not based on the numbers. The figures showed the Coalition increasing current spending slightly in real terms in the first three years, relying on rising tax revenues to cut the deficit. Labour have never accepted the figures in the official statistics, but decided to drop the erroneous too far too fast campaign when it became clear the economy was growing again despite their predictions.

They have adopted their cost of living critique close to the time when real wages at last start rising. Some Labour figures are warning their leaders to drop this campaign now before the numbers improve further. I will not offer advice on this. I wish instead to ask what policies is Labour proposing that will alter the situation on living standards?

They have come up with two main policies to tackle the “crisis”. The first is a two year price freeze to be imposed on the energy companies. It looks as if we might get this anyway. Global energy prices have been falling, which makes this easier. If by any chance Labour were in office and world energy prices took off again, it is difficult to see how they could sustain the two year freeze.

The second is to promise action on rail fares. This presumably means lesser increases, financed by larger taxpayer subsidies. What they give with one hand to rail travellers, they will take with another hand from taxpayers.

More worrying is discussion on a higher National Insurance tax. This tax on jobs would make it a bit more difficult to sustain current high rates of jobs growth. As the best way to raise people’s living standards is to get them into work it is difficult to see why Labour are proposing this backwards step.

Labour’s proposals amount to more interference with big companies supplying essential services, allied to more subsidy for a nationalised industry. None of this will make a lot of difference to living standards in the short term, and in the longer term these policies could b e damaging to future investment and job creation. It is one thing to identify the real wish of people to enjoy higher living standards, another thing to know how to raise them. What you need to do that is successful enterprises, more investment, and more growth. How do Labour propose to achieve those?

114 Comments

  1. margaret brandreth-j
    April 26, 2014

    The last point is perhaps the most significant. For it is this interference which gets the managers high salaries and creates an atmosphere of unrest amongst the workers as more cuts and redundancies are imposed in order to maintain these salaries.I have strongly disagreed with a too big interference in the NHS by large companies who had little idea about running this type of organisation , and whipped up competition with peoples lives. These were labours last terms.

    Energy prices are of course too high ,which is why alternative sources should be still high on any governments agenda.

    1. Hope
      April 26, 2014

      Read Bookers article to see why Davey should not be in office. The Tories are costing each of us a fortune for stupid ideology that has not benefit to anyone other than the egos in the Westminster bubble squabble.

  2. John E
    April 26, 2014

    The worrying thing is their belief that prices and incomes can be set by ministerial diktat. Welcome to the five year plan everyone. We too can succeed like Romania and Bulgaria.

    I am convinced they will be happy if their policy on energy prices causes a crisis that gives them a pretext to re-nationalise the whole industry.

    1. Mark
      April 26, 2014

      Since the industry is dictated to entirely by the DECC, it is effectively already nationalised. It was the DECC that decided on and announced the new expensive offshore wind and biomass power projects during the week, and promised to subsidise them heavily. The companies providing the projects are simply PFI subcontractors in effect.

      I would instead prefer a return to proper competition, which would seek to provide power at much more competitive cost and more reliably than wind farms.

      1. Lifelogic
        April 26, 2014

        Indeed Cameron policy is bonkers on wind farms. After his absurd toy one in non windy Notting Hill – cost to install perhaps Ā£5,000 electricity generated over it life time perhaps Ā£50. One assumes he might have learned what lunacy it all is. Perhaps it did not do the sums as usual.

        The other day I heard him say – when you get up to 10% from wind power it is time to reduce subsidies and cut new land based wind turbines. Why on earth piss away the money on the 10%? It either makes sense or it does not, it is clearly the latter. Also why continue with offshore wind, which is even more idiotic and expensive.

        All the windfarms littering and spoiling the rural UK so far produce about 16.5 tera watt hours PA (as it is intermittent and needs distribution) the true unsubsidised value is only about Ā£15 per person. About as much energy per person as is contained in large wheel barrow load of timber. Wood one could collect in about 10 minutes.

        It make even HS2 look more sensible and Cameron’s offshore wind is even more bonkers. Do they not do sums in Oxford PPE?

        Reply All the time the ULK remains in the EU on current terms it has to subsidise renewables to ensure they account for at least 15% of energy output. There is now enough subsidised energy to meet these unhelpful requirements.

        1. zorro
          April 27, 2014

          Lifelogic, I suspect that Cameron’s mini windmill was a PR stunt like his husky ride. However, what us clear that he seems to support this approach otherwise why would he do it? Also, Cameron wants the UK to stay in the EU so one assumes that he is content with the drift.

          zorro

        2. Mark
          April 27, 2014

          Why waste even more money on offshore windfarms? They get a guaranteed price of 155Ā£/MWh, compared with “just” 95Ā£/MWh for the onshore variety.

        3. lifelogic
          April 27, 2014

          To reply – yet another reason to get out now, Cameron is still pushing the job destroying green crap even now. I see UKIP are climbing to nearly twice the Tory vote despite the BBC and Tories pathetic efforts to brand them as racist and accuse them of using actors (so what). The BBC used the word “unsavoury” but what could be more unsavoury than ratter Cameron, Maria Millar, Clegg, Davey, Laws, Huhne, Davey, Yeo. Major ……… and 299+ tax increases from the IHT ratter Osborne?

      2. uanime5
        April 26, 2014

        I would instead prefer a return to proper competition, which would seek to provide power at much more competitive cost and more reliably than wind farms.

        After privatisation the energy companies didn’t invest in any new power plants. So it’s clear that “competition” doesn’t result in cheaper energy or even enough energy being produced.

        1. Mark
          April 27, 2014

          Neither assertion you make is true. Privatisation was in 1990. In 1991-95 there was 7.857GW of new gas or nuclear capacity, 10.766GW in 1996-2000, but just 3,664GW in 2001-2005 as Labour started its long dither on energy policy that effectively renationalised it, and the creation of the Big 6 in the mergers and takeovers of 2002. In fact, Labour’s move towards the Climate Change Act created such uncertainty that no new major power station opened between 2004 and 2009.

          In 2000 there was just 0.425GW of installed wind capacity, which is roughly equivalent to just 100MW of regular capacity, rising to 1.366GW in 2005 and 5.378GW in 2010 – worth about one conventional 1.35GW power station in output.

          Meanwhile, real energy prices fell until after the creation of the Big 6 (triggered by Labour’s Utilities Act), as the chart on p 2 of this Parliamentary briefing note shows:

          http://www.parliament.uk/briefing-papers/sn04153.pdf

          An important part of the reason for the falling prices was competitive gas supplies from the North Sea, which even resulted in a small surplus being exported to the Continent – and gives hope that we could again benefit from rather lower prices if we got on and developed our own shale gas.

          So it’s clear that state intervention in energy markets is the source of our problems.

          1. uanime5
            April 27, 2014

            In 1991-95 there was 7.857GW of new gas or nuclear capacity, 10.766GW in 1996-2000, but just 3,664GW in 2001-2005 as Labour started its long dither on energy policy that effectively renationalised it

            Did these increases come from expanding existing plants of building new ones?

            In fact, Labourā€™s move towards the Climate Change Act created such uncertainty that no new major power station opened between 2004 and 2009.

            How did it create uncertainty when nuclear plants aren’t effected by this because they don’t produce CO2?

            So itā€™s clear that state intervention in energy markets is the source of our problems.

            What state intervention resulted in energy companies raising their prices at a time when the price of gas was falling? It seems that the problem isn’t too much intervention but too little.

          2. Mark
            April 28, 2014

            There were a mixture of capacity additions at existing sites and new sites. If you want details, they’re easy to find.

            You may recall that some previous Labour Energy Secretaries were entirely anti-nuclear. In particular, the Renewables Obligation mechanism offered large subsidies to renewables, but nothing to nuclear power, which under the New Electricity Trading Arrangements was placed at a disadvantage – so much so that British Energy nearly became bankrupt. Hardly encouraging for investors, was it?

            OFGEM (created by Labour) is required to put green interests ahead of consumer interests under Ed Miliband’s 2010 Energy Act. That includes allowing – even requiring – energy companies to increase prices to fund investment in expensive renewables and associated grid extensions, regardless of what is happening to fossil fuel prices. You should note that so far as power generation is concerned, coal remains more important than gas – and coal prices have been falling – yet taxes and quotas are making coal fired power much more expensive than they should be. The real cost for coal power before these effects is now well under 3p/kWh.

            It’s all about intervention.

        2. Stred
          April 27, 2014

          Private energy companies have built many power plants since privatisation and it is very surprising that a political blog wonk would not know this. Also, the energy providers only invest in plant when they know that there will be a return. The special UK increased carbon tax has thus prevented investment in gas stations, which are vital for wind back up and the main biomass generator is unable to convert coal to American wood burning without guarantees. This is why the go ahead has been given despite the fact that biomass costs have tripled since advocated by the DECC under Mr Milliband. The result will be energy bills inflated to cover the cost and people in fuel poverty freezing to death. Are you happy about this result?

  3. Leslie Singleton
    April 26, 2014

    Our friends in the Labour Party don’t see it as taking with “another” (How many do they have?? lol) hand from taxpayers; but rather, much rather, from only the richer taxpayers. Redistribution in other words. That is the be all and end all as they see it: and sometimes, looking at these bonuses of 200% and more of already high salaries, maybe they have a point on that.

  4. Mike Stallard
    April 26, 2014

    In a real democracy truth is one of the first casualties.
    Seeming, appearance, spin and all that are the way to get re-elected.
    It is exactly the opposite of greatness, of common sense, of reality.

    Labour seem to care about the poor and vulnerable.
    The Conservatives seem to want to get us out of Europe.
    The LibDems seem to be modernisers.

    Here on the ground I know I shall never be rich. But in no way am I starving. My wife has just had a hip done with courtesy and kindness – free! The local BS comp has become orderly as an Academy and the pupils wear their uniforms even when they do not have to – with pride. The local College is working much better with a lot of new buildings. The roads are OK. We may even get a railway. We have a new Tescos, a new Cinema and lots of new shops. Above all, I feel safe.

    Lots of us notice things like that. But will it be reflected in our voting patterns?

  5. alan jutson
    April 26, 2014

    Labour are bankrupt of ideas, and bankrupt by past performance.

    Until they dump past personnel and policies they will surely continue to fail.

    Unfortunately because of Gordon Brown’s social engineering experiment, millions will still vote for them, because the State is responsible for providing their seemingly endless supply of money, and for keeping them in the lifestyle to which many have become accustomed, work or no work.
    New arrivals with nothing except hope, will also tend to vote labour until they have earned enough to realise that the state is an expensive and uneconomic provider.

    Until either the coalition or the Conservatives offer a real alternative to the huge social experiment and immigration policies of the past 15 years, they will continue to find support difficult to come by.

    1. Lifelogic
      April 26, 2014

      No, they are not bankrupt of ideas. They just rely on buying the votes or the poor with childish appeals to envy, the votes of the state sector by stuffing their mouths with good pay and pensions. They then pretend to help the poor (using other people’s money by attacking landlords, taxing the rich until the pip squeek and attacking employer with daft regulations employment and human rights.

      It work a treat (with the help of the BBC types) at the ballet box. It does nothing to help the poor though and destroys the economy, employment and society.

      1. Hope
        April 26, 2014

        All Labour safe seats on offer to their children.

    2. uanime5
      April 26, 2014

      the State is responsible for providing their seemingly endless supply of money, and for keeping them in the lifestyle to which many have become accustomed, work or no work.

      Well the Conservatives could easily have fixed this by requiring companies to pay a living wage so that those in work aren’t reliant on benefits. Funny how they didn’t try to do this. It’s almost as it they want to keep salaries as low as possible.

      New arrivals with nothing except hope, will also tend to vote labour until they have earned enough to realise that the state is an expensive and uneconomic provider.

      Care to provide some evidence for this claim. Specifically where are the countries that have privatised healthcare or education, and spend less as a percentage of GDP than the UK.

      Reply The Coalition has put up the minimum wage, so wrong again.

      1. Lifelogic
        April 27, 2014

        “Reply The Coalition has put up the minimum wage, so wrong again.”

        Another daft & job destroying thing to do. What puts up wages is more availability and choice of jobs not silly minimum wage laws. But then Cameron is not a Tory so what do we expect?

      2. alan jutson
        April 27, 2014

        Uni

        Rather than me go through a huge list of examples of how increased immigration has reduced the rates of pay for many who were and still are trying to make a living in this Country, perhaps you could tell us exactly what you do for a living, which clearly has NOT BEEN AFFECTED and appears to be immune from the effects of immigration on the scale we have had for the past decade.

        I await the answer with interest.

        1. peter davies
          April 27, 2014

          Probably one of those pro EU trolls paid by the taxpayer to “police” blogs and social media

        2. uanime5
          April 27, 2014

          Alan Jutson if minimum wage was raised to a living wage then immigrants would find it more difficult to undercut British workers.

          1. alan jutson
            April 28, 2014

            Uni

            Self employed people are not covered by minimum wage rates.

            A huge number of immigrants work as sub contract or self employed labour.

            Yes I fully appreciate this is the market in operation which fixes the going rate, but then similar living expenses are not common to all.

            EG when your competitors are under the control of gang masters and living in their accommodation, or when they are living in houses or rooms of multiple occupancy and sending the maximum of what they earn back home to families in a lower cost country.

      3. uanime5
        April 27, 2014

        Reply The Coalition has put up the minimum wage, so wrong again.

        Minimum wage isn’t a living wage and it hasn’t kept pace with inflation. So in real terms it’s been cut.

        Reply The latest increase is in real terms!

        1. APL
          April 28, 2014

          uanime5: “Minimum wage isnā€™t a living wage and it hasnā€™t kept pace with inflation.”

          There is the real problem, its not the minimum wage. but the declining value of the currency it’s paid in.

          Who is responsible for ‘maintaining’ the value of the currency?

  6. Richard1
    April 26, 2014

    Every time Mr Miliband opens his mouth it is to propose higher taxes, higher spending, more regulation,more government interference with the economy. He may not now describe himself as a Marxist but it is clear that like many leftists he has no understanding of or sympathy for business, entrepreneurship and wealth creation.

    The Keynesian Cassandras have been proven completely wrong in their prognosis for the economy, which now seems to be on a sustainable recovery track. The ‘cost of living crisis’ is meaningless populism – can there ever have been a time when people wouldn’t rather have been paid more and had lower prices?

    When we listen to Miliband and his crew with their socialist interventionism we see why it is that the old adage holds true: dogs bark, ducks quack and Labour governments end up with financial and economic crises. Let’s hope enough people remember this come the election.

    1. Lifelogic
      April 26, 2014

      “When we listen to Miliband and his crew with their socialist interventionism” but also Cable, Osborne, Davey, Cameron, Clegg ………… with their socialist interventionism too.

      What is the difference?

      1. Richard1
        April 27, 2014

        Not fair, the Cameron / Osborne side of the coalition has pushed welfare and eduction reform and has at least Meade some attempt to cut some taxes. Labour / LidDem would be far worse.

        1. lifelogic
          April 27, 2014

          They have made attempts to cut taxes how? By pushing through 299+ tax increases I suppose.

    2. uanime5
      April 26, 2014

      He may not now describe himself as a Marxist but it is clear that like many leftists he has no understanding of or sympathy for business, entrepreneurship and wealth creation.

      Why would anyone be sympathetic for businesses? Especially businesses which pay their executives huge salaries while paying their employees as little as possible?

      The Keynesian Cassandras have been proven completely wrong in their prognosis for the economy, which now seems to be on a sustainable recovery track.

      What about the US where Obama was able to get sustained high growth by stimulating the economy with billions of dollars? Isn’t that evidence that a Keynesian stimulus works?

      By contrast Osborne’s austerity only resulted in stagnation. It wasn’t until he abandoned austerity and started pumping money into the housing market (a Keynesian stimulus) that the economy started to recover.

      So the evidence is clear Keynes and stimulus were right, Osborne and austerity were wrong.

      The ā€˜cost of living crisisā€™ is meaningless populism ā€“ can there ever have been a time when people wouldnā€™t rather have been paid more and had lower prices?

      I guessing that you don’t understand the ā€˜cost of living crisisā€™. Basically people aren’t going to vote for the Conservatives if their standard of living keeps falling while the Conservatives are in power.

      Labour governments end up with financial and economic crises

      The Labour governments also had 10 years of high growth, while the Conservatives have borrowed more than Labour but only managed 4 years of stagnation. So it’s clear that Labour has better financial management that the Conservatives.

      Reply The US has cut public spending much more than the UK

      1. APL
        April 27, 2014

        JR: “The US has cut public spending much more than the UK”

        Which wouldn’t be difficult since the UK government hasn’t cut public spending at all.

        If the deficit – the amount the government borrows in excess of its spending proposals – is increasing* – albeit at a slower rate than previously, then Public spending is increasing.

        QED, Public spending has not been cut.

        *Nor does this take into account the impact of QE on the economy, which is nothing less than a stealth tax on every asset in the sterling zone.

      2. Richard1
        April 27, 2014

        Most people in this country depend for their livelihoods on profit making enterprises, Labour has no understanding of this and no sympathy with it.

        Your comparison with the US is false. As JR points out there have been actual cash cuts in spending in the US. Public spending and tax / GDP in the US are both far lower than the UK. The US has also embraced cheap energy through shale gas. As a consequence the US is seeing a good recovery (also).

      3. uanime5
        April 28, 2014

        Reply The US has cut public spending much more than the UK

        The US also increased public spending after the 2008 recession much more than the UK.

        Reply Glad you agree they have been cutting it – your latest claim is also wrong. You need to remember the huge sums the last UK government spent on buying banks.

  7. Lifelogic
    April 26, 2014

    Indeed they will be worse than the Tories but only very slightly worse than Cameron with his 299 tax increases form of socialism. Labour usually try to play Father Christmas using others money. They might bugger up the private rental market with silly rent/landlord controls or the employment market with more restrictions on employment contracts and zero hour contracts or the energy market. But Cameron is little better.

    Anyway it is virtually all over 12 months to go. Cameron is highly unlikely to win an overall majority after coming third next month and with the voting system against him, he may well even have broken the Union by then. Above all, nothing the man says can be trusted. He has failed the voters on the EU, on spending cuts, on his endless tax increases, on his silly warmongering, on the idiotic HS2, on his priority in three letters N. H. S (avoidable deaths equivalent to one full jumbo crash every two week it seems).

    Anyone who thinks wind farms and huge photo voltaic subsidies, gender neutral insurance and pension laws are a good plan clearly understand nothing of risk, reward, maths, money, economics or what is actually good for people in the long run.

    It is also too late to change him and anyway half the Tory party are career politicians or pro EU, green crap lefty Cameron types anyway.

    1. Hope
      April 26, 2014

      Well said. Spot on.

  8. Lifelogic
    April 26, 2014

    Some hope perhaps on HS2, Andrea Leadsom, the new Treasury minister, urges David Cameron to rethink the HS2 rail project, saying Ā£50 billion investment is poor value for money. It certainly is, how much have they wasted on it and how many properties blighted so far? Cancel it and cut employers NI and IHT by Ā£50billion a better investment for the country by perhaps a factor of 100+.

    http://www.telegraph.co.uk/news/uknews/road-and-rail-transport/10789512/Treasury-minister-I-will-fight-against-HS2-rail-project.html

    1. Leslie Singleton
      April 26, 2014

      Lifelogic–The twaddle talked on this is unbelievable. I still struggle to understand how it can possibly be that anybody in his right mind would not take it as an obvious absolute given that the goal of any HS2 should be to join up with HS1 and give a fast route to the Continent for freight, repeat freight, and to Hades with the poor hard-pressed businessmen who need so desperately to get to Birmingham of all places–not that that is in the least bit difficult now. As regards the join between the two HS’s why on earth does that need to be in Camden again of all places. Anything other than joining the two HS’s and reviving the Great Central, on basis we are told that it is capacity not speed that matters, is bonkers.

      1. Leslie Singleton
        April 26, 2014

        Postscript–Dear John–Any chance (slowly so I can understand it) of a comment or two on freight from Manchester to Madrid”? Can it be that it is to be offloaded at base of HS2 driven across Camden and then loaded on to top of HS1? Will not believe it till you say so.

      2. Hope
        April 26, 2014

        It is about EU ideology not financial prudence.

    2. Mark
      April 26, 2014

      I find it disgraceful that MPs of all the main parties are being instructed to turn a blind eye to the economic truth that HS2 is a value destroying project, while being offered the excuse that the evaluation is not being made public.

      The same kind of groupthink is evident in energy policy too.

  9. Denis Cooper
    April 26, 2014

    As I detailed in a comment yesterday, a large part of Labour’s “cost of living crisis” can be traced back to the excess inflation caused by the policy of printing vast sums of new money initiated by the Labour government to make sure that it didn’t run of money in the year leading up to the general election.

    But it is difficult for the Tory party to point this out, firstly because it failed to object at the time, despite the obvious political as well as economic implications, and secondly because the coalition government continued with the same policy, with Osborne adding another Ā£175 billion to the Ā£200 billion of new money under Darling.

    Taking the most recent analysis by the Bank of England and extrapolating from the estimated inflationary effect of the first Ā£200 billion to the effect of the full Ā£375 billion it turns out that over the past five years a money printing policy which was advertised as being necessary just to ward off deflation actually generated excess inflation, with about 7.5% added to CPI over and above the 2% a year target, in the same ball park as the 6.2% excess inflation actually observed over the five years to this January.

    1. JoeSoap
      April 26, 2014

      Quite correct, and this was exactly the intended effect by both Labour and the Con Libdem coalition. All 3 parties complicit in increasing inflation, and one then daft enough to even moan about the extra cost of living. Without QE we would have had lower growth by a smidgeon, but lower house prices, lower inflation, lower government borrowing, and higher spending by savers and businesses who have actually earned their money already rather than by businesses and families in hock, many without prospect of repaying. The moral and economic arguments both point in the opposite direction of this government’s actions.

  10. A different Simon
    April 26, 2014

    “As the best way to raise peopleā€™s living standards is to get them into work it is difficult to see why Labour are proposing this backwards step.”

    They are trying to breed dependency .

    The Coalition has done enough good to deserve another turn of office more than Labour deserve it .

    Conservatives need to do more to tackle nimbyism . Changes in the planning system are going in the right direction .

    This killer arguments are going to be about accommodation costs and what to do about the over 80% of private sector workers retiring with a pensions pot of less than Ā£30,000 .

    If Labour , against the better were to summons up the guts to shift taxation from labour onto land via a location value tax , then they could break Britain’s addiction to land price speculation and transform peoples standard of living and the economy .

    Conservatives ought to steal Labour’s thunder on this rather than just recycling yesteryears ideas .

    1. A different Simon
      April 26, 2014

      typo : against the BETTING

    2. Lifelogic
      April 26, 2014

      Indeed 30K pensions for the private sector and often Ā£1M plus pension pots for MPs, the BBC and many others in the state sector.

      Mugged by Brown and further mugged by IHT ratter, 299 tax increases Osborne.

    3. JoeSoap
      April 26, 2014

      Don’t you think we need a total change away from the three parties who gave you Ā£30k pension pots in the private sector while MPs sell second homes and pocket 30 x Ā£30k sums tax free???

    4. uanime5
      April 26, 2014

      The Coalition has done enough good to deserve another turn of office more than Labour deserve it .

      Such as?

      So far all they’ve done is lost the UK’s triple A credit rating, failed to introduce their flagship policy Universal Credit due to their own ineptitude, created a large number of free schools that no one wants to go to because they don’t have qualified teachers, sold Royal Mail too cheaply, trebled tuition fees, had an expensive top-down reorg of the NHS that didn’t achieve anything, introduced the unpopular bedroom tax, and destroyed millions of jobs by forcing the unemployed to work for free.

      Reply employment is up strongly and unemployment down.

      1. uanime5
        April 28, 2014

        employment is up strongly and unemployment down.

        Employment is up because of part time work and zero hours contracts, which is why millions of people are unemployed and wages have remained low.

        Unemployment is down because the government sends people on the 2 year long Work Programme and declares them in training (so they’re officially not unemployed). It’s only because people who started the Work Programme 2 years ago are now coming off this programme that the government has had to create a new scheme to hide the true level of unemployment.

        Reply Wrong again – most of the new employment is either full time jobs or full time self employment, not zero hours contracts or part time.

  11. Jennifer A
    April 26, 2014

    Yet another post on the squeeze on incomes without mention of mass immigration.

    Let’s change the ‘We’re all in it together’ to ‘They’re all in it together’

    LibLabCon

    They all ignore what troubles voters most.

    1. Lifelogic
      April 26, 2014

      Indeed uncontrolled, low skilled immigration clearly suppresses GDP per head hugely.

    2. Tad Davison
      April 26, 2014

      Jennifer,

      You’re right, there’s not a fag paper’s width between them. They’re all scrambling for the same diminishing vote, and scared stiff they might say something to offend some minority somewhere. They don’t seem to realise there’s a mass of disaffected people who could bring about a landslide if they could be encouraged to vote, but their views and aspirations aren’t being catered for by the Westminster three, so they don’t bother. As soon as one says the word ‘immigration’, the LibLabCons jump on the bandwagon and maliciously substitute it for ‘racist’ in order to stir up fear and loathing.

      I for one don’t have a racist bone in my body, but I won’t hesitate to talk about immigration. It’s a boil that needs to be lanced. It’s fine for politicians to talk about immigration and ‘the rich diversity of cultures it brings with it’, but when those cultures refuse to integrate, or, as seen in a recent documentary, use our benefits system to fund new homes in their country of origin, and see it as fine to bring their criminality with them, I think we need a change of attitude and certainly direction!

      And it isn’t a change any one of the three Westminster parties are presently able to provide.

      Tad

      1. Peter Davies
        April 26, 2014

        so true – there has been progress though – a year or so ago if you mentioned the word “immigration” you were shouted down – at least people are talking about it now

      2. Jennifer A
        April 27, 2014

        Not even our host dare mention it, Tad. Otherwise I share your sentiments entirely.

        I’m told that I must vote Tory but I simply can’t. The thought of it makes me feel depressed. 2015 will be my last hurrah !

        Turn Parliament into a museum thereafter.

        If we’re going into the EUSSR then we shan’t be needing it.

  12. Denis Cooper
    April 26, 2014

    Off-topic, JR, this has come my way:

    http://www.w4mpjobs.org/JobDetails.aspx?jobid=45223

    “This is a short-term consultancy contract until the end of May 2014, with an immediate start. Job share or part-time considered.

    Are you a social media enthusiast? Do you engage on a variety of different social channels? Weā€™re looking for someone creative and dynamic that has a natural flair for social media engagement. You will work closely with International Alertā€™s Communications and Europe Teams, and be responsible for running a short-term social media campaign (#EUnify) to counter racist and xenophobic discourse in the UK in the run-up to the European elections.”

    That website was originally set up in 2000 using taxpayers’ money channeled through the EU and is now funded by taxpayers’ money provided by the House of Commons, and International Alert is part funded by the UK government; I am not going to ask whether this is legal, as I fully expect that it is, I am just going to ask whether it is morally right for taxpayers’ money to be used to hire an internet troll to try to influence how people vote in the elections.

    Of course what we are seeing now during this campaign for the EU Parliament elections – last night the BBC’s Have I Got News For You devoted the first third of the programme to slagging off UKIP – is what would happen in the campaign for an “in-out” referendum in the EU.

    1. Tad Davison
      April 26, 2014

      Denis,

      I think this just goes to show how unbalanced and politically biased the whole thing is. Questions ought to be raised in parliament about it, but I’d be surprised if they were. As for the BBC, it should have its funding taken away until it shows even-handedness.

      Tad

      1. Hope
        April 26, 2014

        No commercial accountability equates to no accountability. BBC needs to be privatised.

    2. JoeSoap
      April 26, 2014

      Well done, you’ve hit a wasps’ nest there!
      It all starts with (corporate donors ed) they sponsor perfectly well meaning charity which, it appears, then pulls money in from taxpayers and others purportedly to foster world peace. This is like a honey-pot for lefty would-bes and has-beens, who start using the money to “persuade” public opinion that world peace can only be fostered through well meaning nice people like Mr Miliband, who will no doubt promise them even more money when he gets his hands on taxpayers’ money himself.
      A classic example of taxpayers’ money being added to overseas money through a charity to try to change political opinion in the UK. If it isn’t illegal, it should be.

    3. zorro
      April 26, 2014

      I watched HIGNFY last night too….. The thing is that the UKIP carping came from the representatives of the Metropolitan elite such as Ian Hislop and the other lady. To be honest, I doubt that anyone pays much attention to Hislop’s pronouncements. If anything, such talk is likely to galvanise support for UKIP as a counterblast to the establishment.

      zorro

    4. Peter Davies
      April 26, 2014

      Dennis

      I’ve seen these people on Twitter and Facebook. One was outed on FB and he went very quiet very quicklu

  13. Denis Cooper
    April 26, 2014

    Also off-topic, the CBI is disengaging from the Scottish referendum:

    http://www.scotsman.com/news/politics/top-stories/cbi-u-turn-on-anti-independence-stance-1-3389046

    Reply Yes, I am glad they have been reading and listening – I advised them to back out some time ago on this site.

    1. Tad Davison
      April 26, 2014

      John,

      Could you also persuade the CBI to back out of the EU debate too?

      Tad

      Reply That was the point of my recent exchanges with the CBI and my post on the subject! I think they may now have learned an expensive lesson about interfering in these debates about belonging with silly predictions of major job losses.

      1. Lifelogic
        April 26, 2014

        Indeed the CBI is hugely biased towards the EU and half baked BBC think in general.

      2. Tad Davison
        April 26, 2014

        I know John, I read your blog every day. Almost every one of us could make the case for a change of direction from the CBI but I’m eagre to know their response. Let us have some feedback.

        Tad

        Reply They have just changed their stance on Scotland so I am hoping they will also amend their ways on the EU. They have my words on the subject.

        1. Tad Davison
          April 26, 2014

          Then I live in hope, but I’d be much obliged if you were to keep your readers fully informed of any changes or discourse. I keep challenging them, but largely get nowhere. As an MP of some standing, maybe you’ll get further than little ol’ me.

          Tad

  14. a-tracy
    April 26, 2014

    Are Labour proposing to increase Employer and employee NI? On the self-employed too? Should the self-employed pay the employers NI portion on individuals profits over the lel as SME’s do? If they don’t why do SMEs pay it? What is the tax specifically for now? Should working people over retirement age carry on paying NI if a younger person took that same job they would contribute 12% more tax? Their employer continues to pay Employers NI for retirees. Should public sector workers who retire before 65 still pay NI up to the their state pension kicking in, isn’t this why you want to merge tax and NI? Just what is NI if it’s no longer health insurance and state pension contribution and job seekers allowance insurance?

    George Osbornes NI rebate was very gratefully received this year. It won’t be wasted We have hired two new members of staff this year and are pushing for growth and it’s good that he has trusted business with this small boost of tax back. I compete in an industry with lots of self employed subcontractors and already have to cost employers NI and Ssp and SMP, and spl, and soon Employers NEST contribution into my calculations so I like to know what’s potentially around the corner when I’m making decisions with our investments.

    1. JoeSoap
      April 26, 2014

      The answers to your question all work back to illogicality of NI.
      Clearly you don’t pay it on share dividends, else it would truly be an income tax.
      Therefore SME s don’t pay it on that element of the owners’ income that can be classified as “profit”, i.e. dividends, although what is income and what is profit is a matter of opinion
      Therefore it is illogical for self-employed folk to pay NI on profits above a notional income.
      Therefore it is illogical for employed people to pay NI on income above a certain level.
      The best system has to be a true insurance policy where you pay a premium and you get a pension/healthcare/etc or you haven’t and you don’t, except where you are physically and mentally unable to work.
      At the moment we pretend to pay a premium and the government pretends to give us something back.

      1. a-tracy
        April 29, 2014

        True it’s unbalanced, you only draw dividends from profits that have been taxed. It was and is a Madoff scheme that still gets lorded as though it was some fantastic deal, trouble is the monies running out šŸ™ and the people at the bottom of the pyramid are going to get nowt.

  15. Hope
    April 26, 2014

    I am astonished by paragraph two of your blog considering your previous comments on Hun deficit and debt. Are you acknowledging Osborne deliberately misled and/ or lied to the public when he said he would reduce the structural deficit by his 80/20 split in public spending and tax rises? You were very critical about the lack of real spending cuts despite the media and Labour claiming the cuts were too far too fast. You now acknowledge that real spending increased and the deficit was to be cut by tax rises. So is Osborne a liar about his economic plans? Has he differed cutting the structural deficit deliberately in case Labour return to power after 2015 because if he did not Mervyn King’s warning might come true ie whoever made the drastic spending cuts would not get elected for a generation? Therefore his economic plans are really about self interest and political party interest rather than public and national interest? And our children and their children will paying off the debt for his political convenience?

    Reply: NO, he did not lie. As I have often explained his 80/20 relates to the position at the end of the deficit reduction programme and is based on percentages of total economic output. I have explained endlessly that it does not mean cash cuts in total public spending!

    1. Lifelogic
      April 26, 2014

      Cash cut in public spending (usually waste or worse) are exactly what was needed.

      Anyway he certainly lied about IHT thresholds he has even cut them further in real terms. He hardly even mentions his promise now nor indeed IHT. It seems he will not do it even they win the next election (which they almost certainly will not anyway).

      And Cameron certainly lied (twice) when he claimed to be “a low tax Conservative by instincts”. And again when he absurdly claimed a treaty is not a treaty once ratified.

      1. Hope
        April 26, 2014

        JR, could you show me where he told the public in any broadcast where he would increase public spending and cut the deficit by tax rises.

        Reply He told us all through the Red Books which I have regularly explained to the public. He did always say he would increase health, education and overseas aid spending, and did state in public his increases in welfare payments, which were the main causes of higher spending, and he did talk about putting up VAT, his biggest tax rise.

        1. Lifelogic
          April 27, 2014

          Biggest of the 299+ tax rises.

          1. Hope
            April 28, 2014

            No, JR, where did Osborne say in public that he would cut the deficit by tax rises and where does this fit with his 80/20 split statement which is now be tailored.

            Reply The government made it clear in all the Budget documents issued each year, and the 80/20 they talked about was always based on percentages of GDP

    2. Brian Tomkinson
      April 26, 2014

      Reply to reply,
      I never remember Osborne telling us before the election that his plan was “to increase current spending slightly in real terms in the first three years, relying on rising tax revenues to cut the deficit”. Nor did he make it clear that his pledge to eliminate the deficit by 2015 by 80% reduction in spending and 20% by tax increases was based “on percentages of total economic output.” If overall no spending reductions have been made, then whatever you choose as your denominator, it still means that the % deficit reduction by cuts is less than zero – a long way from 80%. Dissemble as much as you like, we were misled; you can call it not lying if you wish but you don’t convince me..

      Reply I always set out the figures clearly for all to see, and took them from Mr Osborne’s Red Book!

      1. Brian Tomkinson
        April 26, 2014

        Reply to reply,
        It is Osborne who we are naming as the liar for what he said he would do and what he actually did, starting immediately he took office. Your continual defence of his duplicitous mendacity does you no credit (apart, that is, in the eyes of your leaders).

    3. JoeSoap
      April 26, 2014

      Reply to reply.
      Disingenuous – this was not explained at the time and it was reasonable to assume that he meant 80% of his program would be done by spending cuts and 20% by increasing taxes, IN A STRAIGHT LINE FROM DAY 1 TO DAY Z. To try to manipulate things differently is very Brown-like and shows he cannot be trusted.

      Reply I did explain it at the time!

      1. zorro
        April 26, 2014

        Reply to reply – An odd stance on this John really. Osborne’s statements were clear about how he would cut the deficit. If what you say is true, what is the planned end date for the deficit reduction plan so that we can check the 80% – 20% ratio figure…

        zorro

        Reply The cyclical deficit on current spending ends in 2016-17 and the cash deficit ends by 2018-19. Their 80/20 calculation is in the Red Book if you want to see why you disagree with it. I have explained it for you before.

        1. zorro
          April 27, 2014

          Reply to reply – John, I should have rephrased my point. Of course, I know when he plans to show that the 80% / 20% figure will have come to fruition – 2018/19. We shall , of course, test the veracity of that forecast then. I will have another read of this year’s red book which I have only skipped through so far and come back to you. Please be assured that I am not attacking you personally on this point but rather the argument which has been put forth, as I know that you have explained his position but we have discussed other ways in which it might have been achieved on the blog through your posts and our comments.

          zorro

        2. zorro
          April 27, 2014

          https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/293759/37630_Budget_2014_Web_Accessible.pdf

          Chart 1.8 page 28 is interesting. Bearing in mind the assumptions. If everything goes OK, we are looking at reducing public sector net debt to 60% from 75% over the next 25 years…..or back to where we were in 2007 if we’re lucky!

          I must say that the reasoning behind the 80%/20% argument is well camouflaged…..

          zorro

      2. Narrow Shoulders
        April 26, 2014

        Reply I did explain it at the time!

        Would you provide the link to that please Mr Redwood?

        I foolishly have been expecting to see Ā£30 billion in tax increases and Ā£120 billion in spending cuts and have never been able to fathom why my tax (and NI) bill has risen 57% in 4 years but my neighbours’ benefits lifestyle and many civil servants’ lifestyles remain constant or improving. It would be easier to bear if I see that I did not understand properly rather than have been misled by your party which is now retro fitting an argument to the facts as they are today.

        1. Lifelogic
          April 27, 2014

          Well, as we are assured by the government we are all in it together – except me as I have left the UK.

  16. Antisthenes
    April 26, 2014

    Labour predictably role out tried and failed ideas all of which in the end hurt those sections of society that they claim to represent the most. Another effect is they throw large amounts of taxpayers money at the public sector and in subsidies none of which improves efficiency, fairness and makes public spending more unsustainable. I do not think the UK can survive another 5 years of Labour especially with RedEd in charge. He will quickly unravel the recovery and all the good reforms that Conservative ministers have worked so hard to implement since 2010.

  17. Iain Moore
    April 26, 2014

    Labour do what they always do, reach for big state solutions to problems, and here they have dug up an old discredited policy called Prices and Incomes. A policy that should be fairly easy to discredit as there is all the evidence in our history which shows what a disastrous policy it is as it massively distorts the economy.

    The Cameron Conservatives though have been pretty inept at dismantling Labour’s prices and incomes policy, their attack on it has been weak and confused, they remain as ever hung up on the EU and unable to put globalism in its context and make it work for Britain rather than Britain be a servant of it.

    As a result people are confronted by a failed policy from Labour, that might soften the immediate problems but create massive problems down the road, or the Conservatives more of the same, where people know that they will never get ahead while there is mass immigration depressing their wages and driving up the cost of resources . People know that Cameron’s sunlit uplands is a false prospective while our national sovereignty can’t control our borders.

    Heath’s EEC indulgence put a fracture at the heart of the Conservatives that remains as destructive as ever. When we need a political party to put our country first, we find the party that should, the Conservatives, can’t, for they are impotent as ever , doing the splits over the EU chasm. And that I might suggest is the basic truth in UKIP’s position which people understand.

    1. Tad Davison
      April 26, 2014

      Iain,

      The Tories have only themselves to blame. People like me used to pound the streets for them, go out canvassing, stuff envelopes, and ring round at election time getting people out to vote. We never got paid, we used to do it out of conviction. In fact, it used to cost me money in petrol to travel miles away to different constituencies to help out. Then came the dawning of the realisation we were all being taken for a ride. That the party weren’t really all about standing up for Britain, but instead, were secretly plotting to give it all away behind our backs. So, even though I despise Labour and the Lib Dems, it is for the Tories that I have the most bitterness and vitriol, because even though I hate thieves in general, I save the most hatred for the one who robbed me personally.

      There are still good men in the Tory party, but they are in the minority. The rest are either staunch or closet supporters of the EU, and let no-one ever kid us otherwise.

      Tad

      1. Lifelogic
        April 26, 2014

        Exactly that is why they elect a green crap, EU ratting, 299 tax increasing, regulation increasing, big government socialist like Cameron as leader.

    2. M Davis
      April 26, 2014

      Very good post, in my opinion.

  18. Kenneth
    April 26, 2014

    It is a fact that every Labour government has increased unemployment in the UK.

    Yesterday BBC/Labour were campaigning to legislate against zero hours contracts.

    The BBC article suggested that this move would be a good thing. However, zero hours contracts have kept people in work.

    If the BBC/Labour get their way they will throw many people out of a job, causing real hardship.

    At the moment, despite the job numbers improvement, employers have the whip hand and some can treat workers unkindly. This will always be the case while there are so many unemployed.

    If there is full employment the dynamics are completely different where employers would be compelled to do all they can to keep hold of their staff.

    Thatā€™s how it should be: in a free market economy there would be a balance of powers between the employer and employed.

    I am sure the BBC and Labour mean well but, unfortunately, the extent of the ā€˜successā€™ in implementing such policies can be measured in unemployment, unfair sackings and misery.

    1. uanime5
      April 26, 2014

      It is a fact that every Labour government has increased unemployment in the UK.

      Care to explain why unemployment was lower for almost all of when Labour was in power than it is now.

      However, zero hours contracts have kept people in work.

      So you believe that all the stores who have put all their low paid staff on zero hours contracts wouldn’t have hired any staff if zero hour contracts didn’t exist. Face it if zero hours contracts didn’t exists the number of people in employment wouldn’t change in any meaningful way.

      At the moment, despite the job numbers improvement, employers have the whip hand and some can treat workers unkindly. This will always be the case while there are so many unemployed.

      So the government should try to protect these employees by giving them more rights, not less rights.

      If there is full employment the dynamics are completely different where employers would be compelled to do all they can to keep hold of their staff.

      Unless these companies know what immigrants are, then they don’t need to do anything to keep hold of their staff.

      Thatā€™s how it should be: in a free market economy there would be a balance of powers between the employer and employed.

      The only problem is that in the current situation the employer has almost all the power. If you want a more equal balance of power you have to prevent the employer abusing their staff.

      I am sure the BBC and Labour mean well but, unfortunately, the extent of the ā€˜successā€™ in implementing such policies can be measured in unemployment, unfair sackings and misery.

      Well thanks to zero hours contracts there’s already unfair sackings and misery because these employees have even less protection than regular employees.

  19. Iain Gill
    April 26, 2014

    Their approach to zero hours contracts is going to catch out a lot of freelancers operating through umbrella companies. They are on the one hand against use of one-man band personal service limited companies, as they appear not to like folk taking money out as dividends and paying less tax than they would on income. And here they are claiming to be against working on a zero hour contract through an umbrella company and paying full tax and national insurance. Perhaps someone in the political class could clarify exactly which legal construct they would prefer freelancers to operate through? And then leave them aloneā€¦

    1. John E
      April 26, 2014

      Well said Iain. The trouble is that politicians and the media are completely ignorant about the reality. Even quite intelligent and otherwise well informed people think I can just take money out of my company without paying any income tax because of the rubbish that is written in the papers.
      In reality the major saving is usually to the employer in avoiding employers NI. But that doesn’t fit with the ongoing search for scapegoats.

    2. uanime5
      April 26, 2014

      Their approach to zero hours contracts is going to catch out a lot of freelancers operating through umbrella companies.

      An umbrella company simply processes the payment you receive from your employer, then gives you this money minus taxes and their fee. It’s not a zero hour contract because you don’t work for the umbrella company.

      1. Iain Gill
        April 27, 2014

        Legally freelancers working through umbrella companies are employees of the umbrella company on zero hours contracts. Legally they do work for the umbrella, the umbrella provides the employer liability insurance and so on. It’s not very hard to understand.

  20. Tad Davison
    April 26, 2014

    Interesting that this topic should come up today, as I recently had a conversation with a man who viewed Labour’s European election broadcast and said the following:

    ‘I think the problem is one of the ‘I’m voting for the working man, I’m voting Labour’ mentality. The Labour Party depend upon a core of basically politically illiterate people, who have no clear grasp of politics.’

    Who am I to take issue with such a remark, except to say, as many before me have said, we only get what we vote for – or so it would seem. For decades, we have been getting things we absolutely DIDN’T vote for! And all three Westminster parties are just as guilty on that score.

    People do need to be better informed, that much is clear, and it’s a constant battle to stay up to date, but we do have that responsibility to ourselves. I can’t understand why anyone should allow themselves to be conned by any Westminster party, but, that’s just my opinion.

    Tad Davison

    Cambridge

  21. Lindsay McDougall
    April 26, 2014

    The answer is that Labour proposes to bankrupt businesses and/or nationalise them and/or raise taxes and/or increase the fiscal deficit and/or generate more inflation. Take your pick.

    As Kenneth Clarke has said “Sooner or later Labour Governments always run out of money”. This time round, if they regain office, they will run out of money in their first year.

    How is it that this appalling party has lost only 6% of its popular vote over the last two years and that the Conservative Party has gained only 1% in that time?

    1. Tad Davison
      April 26, 2014

      Lindsay, good question, but when a party has the state broadcaster on its side, not to mention left-wing news on channel four, it’s hardly surprising people get brainwashed into thinking Labour is somehow credible.

      Those with the strongest intellectual arguments tend to put their crosses elsewhere, but what is that telling us about the Tories who can barely show an increase at all and the Lib Dems who are fielding far fewer candidates in the coming council elections because of dwindling support. Could it be they have it all wrong and are failing to connect with the thinking public?

      I rest my case.

      Tad

    2. Denis Cooper
      April 26, 2014

      Yes, but if the government can simply get the Bank of England to supply it with more money then it will be later rather than sooner, potentially very much later, in fact potentially never if it also does nothing when inflation keeps going above the target.

      I saw Conservatives hopefully repeating that dictum for years, and then many of them didn’t realise that with QE the Labour government had devised a cunning ploy to overcome that problem of running out of money, and indeed it seems that many of them still don’t understand it five years later.

      1. Tad Davison
        April 26, 2014

        You’re a wise old sage Denis, I take my hat off to you.

        Tad

    3. uanime5
      April 26, 2014

      As Kenneth Clarke has said ā€œSooner or later Labour Governments always run out of moneyā€.

      Either provide a citation for this quote (where and when it was said) or admit you just made it up.

      How is it that this appalling party has lost only 6% of its popular vote over the last two years and that the Conservative Party has gained only 1% in that time?

      Well the decline in living standards hasn’t helped the Conservatives. The lack of policies for areas outside of London is also why more areas in the north of the UK are switching from the Conservatives to Labour.

      Reply I seem to recall but cannot find the quote Mrs Thatcher said “Labour run out of other people’s money to spend|”

      1. David Price
        April 27, 2014

        re: Reply: It was Mrs Thatcher in a “This Week” interview on 5th February 1976, the fifth statement from the end of this transcript – http://www.margaretthatcher.org/speeches/displaydocument.asp?docid=102953

        1. Edward2
          April 27, 2014

          We should now have a full apology from Uni having made such a plainly wrong accusation that the quote was made up.
          Any person of a fair and decent disposition would certainly apologise.

          PS
          Many thanks David for your excellent research.

          1. David Price
            April 29, 2014

            Thank you Edward. The gist of Mrs Thatchers words stuck in my mind as I was starting to look for my first job then and wondering if I should look for another country first. She made all the difference and I didn’t.

      2. Lindsay McDougall
        April 28, 2014

        Others have found a citation for you. Citation or not, it’s TRUE.

  22. Bill
    April 26, 2014

    What your excellent analysis, John, shows is that Labour is fighting in the realm of spin and counter-spin but not in the realm of trade, science, commerce, and wealth-creation.

    This is the dismal legacy of Peter Mandleson and Alastair Campbell.

  23. acorn
    April 26, 2014

    On the left side, data miners and number crunchers are advising to concentrate on the “lost family income” and “the car you will never buy this decade”; “the pounds that will never get into your pocket”; stuff like that. The latter being a twist on the old Harold Wilson sound bite. In fact, Osborne’s cumulative loss over this decade is likely to be circa 1.2 years of GDP. That is, two and a bit more times than Mr A Darling would have lost with his plan A.

    Fortunately, like the metaphoric “boiling frog”, voters will never understand what they have been and, most likely, will continue to be subjected to. Naturally the deficits would have been a lot higher under Darling, but in a sovereign fiat currency economy, the BoE has got the rest of the century to sort that out and can crush any market vigilantes that try it on, just like the Japanese do.

    Don’t you just love this game, I wonder what the poor are doing today.

    Reply More fantasy economics with no consideration of the state of the banks and the failures of the credit creating process the Coalition inherited. Keynes recognised the importance of money as well as of deficits which your single cause explanation misses out.

  24. Ex-expat Colin
    April 26, 2014

    My Scots wife introduced me to this term (way back in 1970 – ish)

    Labour = Poverty for all

    So we will be flip – flopping again fairly soon. I did think some time ago that UKIP might turn some heads around in Westminster. Don’t think so really, too many fences and bear traps created as the multi layered EU rolls on.

    Any chance of EU annual finance audits being signed off yet..you know that Welsh labour rich man and Marta Andreasen finally blowing her fuse?

    1. Tad Davison
      April 26, 2014

      Colin,

      This is why many of us think the only way is out of the cursed thing altogether. No fudges, no compromises, no creep back and regrowth after a few years – a complete severance from what is steadily becoming what we always said it would be – a dangerous, undemocratic, hugely expensive straightjacket.

      Labour consistently demonstrate their lack of suitability to govern, by their adherence to the EU project even though it has failed, and has brought so much misery. And according to OE, the EU’s debt is still increasing so they’ve learned absolutely nothing.

      Tad

      1. Ex-expat Colin
        April 27, 2014

        Indeed it is Tad…..a self serving curse.

  25. uanime5
    April 26, 2014

    In the first Labour attacked the Coalition for cutting too far too fast. They predicted that the UK economy could not recover given this policy.

    Well we did have 4 years of stagnation while austerity was in effect, unlike most other developed countries which grew much faster than the UK during this period.

    In the second Labour switched their attack to the ā€œcost of living crisisā€ saying that the recovery was not delivering any rise in living standards.

    Well since inflation has been higher than wage increases for the past 4 years most people have seen their living standards decline. It’s also unlikely that one year of growth will reverse this.

    but decided to drop the erroneous too far too fast campaign when it became clear the economy was growing again despite their predictions.

    Well I guess Osborne couldn’t prevent the economy growing for 5 years, despite his best efforts.

    They have adopted their cost of living critique close to the time when real wages at last start rising.

    But are unlikely to rise in real terms to their 2010 levels before the 2015 election.

    Global energy prices have been falling, which makes this easier.

    Pity that energy prices have continually risen despite years of falling energy prices.

    This presumably means lesser increases, financed by larger taxpayer subsidies.

    Alternatively they could stop giving these rail contracts to private companies, which would effectively nationalise the railways.

    This tax on jobs would make it a bit more difficult to sustain current high rates of jobs growth.

    The rate of job growth isn’t high, that’s why unemployment levels are much the same as they were in 2010. Though the levels of statistical manipulation are high, such as the 2 year long Work Programme and the 6 month long Workfare which take people off the unemployment register even though they’re still claiming JSA.

    As the best way to raise peopleā€™s living standards is to get them into work it is difficult to see why Labour are proposing this backwards step.

    Unless it’s the unpaid workfare the Conservatives are planning to introduce on the 28th April, then it won’t raise their standard of living in any way. It will also make the standard of living worse for all the people who used to be paid to do these jobs.

    None of this will make a lot of difference to living standards in the short term, and in the longer term these policies could b e damaging to future investment and job creation.

    They’re still better than the Conservatives’ plans which have so far resulted in living standards declining, years of stagnation, house prices rising, 660,000 families being hit by the bedroom tax, millions of sick and disabled people having their benefits cut, and millions of unemployed people being forced to work like slaves so the government can save money by not having to pay their employees minimum wage.

    Reply Lots of good lies in this response -e.g. the Eurozone had a five year recession and performed much less well than the UK economy 2010-14.

    1. uanime5
      April 28, 2014

      Reply Lots of good lies in this response -e.g. the Eurozone had a five year recession and performed much less well than the UK economy 2010-14.

      The eurozone performed less well on average because some countries (such as Spain and Greece) had severe economic problems. However individual countries such as France and Germany have recovered their pre-2008 GDP than the UK because they performed better than the UK.

      I’m guessing the issue you didn’t want to discuss was how the Conservatives are planning to force the unemployed to work for free, even though the government own figures showed that these schemes don’t make people more employable. The fact that the DWP isn’t even going to check that these placements are for a community benefit makes it clear that these placements are nothing more than free labour for private companies.

      1. alan jutson
        April 28, 2014

        Uni

        Guess you would rather stick with people being paid to do nothing from your comments.

        Yes I know it takes time to apply for Jobs, but when do you think those who are already employed do it when looking for a new job ?

        Its a complete nonsense that all of the unemployed spend all day looking for a job, you know it, we all now it.

        So whats wrong with asking people to do something useful in return for their benefits, providing they are able.

        1. petermartin2001
          April 28, 2014

          “So what’s wrong with asking people to do something useful in return for their benefits, providing they are able.”

          It is often said that there is little or no financial benefit to be gained by moving from benefits to a minimum wage job. If that is true why do not government offer minimum wage jobs, or even living wage jobs, as an alternative to those benefits? Tax and NI contributions would be payable as normal.

          Good timekeeping would be expected as per a regular job. These jobs should be directed towards the public purpose and could involve anything from maintaining public parks and garden, tidying up derelict areas, running youth clubs, to helping the elderly in their homes or elsewhere. There is plenty to do. The supermarkets can hire their own staff to fill shelves there is no need to have them doing that.

          The offer could be voluntary, at least to start with, and it would give unemployed young people the opportunity to build up a marketable work record and help them get a better job.

          It wouldn’t cost very much to set up a pilot scheme in some of the highest areas of unemployment. It wouldn’t cost very much and is well worth a try.

  26. Steve Cox
    April 27, 2014

    I agree that Labour’s proposed economic policies are both stupid and damaging, but I have to ask myself if in the long run they would do any more damage than the Coalition’s policies of ZIRP and QE? This government has presided over the greatest peacetime confiscation of private savings wealth in British history, and as a result the national savings ethic on which a financially sustainable future depends has been deeply damaged. On top of this the policies have led to the largest misallocation of capital outside of centrally planned economies, as investors desperately chase yield in ever more risky and ever more expensive assets. I know that many people will call me a naysayer and point to the booming economy we are supposedly enjoying, but just ask yourself what that boom is based on? Is it rational and is it sustainable? Personally I do not think that it is, and soon enough we will find ourselves back where we started from, but with double the national debt and a higher tax base. These are not indicators of a healthy economy.

    1. JoeSoap
      April 27, 2014

      Sadly you’re right. Investment in real growth rather then just throwing money at consumers to spend is the only path which is going to work. Apart from the increase in capital allowances, I can’t think of any other measures that this government has taken which will actually do this. You can point to Eneterprise Zones, but these largely are displacing businesses which would set up elsewhere anyway.
      The destructive policies of QE, Help to Sell, increasing student debt, increasing taxes generally, propping up banks for their top employees, decreasing savings incentives by whacking pensions, keeping welfare and public sector well on the teat are all anti-growth.

  27. petermartin2001
    April 27, 2014

    “What you need to do that is successful enterprises, more investment, and more growth. How do Labour propose to achieve those?”

    If there are paying customers then enterprises will spring up, investment will be found, and growth will be achieved. Capitalism is quite good like that. But if there are no paying customers, or fewer paying customers than needed to make an enterprise viable then there won’t. It isn’t any more difficult than than.

    Labour were on the right track when they reduced VAT to 15% to stimulate the economy after the GFC. It was wrong to put it back up to 17.5% and even worse to raise it to 20%. If customers have to spend more on tax they will have less to spend on what really matters.

    Unfortunately, all politicians are scared of doing, or saying, what needs to be done to break the log jam in the economy. If everyone else believes the Earth is flat, to try to explain otherwise could cost votes, but in the long term that has to be the right approach.

    |Reply Raising VAT to 20% means they are spending it on “what really matters”, as most politicians and much of the media think public spending is more important more virtuous than much private spending. By taxing the government makes sure all the money raised is spent.

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