Tuesday, 30 September 2014

Osborne Calls for 2 year Benefit Freeze

GEORGE OSBORNE was told to ensure hard-working people are paid the living wage yesterday, not freeze the benefits they rely on to keep above the breadline.

The Chancellor outdid even himself in the “nasty party” stakes, insisting a future Tory government would freeze working age benefits for two years.

In one of his biggest attacks to date on Britain’s low-paid workers, Mr Osborne said he would introduce the freeze in 2016 calling welfare dependency “a scar on society.”

He said the policy would exclude disability and pensioner benefits, claiming the move would save £3 billion.

Left economist Andrew Fisher (pictured below) told the Star: “Millions of workers need tax credits and housing benefits because the rents and mortgages are so high and due to a failed economy of low paid, low skill, insecure jobs.

“Cutting benefits will send hundreds of thousands of people into poverty, and many even deeper into poverty.”

Labour’s treasury spokesman Chris Leslie accused the Chancellor of “cutting tax credits which make work pay for millions of striving families.”

And the TUC said policy “puts families with children in the frontline of austerity again.”

“In today’s low-pay Britain, in-work benefits are a lifeline for millions of families,” said TUC general secretary Frances O’Grady.

Plaid Cymru MP Jonathan Edwards pointed out that most people who receive benefits are already in work.

“However, the labour market is blighted by low wages and zero-hours contracts which mean that wages need to be topped up by benefits just so that people have enough to get by from week to week,” he said.

“What we urgently need is a living wage.”

At the same time Mr Osborne made another bid to rescue the Tory vote from Ukip incursions, pledging to abolish the 55 per cent tax charged when untouched defined contributions are passed onto a dependent.

General union GMB’s pensions officer Phil McEvoy pointed out that the proposal will only benefit the “privileged few” who can afford not to touch them.

Ms O’Grady added: “It tells you everything you need to know that George Osborne has unveiled more harsh cuts for working families on the same day as tax breaks for the pension pots of the richest 1 per cent.”

Sunday, 28 September 2014

Against Austerity

Andrew Fisher, author of The Failed Experiment ... and how to build an economy that works, argues that the Labour leadership's embrace of austerityis a fatal flaw in economic policy and must be rejected

(This article appears in the current issue of Labour Briefing)

It's rare that the origins of a mantra are traceable. But this one started with a post-it note left on a ministerial desk in the Treasury: "there's no money left" it read, and it was written by Labour's Liam Byrne MP for his Tory successor in 2010.

David Cameron and George Osborne were happy to repeat, reinforcing as it did their message that Labour had left the UK on the brink of bankruptcy. The UK wasn't anywhere near bankruptcy - not a single credit rating agency put Britain's debts anywhere below AA1 (one step down from a flawless AAA). Throughout the crash and recession the UK could borrow and borrow cheaply.

In the early days of opposition Labour urged that government austerity policies were cutting "too far, too fast", and urged the chancellor to "go for growth". As Osborne plunged the economy back into recession and unemployment rose in those early years, he actually relaxed austerity slightly but extended it - with the harsher years pushed back until after the 2015 election.

This makes Labour's position today all the more idiotic. The Labour frontbench though is now in the absurd position of still saying Osborne's economic strategy is wrong, but will implement an intensified version of it in 2015-16.

This is not just bad economics but bad politics too. The people voting to kick out the Tories in 2015 will be lumbered with the same economic policies. As Ed Balls told a compliant National Policy Forum, "Party members have endorsed the tough fiscal position Ed Miliband and I have set out. We will match the government's overall day-to-day spending totals for 2015-16."

Those spending totals imply cuts to both the education and health budgets and even bigger cuts across the rest of the public services. To put this in perspective, public spending will have risen marginally (by 0.4%) between 2012-13 and 2014-15, but in 2015-16 public sector expenditure will fall by 1.7%.

So if you feel like austerity has damaged your community and public services, after 2015 the really harsh austerity begins. Once you adopt the logic of austerity it is hard to escape.  You might think the shackles will come off in future years and Labour will deviate from Osborne's plans from 2016-17 onwards. However, the two Eds are further committed to not just balancing the books, but creating a surplus on the current budget, and getting the national debt falling.

That means that without overtly saying it, the two Eds are committing Labour to a parliament  of austerity. They say "we will govern with less money around".  But this is utter nonsense, there is no less money around. By all accounts the tax gap is growing, executive pay rose by 14% last year, the wealth of the richest 1,000 Britons increased by £70 billion in the last year alone and corporate profits look healthy.

They say "we will govern in the country's long term economic interest". But which economic interest? The interests of the economy of the city traders, the corporate boardrooms, the property magnates and the credit rating agencies?

Because that's not the economy that you and I inhabit: of people struggling to make ends meet, pensioners choosing between heating and eating, families in temporary and overcrowded accommodation, the person working three low wage jobs just to keep the bailiffs at bay.

Labour is letting people down because it's only economic policy is to hope to manage austerity better than Osborne. I want to kick the Tories out, reverse NHS privatisation and end the bedroom tax, but the Labour leadership puts at risk any of their positive reforms if they stick with austerity.

Tuesday, 23 September 2014

Analysis: Miliband's Six National Goals

At Labour Party conference, Ed Miliband used his leader's speech to outline six national goals if Labour takes power in 2015 - and governs until 2025. Andrew Fisher evaluates those goals ...

It was long, heavy on rhetoric and contained some of the worst devices in modern political speech-making. But, if you wade past the references to 'Gareth' and 'Together', the awkward phrasing at times, and "aren't I clever at remembering my speech" (oops) ... yes, if you forget all that ... then actually, buried deep in there, was a bit of substance. But was it good substance?

1. GIVING ALL YOUNG PEOPLE A SHOT IN LIFE: Ensure as many school-leavers go on to apprenticeships as go to university.

What's right with it?
Labour has previously vowed to ensure vocational education is as valued as academic qualifications, and this could be the meat on the bones of this. The UK labour market seriously lacks skilled work, and this could be part of rebalancing the economy away from the increasingly low skill, low wage, low productivity one that Osborne's policies have intensified.

But ...
Currently there's a real issue about the low quality of many apprenticeships. This is an issue that the Labour-affiliated UCATT highlighted at TUC Congress. This is highlighted by the fact that the largest single provider of apprenticeships is Morrison's. So Labour has a real challenge in simultaneously improving both the volume and the quality of apprenticeships. Otherwise it's just a way of driving down wages and allowing employers to undercut wages, which will hinder Miliband's second goal:

2. TACKLING THE COST-OF-LIVING CRISIS: Help working families share fairly in the wealth of our country so, when the economy grows, the wages of everyday working people grow at the same rate.

What's right with it?
Industrial strategy. It's back on the agenda, and credit to the work of academics like Mariana Mazzucato (among others) for putting it back there. Warm words on science and innovation budgets, the promise of a British investment bank, and building better vocational, skills-based, qualifications.

But ...
The detail is thin on the ground, e.g. how much will this investment bank have to lend? How much will science and innovation budgets actually increase? This Labour conference sent mixed messages. How does a cap on public sector pay or on child benefit help tackle a cost-of-living crisis? And what of non-working families? 

3. RESTORING THE DREAM OF HOME OWNERSHIP: Meet demand for new homes for the first time in half a century - doubling the number of first-time buyers getting on to the housing ladder a year. 

What's right with it?
With London house prices averaging over 14 times the average London wage, and house prices across England now 12 times average earnings, this is a real crisis that has to be challenged. It gives private landlords an increasingly dominant position to use their capital live off the backs of others struggling just to keep a roof over their heads.

But ...
With Ed Balls imposing a no borrowing rule even for capital investment, it seems that councils have no role in tackling the housing crisis. And so Labour's policy seems to be based on simple supply and demand: flood the market with new homes and bring down prices? But how will private developers be incentivised to build substantially more than now? Does it mean a Land Value Tax to put pressure of developers to develop hoarded land, or tax breaks? Does it mean deregulating planning laws, opening up (some of) the greenbelt for development? Finally ... and what does this do for those nowhere near able to buy - those in overcrowded, temporary accommodation, on council waiting lists?

4. TACKLING LOW WAGES: Halve the number of people on low pay in our country, changing the lives of over two million people

What's right with it?
The scourge of low pay is a massive issue (one we've blogged on - we all need a pay rise). It's seen rising in-work poverty as the national share of GDP going to wages has dropped substantially in the last generation. Raising wages means lowering the taxpayer subsidy for low pay - the rising cost of tax credits and housing benefit because wages aren't enough to make ends meet - something we've termed the 'public ownership of living standards'. Miliband is proposing to re-privatising these burdens to employers - and that's a good thing.

But ...
Where are the policies to deliver this? The Labour opposition is pledged to maintain the public sector pay cap - at least in 2015-16, and it's commitment to raise the minimum wage to £8 an hour is nothing if not modest (see analysis). The most effective means of raising wages is to unshackle trade unions - and strengthen employment and trade union rights. Collective bargaining covered 85% of workers a generation ago, but now covers less than a third of workers - but Labour has been silent on trade union rights ... and the sadly inaccurately nicknamed 'Red Ed' appears terrified of doing anything that benefits unions (which by extension means not benefiting workers).

5. SECURING THE FUTURE: Create one million more high-tech jobs by securing the UK’s position as is a world leader in green industries

What's right with it?
Break open the ethical locally-sourced champagne like fizz! He's signed Labour up to the demands of the One Million Climate Jobs pamphlet. The Uk lags woefully behind in investment in green techonologies and only 4% of total UK energy use is renewable, compared with an EU average of 12%. This is great and long overdue.

But ...
Who is doing this investment? Ed Balls says no borrowing (even for investment) and the UK has a long way to catch up just to be a world middle-of-the-road country, let alone a world leader. Something has to give, and if it's Ed Balls, good. Oh, and never use the phrase "securing the future". Nobody speaks like that ... it jars.

6. SAVING OUR NHS: Build a world-class, 21st century health and care service.

What's right with it?
The NHS is - as Miliband says - creaking due to real terms cuts in budgets and to staffing levels. We need investment in the NHS, and a people-centred approach. Ensuring better care is going to be massively popular. A more humane, personal and caring NHS is a vote winner - and is a move away from the mechanistic target driven approach of the last Labour government. Taxing hedge funds, tobacco companies and tackling tax avoidance is also good popular stuff.

But ...
The funding - clamping down on tax avoidance is a good thing, and is doable, but it requires more staff (not less) at HM Revenue & Customs - and Ed or shadow ministers have made no mention of supplying the resources. The proposed surtax on the tobacco companies' profits is very welcome too - they profit from addiction to carcinogens - but sin taxes tend to be regressive (not a reason not to do it, but it necessitates further rebalancing).

There is undoubtedly some good stuff there - and the issues identified are all important ones. With some careful shaping, there are some potentially good punchy messages for Labour activists, affiliates and supporters to go and convince people that Labour is worth voting for next year.

But, there's also a lot of gaps, a lot of issues where Labour is still saying nothing or saying the wrong things. It would be easy to simplify this as Ed Balls giving the 'bad cop' tough messages to appease the media pack and financiers, while Ed Miliband playing 'good cop' wins the people over with some fluffier stuff. But that tension can't be contained - and the contradictions cause mixed messages, sowing the seeds of doubt, and undermining trust in what either of them says.

"Together we can", was the phrase used by Miliband repeatedly. Trouble is, when applied to Miliband and Balls, it means "Together we can ... come across as contradictory and confused". No wonder the electorate is yet to be convinced ...

The Alternative to Broken Markets and Austerity

Andrew Fisher, author of The Failed Experiment ... and how to build an economy that works

Last night I spoke at a Labour conference fringe meeting about the alternative to broken markets and austerity. I'll blog more on the discussion that followed the presentations by Mariana Mazzucato and Michael Meacher, but for now here is a rough note of what I said:

I was hoping that Ed Balls would have made this meeting redundant by setting out in his speech earlier a vision that we could all unite around ... sadly not.

So what's the alternative? Simple, it's democracy.

I'll come back to what I mean by that but I think first that we have to understand the crash - it was a crash caused by broken markets.

Broken markets

The banking and financial markets, the housing market and the labour market. Three interlinked broken markets.

They were broken - and remain broken - because they don't operate in the public interest and there is nothing forcing them to do so.

The finance sector was weakly regulated. It operated in the interests of a few. "The decadent international but individualistic capitalism ... is not a success. It is not intelligent, it is not beautiful, it is not just, it is not virtuous. And it does not deliver the goods. In short, we dislike it, and we are beginning to despise it". That quote is from 1933, by John Maynard Keynes following the great depression. It resonates again today.

The housing market is the story of housing become an investment opportunity rather than a home. The displacement of need and its replacement with greed. In London, where I live the average house price is now 14 times the average annual wage. How could any average earner, even an average earning couple afford the sort of mortgage that would be necessary?

And finally the labour market, which due to the anti-union laws leading to falling collective bargaining, and deregulation that sees rising zero hours contracts, mean wages have fallen dramatically as a share of national income over the last generation - and have been falling in real terms for a decade.

Systematic bailouts

And there has been a bailout of each broken market - in fact an ongoing bailout:

The banking sector was bailed out with £1.3 trillion of cash and guarantees. It continues to be bailed out through quantitative easing and schemes like help to buy.

The housing market is bailed out to the tune of £25 billion every year - a subsidy increasingly for private landlords necessitated by the failure to build for need. Help to buy is a bailout for buyers too who may not otherwise be able to meet the exorbitant cost of housing.

The labour market too is in a state of permanent bailout: with tax credits and housing benefit an annual subsidy for wages that do not meet living costs. New housing benefit claims are increasingly from in-work households.

And these systematic bailouts don't end there: the rail industry receives around three times as much public subsidy as in the days of British Rail, the privatised water industry has produced high executive pay, high dividends for a generation, higher bills and is now getting tax breaks to upgrade the infrastructure it bought on the cheap a generation ago (see Thames Water case study). Likewise the privatised energy companies have failed to invest in renewables and we see new subsidies for fracking and nuclear to pay for that failure.


So ultimately we have to choose: between democracy and the markets.

More precisely, do we want to continue this systematised bailout of broken markets or do we want a government that builds systems to work in the public interest.

Our energy, water, transport, banking, work and housing systems are failing. Unless we start challenging and then changing them we face ongoing austerity - because that is the choice: do we want a society to work for people or people to work for the benefit of the profiteers?

In a democracy we have to fix broken markets and build a system that works in the public interest. That's what my book is about: dumping the failed experiment and building an economy that works.

Sunday, 21 September 2014

Analysis: £8 an hour by 2020 - how good is it?

Andrew Fisher gives us a first take on Labour's policy announcement that it will raise the national minimum wage (NMW) to £8 an hour by 2020

In May last year, we showed that if the minimum wage had kept pace with inflation in the previous five years it would be £6.76 per hour instead of its current £6.31 - enough to make a full-time worker on the NMW better off by £1,097 a year. Next month the NMW will rise to £6.50 per hour.

If we take the 2014 level of £6.50 as the baseline the Bank of England's target inflation rate of 2% as the average increase, then we could expect the NMW to be £7.32 per hour by 2020. Even if we took the current rate of RPI inflation (2.4%) that would lead to the NMW being £7.49 in 2020 - as the table below shows:
So under Labour's plan a NMW worker would be either 68p or 51p better off an hour. If they worked full-time, then they might be either £1,326 or £995 better off a year under Labour's proposals than would otherwise be the case.

But wait a minute ... if the NMW had increased with RPI inflation in recent years then it would be rising from £6.76 to £6.94 in October. If we take that as our new baseline we see under the 'RPI scenario' it would be £8 per hour in 2020:

So effectively - one could argue - Labour's announcement is actually just putting the NMW back in line with the cost of living ... by 2020. Nevertheless, this wouldn't happen on it's own and Labour is to be commended for returning to the late 1990s/early 2000s scenario when consecutive NMW increases met or exceeded inflation.

However ... Labour has said nothing about removing the appallingly low youth rate NMW - will over workers over 21 be entitled to £8 per hour? How much for younger workers?

But is it a Living Wage?

And on another level - it compares unfavourably with the living wage. £8 per hour is already far below the £8.80 per hour London living wage endorsed by Tory London Mayor Boris Johnson. The UK-wide living wage is £7.65 for 2014

If we project the living wage forward to 2020, we see Labour's £8 minimum wage looks rather less impressive:

It therefore fails the Bob Crow test:

So is £8 an hour by 2020 a good thing? Yes.

Will it eradicate poverty pay? No.

Thursday, 18 September 2014

Labour must break with austerity

The letter below signed by prominent economists and economic campaigners has been published in The Guardian on Friday urging Labour to break with austerity.

It comes as Labour members and affiliates assemble in Manchester this weekend for their party conference:
The Coalition's spending plans for the next Parliament are an intensification of austerity, demanding what even the Institute for Fiscal Studies calls unsustainable cuts to public services. Under the coalition government poverty has increased, living standards have fallen dramatically, and homelessness and dependence on food banks is rising. In contrast corporate profits and reserves are holding up nicely and executive pay is increasing at more than ten times the average wage.

Given the Labour Party started this Parliament by saying government austerity was 'too far, too fast' it is extremely disappointing that the Party leadership has said it will adhere to the coalition government's re-intensified austerity for 2015-16. This commitment, including to the government's 1% pay cap policy, will only intensify the economic and social damage caused by austerity policies and by reducing demand could easily see the UK slip back into recession early in the next Parliament. Labour must also end the race-to-the-bottom on tax and regulation.

We urge Labour members, MPs, and trade unionists attending Labour Party conference to demand an economic policy that boosts living standards and invests in the economy - and to save their party from a calamitous mistake.

John Christensen, TaxJustice Network
Andrew Fisher, LEAP economics
John Hilary, War on Want
Richard Murphy, Tax Research LLP
Ann Pettifor, Prime Economics
You can hear from many of these signatories on the Labour conference fringe in Manchester:

  • Mon 22 Sep - 5:15pm - Alternatives to Broken Markets and Austerity - with Andrew Fisher, Mariana Mazzucato and Michael Meacher MP at The Old Monkey pub, 90 Portland Street, M1 4GX
  • Mon 22 Sep - 6:30pm - Policies for a Labour Victory - with Owen Jones, Dennis Skinner MP, John McDonnell MP, Ian Lavery MP, Rezana Azam, Ian Hodson, Andrew Fisher, Ellen Clifford, Joyce Shepherd & Steve Hall at Cross Street Chapel, Cross Street, M2 1NL
  • Tue 23 Sep - 12:30pm - Building a recovery for all - with Mark Serwotka, Richard Murphy & Francesca Martinez at Manchester Central, Charter 3 (inside the security zone)
  • Tue 23 Sep - 12:30pm - Fighting corporate abuse: Beyond predatory capitalism - Prem Sikka, Martin Parker, Tom Hadden, Hugh Willmott, Sol Piciotto, Glenn Morgan, Paddy Ireland & Gordon Pearson at Friends Meeting House, Mount Street, M2 5NS

Monday, 15 September 2014

Housing crisis is class war

Andrew Fisher, author of The Failed Experiment ... and how to build an economy that works, on the class war being waged in the housing system

The National Housing Federation (NHF) has made the headlines this morning by describing home ownership as an "exclusive members' club", citing the fact that first time buyers need 10 times the deposit they did in the 1980s.

There are very simple reasons why this is the case - and no political party is yet offering change of a necessary scale to address the dysfunctional housing system. I deliberately don't use the term 'housing market' because it should not be one. As I've posted before 'housing is a right, amassing wealth is not'. But also, for many people there is no functioning housing market - they are locked out, as the NHF now says.

And so the rest of this post focuses on the locked out. The cuts to housing benefit (to individual entitlement not overall costs), and the imposition of the bedroom tax and benefit cap have forced people to leave their communities, forced a rise in homelessness and forced more families into overcrowded and substandard accommodation.

This is the system for the poorest - low and middle earners as well as benefit claimants who have no prospect of buying a home. With this increasing need for social housing, you might expect the government to be building more but planning approvals for social housing are down 44% in the last year. Research by the Home Builders Federation shows only 3,824 social homes approved in Q2 2014 compared with 6,873 in Q2 2013. The problem is even more acute in London, where the housing crisis is gravest, with social housing approvals down 53%.

So if the government is failing to build social housing  to meet growing demand, is imposing the bedroom tax and benefit cap on out of work households, and cutting housing benefit entitlement for in and out of work households, what is it's solution?

The answer frankly is that it has no answer - except underwriting the debt of those who can afford to buy. And for those worst off in the UK's housing system, 57% of councils have scrapped the only nationally recognised form of regulation of services such as hostels and sheltered housing. A survey by Inside Housing suggests that councils, hit hard by budget cuts, do not have enough staff or resource to continue to undertake assessment. So council cuts means that non-mandatory regulations have been binned.

Even more distressing news is that there has been a dramatic increase in assaults on housing staff. So mostly low or modestly paid council staff are taking the brunt of the backlash for policies imposed on the poorest by a cabinet of millionaires.

While those workers have unionised workplaces, the desperate victims of the UK's housing policy have no support, no organisation and are not only under severe financial pressure, but face eviction, homelessness and even deportation from their communities.

There is an urgent need to organise the housing dispossessed, i.e. those not in what the NHF describes as an "exclusive members' club". Class war is being waged in housing - the non-portfolio'd mass needs to fight back, but against the government and private landlords, not council workers!

Thursday, 11 September 2014

Getting control of energy

Andrew Fisher reviews a new pamphlet - 'It's time to take over the big energy firms' - published by the Fire Brigades Union.

This is another great example of a trade union dedicating itself to political education, and follows on from the FBU's 2013 publication 'It's time to take over the banks', which made the case for public ownership of substantial parts of the banking and finance sector. Like it's predecessor this is another concise, well-argued, and accessible read - and contains many references for those who want to read more.

The pamphlet starts with a section that will be familiar to any household billpayer - the 'naked profiteering' of the the UK's privatised energy system and its toothless regulation.

It points out that UK bills have risen faster than anywhere else in Europe and at nearly twice the rate of inflation between 2009 and 2013. In that same period the big six energy companies' profits have risen by 73%. Not unjustly, the big six are described as an oligopoly, "they may find it more profitable to collude.

The pamphlet dismantles the arguments put by the big six about it's low rate of profit, by exposing the transfer pricing between wholesale and retail divisions and quotes Labour's shadow energy secretary, Caroline Flint, saying that while retail profit margins are only around 5%, in generation they reach 20%.

Privatisation of the energy sector has been a disaster - failing to invest in future supply, hiking prices and, as Oxford energy economist Dieter Helm puts it, they have "focussed on sweating inherited assets, not creating them". A similar story is true in the privatised what industry (see our recent examination of Thames Water).

The pamphlet also considers the proposals of the opposition Labour Party - which brought a hailstorm of doom on leader Ed Miliband for promising an 18 month price freeze and to "reset the market". While welcome, they are deemed "inadequate", because you can't have a proper market in energy.

The cost of this market failure is not just felt in the pockets of the billpayers, but also in the excess winter deaths - 23% higher in the UK than in Sweden, despite our milder winters, with 6.5% saying they can't afford to heat their home, compared with just 1.6% in Sweden.

The dire environmental impications of this are deadly serious too, but these is intrinsic to the market, "private firms calculating what is most profitable to them in the short term, not what is in the best interests of society in the long term". The demands of the One Million Climate Jobs pamphlet are also endorsed.

So when it comes to energy we face three major problems: consumers being ripped off by naked profiteering, while a lack of investment post-privatisation means polluting fossil fuels damaging our environment and the very real prospect of the lights going out.

The case against the energy companies is strong and will be familiar to many, although the pamphlet is full of hard-hitting facts on the subject. But the pamphlet's real strength lies in its final section where it envisions renationalising the big six energy companies with democratic planning and governance.

One option is the Attlee government's model for nationalisation, "shares were swapped for government bonds, one piece of paper for another". Another option is for minimal compensation, "serious government action to take over the big six would see further falls [in share price] as shareholders saw their opportunity to make money out of noething evaporate."

The governance system proposed is similar to that advocated by the late Bob Crow for the rail industry: one-third workers in the industry, one-third consumers and one-third government - with boards at the plant, regional and national level, and ultimately accountable to the government.

As FBU general secretary Matt Wrack pragmatically puts it:
"The market does not and will not provide the investment needed. That's why public ownership and democratic control of our energy system is so important."

Saturday, 6 September 2014

The LEAP guide to TUC Congress

This weekend marks the start of the annual meeting of Britain's biggest democratic organisations: the Trade Union Congress. LEAP gives you a guide to the debates taking place among the delegates representing over six million workers.

With over 70 motions from more than 40 trade unions and delegate conferences, Congress is a very different affair from the party conferences with their minimal debates and long list of platform speeches from the over-promoted and under-talented.

This year TUC Congress takes place in Liverpool from Sunday 7 to Wednesday 10 September. Alongside the formal debates on motions in the convention centre, there are also many fringe events taking place in the surrounding area. Congress delegates will also hear speeches from Labour's shadow business minister Chuka Umunna and Bank of England governor Mark Carney.

The debates at Congress are mostly fraternal - a chance for workers from different unions to share experiences of campaigning, taking industrial action and organising, and to give their perspectives on the issues of the day. This culture is reflected in the compositing process in which motions on similar issues are melded together in advance to achieve consensus and avoid repetition of debates. Within this unity, there is still considerable interest and insight on a range of issues, as well as a few issues that are bound to provoke strong debate.

This being an economics blog, the guide to the debates below focuses on the motions relating to economic issues (there are plenty more interesting debates on a variety of other issues).


Hot on the heels of the 10 July co-ordinated strike action against the public sector pay cap, and at a time when workers' living standards have fallen by an average 8.5% since 2010 (ONS data, see here), pay features prominently on the Congress agenda.

A motion from Unite points out that wages as a share of GDP has fallen from 66% in 1975 to 54% today, and that the proportion of workers covered by collective bargaining agreements has fallen from 83% to 22% over the same period. It calls a return to sectoral wage agreements (the sort that existed before Thatcher scrapped the wage boards, except in agriculture which the coalition government scrapped).

Unison and PCS both call for co-ordinated industrial action against the public sector pay cap, which they call on the government to scrap. PCS also calls for a common dispute too (and their general secretary, Mark Serwotka, is interviewed in the Guardian today).

What will generate an interesting debate is the BFAWU motion that the minimum wage should be raised to £10 per hour. This is a rough equivalent of the $15 advocated by US campaigners against poverty pay. To put it in perspective a 37.5 hour week on £10 an hour equates to £19,500 a year. Well below the median income of £26,000. It will be interesting to hear if there is dissent - perhaps any opposition could explain which jobs don't deserve to earn such a salary?

UCU is also drawing attention to the increase in the gender pay gap - now at 15% between men and women - and calling for mandatory equal pay audits. This call is echoed by Prospect which also calls for "a maximum pay ratio between the highest and lowest paid workers in an organisation" - the BFAWU's call for a £10 minimum wage would help with that!

Meanwhile the RMT highlights that employment law loopholes mean non-UK seafarers are being paid as little as £2.41 an hour while working in the UK.


Trade unions are opposed to austerity (no surprise there), but there are still some issues raised in motions that may stir some genuine debate:
  • Will Congress back Unite's call to support the People's Assembly?
  • Or back the RMT's call to consider organising protests in marginal constituencies where MPs do not oppose austerity?
Finally will the affiliated unions who signed up at Labour's national policy forum to Ed Balls' commitment to Tory spending plans for 2015-16 (see here), back the FBU wording that ...
"any government after the 2015 general election immediately scraps the cuts in funding for public services planned by the current coalition government. This should be done by means of an emergency budget immediately following the general election". 
This is almost word-for-word what all affiliated Labour unions voted against to back Ed Balls' austerity. Should be interesting ...


We have posted our concerns about the transatlantic trade and investment partnership (TTIP) - the trade deal being hammeered out between the US and the EU - and it seems there is considerable concern within the trade union movement too, with four motions submitted on the issue (likely to be composited, see above).

The motions call for "outright opposition to TTIP" (Unite) or for "TTIP negotiations to be halted" (GMB) or "work with like-minded organisations, including the ETUC, in opposing all detrimental aspects of TTIP" (UCU).  It will be interesting to see which demands survive the compositing process.

The motions also highlight the threats to further privatisation of the NHS and other public services, as well as concerns about the investor-state dispute settlement (ISDS) mechanisms, the creation of a transatlantic regulatory council, and the effects of TTIP on workers' rights, environmental protections, consumer rights, and food safety standards. Concern is also expressed about the attack TTIP represents to democracy and also to the economy.

Whatever the outcome, it seems the TUC will be agreeing to oppose TTIP outright or to oppose so many of its key provisions to render it useless to its advocates. Unions including Unite, Unison, GMB, NUT, PCS and UCU (between them representing over 60% of TUC membership) have all voted to oppose TTIP.

Other interesting issues

It is encouraging that UCATT is raising the issue of low quality apprenticeships (as we've raised) - and will the issue of traineeships be raised? The signing of a joint statement by the TUC with the CBI backing the unpaid scheme has raised ire both inside and outside the trade union movement.

PCS is also raising the issue of the attacks on migrants and claimants, and myth-busting the fatuous claims of benefit tourism that have been transferred from gutter politics to mainstream political discourse with the connivance of the main parties quaking at UKIP.

Is Land Value Tax an idea whose time has come? The RMT thinks it deserves consideration. And will Congress back PCS's call for a moratorium on fracking?

The Labour-loyal union USDAW believes Labour's commitments for workers on zero hours contracts should get rights to guaranteed hours after 12 weeks (rather than 12 months) continuous employment - though this still falls some way short of what John Smith committed Labour to in opposition, ""Our charter of employment rights will give all working people basic rights that will come into force from the first day of their employment. We will give the same legal rights to every worker, part-time or full-time, temporary or permanent."
  • LEAPeconomics will also be live tweeting from Congress so you can keep up to date with the debates. The official hashtag is #TUC14

Wednesday, 3 September 2014

3.4m desperate for extra work

But the Tories claim underemployment ‘suits’ people

Conrad Landin in the Morning Star 
Tories claimed yesterday that workers toiling on the breadline are only under-employed because it “suits their circumstances” — despite a record 3.4 million scrambling for extra shifts to make ends meet.

A TUC study found that the number of people working part-time because they cannot find full-time work has soared by 432,000 since David Cameron took office in 2010.

In eastern England, the underemployment figure has swelled by a quarter in the past four years, while Wales saw an increase of 21 per cent.

TUC general secretary Frances O’Grady said the underemployment figures disproved Tory claims that Britain’s economic woes are over.

“Although unemployment is falling, there are still nearly 3.4 million people who would like to be working more hours than they are,” she said.

“Sadly with part-time, temporary, low-paid jobs often the only work that people can get, underemployment remains stubbornly high and is still rising.

“With no let-up in their financial woes in sight, people are understandably looking to take on more hours just to keep the wolf from the door.

“Without a decent pay rise and the creation of more permanent, secure jobs, under-employment is unlikely to fall any time soon.”

But a spokesman for the Department for Work and Pensions, which is run by arch-Thatcherite Iain Duncan Smith, brazenly slammed the TUC figures as “misleading.”

He said: “The overwhelming majority of those working part-time do so because it suits their circumstances, for example students or those with caring or parenting responsibilities.

“Independent statistics show that there are over 100,000 fewer people who say they are underemployed compared to a year ago, and that full-time jobs account for more than three-quarters of the rise in employment since 2010.”

But Left Economics Advisory Panel convenor Andrew Fisher hit back, warning that the TUC figures were “only part of the picture of insecure low-pay Britain.”

He said: “Alongside this are growing numbers of young workers on low-paid, low-quality apprenticeships or in unpaid traineeships or internships.

“The low pay and insecure status of this growing band of underemployed workers is subsidised by tax credits and housing benefit to provide just a semi-dignified existence, while their under-utilised talents are wasted in low-skill jobs.

“This is the grotesque inefficiency of modern capitalism.”