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Archive for January, 2014

NICs currently penalise 3.4m of the lowest paid workers. This must change.

27/01/2014, 12:51:14 PM

by Joe Anderson

The rise in zero-hour contracts since 2010 is well-documented. The ONS estimates that the percent of people in employment on zero hour contracts has increased from 0.57% in 2010 to 0.84% in 2012. Ed Miliband is therefore right to call for a ban on their exploitative use. What, however, has not been often discussed is how the National Insurance system inflicts extra hardship onto workers on zero-hour and many other flexible contracts.

Unlike income tax, class 1 National Insurance contributions (NICs) are calculated on a weekly—rather than annual—basis. Whilst this may seem like a subtle difference, it has profound effects for those whose earnings vary significantly on a week-by-week or month-by-month basis, such as those on zero-hour contracts.

The class 1 NIC primary threshold in 2013/14 is £149, meaning employees earning over £149 in a given week are liable to make NICs. Yet, a significant number of people earning less than £7,775 per year (the annualised equivalent of the weekly primary threshold) will still be compelled to pay NICs. The reason for this is because if they earn more than £149 in any week (or £646 in any month, if paid monthly), they will be required to pay NIC, regardless of their annual income.

To illustrate the perverse effects of this anomaly, consider our conjectural protagonists, Jack and Jill.

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Like Cameron,Enda Kenny hopes economic adversity can translate into electoral credibility

26/01/2014, 07:00:44 AM

by Kevin Meagher

There was a glimpse on show at the World Economic Forum in Davos over the weekend of how David Cameron intends to fight next year’s general election. It wasn’t so much to do with anything Cameron was announcing, it was more what Enda Kenny, the Irish Taoiseach was saying.

Batting aside rumours that he is set to replace Jose Manuel Barroso as EU Commission President or, indeed, Herman Van Rompuy as President of the European Council later this year, Kenny was instead eager to confirm he would be leading his Fine Gael party into the next Irish general election in 2016, to continue the task of “fixing” Ireland’s economy. Speaking to Bloomberg television, Kenny said:

“The mandate given to me [in 2011] was to take our country out of an unholy economic mess that we had inherited and sort out the public finances and get our country working.

“I’m very happy that our people have moved to a point where we had a clear plan and strategy to exit the bailout. We now have a strategy to follow through on that with the publication of a medium-term economic strategy.”

He added: “That’s my mandate. That’s the trust the people placed in us, that’s what we’ve got to do.”

The message is obvious:-”We took the right decisions, hard decisions, and now things are getting better. Give us credit for that and give me another five years.” Wary of predicting those infamous ‘green shoots of recovery’ too early, it could nevertheless be Cameron and Osborne speaking after another couple of quarters of UK growth.

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Kane makes local connections count as he cruises to victory

25/01/2014, 09:36:31 AM

Mike Kane will be Labour’s candidate for the Wythenshawe and Sale East by-election on 13 February, cause by the sad death of former Labour minister, Paul Goggins, earlier this month.

A hustings meeting at Wythenshawe Forum Hall last night saw Kane sweep to victory, winning on the first ballot with around two-thirds of the votes cast. Manchester City Councillor, Rosa Battle, was runner up.

Kane, 45, was the favourite and played on his deep roots in the local area and his ability to see off a strong challenge from UKIP.

Born in Wythenshawe hospital, he grew up in the constituency and taught at a local primary school for a decade, before going on to work as a parliamentary assistant to Labour MPs James Purnell and Jonathan Reynolds.

He is currently acting chief executive of Movement for Change, the grassroots campaigning organisation allied to the party and has led on efforts to promote the living wage and against payday lenders.

UKIP is expected to press hard for second place. Its candidate, local IT entrepreneur John Bickley, grew up in Wythenshawe and comes from a staunch Labour family.

However, with just three weeks to go until polling day, it’s unlikely they have the time to seriously eat into the 7,575 Labour majority.

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Ed Miliband is the only politician talking about what really matters: inequality

24/01/2014, 12:22:34 PM

by Robin Thorpe

With Ed Miliband’s recent talk of rebuilding the middle class and his previous rhetoric of the squeezed middle are we now seeing a resurgence of class consciousness? Or is Ed just focusing on familiar words to cloak his lack of credible policies? I sincerely hope it is the former. The problem with the concept of class is that because the labour market is now so diverse it can be difficult for people to identify what class they are. Perhaps, therefore, we should just recognise that there are broadly only two classes of people; the ‘power elite’ and the rest of us.

I can understand why people may want to cling to the notion that there is a hierarchy of socio-economic divisions that we can climb up if we only work hard enough. People have evolved to compete for resources and societies have long been predicated on prestige and social position. But surely we must now recognise that the division between the elite and the rest is so entrenched that it will take more than a bit of pluck and a protestant work ethic to break the stranglehold of inequality. Will Hutton has written that he thinks that Ed Miliband’s “cost of living” crisis is a sideways route into opening up an argument over inequality and I hope that he is right.

Enabling effective change will not be easy; there are many vested interested who will oppose a recalibration of the way that our economy works. The obvious attack on Miliband’s ambition is to decry it as statist and anti-business. Fraser Nelson writes in the Telegraph that a Labour government implementing this agenda would result in “companies refusing to invest, and wealth-creators leaving”. This argument ignores the fact that the notion of state vs. business is a false choice; neither can this choice be defined as socialism vs. capitalism. Instead it should be defined as shallow versus deep freedom.

Steve Davies from the Institute for Economic Affairs (on Radio 4’s The Longview) agrees that the cost of living is a real problem for those on low wages; in particular the cost of housing. But he also states that workers must increase their productivity to improve their wage-earning capacity, as if low wages are their fault for not working hard enough. Solving the problem of the cost of living will still leave people dependant on increasingly precarious employment.

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Westmorland and Lonsdale needs Labour as much as anywhere else

23/01/2014, 04:44:44 PM

by Jonathan Todd

Labour has invariably been in third place in Westmorland and Lonsdale, as Dr David Clark, Lord Clark of Windermere’s vivid history of the local Labour movement accounts. As Labour’s candidate in the constituency in 2010, however, I know that Westmorland’s Labour activists are as passionate as any elsewhere in the country.

They can see rural poverty around them. Which grinds as its urban cousin does. They can see locals priced out of villages dominated by second homes. Which is inequality as visceral as the contrast between the Square Mile and the poorest parts of London. They can see a country struggling to recover from the ruin reaped by the inhabitants of the Square Mile and a world scarred by injustice. And they know that only a Labour government can best respond to these national and global challenges.

As a party we cannot ask members in seats like Westmorland and Lonsdale to look upon the inequities of their neighbours and to hunger for a Labour government capable of alleviating them without then providing them the support to make a difference in their neighbourhoods and communities.

Pragmatists might point these activists to near-by parliamentary seats – Barrow, Lancaster and Morecambe – that Labour is closer to holding or winning. And I’m confident that John Woodcock, Cat Smith and Amina Lone will provide a warm welcome to helpers from Kendal, Ambleside and elsewhere in South Lakeland.

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In defence of political fixing

23/01/2014, 07:00:27 AM

by Kevin Meagher

If the glamorous world of political power is an aphrodisiac, the grubby underbelly of politics is probably something like a retching motion. That’s to say, it isn’t pretty, as a cast load of dubious characters are coughed forward into our midst. A few crooks. Quite a few oddballs. Plenty of lechers. Mostly, they are men (although there are a few are women too). They are all part and parcel of our political life.

So nothing about the allegations swirling around Lib Dem peer Lord Rennard is particularly unusual or new and no-one, in any party, should react too smugly as this sorry state of affairs unfurls.

And I say that from the start, allegations. I don’t know what Rennard did or didn’t do. Neither does the police, it seems, who found there was no case to answer after investigating complaints from several women Lib Dem activists about unwanted moves they say he made on them.

Neither, did the party’s internal investigation, conducted by Alistair Webster QC, which has triggered this latest crisis. That’s because while he concurs with the earlier police investigation, Webster concludes, in a frankly brilliant circumlocution, that Rennard should still apologise:

“I viewed Lord Rennard, from the weight of the evidence submitted, as being someone who would wish to apologise to those whom he had made to feel uncomfortable, even if he had done so inadvertently.”

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Letter from Wales: Nothing is independent in the Crachach run Welsh media

22/01/2014, 09:58:54 PM

by Julian Ruck

The Welsh-speaking Crachach (or Taffia depending on your point of view) are up to their usual old tricks again. You know, keeping it in the family, jobs for this life and the next and not what you know but who you know.

The Silk commission is looking into the devolution settlement and the powers of the National Assembly of Wales. Also on the Commission’s radar is the much debated control of the Welsh media.

Not long ago, I interviewed one Lee Waters, director of the ‘independent’ Welsh think tank, the Institute of Welsh Affairs. The purpose of the interview was to explore the abject lack of diversity and indeed equal opportunity that appears to exist in Welsh governing institutions. There was also the question relating to whether or not the push for Welsh language nationalism was having a negative impact on the Welsh economy.

Mr Waters immediately accepted that there was a problem here ie that Welsh institutions are run mainly by white, Welsh speaking, middle class and Welsh educated personnel. However, he followed this up with the more facile excuse that “Wales has the same problems as all other Western societies.”

So then, one can conclude that in his view, a white Dai Berlosconi or a white Dai Chirac is fine because everyone else is at it? The nasty Tories also came in for some passionate opprobrium from the independently minded Waters too. Quite obviously a man who prides himself on apolitical inclination if ever there was one!

A simple case of denial perhaps? But then the Welsh Crachach are resilient if nothing else

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If Ed is serious about banking reform, its a British investment bank that is needed

22/01/2014, 02:18:11 PM

by David Butler

The case for banking reform is one that, on the centre-left, does not require extensive repeating. The banks were central to the crash and have not been seen to have redeemed themselves. In particular, lending to small and medium enterprises has fallen substantially in the post-crash environment and was not particularly healthy pre-crash. It is into this sea which the good ship One Nation Labour (formerly known as Responsible Capitalism), under her captain Ed Miliband, sailed.

Small and medium-sized enterprises suffer from an inadequate supply of finance. The impact of this was captured in IPPR’s Investing for the Future report. SMEs are usually reliant on loan-funding and are unable to sell bonds or access other sources of capital available to bigger businesses. The report contends that banks have gradually been switching their activities towards loans and investment that offer bigger yields and more immediate profits, which has squeezed loan-funding to SMEs. Due to information asymmetry, banks have used a ‘tick box’ approach for making decisions on loan funding, which has result in a further structural shortage as many potentially good SMEs are shut up of the one-size-fits-all criteria.

Current government schemes to encourage SME lending do not appear to be successful. In the footnotes of the IPPR report, the authors quote an article in the Financial Times which claims that of the £100 billion in low-cost capital created by the government, banks plan to use up to £80 billion to replace existing loans backed by market-price capital. It is clear that simply giving cheap capital to private sector banks will not help. This has been matched by the continue fall in lending to SMEs captured by recent Bank of England figures. This lending problem is a constraint on future prosperity and do nothing to relieve the cost of living crisis. A new approach is needed. Ed Miliband believes that more competition will provide the answer.

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Labour needs to stop fiddling and get on with the big stuff

22/01/2014, 07:49:35 AM

by Rob Marchant

The opportunity for Labour to score party points against the Tories on the economy is clearly diminishing. While that is difficult rather than disastrous, our reaction is important.

Last week, FT’s Janan Ganesh tweeted a characteristically shrewd observation: influenced by campaign groups, Labour seemed to have furthermore abdicated responsibility for forming a competing macro policy. It had therefore embarked on a series of eye-catching micro initiatives with social aims – intervening in energy markets, stopping payday loans and so on – but had gone quiet on the economy at large.

While many of these measures are fully respectable and positive in themselves, they are hardly a substitute for a robust macro policy, clearly distinguished from the coalition’s. And the obvious danger is that while the coalition looks strategic, we look, to put it bluntly, like tinkerers rather than players.

The culmination of all this micro thinking came last Friday, with Miliband’s statement on banking reform.

Now, banking reform is important and, on the face of it, an ideal place for Labour to make a difference. Why? Because we know (i) that it needs reform, and (ii) that the Tories will soft-pedal on anything which affects City friends and donors – that’s the reality. So far, so good.

But this noble end doesn’t mean that this is the right means. Because, here’s the thing: Labour has straight-facedly announced that the centrepiece of its solution is to create not one, but two new high street banks.

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Jim Dowd. Not so relished in South Yorkshire.

21/01/2014, 05:11:34 PM

Pity poor Jim Dowd. A Londoner to his boots and scourge of cheap knock-offs of quality brands. He led the way in the debate on intellectual property in the chamber yesterday, castigating “parasitic” copies of established products.

Tears were welling-up among fellow MPs and onlookers as he laid out the foul calumny that he himself had suffered, just the previous weekend,

“I was in the Hare and Billet pub in Blackheath (in London). And I was having lunch, and I asked if they had any Worcestershire Sauce – everybody knows the famous manufacturers of Worcestershire Sauce.

Now, I’m a simple soul from south-east London, and I thought there was only one Worcestershire Sauce. And the very nice chap who was serving us went away and said ‘certainly’, and he came back with a bottle, and it was shaped like the bottle which I always remembered containing, I think it’s Lea and Perrins, Worcestershire Sauce and their marvellous concoction: same shape, same size, the label was amazingly enough orange with black lettering.

But it was something from Sheffield, from somewhere called Henderson’s – whoever they were.

Now, I’m sure Mr Henderson and his company is a perfectly estimable organisation and I’m sure they pursue an entirely legitimate business, but I couldn’t help feeling at the time that this, of all the colours they could choose for their label, of all the shapes they could have for their bottle, I didn’t even know there was such a thing as Sheffield sauce until then, but I thought this is an ideal example of just how easy these things are to do (to copy).”

Damn straight Jim. Who the hell is Mr.Henderson anyway?

What’s that? Henderson’s is a brand that has been established for over 100 years? Really? A great British export, shipped all round the world, you say? 750,000 bottles sold each year?

Paul Blomfield, MP for Sheffield Central, rode to the rescue earlier today to set Jim straight, writing him an open letter on Facebook.

But it was already too late.

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