Tax credits and jobs

Yesterday’s news that unemployment is down to 5.3% and employment up to 73.7% of those of working age was good. There are now 2.1 million more people in work than in 2010. The employment rate is up 3.5% from 70.2%. 760,000 people have moved from unemployment to employment over the same time period.

Wages are up by 3% over the last year, at a time of no overall inflation. Three quarters of the growth in employment has come in full time jobs. Some people are better off because they have found a job, some are better off because they have found a full time or better paid job, and some are better off thanks to pay rises. Now it is important that the government builds on this success, and comes back with revised proposals on tax credits.

In the budget debate I offered the following advice:

“I welcome the emphasis on prosperity in the Budget. I want a party and a Government who drive more prosperity for everyone in our country, and I want that to benefit people on all income levels. I especially want to see more people get into work and find other routes out of low incomes and poverty. The Chancellor is right to say that Britain deserves a pay rise and that we need to reinforce that pay rise as people get it, or reinforce their success in getting into a job and getting a pay packet, with tax cuts. I want tax cuts for all, and I am glad that my right hon. Friend has made a start on the promises made in our Conservative manifesto.

It is crucial that, as the Chancellor goes about the task of getting rid of unemployment and poverty through supportive policies, people are better off. What I want to do when we get to the detail of the welfare cuts is to see what the impact is, because we need to look at the overall impact. If people are going from unemployment to work, staying in work, getting a pay rise or getting a tax cut, those are all positive things that will make them better off, and we need to make sure that they are not completely offset or badly damaged by the welfare changes he is making. I look forward to those more detailed debates.

…………………… People need to work smarter to be paid better. We need a pay rise but we have to earn it, and that is the purpose behind many of the measures.

………….
The economic background to the official forecasts shows that the growth figures are still pretty good and we have had a welcome upward revision to figures for the immediate past. We also see a welcome upward revision to the number of people in employment, which is fundamental to the whole strategy. There has been a modest deterioration in the balance of payments, which shows that there is more work to be done.

The productivity work will link into that to make us more competitive. We have to earn our living, so we need more competitive products. All that growth and improved revenue is taking place despite higher interest rates—the forecast assumes a modest increase in interest rates compared with past forecasts.

On productivity—working smarter and working better —I welcome the scheme that the Chancellor outlined today. It will mean better roads and spending money on railways more wisely to get extra capacity in the parts of the system where we need it and increased efficiency. There will have to be a lot of work on energy, because we will need cheaper and more energy: as the march of the makers begins and the northern powerhouse cranks up, more electricity and more gas will be required. I hope that we will find cheaper ways to produce them than we have under the policies followed in recent years. It is important that we price people back into energy-intensive markets, rather than export all our energy-intensive business to other countries. It is no great win for those who want to cut carbon dioxide emissions if it is poured out of a factory in China rather than one in the United Kingdom. We need to be conscious of the need to be competitive in our energy generation.

We will need more on broadband, and clearly much more on housing, as many people have mentioned recently. I look forward to an investment-led recovery, with much more private sector investment coming in. We need to pay special attention to cheaper energy and to fix the railways, where we are spending too much and getting too little. It is not just a question of big investment programmes; it is a question of managing them better. Above all, we need to make sure that, as we implement the welfare reforms, everyone is better off and gets the benefits of tax cuts and higher wages.”

Therein lies the challenge. When reforming welfare it is often better to cut entitlements for future recipients, but to allow those already in receipt of benefits and relying on them to continue drawing them until their circumstances change.

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108 Comments

  1. Leslie Singleton
    Posted November 12, 2015 at 6:51 am | Permalink

    I don’t think it meaningful to say that Britain deserves a pay rise, in fact I think it left wing nonsense.

    • A different Simon
      Posted November 12, 2015 at 11:53 am | Permalink

      Even if you remove the ideological word “deserve” , it still strikes me as nonsense .

      Wages in the UK are 3-5X those in the developing world .

      Jobs and industries are already fleeing overseas because UK wages are too high .

      The UK must bring the cost of accommodation down to a level that current wages are livable (including saving a surplus for old age) .

      John , how is fast tracking swathes of ICT visa’s for Indian software developers and offering their employers and sponsors tax breaks helping wages of Britons ?

      • Narrow Shoulders
        Posted November 12, 2015 at 7:24 pm | Permalink

        Quite, Britain needs a cost of living cut more than it needs a pay rise.

        Accommodation is a very large part of the cost of living so meaningfully reducing housing costs will deliver better results than a national pay increase which will just drive costs higher.

        Given the choice between more money disposable income or higher wages most people will look to their disposable income.

        Of course GDP driven and turnover obsessed government and corporations will disagree.

      • Iain Gill
        Posted November 12, 2015 at 11:45 pm | Permalink

        Good question re Indians (coming ed )in on ict visa’s

    • Lifelogic
      Posted November 12, 2015 at 12:51 pm | Permalink

      Indeed pay will be determined as usual by supply and demand.

      If the government wants higher pay then they have to reduce the burden of the bloated overpaid state sector on the productive, cut the greencrap high energy cost nonsense, relax employments laws, get rid of all the daft regulations, reduce & simplify taxation and then businesses can compete, expand and offer far more choice of better paid jobs for workers.

    • yosarion
      Posted November 12, 2015 at 1:23 pm | Permalink

      I see the HMRC is being consumed into EUSSR Regions.

  2. Lifelogic
    Posted November 12, 2015 at 6:58 am | Permalink

    Any revised proposals on tax credits need to increase the incentive to work on decrease it. The margin needs to be sufficient to allow for the cost of getting to and from work, possible childcare costs, lunches away from home and the much reduced time you have available for other things that can save money (such as DIY, helping you family & mates out and more efficient shopping).

    The current proposals do the complete opposite they are just in effect a huge tax increase on low paid workers.

    On productivity—working smarter and working better- it sounds good but companies need to have the money to invest more in capital equipment and mechanisation. Most are taxed, over charged on energy, rates and over regulated in very foolish ways to an absurd degree by government. They often have little money or incentive to make such investments certainly not in the high cost UK.

    You say: I want tax cuts for all, and I am glad that my right hon. Friend has made a start on the promises made in our Conservative manifesto.

    Well the last budget is a huge tax grab. Forced higher “national living wage” is a huge tax grab, the reduction in in work benefits is a tax grap, the pension reductions is a tax grab, the dividend tax is a tax grab, attacks on child benefit and housing benefits, attacks on landlords legitimate interest costs (an increased rent tax), attacks on pension tax reliefs, increased insurance premium tax, more taxes on banks (bank customers) and misguided attacks on nondoms many of whom will just leave.

    In what way JR has he made a start on reducing taxes? Furthermore he still he is borrowing huge sums (just deferred taxation) and public services like the NHS are simply falling to pieces.

    Reply Increases in the starting point for Income Tax and for the 40% rate

    • Lifelogic
      Posted November 12, 2015 at 7:06 am | Permalink

      Osborne can only really reduce taxes when he stops spending & wasting billions on complete nonsense. Yet spending on complete nonsense seems to be Osborne’s favourite activity (that or increasing taxes and adding further absurd complexity to the tax system).

      Nonsense like offshore windfarms, PV farms, HS2, motorist mugging, issuing government propaganda and brain washing, the EU costs, over priced nuclear contracts, bloated, over paid and over pensioned government employees everywhere – most doing little of any real value to the public taxpayers many doing harm to them.

      • John C.
        Posted November 12, 2015 at 6:55 pm | Permalink

        And of course a few billion going on Foreign Aid. And no doubt much more to be sent to African countries in a vain attempt to head off further migration.

    • Lifelogic
      Posted November 12, 2015 at 7:09 am | Permalink

      sorry – increase “not” decrease

    • Lifelogic
      Posted November 12, 2015 at 12:03 pm | Permalink

      To reply.

      Yes but for many (if not most) these very modest increases in thresholds are more than wiped out by the reductions in work benefits. The new dividend tax, increased insurance IPT tax, restrictions on child benefits and his many other other back door tax grabs further make things worse. Even then he is still borrowing hugely which is just more deferred taxation. Why on earth does he not cut out some waste for a change?

      Osborne tends to use the argument that people will be better off overall due to the increased minimum wage. But this is a totally fraudulent argument. This money comes from businesses giving businesses far less to pay other workers or invest in productivity. Many will just lose their jobs completely or get reduced hours. Self employed people will not get any increase in pay at all. It is not magic money it is yet another imposition on the productive.

      Overall it is a massive net tax grab, rendering the UK less competitive while the state sector continues to waste money hand over fist and continues to remunerate itself at about 50% more than the private sector. This for fewer hours, far less useful output (often negative output), far more sick days, better working conditions and earlier retirement.

      • Iain Gill
        Posted November 12, 2015 at 11:47 pm | Permalink

        Wiped out by the government hyping the price of housing too

    • Lifelogic
      Posted November 12, 2015 at 12:21 pm | Permalink

      The increase in personal allowances for basic rate tax payers this year is worth just £112 PA with a bit more for next year. It is trivial relative to the proposed in work benefit reductions, IPT increases, dividend taxes and all the rest of the back door tax grabs by Osborne.

      • Lifelogic
        Posted November 12, 2015 at 12:25 pm | Permalink

        Plus many will get rent increases all thank to Osborne’s absurd attack on landlord interest deductions and allowances.

      • stred
        Posted November 12, 2015 at 12:46 pm | Permalink

        Just when you thought it couldn’t get any worse, HMRC must have come up with this, possibly on one of their team building holidays. The ‘local’ regional tax offices are nearly all closing. So businesses who can’t get through to a call centre tax expert will have to travel to the remaining main offices. In the case of the Westcountry, they will have to travel 8o miles from Exeter to Bristol, possibly more in the case of other areas.

        As Transport for London keeps telling us, in their very many adverts explaining the jams, it’s to help us enjoy our journey.

        • ian wragg
          Posted November 12, 2015 at 4:54 pm | Permalink

          HMRC is following the government agenda of regionalising things as per the EU agenda.
          This is where the Northern Powerhouse and the East Midland amalgamation of councils and Mayors comes in.
          Slowly, very slowly we are being Balkanised to suit Brussels.
          Scotland only has one police force now as they are a region of the EU.

  3. APL
    Posted November 12, 2015 at 7:21 am | Permalink

    JR: “employment up to 73.7% of those of working age was good .. ”

    So that means more than a quarter of the working population are out of work.

    Solution: Let more unemployed and unemployable ( through language, illness or lack of education ) into the country. Yea! Way to go Team Cameron.

    Reply Many of those not working are mothers or other carers looking after the family where another family member has a job and supports them. Some have retired early with a pension.

    • stred
      Posted November 12, 2015 at 1:19 pm | Permalink

      Yes. Personally I was not working with no pension personally maintaining up to 7 properties for 20 years and caring for ill family members too. Don’t think much of this counted towards GDP, except for what the government spent my taxes on. And it was off the unemployment figures too.

    • libertarian
      Posted November 12, 2015 at 9:43 pm | Permalink

      APL

      “So that means more than a quarter of the working population are out of work. ”

      Er how did you arrive at that conclusion? There are 1.7 million unemployed the 25% of 18-65 year olds not working include houseparents, retired, wealthy, students etc etc

      • APL
        Posted November 13, 2015 at 7:22 am | Permalink

        Libertarian: “Er how did you arrive at that conclusion?”

        according to Redwood employment up to 73.7% of those of working age.

        I presume of those of working age that leaves 26.3% without work. 26.3% > 25%

        Therefor more than a quarter are out of work. That’s how.

  4. Lifelogic
    Posted November 12, 2015 at 7:33 am | Permalink

    Allister Heath is spot on again today. The pro EU BBC think/art grads academia/actor lovies & libdem types are in general totally misguided. The destruction of the Libdims at the last election showed this very clearly. People want far less (and preferably no EU), far cheaper energy, far less regulation, UK based courts, fewer lawyers, far less government waste and far lower taxes.

    That is how they voted at the last election. Had Cameron offered it properly he would have done far better.

    http://www.telegraph.co.uk/news/newstopics/eureferendum/11989773/Allister-Heath-Europhiles-think-history-is-on-their-side-they-could-be-in-for-a-shock.html

    • Lifelogic
      Posted November 12, 2015 at 7:35 am | Permalink

      As it was Cameron was just the least bad option. No one wanted SNP tail wagging the Ed Milliband dog.

  5. Richard1
    Posted November 12, 2015 at 7:44 am | Permalink

    I see Gordon Brown has absurdly stated that if any reforms at all are carried out to his catastrophic tax credit system ‘millions of children’ will be thrown into poverty. We know that most measures of child poverty are spurious – being based on difference from the mean, not on absolute standards. Browns tax credit system, by discouraging work and loading taxpayers with debt is a cause of poverty, or at least of lower prosperity. We also continually hear the BBC conflate ‘poverty’ with ‘inequality’. ‘Inequality’ is asserted to leftists to account for every ill, no consideration is given eg to the possibility that bad healthcare outcomes in the UK is due to the nationalised healthcare system. Leftists should also note that wealth inequality is higher in countries such as Germany Sweden and Switzerland which have better public services in most respects.

    • hefner
      Posted November 12, 2015 at 10:33 pm | Permalink

      Could you please give the references for wealth inequality in Germany, Sweden and Switzerland you are using to be able to write your last sentence?

      Your comment does not seem to fit at all with the findings of Hennig, Ballas and Dorling, 2014 in “The Social Atlas of Europe”, May 2014, or with the equivalent statistics given by Eurostat.

    • Bazman
      Posted November 14, 2015 at 12:05 pm | Permalink

      Browns tax credit system incentivised work that was the point. People do not work for poverty wages often paid by companies making massive profits and paying no tax, the rest of you point relies on the deluded belief that poverty does not exist and massive inequality has no effect on societies. The idea that shovelling taxpayers money to private healthcare companies will make them more efficient is not true, but even if they cost more and provide a worst service you still want them. Why? Dingbat privatisation dogma is costing this country a fortune and giving worse services.
      The BBC are now seen as bias if they ask business leaders if staying in Europe is a good or bad idea. No mention of oligarch owned newspapers are bias though.
      Get off with your idiotic agenda.

  6. CHRISTOPHER HOUSTON
    Posted November 12, 2015 at 7:50 am | Permalink

    “Yesterday’s news that unemployment is down to 5.3%.” Twice that of 1959. The Tory Party has some way to go. Forward to the past!

    There are , officially, now, 1.75 million unemployed people, not producing. But consuming wealth. Using energy. Using housing. Using water. Using transport. Writing to MPs. Reading employment rejections from the NHS. Doubting their ability to pour fresh water into bedside glasses.

    Statistics aside, we remember being told in the 1950s unemployment was half a million, mainly composed of “idlers ” ( it was a conservative media and government ). Though to be fair, this was the opinion in rock solid steel and coalmining areas too.

    Yesterday’s figures do not show “participation rate “, that is, how many people who could register unemployed actually do. Many people do not register as unemployed because:

    1. They cannot find a suitable job.
    2. They prefer personally looking after their children instead of paying a complete stranger to do it.
    3. They are in fact looking for employment but do not register as unemployed because bureaucrats hassle them “Why haven’t you accepted such and such..hmmm?!?”

    The disconcerting news coming from the EU meeting yesterday was that several African nations and other nations are economically dependent ( wholly ) on their citizens who have migrated to the EU and UK. Why? Because it seems, migrants are sending billions of pounds and Euro back to their countries of origin.

    Mr Rt Hon Cameron, the Rt Hon Mr Osborne and the now the Rt Hon… Mr. Corbyn should come clean about the so-called benefit to the UK of immigration. UK factories and enterprises should not be providing the wealth to run and support tens and twenties of millions of people and their Swiss bank account dictators in Africa and elsewhere. Money earned here should by and large be spent here giving increased tax receipts to the government and buying goods on the High Street, providing more work and wealth for everyone.

    We have at least one and three quarter million people laying idle. Not working smarter, not working better. The Cameron solution???? Let them have broadband.

  7. Anonymous
    Posted November 12, 2015 at 8:01 am | Permalink

    According to The Express 3/4 of new British jobs have gone to migrants.

    Balance of payments it the vital figure.

    As for competing intelligently ? It’s more a case that we need to stop the far east from competing with us UNintelligently.

    The EU wants to cut emissions and wants worker’s rights. It is no good, therefore, forcing the closure of our compliant industries and then using non-compliant Chinese industry instead.

    What is achieved by doing that except our own economic suicide ?

    • libertarian
      Posted November 12, 2015 at 9:47 pm | Permalink

      You can safely ignore The Express that figure is total moonshine

  8. bigneil
    Posted November 12, 2015 at 8:13 am | Permalink

    ” people are better off. ” – -certainly not me – 45yr of paying in – £21 per week for one year – then nothing. Whereas I could jump out of a lorry – contribute nothing, hide my real identity ( possibly due to criminality ) – and be put in a hotel, everything free – and £35 a week spending money. – -no wonder they come – -but still our govt asks “what’s the pull factor?” – -housing, benefits and healthcare – – why on earth would they want to work? They already get a good rise in their standard of living – just for arriving. They can sit in their free housing, watching the workers struggle through the rain/snow – knowing the workers are going to earn and pay taxes so all the incomers can have free lives.

    • margaret
      Posted November 12, 2015 at 6:46 pm | Permalink

      and from what I have seen many don’t even respect those gifts which life time workers have given them.. living in squalor created by themselves and causing damage by disregard to what has been given to them for free.

    • Dame Rita Webb
      Posted November 12, 2015 at 7:33 pm | Permalink

      Neil have you been down to your local council’s benefit advice office to see that you are getting what you are entitled to?

    • Anonymous
      Posted November 12, 2015 at 8:29 pm | Permalink

      BigNeil – The state pension is being called a ‘benefit’ in the news today, yet again.

      No.

      Something you’ve paid for all your life is NOT a benefit.

    • APL
      Posted November 13, 2015 at 12:36 pm | Permalink

      Bigneil: “Whereas I could jump out of a lorry – contribute nothing, hide my real identity ( possibly due to criminality ) .. ”

      Trying to get into the country through clandestine means is the very definition of illegality.

      Forcing through weight of numbers as we’ve seen on the borders of East Europe is, well .. an invasion.

  9. alan jutson
    Posted November 12, 2015 at 8:18 am | Permalink

    Certainly agree Mr Osbourne needs to look again at the tax credit system, will be interesting to see what his new proposals are going to be.

    I see a certain Mr Brown in a speech yesterday, said any cuts to tax credits was morally wrong.

    He still does not get it does he, no wonder we are still in a mess after 13 years of him in charge of the finances.

  10. Old Albion
    Posted November 12, 2015 at 8:37 am | Permalink

    Imagine how much better the employment figures would be, if your government hadn’t allowed millions of immigrants to stroll in unchecked.

    • A different Simon
      Posted November 12, 2015 at 12:01 pm | Permalink

      Mr Mandelson’s term describes the situation more accurately than “allow” :-

      – “Send out search parties to find them”

      Ashcroft has told us that Osborne is a big believer in mass immigration . Really hope he is never Prime Minister .

  11. JoeSoap
    Posted November 12, 2015 at 8:48 am | Permalink

    “It is not just a question of big investment programmes; it is a question of managing them better.”

    Yes, and not only investment programmes, also current spending. We seem to be terrible at managing the NHS, as well as the railways, police, tax and other public services. For all the moaning about cuts, people are beginning to realise that organising things properly is the key, not just more money. The pay-offs for NHS, Police etc staff which appeared in the press recently are just symptomatic of the government’s will to spray our money at a problem rather than tackle it on an organisational level.

  12. Ian wragg
    Posted November 12, 2015 at 8:54 am | Permalink

    2.1 million more in employment since 2010. About 70% of them foreigners. Given you have increased the debt by half a trillion pounds and increased the population by 2 million it’s not surprising we are growing.
    Double the population, double GDP or so Gideon thinks
    When will it all stop John. The pretence that we are doing so well when it’s built on such shakey foundations.
    If we’re doing so well why aren’t tax revenues soaring. Why aren’t benefits dropping. Something doesn’t add up.
    I saw the BBC pushing the need for curry house chefs from Asia. Given that most of these places only last a few months before closing I think this is a clandestine route for immigration.

    Reply Tax revenues are rising. Benefit expenditure is up because a lot of benefits are either paid to people in work or to pensioners.

    • Ian wragg
      Posted November 12, 2015 at 11:56 am | Permalink

      Pensions are not a benefit, they are taxable and I paid 50 years national insurance 24 of which was solely for pension.
      I had to pay privately for my wifes operation and was not entitled to any benefits for 24 years.
      Strip out the pension and see how much of the increase is down to those 75% immigrants which have joined our workforce.
      How many more teachers, police, health workers have we provided to cater for the extra 5 million bodies you’ve imported.

    • graham1946
      Posted November 12, 2015 at 11:58 am | Permalink

      reply to reply.

      When you say ‘benefits paid to pensioners’ I sincerely hope you don’t regard pensions as a ‘benefit’ and would welcome your denial of that particular calumny which is slowly gaining ground in political and media circles and is regularly now uttered on tv and radio. Pensions have been paid for and therefore are hard earned and are actually very poor value and are taxed – benefits are not necessarily earned or taxed.. If the amount paid in for pensions had been properly invested instead of squandered, the current pension of less than £6000 would be three times higher than it is, notwithstanding poor annuity rates. Such ‘benefits’ as pensioners may get (bus passes, tv licence over 75 etc) are merely sops to hide the way pensions have been poorly handled by governments and should not be necessary had politicians had a clue about running the economy, instead of constant fire fighting and voter bribing.

      Reply NO I did not mean the pension, though that too is going up.

      • graham1946
        Posted November 12, 2015 at 3:38 pm | Permalink

        Thanks for that, John.

        Though I am bound to point out that it is not the view of your government’s officialdom.

        When I receive a notice about my pension from the DW&P and even, I think from HMRC, they refer to it as a ‘benefit’.

        I guess this is all the softening up process to denigrate the elderly.

      • ian wragg
        Posted November 12, 2015 at 4:57 pm | Permalink

        Then you wonder why politicians aren’t trusted. Wait till a few years down the line when pensions will be means tested and all the workers won’t qualify but the dole dodgers and various imported varieties will get their weekly fix.

        • graham1946
          Posted November 13, 2015 at 11:14 am | Permalink

          Ian, this is what I mean by softening up to denigrate the elderly. For this parliament CMD painted himself into a corner when he said he will stick to the current rates of increase etc. but I am worried about the next parliament. By then most of the options for cutting will have gone and they still will be in deficit so it will be the old ‘uns then and despite what some people think and say, the majority of pensioners are not wealthy and form the biggest poverty group, though this is not counted. They are the ones who die of the cold each year to the tune of 25,000 premature deaths. This ‘calling pensions ‘benefits’ is all part of the plan I reckon.

    • Anonymous
      Posted November 12, 2015 at 8:39 pm | Permalink

      Reply to reply: Is a long term unemployed person who goes beyond retirement age re-classified as a pensioner ?

      As Graham says:

      People who have paid their stamp are not in receipt of a ‘benefit’. They are getting a pension that they have paid good money for.

      Those that have not paid the appropriate stamp should NOT be called ‘state pensioners’ – they are, indeed, benefit recipients and should be added to the unemployed stats.

  13. David
    Posted November 12, 2015 at 8:55 am | Permalink

    The Government is absolutely right to cut tax credits – people get too much at the moment. What they should do is include them in the benefit cap and offer people US style workfare if they are part time workers /don’t work at all.
    Sadly I fear US style workfare would be difficult to do on a national level.

  14. Alan Wheatley
    Posted November 12, 2015 at 8:58 am | Permalink

    I agree the news is good.

    But long gone are the days when women retired at 60 and men at 65 – so nowadays just what is meant by “working age”? And of the “2.1 million more people in work than in 2010”, how many are of “working age”?

    Further, the concept of a “working age” has long been obsolete. Increasing life expectancy means that to retire at a specific age is an invalid concept. The failure over decades to realise this has given rise to increasing problems, such as with pensions.

    It is an inevitable fact that, in general, the longer you live the longer you have to work to achieve a comparable standard of living in retirement.

    Reply People still use the State retirement entitlement age, and many still do retire at that age.

    • Alan Wheatley
      Posted November 12, 2015 at 12:39 pm | Permalink

      Re Reply: Indeed. And the freedom so to do is a good thing, helped by sensible changes to pensions regulations that enable people to take their pension at a time of their choosing.

      But that does not answer the question of what is meant by “working age”. Does it mean between 18 and 60? With increasing life expectancy the upper limit of any notion of “working age” must rise accordingly.

      Does the 2.1 million more people in work include those above 60 who, for one reason or another, are working?

      And as Christopher Houston pointed out above, what about the unemployed? I can remember when unemployment went above one million and the enormous row that erupted as a consequence. But these days who cares? And it does not help that there are many voices on the media praising the value of immigrants and how important they are to our nation while ignoring 1,700,000 British citizens who are without a job.

  15. David
    Posted November 12, 2015 at 9:03 am | Permalink

    There are some examples of how bad tax credits are here
    http://moneyweek.com/merryns-blog/the-truth-about-tax-credits/
    I don’t know why George Osborne etc didn’t quote this.
    “it is entirely possible for a family on tax credits to work very few hours a week but still take home an income similar to that of a junior barrister or doctor”

  16. Bert Young
    Posted November 12, 2015 at 9:16 am | Permalink

    Establishing a minimum wage is a mistake . It is one thing to have an artificial cost of energy to contend with and another an artificial cost of labour . If the labour market is competitive ( in a growing and vibrant economy it is bound to be ) , then obtaining labour ought to be left to open market conditions . The manufacturing sector has enough to contend with trying to compete with low priced imports ; adding a higher wage cost factor without a commensurate improvement in productivity , is a road to failure .

    Osborne’s attack on the benefits system and all of his targets to achieve a balanced economy are commendable , however , he has to take a deeper breath in the time scale he has set . The real world is not one that exists in a paper model , it is one that is based on history and enviromental factors ; the care home faced with an extraordinary feature of labour cost is bound to look at all its means to stay afloat ; equally the NHS cannot absorb additional labour costs without other forms of compromise .

    The concluding paragraph in the blog today sums up the challenge of the direction to be taken very well .

    • Anonymous
      Posted November 12, 2015 at 8:53 pm | Permalink

      Bert – I (reluctantly) agree that a minimum wage is wrong (as are in work benefits)

      We should face the cold reality of what we have done and let the full effects of mass immigration (the impact of supply and demand on our work force) determine real wages.

      Wc can’t continue to have it both ways. Mass immigration AND high wages. That way lies catastrophic national debt.

    • Bazman
      Posted November 14, 2015 at 12:10 pm | Permalink

      No minimum wage and no benifits would have seen civil unrest. Why should the population face the red claw of capitalim and an elite plundering the system. Massive unemplyment and the most desperte working for food money. Dingbat economics.

  17. Posted November 12, 2015 at 9:20 am | Permalink

    Any celebration of all this good news is severely blunted by the fact that such a high proportion of the jobs have gone to migrants rather than from our bank of unemployed people who we that are working and paying taxes have to continue to provide benefits for.

    While on the subject of benefits, Gordon Brown was profoundly wrong in introducing tax credits as anything other than a temporary measure. Even though the bill has risen to £30bn pa, his speech, this week, demanding that the system should go unreformed proved that, despite his utterly disastrous years in 11 and 10 Downing Street, he has learned nothing whatsoever about prudent financial management.

    But, just as tax credits enable employers to offer rates of pay that are insufficient for a family to live on, allowing unlimited numbers of EU migrants into the country removes the necessity for employers to train up those currently unemployed to fill their vacancies.

    There is also a moral dimension to these policies : Countries like Poland need their brightest and most capable young people to fill important jobs in their own economies. Instead, they come here to work in low grade jobs like our local hand car wash where they can earn more money because of tax credits and can claim our higher levels of child benefit which they can then send home.

    But probably the most extreme example is the totally immoral practice of the NHS being allowed to recruit nurses from third world countries whose sick and infirmed have far more need of them than we have. Politicians should have ensured that the NHS planned ahead and properly recruited and trained people within the UK to do these jobs.

    I’m not blaming private sector employers. Politicians set the framework in which businesses and the NHS operate and it’s politicians that have, for example, saddled the UK steel industry with impossible energy costs. So responsibility for the resulting loss of jobs lies with them.

    Camerons pathetic “renegotiation” will achieve nothing of substance and, in particular, it will fail to address inward migration. Workers will continue to flood into the UK to take up jobs and in-work benefits which should really be going to our own unemployed with their new employers contributing to the cost of retraining them.

    It can be done : Japanese car manufacturers in Sunderland and Swindon have shown what you can take both young and middle aged workers from older, obsolete industries and retraining them to successfully do modern, high tech manufacturing jobs.

    • stred
      Posted November 12, 2015 at 12:29 pm | Permalink

      ChrisS. Your entry sums up most of the mistakes being made. One of the things that makes me despair is that government spending such as the £3bn? being given to redundant steelworkers, who made rails for our expanding railway, will count as GDP. They will probably convert to work in retail and cafes, while Chinese rails will be imported.

      Meanwhile, NHS trusts are cash strapped after paying high charges for PFIs and this new version of Gordon has decided to build power stations through Chinese Finance Initiatives by promising double cost, inflation linked electricity. He is also hoping to use this method to pay for the £60bn or probably double HS2 non return project, while proposing HS3 to run commuters around in his Powerhouse. One disaster after another.

      • Posted November 12, 2015 at 8:51 pm | Permalink

        Stred, we should both be in politics.

        But our ideas are just too sensible that nobody would listen !

      • Bazman
        Posted November 14, 2015 at 12:28 pm | Permalink

        If the Chinese are willing to make steel for us at below economic cost and cost to the environment and local pollution then we should we not welcome it? The steel workers are in the wrong job. Sack em’ all without redundancy and use the money saved to reduce the tax burden on the rich freeing up the economy and creating real jobs.

    • John C.
      Posted November 12, 2015 at 7:05 pm | Permalink

      Chris S. Your words should be printed out and distributed to every household in Britain. You sum up the whole immoral con trick perfectly.

    • Anonymous
      Posted November 12, 2015 at 9:07 pm | Permalink

      Chris S – The NHS did plan ahead.

      The ANZACs recruited our medical staff as immorally as we did Poland’s.

      We are being told that we should work harder and smarter and yet the TV show Wanted Down Under shows us a life of wealth, ease and leisure to which our professionals flee.

      There is (or was) another way but we were lied to.

      • stred
        Posted November 13, 2015 at 10:33 am | Permalink

        One of our daftest policies is to insist on expensive degree qualifications for nurses, while recruiting from countries where nurses can qualify without having to learn all the theory and write long essays. The numbers of British young people wanting to learn nursing exceeds places by something like ten to one. Yet, the NHS lets the unions play the scarcity game and ‘raise the status of nursing’. Perhaps they are afraid that, as with other professions which promoted ‘technicians’ to do the donkey work, the ‘technicians’ would pinch the work from under their sniffy noses. How many essays does it take to learn how to wash a patient’s backside or help them wash pills down.

        The NHS could easily introduce in work courses for SEN type nurses and have plenty of willing English speaking applicants. But they don’t because nurses and doctors have their placemen and women in the ministry. The latest lunacy is that the police are trying to make all plodding degree level. It’s the ones who have degrees that keep finding silly things to do, in my opinion.

  18. oldtimer
    Posted November 12, 2015 at 9:35 am | Permalink

    The tax credits saga suggests that someone failed to examine the perverse impact the changes could have at the micro level. This is typical of this and earlier Chancellors. It is typical of an overly complex tax and benefit system. It also exists in relation to legislation on the taxation of income and capital gains arising from investment. I can think, off the cuff, of at least six different regimes, and there are certainly more. This is both absurd and grossly inequitable. Too much time is wasted navigating and avoiding the worst tax pitfalls of these regimes and not enough researching investments which will be fundamental to our future.

  19. Bill
    Posted November 12, 2015 at 10:03 am | Permalink

    Agree. We have been a trading nation ever since we learnt to built seaworthy wooden ships. We need to produce things we can sell overseas and we need an educational and infrastructural system that will ensure the services we offer are competitive. We have the golden advantage of our language that is spoken or understood worldwide. We simply need the conditions to allow burgeoning trade and to remove the burden of socialist dogma from public discourse. Yes, we need to take care of the poor and needy without treating them in such a way that they lose self-respect. But taking care of people and inculcating a sense of entitlement are not the same things.

  20. MickN
    Posted November 12, 2015 at 10:03 am | Permalink

    Off topic John but I have just heard it reported that David Cameron is not able to attend the EU leaders conference and ” the UK is being represented by the leader of the Netherlands”
    What the hell is that all about??
    Do we have no-one from our own country to “represent” us?
    Since when did the UK have to use leaders of OTHER countries as OUR representatives?

    Reply There are too many EU meetings – Ministers are run ragged and it impedes doing the day job in the UK. Mr Cameron has to host the Modi visit. I don’t know who is standing in for him. The EU debates seem to be more about Schengen which we don’t belong to.

    • lojolondon
      Posted November 12, 2015 at 11:03 am | Permalink

      John, I do not accept this. How can a person who does not agree with British politics represent Britain? What great wins will he negotiate for us? Why is another British politician not representing us? Will Merkel and Hollande represent themselves, be represented by another ‘local’ elected politician or be represented by another country? I am afraid that this doesn’t wash, it is unacceptable on every level.

      • John C.
        Posted November 12, 2015 at 7:10 pm | Permalink

        I fully agree. I heard the news with some astonishment. We have more politicians and bureaucrats per head of population than anywhere, and we cannot represent ourselves at a major E.U. conference?
        And then we are told that we must remain in the E.U. to have a say and a seat at the top table? It beggars belief.

        • alan jutson
          Posted November 12, 2015 at 10:34 pm | Permalink

          John C.

          You describe perfectly the Politicians logic.

          Its the politics of the madhouse.

    • Brian Tomkinson
      Posted November 12, 2015 at 2:01 pm | Permalink

      Reply to reply,
      Suggest you take a little more interest if you don’t know who is representing our country at an EU Council meeting. Who deputises for Mrs Merkel if she can’t attend?

  21. Iain Gill
    Posted November 12, 2015 at 10:08 am | Permalink

    The employment figures need a little more analysis. Something like 75% of new jobs have gone to immigrants. A high percentage of new jobs are part time jobs, where the employee would prefer full-time but can find nothing else. With things like this in mind these figures do not reflect a successful economy run for the benefit of the British people. The ongoing off-shoring of British jobs isn’t good either.
    The problem with benefits and tax is that they are far too complicated. Far too much money is taken in administration of the tax and benefits systems. Politicians endlessly meddle and change the goalposts when what is really needed is a radical simplification of the system.
    The incentives to “do the right thing” are not there.
    The benefits and social housing systems also encourage poverty by putting pressure on people to stay in locations where there are no jobs for them. When really we should be encouraging workforce mobility.
    Our sink estates are a state manipulation. These areas were once “salt of the earth” areas, where the population worked in shipyards, mines, steelworks, and so on, but as these large employers have shut the large populations have been kept in the area by the state when there is no realistic prospect of anything emerging needing that size of workforce locally. Keeping such populations on out of work benefits, or minimum wage jobs in the local burger bar topped up with in-work benefits, is a waste of our tax spend, we would be better helping them move to other locations with better jobs prospects.
    The sink schools are still there. No sign of them improving. A bigger cause of poverty than anything else in this country.
    The labour party should be challenged about what they think should happen to the sink estates and the sink schools. Keeping pumping money into them endlessly is not working.
    As for the chancellor he needs replacing with someone who has some experience in the real world.

    Reply Most of the jobs are full time, not part time. The government does have an energetic programme to challenge and improve poor performing schools.

    • Iain Gill
      Posted November 12, 2015 at 11:28 am | Permalink

      I am sure right now the PM and Chancellor will be promising more visas to the Indian delegation being shown the red carpet, and more smoothing of the way for exporting even more British jobs to India with outsourcing and all the rest of it, and handing our best intellectual property over for them to undercut us. Where is the government fighting for the British people exactly? How stupid we must look.

      Come on let me take you round a sink school? Not in leafy Wokingham but in the sink estates of the North East? Decades of government promises have produced no improvement and the parents still have no choice in the matter. Our ruling class would rather import large workforces than educate and train our own people, the evidence is there for all to see.

      Reply What further action do you want them to take? The aim of policy is clear – to raise standards and offer more educational opportunity. Poor performing schools in poor performing areas usually are sent more money to help them.

      • Iain Gill
        Posted November 12, 2015 at 1:06 pm | Permalink

        On the sink schools give the parents buying power to take their business elsewhere, and give them the buying power to take their housing subsidy away from the sink estates to places closer to the modern jobs market. Free individuals up to make common sense decisions, and let them voting with their feet close the worst schools and sink estates. Accept that consumer buying decisions are a better force for good than top down state control, in schools and housing as much as anything else.

        On India no more intra company work visas, no more entry for skills already in oversupply, no free nhs or schooling to their nationals here, make their big companies pay tax here and not in havens, remove the exception from national insurance for workers here for the 1st 12 months, no expenses tax exceptions that Brits working away from home within the UK cannot get, pro rata tax allowance with amount of the tax year they are here, no more indefinite leave visas or British passports simply for being here a while, no right to work for student visa holders, no more allowing them to take 5 years to do a one years masters course just to get the visa cheaply. Stop them getting our best intellectual property, and start fighting to keep it. etc ed

    • Qubus
      Posted November 12, 2015 at 5:59 pm | Permalink

      I have always had my doubts about Mr Osborne; I do not really think that he has a sound understanding of economics.

    • Anonymous
      Posted November 12, 2015 at 9:14 pm | Permalink

      Iain – I’d agree with you if you’d said ‘greatest cause of *spiritual* poverty’ because the sink estates that replaced industrial towns contain housing of a better standard and better appointed than anything that the workers aspired to.

      In many ways we are still subsidising industries that no longer exist.

      And it is this insanity that causes pushy young men to mass at Calais for a bit of it.

      • Iain Gill
        Posted November 13, 2015 at 11:19 am | Permalink

        Its only the last 50 years or so that governments have manipulated society to encourage people to stay in geographic locations with insufficient jobs for the size of the local population. It is that very manipulation which is the problem. The people left to their own devices, with a neutral or better set of carrots and sticks for moving, would move and optimise themselves closer to realistic jobs prospects.

  22. beecee
    Posted November 12, 2015 at 10:08 am | Permalink

    I read today that some 75% of the 400,000 plus new jobs in the past year were taken by EU migrants. This ongoing threat to the job prospects of the indigenous population is not being addressed by Mr Camron in his ‘negotiations’ with the other EU leaders.

    I do agree with you Dr Redwood that preserving the benefits of existing recipients whilst seriously curbing them for future ones is both prudent and sensible.

  23. Martyn G
    Posted November 12, 2015 at 10:28 am | Permalink

    All that you say makes complete sense, John but your “It is not just a question of big investment programmes; it is a question of managing them better” is surely one key area where it is so often seen that real management skills are lacking at all levels across public service, national and local.
    Time after time we read of clearly inept managers on extraordinarily high salaries either being pushed out with huge redundancy payments, or jumping ship before being pushed, only to reappear elsewhere and often at a higher level of salary, probably to repeat their poor performance before recycling themselves elsewhere again.
    It seems to me that the people who gain these highly paid management positions are appointed because they have the inestimable benefit of knowing and and being known to the people in a position to make these appointments. In other words, politics, being on message and belonging to the right group is more important than ensuring that only people with the essential management skills needed for major projects are appointed on merit, not influence.

  24. Ex-expat Colin
    Posted November 12, 2015 at 10:33 am | Permalink

    “There will have to be a lot of work on energy, because we will need cheaper and more energy: as the march of the makers begins and the northern powerhouse cranks up, more electricity and more gas will be required”.

    Steel trains dramatically reduced near me (w.mids)….so what will change fast to correct that? And the knock on effect.

    How many people with 2 or 3 jobs/day?

    Get out of the EU and get busy…

  25. Atlas
    Posted November 12, 2015 at 10:41 am | Permalink

    I agree with your analysis John – especially the part concerning tax credit changes. We’ll have to wait to read what Osborne proposes…

    Off topic: I trust that as somebody who is cautious over the claims about man-made climate change, you will view the Met Office’s starting to name big storms with a little suspicion – given the timing. Is it a coincidence that with Paris talks looming the Met Office starts this? Are they trying to spin that things are getting worse (even if they are not) when it comes to storms by naming them?

    Reply There does seem to be a new concerted BBC drive on global warming theory.

    • stred
      Posted November 12, 2015 at 12:07 pm | Permalink

      Today, it was wake up to Breakfast and coastal erosion as sea levels rise. The National Trust says we should ‘go with the flow’ and intelligently follow nature, as do the Environment Agency boys and girls. Perhaps let the best farmland in the Wash and become salt marsh?

      Sea level has been rising for a long time by about 3mm a year. Tidal markers give a record all over the world. However, some satellite data found a slight increase much more recently and this, together with estimates resulting from temperature estimates, have caused the head of the Met Office to talk about a 2 or even 3 ft rise this century. Conclusion, ignore the Dutch and withdraw, creating a wonderful environment for waders.

      • The PrangWizard
        Posted November 12, 2015 at 12:35 pm | Permalink

        We should do what the Dutch do, and are doing; reclaim land from the sea, there are plenty of areas where we could and should do it. The idea that we should let the sea reclaim the land is the thought of a warped mind.

        • Leslie Singleton
          Posted November 12, 2015 at 3:26 pm | Permalink

          Wizard–Totally agree–Far too much is heard about how difficult it is. The Victorians when they were building new seaside resorts put up when necessary massive and sufficiently strong sea walls which are very much still there. Or could build a wall out to sea as with the Swansea tidal scheme but then fill it in. Do this all round the coast et voila. Somewhere to put the net inward migrators. A bit more seriously, what do the Dutch do, or how are their conditions so different, such that we cannot reclaim land from the sea as they have done and do? On any basis could do a lot for the cost of HS2, which latter doesn’t even have the basic common sense involved as to be attached to HS1.

          • alan jutson
            Posted November 12, 2015 at 10:39 pm | Permalink

            Leslie

            I agree, better to pay people to work on saving our coastline than pay them to do nothing, they could even learn a trade at the same time.
            You could even call it a type of National Service, to give the Country security from the sea.

  26. Antisthenes
    Posted November 12, 2015 at 10:50 am | Permalink

    Employment news is not going to look so good after the new minimum wage level is introduced. The least skilled workers and therefore the poorest people are going to find that they are not going to be able to enter the work place unless it is in black/grey economy. Some of those currently employed will be laid off. A politically good idea to steal the lefts thunder but a poor economic one. Services some of which the public rely on which in turn rely on lower paid workers are going to be forced to close or rely on more of tax payers money to stay open.

    In work benefits and many out of work benefits have to go. People and businesses have to be able to stand on their own feet and either succeed or fail that way but it will have to be over time. On the face of it Osborne has made a mess of taking the first steps in achieving that with his tax credits policy. He or probably someone more competence should not give up but devise better ways of reducing dependency and ultimately perceptions on what entitlement should cover. Not very much.

    Energy policy is a mess and very damaging and unless more economically sound ones are implemented and as all governments are not singing from the same hymn book then some countries are are going to be worse off and some better off. The worst off currently is the West and the worst off of the worst off are members of the EU.

    It may be a deliberate plot in that it gives advantage to developing countries allowing them to catch up with the West industrially and thereby improving their economies. I am not a conspiracy theorist so I do not believe it is deliberate just a side affect of bad energy policies. The upside is that the consumer will benefit from cheaper goods from abroad. The downside is that consumers and/or taxpayers are going to find prices for energy from domestic suppliers for ever increasing and energy reliability for ever decreasing.

  27. lojolondon
    Posted November 12, 2015 at 10:59 am | Permalink

    Dear John, I am totally, utterly against tax credits.

    I firmly believe that Tax Credits were created by Gordon Brown in a response to the valid charges that Labour is the party of ‘tax and spend’. The effect of ‘tax credits’ is to utilise negatives on the balance sheet to falsely reduce the recorded level of taxation, at the same time falsely reducing the level of welfare spending. I feel tax credits are dishonest to the core, and should be halted immediately. Taxation and benefits should be honestly applied, recorded and reported.

    • Bazman
      Posted November 14, 2015 at 12:34 pm | Permalink

      The workforce presumably working for whatever the market pays without minimum wage? Should they accept this poverty? Oh! The market would right itself and cleaners would make more money as profits rise for cleaning companies? Thick nonsense or wilful ignorance at best.
      Maybe if they had more jobs that enabled them to rig markets, pay no tax, run scams and various other methods of ‘wealth creation’ and massive subsidy they would not need tax credits?

  28. fedupsoutherner
    Posted November 12, 2015 at 11:24 am | Permalink

    There was an interesting interview with an illegal immigrant from the Sudan who was smuggled into Britain a few years ago. He said the money the EU is going to throw at African leaders will be wasted as they will only spend it on arms. If this happens then the situation in African countries will get worse and more will continue to come to Europe. So they cost us over here and they cost us more over there. This and tax credits must stop.

  29. Cheshire Girl
    Posted November 12, 2015 at 12:18 pm | Permalink

    The Chancellor did say that Britain deserved a pay rise, but that pay rise was expected to be paid by employers and not by the Government. Just saying……

    • A different Simon
      Posted November 12, 2015 at 7:54 pm | Permalink

      I hope the Chancellor was not including himself when he said “Britain deserved a pay rise” .

      • Cheshire Girl
        Posted November 13, 2015 at 5:19 am | Permalink

        Let’s hope not, as the Politicians recently ‘accepted’ (under duress of course) a large pay rise of eleven per cent. How this could be justified in the present climate, defies belief!

  30. ian
    Posted November 12, 2015 at 2:06 pm | Permalink

    Ideological drivel and dogmatic propaganda, brainwashed,
    What that means is you do not listen to people, you just spout party propaganda, that why this country is in a mess and the rest of the country in the world.

  31. Brian Tomkinson
    Posted November 12, 2015 at 2:08 pm | Permalink

    JR: “Now it is important that the government builds on this success, and comes back with revised proposals on tax credits.”
    Why is it that Osborne (who we are told ad nauseam is such a brilliant politician – which strikes me as worryingly absurd) needs to be always revising what he proposes? Don’t tell me he is listening – he is useless.

  32. JJE
    Posted November 12, 2015 at 2:39 pm | Permalink

    I have an idea for the Prime Minister and/or Cabinet Office to pass on to Oxfordshire County Council.

    They could stop their 50+ year opposition to a third bridge over the Thames at Reading and allow some development in their adjacent territory to the south of the county. This would generate extra income to help them balance their books.
    Their nimbyism comes at a price.

  33. ian
    Posted November 12, 2015 at 3:56 pm | Permalink

    As the government spending go up by 10 to 20 billion a year to employ people on jobs that are not needed for 100,000 to 1,000,000 pounds wages, just so they can say, tax take up on employment and more full time job.
    That’s propaganda Using the people taxes to make the books look right and to say everything is great.
    I thought labour party was bad for waste but think the con party is going to pip them at the post.
    The thing is they do not care how they get the money into the economy and who they take money from because they have no plan, the northern powerhouse plan as it is, is all base on council workers pension, they call it the six regions. That how bad it is, everything has to come out councils workers pensions, wait to big business gets it hands on that with open ended contracts with quangos dolling out the money and contracts to big business and china, As usual a big boom lots of thrown a round the place and 5 year late back to square one and nobody has asked the council workers if they wish their pension money to be used in that way because the risks are high and returns are way in the future that’s if you get a return at all. Most of the money will go to office staff on every high wages and pension that will protected and big business jolly.
    What it is, is bailout with councils workers pension funds and selling or giving away council homes to try to save money on the housing credits but working credits have not workout so far.
    Like I said awhile back last chance saloon.
    that’s my wet&mad says it will not happen on his watch but on the person watch following him.

  34. Antisthenes
    Posted November 12, 2015 at 4:41 pm | Permalink

    On the jobs front Cameron and Osborne are doing sterling work. Not just at home. Cosying up to China and India will eventually reap enormous trade benefits that will translate into jobs.

    It may all be for nothing if two groups the EU and indignant moralists decide that their interests are under threat. The former may feel that the UK is getting a better deal out of it than them and as they ultimately have control over all external EU trade will find ways to disadvantage the UK(it does appear that they are doing this regularly already). The latter of course insist that we put human rights above the prosperity and the well being of the citizens of our country(what about their human rights) and their are enough loony lefties and bleeding hearts to influence that we do.

  35. RB
    Posted November 12, 2015 at 4:42 pm | Permalink

    What was Bercow doing emphasizing that India must respect “orientations” while we sit Chris Bryant on the front row to glare at him? Yet again promoting gay rights is the new evangelicalism. How deluded the political class are.

  36. Brian Tomkinson
    Posted November 12, 2015 at 4:59 pm | Permalink

    Three out of four jobs went to immigrants.

  37. ian
    Posted November 12, 2015 at 5:02 pm | Permalink

    The government is not worried about losing the money in council workers pension funds because they can pay the pensions out of revenue like they pay their pensions from the treasury, from the council tax and send you the inflated bill, like your inflated energy bills.
    I can see more tax increases coming to try to fill the never ending black hole called deficit.

  38. ian
    Posted November 12, 2015 at 6:00 pm | Permalink

    In 1979 big business done a deal with con party for all government assets to be sold off and people to become shareholders and house owners and big government industry to be shutdown and the people up north to be compensated with full sick benefits for life, and con party admit nothing about today. by 1989 it all went tits up.
    In 1996 Gordon and tony done a deal with big business which was all in the press but not the detail of the deal, 1 banking regulation gone 2 European workers from the east and west and border controls down. 3 working tax credits and housing credits to bring down their costs and more subsidies for business.
    By 2007 it went tits up again after winner three elections.
    Now big business and the con party doing another deal in 2015 with council pension and housing and what ever else they can get like subsidies.
    I should think it will last as long as the other deal around 6 to 7 years.

  39. DaveM
    Posted November 12, 2015 at 6:15 pm | Permalink

    I think we knew that anyway! But the good ole BBC is in full pro-immigrant mode at the minute.

  40. fedupsoutherner
    Posted November 12, 2015 at 8:25 pm | Permalink

    Just heard the news that thousands of HMRC workers are to be made redundant. That will really help – not!

  41. turbo terrier
    Posted November 12, 2015 at 8:26 pm | Permalink

    but to allow those already in receipt of benefits and relying on them to continue drawing them until their circumstances change.

    I don’t think that relying on people that are on tax credits to the equivalent of £40K according to the link provided by David today are in any great rush to get off of the gravy boat.

    Some things in life are hard very hard like working past 65 just to pay the bills but cases like this have to be stopped, it is those that really need the help that get hit the hardest as they get painted with the same brush.

  42. Jon
    Posted November 12, 2015 at 8:43 pm | Permalink

    Yes very good blog as always.

    We do indeed need to be careful what statistics we are looking at.

    I would say the employee with no control over their hours, work and wages needs a pay rise, yes. However, does the consultant who chooses to work Tuesday to Thursday for lifestyle reasons need a pay rise?

    There in I think lies our productivity issues and anomalies.

    Unfortunately those stats mean the workers get a lower % pay rise as a result because of lifestyle choices of the higher earners.

    I think what we have been seeing is the £50 – £100 k earnings group choosing to remain on that salary level and rather than working for more money choosing to work 3 or 4 days a week instead.

    I am seeing this myself and no wonder, it’s not a bad salary level, especially with tax credits for those eligible. Choosing to have time at home.

    Productivity has not gone up, the 5 day a week contracted workers are paid relative to average salary. They loose out here, yes a payrise is needed.

    The private sector does of course adjust and I am seeing that too as well. The base 5 day a week contracted worker looks better on a spreadsheet. The high paid lower productivity ones on 3 day a week look expensive.

  43. ian
    Posted November 12, 2015 at 9:19 pm | Permalink

    All they all worry about is the 5th biggest economy in the world to which they cannot afford, and from 5th to be 4th, that means unbridled spending on anything you can think of, also to push prices higher and higher with nothing fixed in the economy.
    Its the worst management you will ever come across
    Just waiting now for the flood of immigrant to come to take up the jobs less tax to pay.

  44. Posted November 13, 2015 at 1:21 am | Permalink

    There will be more than few people thinking along the lines that as they haven’t had any pay rise at all in recent times, that if the average increase in pay is 3% then there must be some mysterious group of people who have had bigger pay rises that that.

    If inflation is 0% and the average pay rise is 3% then what is happening to that extra 3%. It could be saved in which case there would need to be no extra production or extra imports. But this is not the case. There is actually desaving going on in the economy as can be seen from the following graph. It’s from a TUC source which might cause some to doubt its accuracy – but I would say it is correct.

    http://touchstoneblog.org.uk/wp-content/uploads/2015/11/fourblogs.png

    The graph shows an economy heading quickly for another crisis. The situation is worse than at the time of the GFC. The government’s deficit is not enough to cover the trade gap and the private sector are borrowing to make up the difference.

    The choices for the government are:
    1) Learn to love deficit spending. Do more of it.
    2) Do something to reduce the trade imbalance.
    3) Carry on with the present policies and crash the economy.

    • stred
      Posted November 13, 2015 at 10:12 am | Permalink

      Figures put on this blog last week showed than borrowing from industry and others was about one tenth of private mortgage debt. The official figures presumably calculate private debt by subtracting borrowing from value of assets. As house values have been driven up by cheap borrowing, financed by QE, what happens if there is a correction and this very large private debt has to be added to Gideon’s whacking great overdraft? We will be way below the rest of the world on the graph. At least the banks will not have the ‘Help to Buy’ negative equity to worry about, as he has given a taxpayer’s guarantee on properties up to £600k current value.

      • stred
        Posted November 13, 2015 at 10:15 am | Permalink

        Should be above the rest of the world.

  45. RB
    Posted November 13, 2015 at 4:02 am | Permalink

    Ideologically tax credits were a bad idea, but they needed to be phased out in a way that did not make the poor any worse off. Is that possible?

    Reply. yes – just takes longer to do

    • Posted November 13, 2015 at 6:25 pm | Permalink

      Reply to Reply:

      Yes it takes longer the end position is exactly the same.

      The problem with tax credits is they transfer the obligation to pay decent wages to the taxpayer rather than the employer. It’s a bit like tipping in a restaurant. On the one hand I don’t begrudge the staff a bit extra but on the other hand the net result of too much tipping is the situation we have in the USA.

      There the staff are paid a pittance by their employer. who then not only expects his customers to pay for their meals but he expects them to pay the wages of his staff too!

      • Bazman
        Posted November 14, 2015 at 12:40 pm | Permalink

        Its a subsidy for low paying employers. Use the word subsidy do not be afraid as you are not when it applies to anything else you do not like being subsidised.
        The tipping analogy is a good one. Many employers would like you to work for free and have a couple of quid chucked to you now and then. They do not get wages, so why do you need them? The fact that he is loaded is lost on him.

  46. Posted November 13, 2015 at 4:56 pm | Permalink

    Sorry to be a party pooper yet again but it is essential the Chancellor sticks to his fiscal targets, with a clear programme of deficit reduction. Therefore, anyone who doesn’t like the reductions to tax credits must propose alternative tax increases or public expenditure reductions.

    If any of the parties of the Left – Labour, SNP, LibDem, Green, Plaid Cwmry and SDLP – took office, they would be obliged to raise the standard rate of income tax to finance their big state, no matter how much they deny it.

    Conservatives will continue to took to public expenditure ‘cuts’ (i.e. public expenditure growing less than GDP). We fill find it impossible unless we are prepared to end ring fencing and also to ask the retired elderly (particularly baby boomers like myself) to share in the misery.

    ANY austerity measures will hamper the rate of economic growth in the short term, but that doesn’t alter the fact that they are needed.

  47. Bazman
    Posted November 14, 2015 at 12:56 pm | Permalink

    It will be interesting to see what the knock on effect of these tax credit and the reduction of disability benefits will be to the wider economy which are often spent very wisely and efficiently in the goods and services from private companies such as supermarkets utilities pubs and SKY TV Murdoch will not be happy and will be having a word about the Tories telling the poor to unsubscribe as often this is the first thing to be hit when the poor face more poverty. The match is always on in the pub!

  • About John Redwood


    John Redwood won a free place at Kent College, Canterbury, He graduated from Magdalen College Oxford, has a DPhil and is a fellow of All Souls College. A businessman by background, he has been a director of NM Rothschild merchant bank and chairman of a quoted industrial PLC.

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