Category: Social justice

Corbynism (or why Nuneaton has a point)

I think Jeremy Corbyn would be an electoral disaster for the Labour Party from which it would take at least 10, probably 15 and quite possibly 20 years to recover. Too many of his supporters seem either indifferent to electoral success or utterly unaware of what that requires – but they’re right that the rest of us haven’t talked enough about policy. So here are a few of my concerns about his policies.

Jeremy says some things I support but don’t believe the British people will currently buy (a clear defence of higher taxes, though not necessarily his specific ones). There are also some I support and think they might well buy (universal childcare). But much of Corbynism isn’t just unelectable, but ill-thought-through, impractical and downright wrong.

Housing policy

Jeremy is calling for rent controls, with rent levels fixed in relation to earnings. Sounds wonderful: so why doesn’t Shelter buy it?

If you just cap prices in a situation where you haven’t got enough of something and too many people want to buy it, odd things start to happen. In this case, lots more people might sell rather than buy. Granted, we’ve all been saying we want more people to be able to buy homes. But what happens to people who can’t afford a deposit (or the still-uncapped mortgage payments) if the rental stock reduces too rapidly and the total housing supply doesn’t increase fast enough to match?

Will landlords just become more discriminating about people’s characteristics rather than the price they charge (‘No DSS’)? Will they cut back even further on things like repairs? Or will they subdivide properties more and more? More nuanced policies might be a different story (look at the rest of Europe, or the 2015 Labour manifesto), but just legislating a problem of supply and demand out of existence won’t work.

Jeremy is also proposing to extend some kind of ‘right to buy’ to the private sector. First of all, that seems a very odd spending priority for housing: our primary problem is insufficient stock, so why spend however much money on yet more subsidised ownership? (And since people in social housing have lower average incomes than private renters who can afford even a discounted property, isn’t it an odd distributional choice too?)

Second, how on earth would you control the cost? Right to buy may have done great damage, but at least councils actually owned the asset which was being flogged off: here, the state would have to pay the difference to landlords. (I suppose we could theoretically just take people’s property and give it to someone else at an enormous discount. Good luck getting that past the European Court of Human Rights.)

Third, why would you ever rent out a property if you could have it taken off you at any time? Like it or not, plenty of people can’t or don’t want to buy: they need a reliable private rented sector. By all means talk about how to improve it. But treating private rent with such abandon could really harm people who desperately need somewhere to live.

NATO membership

Jeremy has said he wants to leave NATO – our principal defence guarantee. Right now, our ‘if all else fails’ policy is NATO and, via NATO, the US commitment to Europe. We know that Jeremy doesn’t intend to raise defence spending way beyond 2% of GDP – it’s just about the only thing he’d definitely cut. There’s arguably an implicit defence guarantee in the EU treaties, and we have a European Defence Agency to co-operate on procurement, but these are a) pretty vestigial and b) exactly the kinds of things Jeremy won’t want the EU doing (assuming we stay in: see below).

So, given the rapidly rising costs of defence, Corbynism is offering us a radically reduced domestic capability, the abandonment of our key security guarantee and no replacement for either. That is not a defence policy. It’s crossing our fingers and hoping everyone will be nice to us forever.

EU membership

Jeremy has said he wants to fight for ‘a better Europe’, though we still don’t have a definite answer on how he’ll vote in the EU referendum.

Labour should, apparently, set out its own position on reform negotiations – which is fine as far as it goes. But almost nothing on David Cameron’s shopping list is going to appeal to Jeremy – and I doubt anything on Jeremy’s list will appeal to Cameron. The only real question is how much further Cameron will succeed in taking the EU away from Jeremy’s ideal.

If Jeremy might vote No, what would be his alternative? The European Economic Area (most of the free-market regulations without any say)? A Swiss model (slightly fewer regulations, slightly more say, but not a model the rest of Europe will ever offer)? No deal at all (and new tariffs on half our trade)? What makes him think Britain would discover the joys of radical socialism after voting with UKIP? And how does it help climate change negotiations to weaken one of the better players in said negotiations?

Again, this isn’t a policy. It’s a vague statement that the EU should be different, with no route map to change it.

The list goes on. You can’t talk about a ‘wealth tax on massive incomes’, fail to recognise that wealth and income are different things, conflate annual wealth taxes with one-off windfall taxes and expect to be taken seriously. You cannot talk about £50 billion of uncollected tax as though you can easily collect it in one fell swoop and expect anyone to think your sums add up. You cannot describe ‘not reducing our deficit as quickly’ as ‘funding’ free tuition and expect anyone to trust you not to wreck the public finances.

We’re not the Green Party: we’re supposed to be choosing a future Prime Minister. You cannot ask to govern a country with policies like these – not because they’re unelectable, but because they’re unworkable. Nuneaton wouldn’t buy Jeremy’s pitch: but we shouldn’t even be trying to sell it.

Slipping behind: with benefit reform, keep an eye on the index

Historians generally agree that cutting back public spending is difficult in a modern democracy. Losers shout louder than winners; the most expensive programmes are generally the ones with the most interests behind them; radical cuts are more likely to provoke strong reactions. (Similar objections apply to tax rises, of course.) The current cuts are striking, not just in their sheer unprecedented scale, but in the extent to which they cut back on services on which a lot of people rely in a very visible way.

So governments have always tended to fiddle with the small print of tax and spending rules – it’s hard to twig exactly what’s going on, the consequences aren’t immediately clear and by the time the full impact is clear the deed will already be done. Freezing the basic-rate limit (or, in days gone by, the personal allowance) for income tax is a classic example. So, too, with changing the rules for calculating benefit increases.

Of course, the Government’s already played this game. Nearly £6bn of its £18bn of planned welfare savings come from changing the measure of inflation used in uprating benefits from RPI/the Rossi Index, depending on the benefit, to CPI (see p40 of the Emergency Budget). This is simply because small changes, repeated each year, add up. If you look at the chart here, the impact over a long period becomes very clear. Whether Gordon Brown specialised in stealth taxes or not, George Osborne certainly has a fondness for stealth cuts.

The exception to the rule is the Coalition’s ‘triple guarantee’ on state pensions, guaranteeing annual increases of the highest of an increase in earnings, prices or 2%. Of course, this will start undoing the work of the last Conservative Government, when it broke the link between pensions and earnings. The (clearly documented) consequence was that the basic state pension fell further and further as a share of earnings – from 20% in 1978 to under 15% by 1998; it has carried on falling ever since. That trend will now reverse over time; but note how differently a large, vocal, Conservative-inclined group is being treated from people on low incomes, with disabilities or in need of housing.

We need to spell it out: the decision to uprate benefits by CPI rather than RPI is a straightforward decision to make the very poorest people in Britain poorer. It hits people on Income Support, on Jobseeker’s Allowance, on Incapacity Benefit or ESA. As the Government are even cutting the link between Local Housing Allowance and rent levels, it will drive more and more people out of their homes: eventually, given long enough, it will make people out and out homeless. (This holds even if we ignore the effect of all the other LHA cuts.) The single biggest policy change, fiscally speaking, in the Emergency Budget and the Spending Review combined is a plain and simple cut to the incomes of Britain’s most disadvantaged inhabitants – one which will be repeated every year, until it changes.

That’s quite bad enough as it is, and it makes the Government’s claim that it’s determined “not [to] balance the books on the backs of the poor” look pretty hollow already. This September, the difference between CPI (5.2%) and RPI (5.6%) was fairly small, but the long-term effect will be dramatic. So for the Government to even consider ways of reducing the annual rise again, even for one year only, is a particularly nasty attack on the living standards of a lot of very vulnerable people. The reason inflation is high is that the cost of living is going up: a lot of that is to do with global food prices, which (as a relatively fixed cost) will bear especially hard on the poorest. When the IFS says that £1.4bn (out of £1.8bn) could be saved by averaging out six months’ worth of inflation figures, they mean that most of a badly needed boost to incomes for the very poorest people in the country could be removed.

If the Government want to argue that that’s justified, then I’d disagree, but it’s a point for debate. But they cannot then claim that they’re not “balancing the books on the backs of the poor”. As a matter of cold, hard, statistical fact – whether they go ahead with this one-off change or not – they already are.

Organise and divide? Belated musings after the J30 strike

One of the current Government’s core tactics, when it comes to steering through cuts, is defining different groups against each other. Whether it’s pitting private sector workers against the public sector, justifying cuts to housing benefit on the basis of unfairness to people in work or distinguishing deserving from undeserving social tenants, the Coalition understands the political gain of identifying a particular group, claiming that they’re gaining unfairly and then cutting in the name of fairness.

One nation social democrats?

Left-wingers have tended to argue against this kind of narrative, for obvious reasons. They reply that, even if ‘divide and rule’ sounds effective, it doesn’t cut much ice in a two-earner household where the only reliable pension is from the public sector employee, the family whose 20-something son or daughter is on ESA but whose parents are in full-time work or the low earner in London who relies on Housing Benefit to pay the rent. There is, of course, a lot of truth to this: the lives of people in different jobs, different housing tenures and different personal circumstances are often deeply intertwined.

Note, though, how much these examples rely on people’s own specific lives being intertwined. Not every public sector worker lives with, marries or relies on someone in the private sector; most families don’t have a member on ESA. In fact, assortive mating means that people are often likely to end up with people like them than not. (The overwhelming majority of people I know work outside the for-profit world – the state, political parties, universities, charities, NGOs … almost anything, in fact, but a private company.)

Partly as a result, many of these divides are more real than social democrats like to admit. In my own family, some of our most visceral differences come from the fact that I don’t work for the private sector, but my father does. Left-wingers’ own attitudes often contribute to those divides: in my heart of hearts, I know that I tend to place the public sector, its values and its ethos higher on my priority list and to treat it as an ethically better option. I’m not saying I should: I’m saying I recognise my own prejudice – and that it makes it harder, not easier, to win over people who do work in the profit-making economy.

Trade unions suffer badly from this – and it’s very hard for them to get out of the bind. It’s worth noting that, since May 2010, unions have been keen to ‘speak for society’ and to emphasise their role in defending public services. Unions 21’s new report highlights some of the problems they face presentationally, both through their own failings and through hostile reporting; but at least part of the problem is intrinsic. Trying to articulate the national voice is, by its very nature, going to be in tension with action on behalf of members’ specific interests: not necessarily in conflict, but in tension. When considering responses like the 30 June strikes, this is worth bearing in mind. The unions’ great opportunity is to be seen as on the side of the public; their great danger is convincing the public, again, that their powers need to be curbed.

Justice versus envy?

Left-wingers can also risk playing to the Coalition gallery in the way they talk about justice. Much of what we consider to be justice is, of course, decried by the right as the ‘politics of envy’ – when complaining about the super-rich, for instance. Now, of course, this is spurious: there is a distinction between saying ‘the wealthy in our society have too great a share of the wealth, while millions of people are in poverty’ and saying ‘I haven’t worked my way up the ladder, so I want to pull you down to my level’ – and if we can’t make that distinction, the debate about fair shares is effectively over. But, rhetorically and in the eyes of people less committed to our own values, the line is a hard one to police. Arguments about ‘reverse class war’ may make it more difficult, rather than less – though it’s important to remember that defining a privileged minority working against the interests of most people is a long tradition of the left, as well as the right (People’s Budget, anyone?).

This is part of the reason why, when dealing with tax paid by the wealthy, issues like tax avoidance are so useful. They tap into a very widely held view that the rules should be the same for all of us – providing a way of arguing for the wealthy to pay their share and binding us together, as a society. (Even Ted Heath talked about ‘the unacceptable face of capitalism’, after all.)  In particular, this argument helps to explain why focussing on paying due rates of tax, rather than just raising the rates, tends to have a wider political appeal.

All in all, I have more of a sense that there’s a problem than I have of the answers. But for what it’s worth, people on the left need to be aware that they too have prejudices in favour of particular social groups (maybe even vested interests … sometimes). We need to ask ourselves whether we make enough effort to engage with others – private sector workers in particular, who do after all provide much of the revenue for social programmes. We need to do more to connect campaigns to the wider good – where union campaigning can be linked to the interests of patients, pupils, parents and families, it should be. And we may even have something to learn from the language of one nation conservatism: it was, after all, Benjamin Disraeli who first talked of ‘two nations’!

Dear ministers: poverty generally means not having enough money

Yesterday’s furore over Nick Clegg’s former interns rather missed the bigger picture. Yes, it’s not on for MPs (Clegg is, in this respect, pretty typical) to hire de facto labour and not pay for it: equally, Jonny Medland’s tactics aren’t exactly edifying (it’s not as if he suffered from the experience). The Social Mobility Strategy seems to contain a number of reasonable-in-principle-but-less-than-earth-shattering initiatives, most of which have already been announced and some of which are new. Fair enough, to a point: all governments try to reframe a whole series of policy announcements from time to time, and goodness knows oppositions like to repackage old policies too. It’s worth pointing out that much of it rings hollow in the current climate (commitments to Sure Start would be a bit more plausible if Children’s Centres weren’t closing all over the country …), but few of us are going to argue against the general principle.

The Government’s Child Poverty Strategy was also published yesterday. Of course, it received much less attention: poor children are always of much less interest to the British press than who ends up interning for the Deputy PM. But a key strand running through it was a commitment to ‘broader’ definitions of poverty. This ‘broader’ definition seems to stretch through from access to health services to – you guessed it – social mobility and life chances. Frankly, the Government seems to be in serious danger of confusing the words ‘broader’ and ‘different’: throughout the document, we get references to opportunities, to generational cycles of poverty, to unfair educational outcomes – to anything, in fact, which avoids the question of whether poor families have enough money.

Perhaps I’m narrow-minded, but it seems to me that poverty has rather a lot to do with not having enough money. It’s all very well to say that poverty isn’t all about money or that poverty plus a pound doesn’t equal fairness (not a statement, I suspect, that anyone who finds themselves one pound above the poverty line would ever make) – but ultimately, if a family struggles to put decent meals on the table, it’s about money. If an unemployed parent can’t afford the transport to a job interview, it’s about money. Finding the money for school uniforms is a question of, well, money. Children whose parents can’t afford enough space for them to study in peace and quiet are struggling with their schoolwork because their parents don’t have enough money.

There’s a cynical conclusion to draw here, which has a large degree of truth to it. This Government needs to have targets which go broader – and longer-term – than the current set: it knows perfectly well that its chances of the current targets going in anything other than the wrong direction, fast, are vanishingly small. £18bn of welfare cuts will cut savagely into poor families’ incomes; Housing Benefit cuts will mean that many poor people will find themselves forced to give up jobs as they move out of their reach, one bus ride too many to sustain or one extra half hour too much to juggle with another job; closed Children’s Centres translate into parents who find it that much harder to stay in work. All in all, income-based targets which can be measured in 2015 are unlikely to hold much comfort for Cameron and Clegg.

But it isn’t just that. The Government doesn’t really believe that income poverty is the measure of fairness. It pays lip service to it – it’s obliged to by law, after all – but in its view, as per its Social Mobility Strategy, ‘The true test of fairness is the distribution of opportunities.’ The Child Poverty Strategy trumpets the Fairness Premium for education – and the Child Poverty Commission will now be set up as a Social Mobility and Child Poverty Commission (note the order, by the way) – because the Coalition thinks that poverty and mobility can be elided. It believes that the question of whether people are poor is basically the same as the question of which people are poor in a generation’s time.

Well, it isn’t. Poverty is poverty: it is a grinding, day-to-day inability to share in the common life. As Polly Toynbee said of social exclusion, “It is a No Entry sign on every ordinary pleasure”. And if we subordinate tackling poverty to promoting mobility, not only will we fail to do either: we will condemn another generation of poor children to grow up in poor housing, without birthday presents, with the fear of falling into debt, with parents trying to make ends meet (often with several jobs at once) and often divided from each other under the strain. It’s very easy to treat the lack of money as a sideshow when you’ve always had plenty of it. Our Government ought to remember that.

Afterthought: A partial exception to this, in fairness, is a focus on getting people into work. This is something the last government worked hard on, and found dauntingly difficult, at a time of economic plenty. At a time when the best part of a million people are about to be put out of work by government policy, I find it hard to believe that the Universal Credit is going to get us very far towards raising employment in the next few years – especially when no one’s even going to start receiving it until 2013. Smoothing out some of the kinks of the current system is a good thing: but it’s a smoothing out, not a revolution, and it’s accompanied by plenty of benefit horrors – many of which, like the lowering of the maximum award for childcare from 80% to 70% of costs, will actually make it harder for people to enter or to stay in work.

Housing policy poses similar problems: the arguments around the Coalition’s plans to allow higher social rents in order to create revenue streams for building more homes are complex, but higher rents combined with Housing Benefit tapers mean that the barriers to work rise even higher. (And the need for this particular expedient might have been reduced had the Government not decided to cut the social housing budget in half.)

The March for the Alternative, and why it’s OK for the marchers to want different things

Like many (probably most) of my friends in London, I spent my Saturday marching in protest against the Coalition’s planned spending cuts. Like everyone else on the march, I don’t believe that £81bn of spending cuts by 2015 and only £29bn of tax rises represents a plan in any way compatible with social justice: and I do believe that it will do terrible social damage and wreck lives.

I’d have to concede, though, that the alternatives put forward by the marchers were many and various. People miles to my political left and my right were there – from those who were much more concerned by the speed than the composition of the fiscal tightening through to those who ‘opposed every cut and fought for every job’ (except Trident, usually!). The Coalition’s response has been, in essence: ‘You have no alternative; we have a plan; we’re carrying on with the plan’.

The trouble is, their plan bears no relationship to anything the public could reasonably be said to have endorsed. Forget the fact, for the moment, that all three parties fudged and dodged a real accounting of what would have to happen in this parliament. Even on the points which did come up – should we cut over five years or over eight? – the current plan is at odds with the votes. During the campaign, the public displayed a preference for the more gradual approach. 52% of people voted for parties who (at the time) agreed. Whatever you think about the balance of taxes and cuts, this is not a mandate for shock therapy in Britain. But that is what we’re getting: the sheer depth of austerity we now face parallels the 1920s.

And a large part of the reason for this is that, in the coalition negotiations, the Liberal Democrats didn’t prioritise economic policy when they chose their sticking points. In fact, they may well have decided to reverse their policy before they even entered the room; according to Nick Clegg, at least some of them changed their minds before they went to the ballot box themselves. The result is that the basic process of discussion, of splitting the difference – of negotiation – which a hung parliament might have been expected to require has been short-circuited. Instead, we’ve got a deficit reduction plan written in outline by one party alone and occasionally coloured in slightly different tones by another. Perhaps that’s not so different from the norm in British politics: but then, a hung parliament was supposed to change all that.

The marchers wanted a range of different things, granted. A march for any other alternative, if you will. But what they were trying to start, in a way, was that very negotiating process which our Parliament so signally failed to carry through. That’s why it was a March for the Alternative: Saturday’s protesters all agree that there are alternatives, even if they don’t agree which ones should be chosen. And that’s why, rather than saying ‘what’s your alternative?’, the powers that be ought to look at the range of alternatives we do have.

If we’re looking at compromises from the Coalition, they might involve more capital spending, combined with a reduction of the structural deficit at the planned rate; they could involve a greater emphasis on taxes. I appreciate that a Conservative government is not going to give me the deficit reduction programme I actually want – but then the voters didn’t elect a pure Conservative government, even if the deficit reduction programme makes it look as if they did. It’s high time the government acknowledged this reality in its economic policy.

And by the way, they should remember that mass demonstrations don’t always have an effect on the government’s policy … but if that policy goes wrong, the demonstration has a habit of making the government look a whole lot worse later on.

Taxes, taxes, taxes

I realise very few people see it as an interesting exercise to sit down and work out how the plans for £29 billion of net tax rises break down. But if you’re going to think about better ways to close the gap between what we spend and what we raise, then it’s not a bad idea to look at what we’re doing at the moment. And in rough and ready fashion, based on the Emergency Budget* figures, the planned breakdown of net tax rises in 2014-15 is about as follows:

Tax Net revenue raised (£ billion) Tax Net revenue raised (£ billion)
VAT and IPT 13.9 Green taxes 0.7
Pension contribution relief 4.6 Stamp Duty 0.3
National Insurance 3.3 Inheritance Tax 0.3
Income tax 2.5 Other tax rises 0.2
Bank levy 2.4 Other tax cuts -0.2
Other pension tax breaks 2.1 Council Tax -0.6
Capital Gains Tax 0.9 Various business taxes -0.8
Sin taxes 0.8 Corporation Tax -1.3

Those figures conceal significant tax cuts in terms of income tax (£3.9 billion goes to raising the personal allowance by £1,000) and National Insurance (£3.7 billion spent on raising the threshold for employers’ NI to offset some of the increased costs), as well as a number of tax hikes in Corporation Tax to help pay for a headline rate cut. But in terms of where the main burden is falling, you’ll get a fair idea here.

It shouldn’t take too much to work out that any attempt to raise another £26 billion, say, is going to be very politically difficult. Labour have argued for keeping the bankers’ bonus tax (£3.5 billion or so – assuming revenues don’t fall if the tax stops being a one-off), and they’ve pointed to their National Insurance plans too (£3.7 billion more). If you were to argue for, say, 5p on the higher rate of income tax (taking a very brave example), the Treasury’s Ready Reckoner suggests you’d raise about £4.6 billion. Lowering the starting point for the 50p rate to, say, £100,000 might raise £1.3 billion (or about half that, if you raise the 40p rate to 45p – otherwise you’re double-counting). The Liberal Democrats’ famous ‘mansion tax’ was intended to raise about £1.7 billion. If, in another act of extreme bravery, you were to raise Inheritance Tax to 60%, you might net about £1.4 billion. The exact amount of money you could get from tackling avoidance may very well be substantial – but it’s difficult to bank on, and I wouldn’t envy the Chancellor who tried to rely on it as a main tool for tackling the deficit.

This clearly doesn’t, even in terms of orders of magnitude, add up to a £26 billion alternative to the Coalition’s plans. So in the end, substantially higher taxes will mean that people on moderate incomes will also end up paying more – not just the wealthy and the banks. In saying that, I’m not arguing against the idea: in almost all cases, tax rises are more progressive than cuts to services – and of course, it’s quite possible to use some revenue to compensate the poor too. It’s no accident that Scandinavian social democracies pay substantially more VAT than the UK – if you’re serious about social justice, the volume of money for benefits and services will make much more of a difference than the exact degree of redistribution managed through taxes on their own, and the tax burden has to be fairly widely spread in order to be politically accepted.

So not only would a centre-left government almost certainly end up raising VAT at some point, for instance; it would probably be right to do so, though probably not right now. It makes sense that, in an economy which needs to move towards more saving over time, we might increase taxes on consumption. The debate over how progressive/regressive VAT is has run and run, but it’s certainly more progressive than even more service cuts – and if it’s difficult enough to find £26 billion extra, try finding £40 billion instead. In the same way, further income tax/NI rises would be pretty hard to avoid. Property taxes would be politically very difficult, but probably sensible as policy. And if the centre-left want to reduce the damage done to public services, welfare benefits and public investment more generally, then we’d better start learning how to argue it’s worthwhile for all of us to pay more taxes in a good cause.

How much of this does Labour need to spell out? Some of it, at least – at least as an indication. The Conservatives didn’t give much away on their plans in 2010, but they did highlight plans to raise the retirement age faster and taper tax credits more aggressively. Not an obvious route to electoral success, in a way, but a manifesto which made no mention at all of any difficult tax/spending changes wouldn’t have been more popular: it would just have made people think they either weren’t being given the full story (even more than they already did!) or that the party in question shouldn’t be trusted with the public finances. And in reverse, the same applies to any party of the left.

* Figures weren’t provided for revenue raised by the 50p rate, the restriction of the personal allowance from £100,000 or revenue raised from Labour’s changes to ‘sin taxes’ (alcohol, tobacco etc.) – I did find a Treasury figure for 2014-15 for the first, but the other two had to be extrapolated a bit from previous Budgets. But the broad outline stands.