Showing posts with label cut. Show all posts
Showing posts with label cut. Show all posts
Monday 6 June 2022
Friday 25 February 2022
Monday 27 July 2020
Lay-offs are the worst of the bleak options facing recession-hit companies
Some groups are becoming more creative, offering short-time working rather than redundancies observes Andrew Hill in the FT
From the videotapes to the workplace hugs, much of Broadcast News, the 1987 satire on media, looks old-fashioned. But when I watched the film again recently, as an escape from pandemic-provoked gloom, the scene where the network announces a round of redundancies seemed raw and relevant.
“If there’s anything I can do,” says the network director, relieved at how a veteran newsman has accepted the news of his forced early retirement. “Well, I certainly hope you die soon,” responds the departing colleague.
Similar scenes are playing out at companies around the world. Marks and Spencer, the retailer, Melrose, which owns venerable manufacturer GKN, New York-based Macy’s department store, and European aircraft-maker Airbus have all announced potential cuts in recent weeks. Manufacturing trade group Make UK has warned of a “jobs bloodbath”. Newsrooms have been particularly hard hit.
One added twist is that some of today’s lay-off conversations with unlucky staff will take place by video link rather than in person — easier for nervous managers, but crueller for the people they are laying off.
Another, more positive, development is that companies are becoming more creative as they brace for recession, turning to short-time working rather than lay-offs. As governments remove subsidies, what was a simple decision to hold staff in reserve, rather than fire them, will become more complicated. But avoiding permanent cuts makes sense, according to David Cote, former chief executive of Honeywell. The sheer cost of severance — in time, money and administrative hassle — mounts up. Often you have to hire the staff back to meet demand as the economy recovers.
“If someone told you that it would take you six months to build a factory, six months to recover your investment, you’ll get a return for six months, and then you’ll shut it down, you’d never go for it because it would be ridiculous,” he writes in his new book Winning Now, Winning Later. “Yet somehow leaders think it makes sense to do the same with people.”
Honeywell’s reliance on furlough — combined with its commitment to customers, sustained long-term investment, and attention to supplier relations — helped it bounce back.
Research also backs up the hunch on which Mr Cote acted 12 years ago. A 2011 OECD review of 19 countries’ experience of short-time working confirmed such schemes preserved permanent workers’ jobs beyond recession. In a recent article for Harvard Business Review, Sandra Sucher and Shalene Gupta applaud US companies such as Tesla and Marriott for using furlough to soften the blow of this crisis. Such schemes let companies “maintain connections with their employees, cut costs while still providing employee benefits, and create a path to a seamless recovery”.
Yet defending the decision in 2008 was one of the toughest points of Mr Cote’s tenure as Honeywell’s boss.
Management, employees and investors were not “trained” to accept short-time working as a solution, he told me. Laws differed from country to country, and even state to state. In regions where furlough was put to a vote, support varied in line with the enthusiasm of managers for the measure. Elsewhere, while workers backed short-time working publicly, as Honeywell pushed through successive rounds of furlough, Mr Cote received private notes from staff urging him to “lay off 10 per cent of our people and have done with it”. As one FT reader commented when we asked recently about individuals’ experience of furlough: “Loneliness, anxiety, depression and guilt are hourly occurrences.”
“All recessions are different,” Mr Cote says, “but they all feel miserable.” He remains convinced, though, that irreversible job cuts would have undermined Honeywell’s ability to respond to an economic upturn, ultimately harming staff, investors and customers.
Jamie Dimon, chief executive of JPMorgan Chase, has declared that “this is not a normal recession”. Mr Cote suggests, rather, that 80 per cent of the actions companies take to respond to recession are common across downturns, whether triggered by oil crises, inflation, terror attacks or mortgage mis-selling. To managers, he offers this advice: don’t panic; think independently; keep investing for the long term; communicate; and “whatever you do, let people know you’re sacrificing too”.
Some things, though, don’t change. “This is a brutal lay-off,” remarks Jack Nicholson’s smug anchorman, visiting the newsroom in Broadcast News, supposedly in solidarity with his colleagues. “You can make it a little less brutal by knocking a million dollars or so off your salary,” says his boss, before rapidly backtracking in the face of the trademark Nicholson glare.
From the videotapes to the workplace hugs, much of Broadcast News, the 1987 satire on media, looks old-fashioned. But when I watched the film again recently, as an escape from pandemic-provoked gloom, the scene where the network announces a round of redundancies seemed raw and relevant.
“If there’s anything I can do,” says the network director, relieved at how a veteran newsman has accepted the news of his forced early retirement. “Well, I certainly hope you die soon,” responds the departing colleague.
Similar scenes are playing out at companies around the world. Marks and Spencer, the retailer, Melrose, which owns venerable manufacturer GKN, New York-based Macy’s department store, and European aircraft-maker Airbus have all announced potential cuts in recent weeks. Manufacturing trade group Make UK has warned of a “jobs bloodbath”. Newsrooms have been particularly hard hit.
One added twist is that some of today’s lay-off conversations with unlucky staff will take place by video link rather than in person — easier for nervous managers, but crueller for the people they are laying off.
Another, more positive, development is that companies are becoming more creative as they brace for recession, turning to short-time working rather than lay-offs. As governments remove subsidies, what was a simple decision to hold staff in reserve, rather than fire them, will become more complicated. But avoiding permanent cuts makes sense, according to David Cote, former chief executive of Honeywell. The sheer cost of severance — in time, money and administrative hassle — mounts up. Often you have to hire the staff back to meet demand as the economy recovers.
“If someone told you that it would take you six months to build a factory, six months to recover your investment, you’ll get a return for six months, and then you’ll shut it down, you’d never go for it because it would be ridiculous,” he writes in his new book Winning Now, Winning Later. “Yet somehow leaders think it makes sense to do the same with people.”
Honeywell’s reliance on furlough — combined with its commitment to customers, sustained long-term investment, and attention to supplier relations — helped it bounce back.
Research also backs up the hunch on which Mr Cote acted 12 years ago. A 2011 OECD review of 19 countries’ experience of short-time working confirmed such schemes preserved permanent workers’ jobs beyond recession. In a recent article for Harvard Business Review, Sandra Sucher and Shalene Gupta applaud US companies such as Tesla and Marriott for using furlough to soften the blow of this crisis. Such schemes let companies “maintain connections with their employees, cut costs while still providing employee benefits, and create a path to a seamless recovery”.
Yet defending the decision in 2008 was one of the toughest points of Mr Cote’s tenure as Honeywell’s boss.
Management, employees and investors were not “trained” to accept short-time working as a solution, he told me. Laws differed from country to country, and even state to state. In regions where furlough was put to a vote, support varied in line with the enthusiasm of managers for the measure. Elsewhere, while workers backed short-time working publicly, as Honeywell pushed through successive rounds of furlough, Mr Cote received private notes from staff urging him to “lay off 10 per cent of our people and have done with it”. As one FT reader commented when we asked recently about individuals’ experience of furlough: “Loneliness, anxiety, depression and guilt are hourly occurrences.”
“All recessions are different,” Mr Cote says, “but they all feel miserable.” He remains convinced, though, that irreversible job cuts would have undermined Honeywell’s ability to respond to an economic upturn, ultimately harming staff, investors and customers.
Jamie Dimon, chief executive of JPMorgan Chase, has declared that “this is not a normal recession”. Mr Cote suggests, rather, that 80 per cent of the actions companies take to respond to recession are common across downturns, whether triggered by oil crises, inflation, terror attacks or mortgage mis-selling. To managers, he offers this advice: don’t panic; think independently; keep investing for the long term; communicate; and “whatever you do, let people know you’re sacrificing too”.
Some things, though, don’t change. “This is a brutal lay-off,” remarks Jack Nicholson’s smug anchorman, visiting the newsroom in Broadcast News, supposedly in solidarity with his colleagues. “You can make it a little less brutal by knocking a million dollars or so off your salary,” says his boss, before rapidly backtracking in the face of the trademark Nicholson glare.
Tuesday 9 May 2017
Enemies of the state: the 40-year Tory project to shrink public services
Polly Toynbee and David Walker in The Guardian
Just as he reaches the end of his inspection, the environmental health officer spots the meat pies. A stack of them have tumbled on to a shelf on the floor of the storeroom, not in the chiller. A flicker of alarm crosses the transport cafe owner’s face. Pies are big on his menu. He sighs. “Well, it’s complicated,” and the story unfolds. The pies used to be made by so-and-so but the company owners split acrimoniously and it’s all a bit chaotic now.
“Ah, yes,” says the inspector. “I know this one.” He has the local background and, as he probes and prods, the cafe proprietor admits sheepishly that the pies arrive with a scrappy piece of paper, no official invoice, dubiously labelled “organic” with no list of contents, paid for in cash to an old chap called Gramps off the back of a lorry.
A boy plays on an iPad at an early-learning centre. The idea of the state and what it provides has been systematically derided. Photograph: Lukas Coch/AAP
School are losing staff in the latest round of cuts. Photograph: Dave Thompson/PA
What is the social glue that binds us to Britishness if not the things we share collectively? Government underpins pride in who we are. When fine old town halls from Sheffield to Hornsey, north London, are sold off as boutique hotels, when councils sell slices of parks, when libraries and local museums close, we lose what defines us. Contracts with Capita, Virgin, Sodexo and the rest are written on water. The sale of everything from power stations, property and basic transport systems to foreign powers is a form of treason other countries resist.
Marketisers, outsourcers, asset-strippers and state-shrinkers are not patriots: they surf the world on seas of money, undermining community and nationality. The NHS and the BBC stand as last bastions, but under constant assault from anti-statists affronted by their very success.
Part of the dismembering has been the deliberate complexification of services and blurred lines of responsibility. Successive governments’ attitude to services has been to cut bits off, chop them up and, bizarrely, force their limbs to compete with one another, trying to portray them as commercial. Schools must be academies in chains with reassuringly market-oriented names – Enterprise, Oasis, Reach or Harris (named after the carpets magnate). The NHS must be broken into trusts vying with each other for business. The frail must hold individual budgets to purchase their own care privately. Some of these services may be good – but this approach indicates a flight from the idea that the state itself does good.
Outsourcing, offloading and privatising leaves less of the state and less that is ostensibly ours, even though it is still paid for by our taxes. Gigantic, mainly overseas companies and often foreign governments own slabs of utilities, land, property and infrastructure that were once ours.
Not even our sewage belongs to us. The government created a company called Tideway, comfortably underpinned by Treasury guarantees, to work on behalf of privately owned Thames Water to construct a £4.2bn tunnel to carry sewagealongside the river. Thames Water is owned by shifting international investors, whose sealed, ambiguous contracts include Chinese corporations supervised by the Communist party, although cheaper finance could be raised by the British state. The National Audit Office is rightly anxious about the taxpayer’s huge liabilities, but Tideway managed to frighten ministers with warnings of raw sewage spilling into the Thames. So who gains?
Sir Ian Byatt, a former Treasury official who was the first head of Ofwat, the water regulator, gives a forthright answer: neither the fish in the Thames nor households will benefit. “Thames Water is an incredibly complicated company. There will be an array of extra dividends sliced and diced into the pockets of all these different interests along the way.” The state could do simpler, smaller schemes more cheaply. Paying needlessly high interest rates, the cost of the super sewer will be added to all Thames Water customers’ bills, who have no choice but to pay. Digging has just begun.
What we do together through our taxes … is worth more than any private gain through market transactions
Since the Thatcher privatisations, the UK has been subject to a giant experiment in the ability of markets to sustain the common interest, with light-touch regulation. Over time, the failures have multiplied. The government itself now inveighs against the cartel grip of the big six energy companies. Markets dashed for gas, regardless of security of supply; they ditched nuclear and only turned to wind and solar with hefty state incentives, then stopped as soon as those were axed. However faltering, only the state can confront climate change – which is why the right clings to climate change denial.
Localism has often been another assault on the state, breaking up central government to cast chunks down to impoverished councils, handing over the axe. Cuts of a fifth in English council budgets between 2010 and 2015 have been grossly unfair, poor Liverpool cut hardest, rich Dorset least. Soon councils will keep their own business rates, worsening regional inequalities: Westminster makes so much it could pay its denizens a dividend, while Middlesbrough is left penniless.
Our ageing population needs more, not less state support. Take podiatry, an unglamorous backwater of the NHS, cut back by commissioners struggling to finance A&E or maternity. But feet matter, too, never more than with the rocketing cases of type 2 diabetes. Southampton is typical, where we found how cuts to NHS foot care have serious consequences for mobility: every week in England, 135 diabetics have gangrenous limbs amputated that could have been saved if foot ulcers had been caught sooner. Across the NHS, cuts in prevention lead to higher spending later.
In Shropshire, the sudden axing of the Link bus service connecting 5,000 people across a string of villages has wrecked many lives: those without cars who used to travel daily to Bridgnorth for work, shopping or doctor’s appointments are now left isolated with just one weekly bus, driven by a volunteer. Compare that with the borough of Reading, a rare council that clung to running its own buses when John Major privatised most: it makes £1m a year so efficiently that 93% of journeys are taken by its popular buses, not cars. That’s just one challenge to the prevailing politics that claims the state always does everything worse.
What confronts Britain in the 21st century is a class of problem that only collective action can solve. How to stop inequality being amplified generation after generation? The country’s 3,500 children’s centres were one of Labour’s best achievements, founded on all the evidence that helping children in their early years makes most difference. But many centres have shut, had vital services ripped out, leaving others no more than shells for skimpy private nurseries. But on a recent visit to Springfield children’s centre in the West Midlands district of Sandwell, we saw parents on the edge of despair rescued; listening to their stories should weaken the hardest anti-state heart.
Only the state can deal with looming problems in productivity, regional imbalance, energy, climate change, automation, reskilling. Take research and development. The Sheffield engineering startup Magnomatics is developing a magnetic gearbox for hybrid cars that was invented at Sheffield University in 2000 and cuts fuel consumption by 35%. Such projects take patience and funding, both in scarce qualities among short-termist venture capitalists; only state support with adequate research funds could see the gearbox through to use in cars for 2022. But Britain has a lot less R&D for these “catapult” schemes than competitor countries.
Take another case of creative state funding: the Royal Shakespeare Company took seven years to develop the worldwide hit Matilda the Musical, “the most difficult and expensive show”, according to the executive director and “nothing short of a miracle” according to reviewers. No commercial producer could invest that much for so long: now it yields great dividends for the RSC and the exchequer. But though the cultural sector, broadly, brings in £77bn a year, funding for Arts Council England has been reduced and the next generation of creators are being stymied by a Gradgrind curriculum with few schools able to afford art, design, drama, music and dance teaching.
The A&E department at Queen’s Medical Centre, Nottingham. Public servants soldier on with swelling caseloads. Photograph: David Sillitoe for the Guardian
The old anti-state canard pretends private enterprise creates national wealth, while governments spend and squander it. After 2010, the Conservatives claimed public employment “crowded out” private initiative, so they cut more than a million public sector jobs. Yet wealth creation depends on a strong state, not only for protection of property by the law, but for decent roads and railways, regulators ensuring fair markets, for the health and education of private enterprise staff, and for the same clean air we all breathe. The business world has a mistaken cultural reflex that pleads for low tax and less government, yet everything that makes commerce flourish relies on a strong state.
Public servants soldier on with swelling caseloads but less pay, keeping going, often heroically dedicated. Fixed to a 1% rise, by 2020 they will be earning no more than they were in 2004, according to the Resolution Foundation. Of course, not all are heroes: vigilant management has to ensure the public face of the state is kind, effective and innovative. Polls show great popular affection for public servants whom people know – their child’s teacher, their doctor, their local police. Yet they have imbibed the political poison that thinks the state is probably bad value, inefficient and extravagant. A few fat-cat chief executive stories die hard. Is that where their taxes go?
This is a hymn of praise to what should be blindingly obvious – the triumph of our collective endeavours. Years of chiselling away at the foundations of trust in good government mean it needs saying again and again: what we do together through paying our taxes and concerning ourselves with our common good is worth more than any private gain through market transactions.
Margaret Thatcher said you will always spend the pound in your pocket better than the state will; her political heirs believe it still. But they are profoundly wrong in fact and in principle. What we buy together is worth infinitely more than anything we can buy in a shop. In a renewed state lies strength and identity – and a reclaimed sense of lost nationhood.
Dismembered: How the Attack on the State Harms Us All by Polly Toynbee and David Walker is published by Faber, £9.99.
Just as he reaches the end of his inspection, the environmental health officer spots the meat pies. A stack of them have tumbled on to a shelf on the floor of the storeroom, not in the chiller. A flicker of alarm crosses the transport cafe owner’s face. Pies are big on his menu. He sighs. “Well, it’s complicated,” and the story unfolds. The pies used to be made by so-and-so but the company owners split acrimoniously and it’s all a bit chaotic now.
“Ah, yes,” says the inspector. “I know this one.” He has the local background and, as he probes and prods, the cafe proprietor admits sheepishly that the pies arrive with a scrappy piece of paper, no official invoice, dubiously labelled “organic” with no list of contents, paid for in cash to an old chap called Gramps off the back of a lorry.
Here in Huntingdonshire, the number of environmental health officers has been cut by a third over the past five years. “But the number of food outlets grows, 1,300 on our patch, with a high churn in ownership,” says the chief officer.
These public servants are a quiet lot, meticulous, precise; just another workaday arm of the state that goes unnoticed. It’s the taken-for-granted state. If a waiter swears the chicken tikka masala contains no peanuts, we expect someone to have checked, as the wellbeing of those with severe allergies depends on it.
But austerity is sweeping all this away. Local knowledge and expertise dissipate. Who remembers, before new building starts, the location of contaminated land, industrial waste, disused gas works? Pest control is on the wane. There is no out-of-hours anti-noise service.
These public servants are a quiet lot, meticulous, precise; just another workaday arm of the state that goes unnoticed. It’s the taken-for-granted state. If a waiter swears the chicken tikka masala contains no peanuts, we expect someone to have checked, as the wellbeing of those with severe allergies depends on it.
But austerity is sweeping all this away. Local knowledge and expertise dissipate. Who remembers, before new building starts, the location of contaminated land, industrial waste, disused gas works? Pest control is on the wane. There is no out-of-hours anti-noise service.
A boy plays on an iPad at an early-learning centre. The idea of the state and what it provides has been systematically derided. Photograph: Lukas Coch/AAP
The fast-disappearing environmental health officer – in England, their numbers down by 25% over five years – is just one example of how the state is shrinking, its capacities dwindling and its fabric stretching thin. This is not just a regrettable deficit-reducing necessity, but a long-term political project to return us to a pre-second world war dominance of the private realm. And so far, that seems to have worked, with relatively little complaint from a public that has widely accepted the story of the exchequer’s “maxed-out credit card”. Opinion polls suggest a sense of resignation that has allowed the functions of the state to be dismembered, fragmented and degraded as deliberate policy.
Diminished trust in the public realm is part of the explanation for the Brexit vote. “Take back control” was a perverse slogan that cleverly captured a feeling of things falling apart. That is because the idea of the state has been systematically disrespected and derided as a concept to be regarded with suspicion. People may rely in their daily lives on myriad unseen state services, yet they are encouraged to despise the bureaucrats who keep everything running.
The shrinkage was no emergency operation to balance the books: it was the realisation of a 40-year rightwing project to downgrade, downsize and disparage the public realm. David Cameron and George Osborne committed to push the state down to 36% of GDP or less, for ever, and Philip Hammond repeated that target in the March budget. Current spending is now just under 38%, with the target of 36% to be reached in 2020. Getting there means a volume of public services greatly smaller than in equivalent European countries. People ask why German roads, health services and civic environments are so superior: the answer is that their state is larger than ours, at 44% of GDP. Why is Danish wellbeing so much higher than ours? Their state provides more comfort, being in receipt of 50% of GDP.
In the general election, Brexit occludes the question, which ultimately every election has to be about: are we willing to pay for a state that secures wellbeing? The Tories won’t admit that Brexit demands more not less government. Theresa May has talked of the good that government does, but has declined to face the fiscal consequences. For its part, Labour (and the Scottish Nationalists) won’t acknowledge that soaking “the rich” and raking in more from uncollected taxes won’t provide enough revenue: median earners and all of us have to pay more.
Meanwhile, the NHS is now squeezed more harshly than ever in its history. Schools are losing staff in the latest cuts. This April’s removal of an epic £12bn in credits and benefitswill cause inequality to take off as steeply as it did in the 1980s, according to the Institute for Fiscal Studies, with a 50% rise in child poverty by 2020.
What is less reported is how the thinning of public services weakens bonds of community as the emblems of orderliness disappear – the vanishing park keepers, estate caretakers, station masters, guards, crown post office counters, district nurses, health visitors, local police on the beat and community support officers.
When she was home secretary May cut police numbers by a fifth. Crime is falling across the western world, but the work of the police is increasingly about reassurance and social order. The thinning blue line fills the gaps left as other services stretch and snap: it is the last resort. On a typical night shift in Bedford and Luton, police hear the cries of distress, the suicide attempts, the terrified, the psychotic and the shrieking family rows that remind us that people will always need help; the police are often the only ones left to respond.
Diminished trust in the public realm is part of the explanation for the Brexit vote. “Take back control” was a perverse slogan that cleverly captured a feeling of things falling apart. That is because the idea of the state has been systematically disrespected and derided as a concept to be regarded with suspicion. People may rely in their daily lives on myriad unseen state services, yet they are encouraged to despise the bureaucrats who keep everything running.
The shrinkage was no emergency operation to balance the books: it was the realisation of a 40-year rightwing project to downgrade, downsize and disparage the public realm. David Cameron and George Osborne committed to push the state down to 36% of GDP or less, for ever, and Philip Hammond repeated that target in the March budget. Current spending is now just under 38%, with the target of 36% to be reached in 2020. Getting there means a volume of public services greatly smaller than in equivalent European countries. People ask why German roads, health services and civic environments are so superior: the answer is that their state is larger than ours, at 44% of GDP. Why is Danish wellbeing so much higher than ours? Their state provides more comfort, being in receipt of 50% of GDP.
In the general election, Brexit occludes the question, which ultimately every election has to be about: are we willing to pay for a state that secures wellbeing? The Tories won’t admit that Brexit demands more not less government. Theresa May has talked of the good that government does, but has declined to face the fiscal consequences. For its part, Labour (and the Scottish Nationalists) won’t acknowledge that soaking “the rich” and raking in more from uncollected taxes won’t provide enough revenue: median earners and all of us have to pay more.
Meanwhile, the NHS is now squeezed more harshly than ever in its history. Schools are losing staff in the latest cuts. This April’s removal of an epic £12bn in credits and benefitswill cause inequality to take off as steeply as it did in the 1980s, according to the Institute for Fiscal Studies, with a 50% rise in child poverty by 2020.
What is less reported is how the thinning of public services weakens bonds of community as the emblems of orderliness disappear – the vanishing park keepers, estate caretakers, station masters, guards, crown post office counters, district nurses, health visitors, local police on the beat and community support officers.
When she was home secretary May cut police numbers by a fifth. Crime is falling across the western world, but the work of the police is increasingly about reassurance and social order. The thinning blue line fills the gaps left as other services stretch and snap: it is the last resort. On a typical night shift in Bedford and Luton, police hear the cries of distress, the suicide attempts, the terrified, the psychotic and the shrieking family rows that remind us that people will always need help; the police are often the only ones left to respond.
School are losing staff in the latest round of cuts. Photograph: Dave Thompson/PA
What is the social glue that binds us to Britishness if not the things we share collectively? Government underpins pride in who we are. When fine old town halls from Sheffield to Hornsey, north London, are sold off as boutique hotels, when councils sell slices of parks, when libraries and local museums close, we lose what defines us. Contracts with Capita, Virgin, Sodexo and the rest are written on water. The sale of everything from power stations, property and basic transport systems to foreign powers is a form of treason other countries resist.
Marketisers, outsourcers, asset-strippers and state-shrinkers are not patriots: they surf the world on seas of money, undermining community and nationality. The NHS and the BBC stand as last bastions, but under constant assault from anti-statists affronted by their very success.
Part of the dismembering has been the deliberate complexification of services and blurred lines of responsibility. Successive governments’ attitude to services has been to cut bits off, chop them up and, bizarrely, force their limbs to compete with one another, trying to portray them as commercial. Schools must be academies in chains with reassuringly market-oriented names – Enterprise, Oasis, Reach or Harris (named after the carpets magnate). The NHS must be broken into trusts vying with each other for business. The frail must hold individual budgets to purchase their own care privately. Some of these services may be good – but this approach indicates a flight from the idea that the state itself does good.
Outsourcing, offloading and privatising leaves less of the state and less that is ostensibly ours, even though it is still paid for by our taxes. Gigantic, mainly overseas companies and often foreign governments own slabs of utilities, land, property and infrastructure that were once ours.
Not even our sewage belongs to us. The government created a company called Tideway, comfortably underpinned by Treasury guarantees, to work on behalf of privately owned Thames Water to construct a £4.2bn tunnel to carry sewagealongside the river. Thames Water is owned by shifting international investors, whose sealed, ambiguous contracts include Chinese corporations supervised by the Communist party, although cheaper finance could be raised by the British state. The National Audit Office is rightly anxious about the taxpayer’s huge liabilities, but Tideway managed to frighten ministers with warnings of raw sewage spilling into the Thames. So who gains?
Sir Ian Byatt, a former Treasury official who was the first head of Ofwat, the water regulator, gives a forthright answer: neither the fish in the Thames nor households will benefit. “Thames Water is an incredibly complicated company. There will be an array of extra dividends sliced and diced into the pockets of all these different interests along the way.” The state could do simpler, smaller schemes more cheaply. Paying needlessly high interest rates, the cost of the super sewer will be added to all Thames Water customers’ bills, who have no choice but to pay. Digging has just begun.
What we do together through our taxes … is worth more than any private gain through market transactions
Since the Thatcher privatisations, the UK has been subject to a giant experiment in the ability of markets to sustain the common interest, with light-touch regulation. Over time, the failures have multiplied. The government itself now inveighs against the cartel grip of the big six energy companies. Markets dashed for gas, regardless of security of supply; they ditched nuclear and only turned to wind and solar with hefty state incentives, then stopped as soon as those were axed. However faltering, only the state can confront climate change – which is why the right clings to climate change denial.
Localism has often been another assault on the state, breaking up central government to cast chunks down to impoverished councils, handing over the axe. Cuts of a fifth in English council budgets between 2010 and 2015 have been grossly unfair, poor Liverpool cut hardest, rich Dorset least. Soon councils will keep their own business rates, worsening regional inequalities: Westminster makes so much it could pay its denizens a dividend, while Middlesbrough is left penniless.
Our ageing population needs more, not less state support. Take podiatry, an unglamorous backwater of the NHS, cut back by commissioners struggling to finance A&E or maternity. But feet matter, too, never more than with the rocketing cases of type 2 diabetes. Southampton is typical, where we found how cuts to NHS foot care have serious consequences for mobility: every week in England, 135 diabetics have gangrenous limbs amputated that could have been saved if foot ulcers had been caught sooner. Across the NHS, cuts in prevention lead to higher spending later.
In Shropshire, the sudden axing of the Link bus service connecting 5,000 people across a string of villages has wrecked many lives: those without cars who used to travel daily to Bridgnorth for work, shopping or doctor’s appointments are now left isolated with just one weekly bus, driven by a volunteer. Compare that with the borough of Reading, a rare council that clung to running its own buses when John Major privatised most: it makes £1m a year so efficiently that 93% of journeys are taken by its popular buses, not cars. That’s just one challenge to the prevailing politics that claims the state always does everything worse.
What confronts Britain in the 21st century is a class of problem that only collective action can solve. How to stop inequality being amplified generation after generation? The country’s 3,500 children’s centres were one of Labour’s best achievements, founded on all the evidence that helping children in their early years makes most difference. But many centres have shut, had vital services ripped out, leaving others no more than shells for skimpy private nurseries. But on a recent visit to Springfield children’s centre in the West Midlands district of Sandwell, we saw parents on the edge of despair rescued; listening to their stories should weaken the hardest anti-state heart.
Only the state can deal with looming problems in productivity, regional imbalance, energy, climate change, automation, reskilling. Take research and development. The Sheffield engineering startup Magnomatics is developing a magnetic gearbox for hybrid cars that was invented at Sheffield University in 2000 and cuts fuel consumption by 35%. Such projects take patience and funding, both in scarce qualities among short-termist venture capitalists; only state support with adequate research funds could see the gearbox through to use in cars for 2022. But Britain has a lot less R&D for these “catapult” schemes than competitor countries.
Take another case of creative state funding: the Royal Shakespeare Company took seven years to develop the worldwide hit Matilda the Musical, “the most difficult and expensive show”, according to the executive director and “nothing short of a miracle” according to reviewers. No commercial producer could invest that much for so long: now it yields great dividends for the RSC and the exchequer. But though the cultural sector, broadly, brings in £77bn a year, funding for Arts Council England has been reduced and the next generation of creators are being stymied by a Gradgrind curriculum with few schools able to afford art, design, drama, music and dance teaching.
The A&E department at Queen’s Medical Centre, Nottingham. Public servants soldier on with swelling caseloads. Photograph: David Sillitoe for the Guardian
The old anti-state canard pretends private enterprise creates national wealth, while governments spend and squander it. After 2010, the Conservatives claimed public employment “crowded out” private initiative, so they cut more than a million public sector jobs. Yet wealth creation depends on a strong state, not only for protection of property by the law, but for decent roads and railways, regulators ensuring fair markets, for the health and education of private enterprise staff, and for the same clean air we all breathe. The business world has a mistaken cultural reflex that pleads for low tax and less government, yet everything that makes commerce flourish relies on a strong state.
Public servants soldier on with swelling caseloads but less pay, keeping going, often heroically dedicated. Fixed to a 1% rise, by 2020 they will be earning no more than they were in 2004, according to the Resolution Foundation. Of course, not all are heroes: vigilant management has to ensure the public face of the state is kind, effective and innovative. Polls show great popular affection for public servants whom people know – their child’s teacher, their doctor, their local police. Yet they have imbibed the political poison that thinks the state is probably bad value, inefficient and extravagant. A few fat-cat chief executive stories die hard. Is that where their taxes go?
This is a hymn of praise to what should be blindingly obvious – the triumph of our collective endeavours. Years of chiselling away at the foundations of trust in good government mean it needs saying again and again: what we do together through paying our taxes and concerning ourselves with our common good is worth more than any private gain through market transactions.
Margaret Thatcher said you will always spend the pound in your pocket better than the state will; her political heirs believe it still. But they are profoundly wrong in fact and in principle. What we buy together is worth infinitely more than anything we can buy in a shop. In a renewed state lies strength and identity – and a reclaimed sense of lost nationhood.
Dismembered: How the Attack on the State Harms Us All by Polly Toynbee and David Walker is published by Faber, £9.99.
Saturday 26 March 2016
Osborne needn’t say sorry – after all his Budget was just a suggestion
Mark Steel in The Independent
There’s no need for George Osborne to say sorry for trying to cut money to the disabled: he says it was a genuine mistake, and he couldn’t possibly know that cutting money to the disabled would lead to the disabled being poorer in any way.
How could anyone have predicted that taking away money for carers who get people dressed and take them to the toilet might have worried anyone at all? Is he supposed to be psychic? There was every chance these measures would have been welcomed by the disabled. They’d have been free to mess on the floor instead of fussing about going backwards and forwards to a toilet, leaving plenty of time to pursue other leisure activities such as go-karting.
We all make mistakes. Some of us put cardboard packaging in the wrong recycling box. And some of us try to take £4 billion off the disabled. We can’t say sorry for everything can we? In any case, Osborne’s explained the reason for these cuts is to build a strong economy, and there’s no greater sign of a strong economy that someone with spina bifida laying in their pyjamas for three years because we’ve made redundant the carer that used to get them dressed. And, to be fair, there was an element of genius about his Budget. Because up until last week, it was believed to be impossible to come up with benefit cuts so appalling that Iain Duncan Smith would oppose them. Osborne should receive the credit due for overturning such a natural law.
READ MORE
The buck should stop with the PM for his immoral cuts
He probably announced his intention in a gentleman’s club, declaring over a bottle of port: “Gentlemen, I hereby declare I have discovered cuts so gargantuan, so magnificently despicable, I contend the fellow Duncan- Smith shall scream with fury at their injustice.” Then the others must have stood upright and bellowed “Preposterous, Sir. Such cuts are not possible within the known universe. To discover such reductions would confound the very essence of mathematics, you are a fool, Sir.”
And they had a point, because Duncan Smith was dedicated to cutting benefits. When he got home from his job of cutting benefits, he used to cut more benefits in his spare time for fun. His wife would knock on the shed door on a Sunday afternoon, saying “Come and have a rest, dear, you’ve been in here since six this morning”, and he’d reply, “I won’t be long, I’m just working out how to make people in a coma attend job interviews.” And he went berserk about Osborne’s cuts.
So instead of saying sorry, the Chancellor must have expected to ride into the House of Commons on a white horse while his MPs begged him to touch them in the belief it will make them taller and live forever.
His problem was the reaction from everyone else as well as Duncan Smith. The Conservatives seem to believe their own newspapers and assume they have no opposition, so they can do whatever they like, as most people will think ‘“I don’t mind that the Tories have stopped my disabled aunt going to the toilet, because at least their leader sings the National Anthem’”.
David Cameron must be encouraged in this belief by the way that, whenever Jeremy Corbyn is speaking in Parliament, his own Labour MPs sit behind him sneering and flicking through Viz magazine or doing the puzzles in Take- a- Break. You expect them to start making humming noises and flicking paper clips at his head while he’s responding to a statement about Syria.
But on this issue, so many people were furious that the Government had to abandon huge chunks of their plans, and Nicky Morgan adopted the imaginative line that the entire Budget was “just a suggestion.”
This is certainly a modern touch; to deliver a Budget – a 90-minute, precisely written detailed speech, pieced together for months and concerning exact plans for every aspect of the economy – and then say “But hey, that’s just a suggestion.” Next year, the Budget speech will start: “OK let’s all get in a circle and go round saying our names, then we can break up into workshops and write down some ideas on what we think should be spent on what stuff, then come together for feedback after lunch.”
READ MORE
Osborne repeatedly refuses to apologise for disability cuts
In some ways he’s already gone further than that, because now he’s been forced to abandon his plans, his figures are four billion pounds out. But he says that doesn’t matter as he’s on course to meet his target anyway. So he didn’t even need to make the cuts, he just fancied doing it anyway. Maybe he thought it’s not fair the disabled get all this disability money every single year, we should let other groups have it for a change; people who keep tropical fish, perhaps.
Combined with all his targets he gets nowhere near keeping, it suggests he sees numbers as an unnecessary distraction. In his Autumn Statement he’ll tell us: “It does appear that when I was working out the country’s money, I multiplied when I should have divided so we’ll have to sell the Navy, but hey ho, the important thing is if you ignore the figures we are stronger and sounder than ever before.”
It’s possible that what forced the Conservatives to change their plans for the economy, for the second time in a few months, is a vast, if not always visible, opposition. And however chaotic Labour may appear, at least under Jeremy Corbyn they now oppose the cuts.
Or maybe Osborne is honest, and as he said, this episode proves he listens. Similarly, if the police catch a burglar robbing a house, and the burglar then agrees to put back the stuff he tried to nick, this proves the burglar listens, and we should in no way expect him to say sorry.
There’s no need for George Osborne to say sorry for trying to cut money to the disabled: he says it was a genuine mistake, and he couldn’t possibly know that cutting money to the disabled would lead to the disabled being poorer in any way.
How could anyone have predicted that taking away money for carers who get people dressed and take them to the toilet might have worried anyone at all? Is he supposed to be psychic? There was every chance these measures would have been welcomed by the disabled. They’d have been free to mess on the floor instead of fussing about going backwards and forwards to a toilet, leaving plenty of time to pursue other leisure activities such as go-karting.
We all make mistakes. Some of us put cardboard packaging in the wrong recycling box. And some of us try to take £4 billion off the disabled. We can’t say sorry for everything can we? In any case, Osborne’s explained the reason for these cuts is to build a strong economy, and there’s no greater sign of a strong economy that someone with spina bifida laying in their pyjamas for three years because we’ve made redundant the carer that used to get them dressed. And, to be fair, there was an element of genius about his Budget. Because up until last week, it was believed to be impossible to come up with benefit cuts so appalling that Iain Duncan Smith would oppose them. Osborne should receive the credit due for overturning such a natural law.
READ MORE
The buck should stop with the PM for his immoral cuts
He probably announced his intention in a gentleman’s club, declaring over a bottle of port: “Gentlemen, I hereby declare I have discovered cuts so gargantuan, so magnificently despicable, I contend the fellow Duncan- Smith shall scream with fury at their injustice.” Then the others must have stood upright and bellowed “Preposterous, Sir. Such cuts are not possible within the known universe. To discover such reductions would confound the very essence of mathematics, you are a fool, Sir.”
And they had a point, because Duncan Smith was dedicated to cutting benefits. When he got home from his job of cutting benefits, he used to cut more benefits in his spare time for fun. His wife would knock on the shed door on a Sunday afternoon, saying “Come and have a rest, dear, you’ve been in here since six this morning”, and he’d reply, “I won’t be long, I’m just working out how to make people in a coma attend job interviews.” And he went berserk about Osborne’s cuts.
So instead of saying sorry, the Chancellor must have expected to ride into the House of Commons on a white horse while his MPs begged him to touch them in the belief it will make them taller and live forever.
His problem was the reaction from everyone else as well as Duncan Smith. The Conservatives seem to believe their own newspapers and assume they have no opposition, so they can do whatever they like, as most people will think ‘“I don’t mind that the Tories have stopped my disabled aunt going to the toilet, because at least their leader sings the National Anthem’”.
David Cameron must be encouraged in this belief by the way that, whenever Jeremy Corbyn is speaking in Parliament, his own Labour MPs sit behind him sneering and flicking through Viz magazine or doing the puzzles in Take- a- Break. You expect them to start making humming noises and flicking paper clips at his head while he’s responding to a statement about Syria.
But on this issue, so many people were furious that the Government had to abandon huge chunks of their plans, and Nicky Morgan adopted the imaginative line that the entire Budget was “just a suggestion.”
This is certainly a modern touch; to deliver a Budget – a 90-minute, precisely written detailed speech, pieced together for months and concerning exact plans for every aspect of the economy – and then say “But hey, that’s just a suggestion.” Next year, the Budget speech will start: “OK let’s all get in a circle and go round saying our names, then we can break up into workshops and write down some ideas on what we think should be spent on what stuff, then come together for feedback after lunch.”
READ MORE
Osborne repeatedly refuses to apologise for disability cuts
In some ways he’s already gone further than that, because now he’s been forced to abandon his plans, his figures are four billion pounds out. But he says that doesn’t matter as he’s on course to meet his target anyway. So he didn’t even need to make the cuts, he just fancied doing it anyway. Maybe he thought it’s not fair the disabled get all this disability money every single year, we should let other groups have it for a change; people who keep tropical fish, perhaps.
Combined with all his targets he gets nowhere near keeping, it suggests he sees numbers as an unnecessary distraction. In his Autumn Statement he’ll tell us: “It does appear that when I was working out the country’s money, I multiplied when I should have divided so we’ll have to sell the Navy, but hey ho, the important thing is if you ignore the figures we are stronger and sounder than ever before.”
It’s possible that what forced the Conservatives to change their plans for the economy, for the second time in a few months, is a vast, if not always visible, opposition. And however chaotic Labour may appear, at least under Jeremy Corbyn they now oppose the cuts.
Or maybe Osborne is honest, and as he said, this episode proves he listens. Similarly, if the police catch a burglar robbing a house, and the burglar then agrees to put back the stuff he tried to nick, this proves the burglar listens, and we should in no way expect him to say sorry.
Tuesday 22 March 2016
Iain Duncan Smith will do anything for Brexit – even tell the truth
Polly Toynbee in The Guardian
There’s only one question about Iain Duncan Smith: is he a “bastard”, as described by his former prime minister John Major, or a “shit” – as reportedly described by his current leader, David Cameron? For hypocrisy and outright dishonesty do you howl in indignation, or roar with crazed laughter at his new compassion? How has this architect of so much torment for so many, justifier of injustice, scourge of the poor and the sick, become the champion of underdogs? How can this Nosferatu say he never had a taste for blood?
As for David Cameron’s riposte yesterday – improving life chances, rebuilding sink estates? – reviving his old pretence of “modern compassionate Conservatism”, that deserves the same raspberries of ridicule. But he does it well, for those who hear the words and never see the facts on the ground. And now he is forced to abandon extra cuts.
What is the former welfare secretary up to? Look at the backers who defend him: all are Brexiteers, mostly on the right, not friends of the poor. He was always the pre-referendum ticking time bomb, and now he has pulled the pin to inflict maximum damage to the authority of the prime minister. As the Daily Express headline gloats: “Tory split helps fight to free us from Brussels.” The IDS backer and Europhobe Owen Paterson has never knowingly objected to cuts for the poor, nor has Bernard Jenkin: his wife, Baroness Jenkin, presented a Church of England report on 4 million people going hungry, saying: “Poor people don’t know how to cook. I had a large bowl of porridge today, which cost 4p.” In their world, poverty is always due to fecklessness: IDS never acknowledges that most of the poor are in work.
Worse than cuts has been this government’s relentless anti-poor propaganda, with George Osborne’s sneers at households sleeping on with blinds closed; or IDS’s attacks on the “something for nothing culture” as he warned those on benefits: “This is not an easy life any more, chum. I think you’re a slacker.”
The invention of “compassionate conservatism” came in 2002 when Duncan Smith staged a public epiphany with photographers in Glasgow’s Easterhouse estate: he said he was shocked by the wretchedness he saw. Cameron seized on this to detoxify the party. When I retraced Duncan Smith’s steps, I found those in the Easterhouse community centre he visited who had warmly welcomed his conversion now distraught at the effects of his policies. Many had been cut off benefits, one man with acute psychosis, another who was barely literate and failed to claim correctly. Food banks everywhere are filled with victims of sanctions: abolishing the emergency social fund – handing out £5 a day to the truly desperate – was emblematic.
Iain Duncan Smith rapped by watchdog for misusing benefits cap statistics
It’s hard to exaggerate the cruelty of his cuts, boasting of the £30bn “saved”. Not a croaky whisper of protest came from him at £12bn more cuts in the manifesto. The bedroom tax left most people unable to downsize, their income massively depleted. The benefits cap poleaxed families in the south-east. Universal credit has a 50-page online form, leaving many with learning difficulties or mental health problems unable to apply. Billed as a modest technical tidying up, universal credit has wasted billions with failed IT systems; it is years late and doesn’t do what he says it does: incentives to work are no better, its recipientslosing 65p or more in any extra pound they earn. It disincentivises partners from working, losing earnings in withdrawn credits.
IDS ignored warnings, claiming magical solutions to eternal welfare conundrums: how do you give the needy enough for a decent life without damaging the impulse to work? How do you taper benefits gently so that earning more doesn’t lose them money? At first he plainly didn’t understand the complexity: later he just denied it, claiming that putting six benefits together was “simplifying”. But each of those still has to be recalculated monthly.
His successor inherits a morass of expensive bungles and needless viciousness. IDS’s reign of terror extended to every jobcentre, though he denied there were targets for staff to knock claimants off benefits. The word “target” is replaced with euphemisms like “spinning plates”. One unhappy jobcentre adviser told me: “You park your conscience when you work here.” Advisers tell of orders to apply sanctions for tiny infractions, closing the claims of those who fail to follow the “50 steps to work” so they vanish from statistics. Every month managers check “sanction-raising figures”: low sanctioners are “managed out” of their jobs.
Duncan Smith’s numerical jiggery-pokery became legendary, undeterred by stern rebukes from the public accounts committee, the National Audit Office and the UK Statistics Authority. As few understand benefits, he felt free to make any claim and distort any figure. He, like Cameron and Osborne, is a serial user of factoids: the UK has 1% of the world’s population but spends 7% of the world’s welfare. True, but meaningless to compare ourselves with Sudan and other nations with no welfare.
Like Cameron yesterday, IDS denied cuts by pointing to the still rising total welfare bill. But rises in the population and numbers of pensioners, or in soaring housing benefit, are no comfort to those whose benefits certainly have been brutally cut. One legacy will be hundreds of thousands more children projected by the Institute for Fiscal Studies to fall into poverty by 2020. His answer was to change the measurement – until the Lords rebelled.
All this makes his sudden fit of truth-telling such a culture shock. He is entirely right: the budget was “deeply unfair”, extra money for the rich taken from poor and disabled people. How startlingly honest when he says his party ignores the poor because they don’t vote Tory. But what’s new?
Duncan Smith has always had a pious way, followed by irritability if challenged. The man’s psyche hardly matters, but he has a stock of self-belief and self-deceit that lets him utter sorrowful words of tough love towards the poor. Little is genuine – not his name, his qualifications, his repeated epiphanies. It’s the third time he has inflicted near-mortal damage on his party – against John Major, then as worst ever leader, now as would-be assassin of a winning leader.
In other times all this would be joy for Labour. But even they must realise this man’s only intent is to get Britain out of the EU. So gripping is the Brexit virus that its victims will sacrifice all other beliefs to pursue it. Here his chosen weapon is truth.
There’s only one question about Iain Duncan Smith: is he a “bastard”, as described by his former prime minister John Major, or a “shit” – as reportedly described by his current leader, David Cameron? For hypocrisy and outright dishonesty do you howl in indignation, or roar with crazed laughter at his new compassion? How has this architect of so much torment for so many, justifier of injustice, scourge of the poor and the sick, become the champion of underdogs? How can this Nosferatu say he never had a taste for blood?
As for David Cameron’s riposte yesterday – improving life chances, rebuilding sink estates? – reviving his old pretence of “modern compassionate Conservatism”, that deserves the same raspberries of ridicule. But he does it well, for those who hear the words and never see the facts on the ground. And now he is forced to abandon extra cuts.
What is the former welfare secretary up to? Look at the backers who defend him: all are Brexiteers, mostly on the right, not friends of the poor. He was always the pre-referendum ticking time bomb, and now he has pulled the pin to inflict maximum damage to the authority of the prime minister. As the Daily Express headline gloats: “Tory split helps fight to free us from Brussels.” The IDS backer and Europhobe Owen Paterson has never knowingly objected to cuts for the poor, nor has Bernard Jenkin: his wife, Baroness Jenkin, presented a Church of England report on 4 million people going hungry, saying: “Poor people don’t know how to cook. I had a large bowl of porridge today, which cost 4p.” In their world, poverty is always due to fecklessness: IDS never acknowledges that most of the poor are in work.
Worse than cuts has been this government’s relentless anti-poor propaganda, with George Osborne’s sneers at households sleeping on with blinds closed; or IDS’s attacks on the “something for nothing culture” as he warned those on benefits: “This is not an easy life any more, chum. I think you’re a slacker.”
The invention of “compassionate conservatism” came in 2002 when Duncan Smith staged a public epiphany with photographers in Glasgow’s Easterhouse estate: he said he was shocked by the wretchedness he saw. Cameron seized on this to detoxify the party. When I retraced Duncan Smith’s steps, I found those in the Easterhouse community centre he visited who had warmly welcomed his conversion now distraught at the effects of his policies. Many had been cut off benefits, one man with acute psychosis, another who was barely literate and failed to claim correctly. Food banks everywhere are filled with victims of sanctions: abolishing the emergency social fund – handing out £5 a day to the truly desperate – was emblematic.
Iain Duncan Smith rapped by watchdog for misusing benefits cap statistics
It’s hard to exaggerate the cruelty of his cuts, boasting of the £30bn “saved”. Not a croaky whisper of protest came from him at £12bn more cuts in the manifesto. The bedroom tax left most people unable to downsize, their income massively depleted. The benefits cap poleaxed families in the south-east. Universal credit has a 50-page online form, leaving many with learning difficulties or mental health problems unable to apply. Billed as a modest technical tidying up, universal credit has wasted billions with failed IT systems; it is years late and doesn’t do what he says it does: incentives to work are no better, its recipientslosing 65p or more in any extra pound they earn. It disincentivises partners from working, losing earnings in withdrawn credits.
IDS ignored warnings, claiming magical solutions to eternal welfare conundrums: how do you give the needy enough for a decent life without damaging the impulse to work? How do you taper benefits gently so that earning more doesn’t lose them money? At first he plainly didn’t understand the complexity: later he just denied it, claiming that putting six benefits together was “simplifying”. But each of those still has to be recalculated monthly.
His successor inherits a morass of expensive bungles and needless viciousness. IDS’s reign of terror extended to every jobcentre, though he denied there were targets for staff to knock claimants off benefits. The word “target” is replaced with euphemisms like “spinning plates”. One unhappy jobcentre adviser told me: “You park your conscience when you work here.” Advisers tell of orders to apply sanctions for tiny infractions, closing the claims of those who fail to follow the “50 steps to work” so they vanish from statistics. Every month managers check “sanction-raising figures”: low sanctioners are “managed out” of their jobs.
Duncan Smith’s numerical jiggery-pokery became legendary, undeterred by stern rebukes from the public accounts committee, the National Audit Office and the UK Statistics Authority. As few understand benefits, he felt free to make any claim and distort any figure. He, like Cameron and Osborne, is a serial user of factoids: the UK has 1% of the world’s population but spends 7% of the world’s welfare. True, but meaningless to compare ourselves with Sudan and other nations with no welfare.
Like Cameron yesterday, IDS denied cuts by pointing to the still rising total welfare bill. But rises in the population and numbers of pensioners, or in soaring housing benefit, are no comfort to those whose benefits certainly have been brutally cut. One legacy will be hundreds of thousands more children projected by the Institute for Fiscal Studies to fall into poverty by 2020. His answer was to change the measurement – until the Lords rebelled.
All this makes his sudden fit of truth-telling such a culture shock. He is entirely right: the budget was “deeply unfair”, extra money for the rich taken from poor and disabled people. How startlingly honest when he says his party ignores the poor because they don’t vote Tory. But what’s new?
Duncan Smith has always had a pious way, followed by irritability if challenged. The man’s psyche hardly matters, but he has a stock of self-belief and self-deceit that lets him utter sorrowful words of tough love towards the poor. Little is genuine – not his name, his qualifications, his repeated epiphanies. It’s the third time he has inflicted near-mortal damage on his party – against John Major, then as worst ever leader, now as would-be assassin of a winning leader.
In other times all this would be joy for Labour. But even they must realise this man’s only intent is to get Britain out of the EU. So gripping is the Brexit virus that its victims will sacrifice all other beliefs to pursue it. Here his chosen weapon is truth.
Sunday 22 November 2015
Everything we hold dear is being cut to the bone. Weep for our country
Will Hutton in The Guardian
Last Thursday, my wife was readmitted to hospital nearly two years after her first admission for treatment for acute lymphoblastic leukemia. She is very ill, but the nursing, always humane and in sufficient numbers two years ago, is reduced to a heroic but hard-pressed minimum. She has been left untended for hours at a stretch, reduced to tearful desperation at her neglect. The NHS, allegedly a “protected” public service, is beginning to show the signs of five years of real spending cumulatively not matching the growth of health need. Between 2010 and 2015, health spending grew at the slowest (0.7% a year) over a five-year period since the NHS’s foundation. As the Health Foundation observed last week, continuation of these trends is impossible: health spending must rise, funded if necessary by raising the standard rate of income tax.
There will be tens of thousands of patients suffering in the same way this weekend. Yet my protest on their behalf is purposeless. It will cut no ice with either the chancellor or his vicar on earth, Nick Macpherson, permanent secretary at the Treasury. Their twin drive to reduce public spending to just over 36% of GDP in the last year of this parliament is because, as Macpherson declares more fervently than any Tory politician, the budget must be in surplus and raising tax rates is impossible. Necessarily there will be collateral damage. It is obviously regrettable that there are too few nurses on a ward, too few police, too few teachers and too little of every public service. but this is necessary to serve the greater cause of debt reduction.
To reduce the stock of the public debt to below 80% of GDP and not pay a penny more in income or property tax, let alone higher taxes on pollution, sugar, petrol or alcohol, is now our collective national purpose. Everything – from the courts to local authority swimming pools – is subordinate to that aim.
Not every judgment George Osborne makes is wrong. He is right to advocate the northern powerhouse, to spend on infrastructure, to stay in the EU, radically to devolve control of public spending to city regions in return for the creation of coherent city governance and to sustain spending on aid and development. It is hard to fault raising the minimum wage or to try to spare science spending from the worst of the cuts.
But the big call he is making is entirely misconceived. There is no economic or social argument to justify these arbitrary targets for spending and debt, especially when the cost of debt service, given low interest rates and the average 14-year term of our government debt, has rarely been lower over the past 300 years.
This is not to contest the need to balance current public spending and current revenues over the economic cycle. As I wrote in my first book, The Revolution That Never Was, completed 30 years ago this month, Keynes was no deficit denier. But governments have choices about how they arrive at this outcome.
The Conservatives’ choice is driven by a refusal to see any merit in public activity: in their worldview, the point of life and the purpose of civilisation is to celebrate and protect the private individual, the private firm and private property. The state should be as small as possible. It has no role, say, in owning Channel 4 to secure public service broadcasting; it will be privatised with scant care about its ultimate owner. Equally, there was no point in holding the 40% stake in Eurostar, forecast to generate more than £700m in dividends over the next decade and a good payback for £3bn of public investment. Thus it was sold for £757m in March, the government concerned to get the sale through before the general election. You could only proclaim a £2.25bn loss on the public balance sheet and the surrender of £700m of dividends as a “fantastic deal for UK taxpayers”, as Osborne did, if you see zero value in public activity.
It is this philosophy that will drive the choices to be laid out on Wednesday. The spending of the so-called protected departments – the £189bn spent this year on the NHS, schools for five- to 16-year-olds, aid and defence – will rise in cash terms in line with inflation, but only to buy the same in 2019-20 as it does today, an unprecedented decade-long freeze in real terms. The block grants to Scotland, Wales and Northern Ireland will be hit slightly harder, protected only in cash terms, implying, after adjusting for inflation, a small real fall. The axe therefore has to fall on what is left – £77bn of spending by 15 departments along with non-school spending.
So if we take the summer budget and Office of Budget Responsibility economic forecasts as the baseline (both may change) – and there are no new tax increases – to meet his target, the chancellor has to find £22bn of cuts from this £77bn, crucial areas of our national life that have already cumulatively been cut by 30% since 2010.
As the Resolution Trust points out, seven of the smaller departments have settled for 21% cuts, which leaves the big five – Business, Communities and Local Government, Justice, the Home Office and non-schools education – to bear the brunt. This can only mean the de facto wind-up of the Department for Business as a pro-active department, further shrinkage of the criminal justice system (mitigated by prison sell-offs), local government reduced to a husk and the knell of further education. Meanwhile, the cuts in welfare will hit the wellbeing of millions, including their children. Expect on top a firesale of government assets – from housing associations to Channel 4.
Is this wanted, necessary or appropriate for these profoundly troubled times? I think it’s a first-order category error and that in 2015 the need – whether protection from terrorism or the promotion of innovation and investment – is for complex collaborative action between a properly resourced, agile public sector and a private sector in desperate need of remoralising and repurposing. There is no magic in a 36% state. But as Osborne knows, he is politically free to do what he wants. The leadership of the Labour party offers no substantive intellectual or political opposition, nor represents a potential governing coalition, nor, wedded to a bankrupt simplistic top-down statism, understands the complexities of these new times. Rarely has the principal opposition party been so irrelevant at a time of national need. All that is left is noises off – the odd newspaper editorial or column and civil society and business beginning to stir as they experience the impact. Weep for our country.
Last Thursday, my wife was readmitted to hospital nearly two years after her first admission for treatment for acute lymphoblastic leukemia. She is very ill, but the nursing, always humane and in sufficient numbers two years ago, is reduced to a heroic but hard-pressed minimum. She has been left untended for hours at a stretch, reduced to tearful desperation at her neglect. The NHS, allegedly a “protected” public service, is beginning to show the signs of five years of real spending cumulatively not matching the growth of health need. Between 2010 and 2015, health spending grew at the slowest (0.7% a year) over a five-year period since the NHS’s foundation. As the Health Foundation observed last week, continuation of these trends is impossible: health spending must rise, funded if necessary by raising the standard rate of income tax.
There will be tens of thousands of patients suffering in the same way this weekend. Yet my protest on their behalf is purposeless. It will cut no ice with either the chancellor or his vicar on earth, Nick Macpherson, permanent secretary at the Treasury. Their twin drive to reduce public spending to just over 36% of GDP in the last year of this parliament is because, as Macpherson declares more fervently than any Tory politician, the budget must be in surplus and raising tax rates is impossible. Necessarily there will be collateral damage. It is obviously regrettable that there are too few nurses on a ward, too few police, too few teachers and too little of every public service. but this is necessary to serve the greater cause of debt reduction.
To reduce the stock of the public debt to below 80% of GDP and not pay a penny more in income or property tax, let alone higher taxes on pollution, sugar, petrol or alcohol, is now our collective national purpose. Everything – from the courts to local authority swimming pools – is subordinate to that aim.
Not every judgment George Osborne makes is wrong. He is right to advocate the northern powerhouse, to spend on infrastructure, to stay in the EU, radically to devolve control of public spending to city regions in return for the creation of coherent city governance and to sustain spending on aid and development. It is hard to fault raising the minimum wage or to try to spare science spending from the worst of the cuts.
But the big call he is making is entirely misconceived. There is no economic or social argument to justify these arbitrary targets for spending and debt, especially when the cost of debt service, given low interest rates and the average 14-year term of our government debt, has rarely been lower over the past 300 years.
This is not to contest the need to balance current public spending and current revenues over the economic cycle. As I wrote in my first book, The Revolution That Never Was, completed 30 years ago this month, Keynes was no deficit denier. But governments have choices about how they arrive at this outcome.
The Conservatives’ choice is driven by a refusal to see any merit in public activity: in their worldview, the point of life and the purpose of civilisation is to celebrate and protect the private individual, the private firm and private property. The state should be as small as possible. It has no role, say, in owning Channel 4 to secure public service broadcasting; it will be privatised with scant care about its ultimate owner. Equally, there was no point in holding the 40% stake in Eurostar, forecast to generate more than £700m in dividends over the next decade and a good payback for £3bn of public investment. Thus it was sold for £757m in March, the government concerned to get the sale through before the general election. You could only proclaim a £2.25bn loss on the public balance sheet and the surrender of £700m of dividends as a “fantastic deal for UK taxpayers”, as Osborne did, if you see zero value in public activity.
It is this philosophy that will drive the choices to be laid out on Wednesday. The spending of the so-called protected departments – the £189bn spent this year on the NHS, schools for five- to 16-year-olds, aid and defence – will rise in cash terms in line with inflation, but only to buy the same in 2019-20 as it does today, an unprecedented decade-long freeze in real terms. The block grants to Scotland, Wales and Northern Ireland will be hit slightly harder, protected only in cash terms, implying, after adjusting for inflation, a small real fall. The axe therefore has to fall on what is left – £77bn of spending by 15 departments along with non-school spending.
So if we take the summer budget and Office of Budget Responsibility economic forecasts as the baseline (both may change) – and there are no new tax increases – to meet his target, the chancellor has to find £22bn of cuts from this £77bn, crucial areas of our national life that have already cumulatively been cut by 30% since 2010.
As the Resolution Trust points out, seven of the smaller departments have settled for 21% cuts, which leaves the big five – Business, Communities and Local Government, Justice, the Home Office and non-schools education – to bear the brunt. This can only mean the de facto wind-up of the Department for Business as a pro-active department, further shrinkage of the criminal justice system (mitigated by prison sell-offs), local government reduced to a husk and the knell of further education. Meanwhile, the cuts in welfare will hit the wellbeing of millions, including their children. Expect on top a firesale of government assets – from housing associations to Channel 4.
Is this wanted, necessary or appropriate for these profoundly troubled times? I think it’s a first-order category error and that in 2015 the need – whether protection from terrorism or the promotion of innovation and investment – is for complex collaborative action between a properly resourced, agile public sector and a private sector in desperate need of remoralising and repurposing. There is no magic in a 36% state. But as Osborne knows, he is politically free to do what he wants. The leadership of the Labour party offers no substantive intellectual or political opposition, nor represents a potential governing coalition, nor, wedded to a bankrupt simplistic top-down statism, understands the complexities of these new times. Rarely has the principal opposition party been so irrelevant at a time of national need. All that is left is noises off – the odd newspaper editorial or column and civil society and business beginning to stir as they experience the impact. Weep for our country.
Tuesday 2 December 2014
Economic dishonesty is the deadliest deficit of all
Chancellor George Osborne will disguise the harm he means to do in the autumn statement, but Labour and the Lib Dems are trapped in me-too territory
Never – probably – in the history of political conflict will so many be misled by so few as in Wednesday’s autumn statement. If the chamber had a polygraph and a Geiger counter to measure radioactive levels of untruth, the place would bleep so loud nothing else would be heard. On all sides barely an honest word will be spoken, including the ifs and the buts.
Yet if the public groans that the yah-booing parties are “all the same”, they would be wrong. Far from it – the parties will be lying about very different things for different reasons. Rarely have they been so far apart in true intentions.
George Osborne will disguise the harm he means to do with his unmentionable £48bn cuts, for fear of frightening voters. Labour will lie about the relative good they mean to do, for fear that fiscal laxity frightens them too. Osborne will be the wolf in sheep’s clothing, bearing sham gifts to the NHS, road users and, maybe, orchestras. Labour will struggle to look wolfish enough, hiding plans to protect public services from the worst by cutting the deficit more slowly. How mad is this?
Here’s Osborne’s situation: he will trumpet 3% growth and falling unemployment while rattling past rising debt and deficit – targets missed by light years as benefits spending shoots up due to housing costs and low pay. Empty Treasury coffers will be slid past, as his “miracle jobs” pay too little to contribute tax. His bold-faced claim that he can afford an NHS bung (not new money) because growth has yielded rewards is just, well, a lie. The Institute for Fiscal Studies, the Resolution Foundation and others warn that Osborne’s cuts will feel far deeper and harsher, wiping out whole departments and leaving councils with only their statutory spending.
This time, as Gavyn Davies warns in the Financial Times, there will be no quantitative easing to smooth the path. Austerity unbound awaits. Even the tactfully conservative estimate of the Office for Budget Responsibility says Osborne’s austerity wiped 1% off growth: his next dose could do even more damage. That’s why the Oxford economics professor Simon Wren-Lewis finds these plans “scarcely credible”. The only possible explanation is ideological, not economic, he says. It “represents a shrinking of the UK state that is unprecedented”.
Cuts Osborne dare not speak are listed by the ConservativeHome website: abolish whole departments, cut more public jobs and pay. An affordability commission will monitor fairness between generations (not between rich and poor) as cover for trimming pensioner perks so far guarded by David Cameron, even the cripplingly costly “triple lock” for rich and poor pensioners alike. The Tory MP Dominic Raab, writing in the Telegraph, expects £20bn to be stripped from Whitehall’s “sprawling bureaucracy”(already cut by a third and denuded of capability) and reduced benefits and public-sector pay, despite five years of cuts.
But Osborne won’t explain how he can make a £100bn deficit vanish in three years, Tommy Cooper-style, just like that. You could accuse him of double-bluff: neither the IFS nor many economists outside the Tory omerta think he can do it – or that he should. It would cause government-terminating rebellion. Osborne has slipped his timetable by several years, but it has brought none of the disasters he warned of in Labour’s “less deep, less fast” plans. Markets happily buy British debt: losing that triple AAA credit rating had no consequences. He can pass his own fiscal responsibility nonsense law – but so what? All such declaratory laws are unworkable – including Labour’s child poverty and equality acts. This is no trap for Labour: Osborne has blithely ignored them all, as inequality rises and social mobility falls.
Now he plans to take from the poor to gift the rich. The Resolution Foundation shows how his raising of the personal tax allowance and higher rate thresholds will give £35 a year to the bottom tenth and £649 to the top, with most money going to the top half. Worse still, on The Andrew Marr Show Osborne said its £7bn cost would be seized from benefits.
Also look out for Osborne in an even more preposterous disguise – George, champion of the north. With hair flattened from hard-hat photo ops, he will promise investment that doesn’t begin to repair his harrowing of the north. David Blunkett, speaking for Sheffield, was spitting teeth last week at Osborne’s abolition of the regional development agency only to rebadge the remaining third as his “growth fund”. Worse, Osborne not only shifted council funding from poorer to richer areas, but Blunkett shows Osborne has taken EU funds specifically granted for poorer places away from Sheffield (cut by 61%) and Liverpool (cut by 57%) to give to better-off areas. Northern investment will be no more than a veneer over previous cuts. Nor will £15bn for road and rail – destined for the marginals – be new money.
Labour should be in clover. Watch Ed Balls gloat at every hideous debt and deficit reveal. But one day’s glee comes at a high cost, if mocking Osborne’s failure to cut more pretends Labour is on the same path. In fact, as Wren-Lewis spells out, there has rarely been a wider gap between the two parties: Labour has taken a £30bn leeway on current spending, more on capital borrowing to invest, but dare not say so. A typical example of Labour pretending to mimic the Tories is its own tax cut, reintroducing the 10p tax rate, which uses the same fiction that it’s for low earners, though most goes to the top. But here’s the key difference: it’s a very small gesture. The Tories will spend £5bn on tax cuts for the well off, Labour less than £1bn.
Labour is trapped, not by Osborne’s fantasy law which they should vote against, but by staying in the me-too rhetorical territory on the deficit, cuts and taxes. If they win, they have no intention of following Tory plans, but – beyond taxing the rich more – dare not say so. They have left it perilously late to chart the opposite course: to say that more borrowing would do little harm for now, that capital borrowing is good for a huge boost to housing, or to warn that austerity is the real danger to growth.
Labour, the Tories and the Lib Dems all agree that the public can’t take much honesty. The truth will kill those who try it, they fear. The Tories won’t admit to £48bn cuts, with which the Lib Dems mostly concur; Labour dare not trust voters with their more gentle plans, for fear of looking fiscally soft. And so the cycle of mistrust between people and politics ratchets up. One economist calls this the “candour deficit” – and in the end, that may be the deadliest political poison of all.
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