Monday, 25 February 2013

The road to nowhere

The media has broken out in mass hysteria because of the loss of our AAA financial rating. Yet, I'm surprised anyone should be surprised by the decision.

The politics of the decision is more important than the economic.

Politically George Osbourne has staked his reputation on AAA status, he has claimed that his austerity policy would sustain AAA. But the economic realities of stagnant income, high inflation in food, fuel. utilities and cuts to capital projects and reductions in the public sector has been a cocktail that has delivered a double dip and on the way to a triple dip recession.

The Great Recession has seen incomes now at 2003 levels.

This is the government of nil action, banking reform put off to the next government. Businesses continue to suffer the lack finance to invest in their businesses.

Inequality continues to grow. The inequality is severely damaging the housing market, last year saw 100,000 homes built, this short of £240,000 needed.

This is hurting economically and in terms of tackling housing need.

The housing market is hamstrung, by overpriced housing, this because first time buyers cannot afford to buy, this does not allow for movement in the housing chain.

Government, central or local refuse to build housing, private landlords with high rents and high benefits are the unsustainable policy of this government.

So housing need continues to grow, the vice like grip will continue, high housing costs, high living costs, it is time for action, we need action on affordable housing.

Under Mr Osbourne we are on the road to nowhere.

Wednesday, 13 February 2013

Why it does not add up anymore

The Office of National Statistics today reported that the level of earnings had retreated to 2003 levels with 7% of people have had pay rises above their living costs since coalition

From 2010 to 2012, the decline in median real earnings averaged 2.1% per year for full-time male public sector workers in the UK compared with 3.1% per year for their private sector counterparts.

The self-employed were the worst hit of all, with a 16% drop in median real income between 2007/08 and 2010/11 for the UK

Official figures now confirm what everyone knows. Living standards have been falling for the vast majority, and there is no sign of change.

With unemployment figures being kept down by part time labour or by self employed this explains why jobseekers has not grown nor has the economy.

But on top of the wage squeeze, the government has been making it worse with cuts to tax credits, the freeze in child benefit and a VAT hike. Millions of low-income families - both in and out of work - are now threatened by the bedroom tax and the one per cent cap on benefits and the changes to council tax benefit, where everyone of working age will make a contribution. The cost of living goes ever upwards with the costs of essentials such as food, fuel, energy and rented accommodation continuing to increase.

There is a sharp contrast with the few at the top of the corporate ladder, where bonuses and huge salaries allow them to enjoy more than their fair share of the created wealth. They are now looking forward to the top-pay tax cut due in April.

With this wage disparity, with the many having pay freezes and the few milking the system, this will continue to have an impact on the wider economy.

The economy will not recover until people have money in their pockets to spend, and businesses can know that their customers feel confident. The challenge for the government is to reverse austerity and start boosting wages and incomes for the majority. That is the only route to growth.

Matthew Whittaker of the Resolution Foundation says "We now know that the squeeze on living standards will be longer and deeper than projected this time last year. Average wages are not expected to rise in real terms until late 2014 after a period of stagnation and decline. Despite stronger than expected job growth in the private sector, many people continue to work fewer hours than they would like, putting downward pressure on household incomes."

The unite union says "The challenge is how we ensure that the benefits of future growth are fairly shared."

"In the absence of wage rises, consumers must borrow to buy goods and services. If they don't borrow, they don't shop and if they don't shop, producers of goods and services shed jobs."

"Britain isn't just being squeezed, our country is going backwards under the Tory-led coalition. The nation is now characterised by falling wages, insecure employment and cuts to welfare.

Ed Balls the Shadow Chancellor says .“We have a chancellor who believes that he can slash public spending, raise VAT and cut benefits – he can take billions out of the economy and billions more out of people’s pockets, he can directly cut thousands of public sector jobs and private sector contracts, and none of this will have any impact on unemployment or growth.
Against all the evidence, both contemporary and historical, he argues the private sector will somehow rush to fill the void left by government and consumer spending, and become the driver of jobs and growth”

The Bank of England says today that Inflation will be running higher than wages this year.

The challenge for politicians is how to create increases in incomes, until the coalition invests in the infastructure, develop an industrial strategy, develop skills, investing in sciences and research and development, this country will be cut away from prosperity and human misery will grow.

Wednesday, 6 February 2013

Unfair and the second coming of Poll Tax

So the Conservatives with the lib Dem poodles are launching their next phase of punishing low paid people.

Poll Tax 2 is landing on many low paid people of working age door mats, in Mendip, will pay a minimum 20% of the Council Tax with the former exempt, will now pay a minimum £4 a week.

This on top of housing benefit changes and the 1% in work benefit rises amounting to a real terms cut in living standards.

I am pleased that the government has dropped the "we are all in this together" line, frankly it would be a sick joke if they continued. In the new tax year, millionaires will get a £40,000 tax cut, people who need it the less.

The Conservatives and Lib Dems have a perverse mentality, the millionaires need the tax cut because they will either avoid paying the 50% tax or it is a disincentive, yet for really low paid people need to be incentivesed by taking money away from this. This perversity must be taught in Eton.

Sadly the cover for these attacks are the basic attack on the scroungers, the retoric clearly resinates with some but the truth is the largest gainers from the welfare budget are pensioners and this group is exempt from cuts, 60% of those whom claim welfare support are in work, so the picture is painted to appeal to base elements in people.

The only way to attack poverty is creating jobs, well paid jobs, yet today we see finance to business fell by £18.6 billion in the last year, so businesses will not retool and businesses will not grow, this government have completely failed in getting banks to lend for business growth and in turn new jobs in new industries, whilst we stagnate, Germany and the USA grow.

This government are punishing the low paid, failing to create the opportunity for business to grow, they are also failing to reduce the deficit as fast as they said with £64 billion more borrowed by the general election.

The priority of government must be creating a productive economy.

If they want to attack the dodgers, lets tackle tax evasion it costs the economy more than benefit fraud. We need a government for the millions not just the millionaires.