Chancellor’s spending plans are toxic

Another Spending Review, yet more bad news for public services, the people who work in them and benefit claimants. TUC General Secretary Frances O’Grady said: ‘This is a toxic mix of bad economics, nasty politics and dishonest presentation.

‘The last thing our struggling economy needs is further cuts to spending to try to close a deficit made worse by the Chancellor’s earlier cuts. When the medicine is not working and side effects are choking the patient you need a change in treatment not more of the same.

‘Many services will be hard hit. Worst of all is a new attack on some of the most vulnerable in our society through the seven day wait and other conditions for social security payments. The Chancellor may think attacks on welfare go down well with voters, but these will lead to parents not having enough cash to feed their children.

‘And for all the talk of new investment, the truth is that the overall capital spend in 2015 will be exactly the same as the Chancellor forecast in his Budget earlier this year.’

Public service pay and jobs squeeze goes on

The Chancellor announced ‘further reductions in the number of people working in the public sector’ – a cut of 144,000 jobs. Looking at the small print of the OBR’s March 2013 report (p79), this appears to be a confirmation of the OBR projection made back at the time of the Budget. So, as they predicted, an average of 36,000 public service jobs a quarter (395 a day) will still be being cut in 2015-16 as a result of government policies, on track with their estimate of a total of 1 million job cuts from the beginning of 2011 to the start of 2018.

He also confirmed another Budget announcement, that there would be a further year’s 1 per cent cap on pay increases in the public sector, following the two or three year 1 per cent cap and two or three year freeze (depending on where you work). What this means in practice, of course, is living standards falling further and further as real terms pay cuts bite. TUC research published earlier this week showed the impact this had had on households, pushing 180,000 children with a parent in the public sector into poverty.

Seven days wait for family and housing benefits for unemployed claimants

Full information on what the new ‘seven day waiting period’ for unemployed claimants will mean is not yet available. But from what’s available so far it doesn’t look good for people who lose their jobs, or their families. The CSR policy costings document specifies that the policy will:

Introduce seven waiting days in Universal Credit for new claimants that have not had a Universal Credit claim in the past six months, where at least one person in the household is subject to conditionality. This costing assumes a 2015-16 start date for the measure.

The measure is forecast to save around £250 million a year, and is calculated on the basis that:

From April 2015 new awards of Universal Credit in each month for claimants who would be subject to conditionality are reduced by the average amount of Universal Credit claimed per claimant per week.

UC claimants ‘who will be subject to conditionality’ includes a very large group of claimants currently on Jobseeker’s Allowance and could even be taken to mean that those on Income Support (a benefit claimed primarily by lone parents with very young children), or those subject to the benefit cap, are included. Today’s announcement that lone parents will have to start preparing for work once their children are three underlines this point. People in these groups face conditions, just not to actively apply for jobs. More details on which conditionality regime this new policy will apply to is needed before we can rule certain groups out of this new process. We do know that at least those claiming Employment and Support Allowance and contributory JSA will not be affected.

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It is also not just unemployed claimants who are affected, those ‘not earning as much as the government expects them to’ will also see their income fall. This means people earning less than the NMW at 35 hours a week (or whatever their specific rule is – requirements will be less for those who are only required to seek part-time work). Households who are working, but see their income fall, will now have to wait a week to claim UC even if they remain in work with reduced hours during this period.

But the most worrying point is that Universal Credit will bring together all cash benefits into a single payment – so a delay in UC can also mean a delay in benefits currently classified as child and working tax credits, housing benefit, council tax benefits and many more. This policy sounds as if it will do far more than simply affect access to £71.70 of JSA for unemployed claimants (hard as that would be by itself) – it looks as if it is also their rent, their bills and their children’s food costs which won’t be met.

The Macroeconomics of the CSR

James Plunkett, director of policy and development at the Resolution Foundation, stated the £11.5bn of cuts for 2015/16 have been pencilled in for sometime and today was more about getting the detail than the direction of travel. James also noted:

The Chancellor needs a further £13bn in both 2016-17 and 2017-18 on top of today’s cuts in order to meet his deficit targets.

In other words, under the current fiscal framework, there is a lot more pain to come.

So the bigger questions today should be about that fiscal framework. It has utterly failed. The triple A rating has been lost, austerity has been extended from 4 years to at least 8, debt/GDP will still be rising at the end of this Parliament and the fiscal rules have either been broken (falling debt/GDP) or proved meaningless (the rolling structural deficit target).

Sources:

Public service pay and jobs squeeze goes onAlice HoodTouchstone Blog Copyright © 2013 Trades Union Congress

Seven days wait for family and housing benefits for unemployed claimantsNicola SmithTouchstone Blog Copyright © 2013 Trades Union Congress

The Macroeconomics of the CSR
Duncan WeldonTouchstone Blog Copyright © 2013 Trades Union Congress

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The People’s Assembly: Draft statement and proposed action plan

The declaration below represents the beginning of a democratic process leading towards a second People’s Assembly in early 2014. This declaration represents the views of all those who initially called for the People’s Assembly. We hope it will be endorsed by the People’s Assembly on 22nd June. It will then be open to the local People’s Assembly’s, union bodies and campaign groups who support the People’s Assembly to suggest amendments, additions, or deletions. These will then all be discussed and decided upon at the recall People’s Assembly in 2014.

The plans for action are simply the most obvious rallying points for a national anti-cuts movement for the remainder of 2013. They are not intended to supersede local or sectional action by existing campaigns or trade unions. They are intended to be focus national, collective action by the whole anti-austerity movement.

The People’s Assembly, meeting in Westminster Central Hall, declares:

We face a choice that will shape our society for decades to come. It is a choice faced by ordinary people in every part of the globe.

We can defend education, health and welfare provision funded from general taxation and available to all, or we can surrender the gains that have improved the lives of millions of people for over more than 50 years.

We do not accept that government’s austerity programme is necessary. The banks and the major corporations should be taxed at a rate which can provide the necessary resources. Austerity does not work: it is a failure in its own terms resulting in neither deficit reduction nor growth. It is not just: the government takes money from the pockets of those who did not cause the crisis and rewards those who did. It is immoral: our children face a bleaker future if our services and living standards are devastated. It is undemocratic: at the last election a majority voted against the return of a Tory government. The Con-Dem coalition has delivered us into the grip of the Tories’ whose political project is the destruction of a universal welfare state.

We therefore choose to resist. We refuse to be divided against ourselves by stories of those on ‘golden pensions’, or of ‘scroungers’, or the ‘undeserving poor’. We do not blame our neighbours, whatever race or religion they maybe. We are not joining the race to the bottom. We stand with the movement of resistance across Europe.

We are clear in our minds that our stand will require us to defend the people’s right to protest, and so we support the right of unions and campaigns to organise and take such action as their members democratically decide is necessary.

We stand with all those who have made the case against the government so far: in the student movement, in the unions, in the many campaigns to defend services, the NHS, and in the Coalition of Resistance, the People’s Charter, UK Uncut, the environmental movement and the Occupy movement.

We do not seek to replace any organisations fighting cuts. All are necessary. But we do believe that a single united national movement is required to challenge more effectively a nationally led government austerity programme.

We have a plain and simple goal: to make government abandon its austerity programme. If it will not it must be replaced with one that will.

We will concentrate on action not words. We aim to provide the maximum solidarity for unions and other organisations and others taking action. We support every and all effective forms action and aim to build a united national movement of resistance.

Our case is clear. The government’s austerity programme does not work; it is unjust, immoral and undemocratic. Alternatives exist. Debts can be dropped. Privatisation can be reversed and common ownership embraced. A living wage can begin to combat poverty. Strong trade unions can help redistribute profit. The vast wealth held by corporations and the trillions held by the super rich in tax havens can be tapped. Green technology, alternatives to the arms industries, a rebuilt infrastructure including growth in manufacturing are all desperately needed. We are fighting for an alternative future for this generation and for those that come after us.

Proposed actions:

  • The People’s Assembly will support every genuine movement and action taken against any and all of the cuts. We support all current industrial actions by the unions. We encourage and will help to organise the maximum solidarity action with the PCS and teaching union members taking strike action the week after the People’s Assembly, as well as with other action by unions planned for the autumn.
  • Peoples Assemblies against the cuts should be organised in towns and cities across our nations, bringing all those fighting the cuts together into a broad democratic alliance on a local basis.
  • The national and the local Assemblies, in partnership with Trades Unions, Trades Councils, campaigning and community groups, can unite our movement and strengthen our campaigns. Local Assemblies will help us to organise a recalled National Assembly to review our work in the early spring of 2014.
  • We will work together with leading experts and campaigners both here and abroad, and friendly think tanks, to develop rapidly key policies and an alternative programme for a new anti-austerity government. We will continue to welcome support from all who fight the cuts.
  • We will call a national day of civil disobedience and direct action against austerity.
  • We will call a day of co-ordinated local demonstrations in the early autumn.
  • We will work with the trade unions and others to call a national demonstration in November.

tpa1 black

The boom in UK food banks

Demand for food banks in the UK is ‘booming’ with over 500,000 people forced to use them to stave off hunger and destitution. Half of those helped are children. They are among the victims of sweeping austerity which is cutting welfare, services and programs precisely when they are needed most.

The following has been republished with kind permission from Gareth Hill

Food bank manager in Bournemouth blames welfare reform for rising demand

The manager of Bournemouth Food Bank has blamed welfare reform and changes to Job Seekers Allowance for a rising need for food handouts.

Debbie Bramley said that the charity she runs in Charminster is struggling to keep up with demand as George Osborne outlines *planned spending cuts for 2015.

Bournemouth East MP, Conservative Tobias Ellwood, did not respond to a request to discuss accusations that government policy is forcing people to rely on food banks.

Warning Signs

Reproduced with kind permission from TUC – Warning Signs

The warning signs have been there for some time. Last month one poll showed that the general public has lost confidence in politics providing solutions to the failing economy. More recently opinion polling showed antipathy to all things Europe, amplified by anxieties about a contagion of struggling EU economies.

This anti-politic dynamic gains traction from the Coalition dogma that there is ‘no alternative’ to the course they are plotting; that austerity is the natural and only response to the fiscal and monetarist challenges exerted on the global economy. It’s easier, their theory goes, for the social and economic devastation inflicted by their undiluted assault on public spending and public services to remain unchallenged if we believe it is ‘out of their hands’ and they have no choice.

One side-effect of this deliberate denial of culpability, this refusal to accept ownership of or responsibility for the outcomes of their choices as a government, is a diminishing faith in politics and politicians being seen as part of the solution. The consequence of that is democratic fracture and an increasing tendency to withdraw support for mainstream political parties – either through not voting at all or, as was demonstrated last week, by voting for what is essentially a protest party that says ‘no’ to many things, but not much about anything else, a party that stands on a platform of incoherent, impractical and inherently flawed, ill-thought policies.

This anti-politics combined with anti-Europeanism created a perfect storm for UKIP and they maximised benefit to them, aided and abetted by an increasingly eurosceptic Tory Party and an inherently right-wing media. It would be wrong, though, to suggest that their message, however superficial, didn’t resonate in some quarters with a voting public deeply frustrated by the failings of the current government and yet to be sufficiently convinced that ‘One Nation’ Labour are offering a strong enough alternative.

Bill Clinton’s eponymous, “It’s the economy, stupid!”, rings as true today as ever. Herein lies both a paradox for the Tories and an opportunity for Labour. The Conservatives of the last thirty years have retained a deliberate ambition to maintain high levels of unemployment and to limit trade union influence in order to keep wages low and to pacify the demands of workers, thus, as they see it, maximising profit, although this is ultimately self-defeating. For Labour, it should be an open goal, focusing on fair taxation, fair pay, investment in jobs and growth, including their jobs guarantee, should be music to the ears of struggling families – but swimming against the media tide to convince voters remains a tough challenge.

Whether it is by design (the Tories) or through insufficient impact (Labour) unless there is a more promising story to tell on the economy very soon we risk a growth of protest party politics that could push the UK toward a democratic train wreck that would render solutions to the economic and social challenges we face ever more unlikely.

Kevin Rowan
Head of Organisation and Services
TUC

© Trades Union Congress 2013

TUC

TUC Campaign Plan 2013: Five steps towards a future that works

TUC campaign to make case for radical economic reform
A jobs guarantee for young people, spreading the living wage across the public and private sectors, putting communities not profits at the heart of public services, and creating a stronger voice for workers in the management of companies are among the TUC’s five key campaign priorities in the run up to the general election, according to its campaign plan published on May 1st.

‘A Future That Works’ sets out five key priorities that will drive the work of the TUC over the next two years. The plan has been agreed by the General Council, which represents the TUC’s 53 affiliated unions who between them have almost six million members.

The campaign for jobs, growth and a new economy will mobilise resistance to austerity, with a series of events across the UK this summer, and will also provide a platform for advocates of pro-growth policies and new economic ideas. This will include an event with former US labour secretary and fierce critic of UK austerity, Robert Reich, who will deliver a lecture at the TUC on 21 May.

The TUC will work with and champion public and private sector employers who reach living wage agreements, as part of its campaign for fair pay and a living wage. The TUC itself became a living wage employer earlier this year.

Opposing the outsourcing and privatisation of public services will be the focus of good services and decent welfare. As well as the Save Our NHS campaign and the Action for Rail campaign to put the rail system back into public ownership, the TUC also plans to support parents and education unions against future attempts to allow state schools to be run for profit.

Having helped see off some of the government’s attacks on employment rights in the Beecroft report, the TUC will continue to press for respect and a voice at work for UK employees. The TUC aims to campaign to retain rights to paid holidays, a proper lunch break and reasonable hours at work that are under threat as the government attempts to repatriate powers back from the EU.

Finally, the TUC’s strong unions programme will train of a new generation of union reps to take the TUC campaign messages to non-unionised workers and workplaces and give a voice to a new generation of young employees.

TUC General Secretary Frances O’Grady said: ‘Margaret Thatcher’s legacy of deregulated capitalism and the cult of finance crashed dramatically in 2008. But the government is still peddling the same old busted model.

‘The government’s failed austerity drive means it could take another ten painful years just to get back to where we were before the recession.

‘Not only will the TUC and unions continue to be the backbone of Britain’s anti-austerity movement but we will also lead the call for new economic ideas.

‘We will champion and work with those who are helping to create a fairer economy – from paying a living wage to giving staff a bigger say in how their company is run.

‘As well as a decent wage, people deserve decent public services. Having overseen the fragmentation of the NHS, ministers now want to introduce the profit motive into Britain’s schools. The TUC will fight this privatisation drive, which we know the public doesn’t support.

‘The TUC is not alone in wanting radical economic and social change. That’s why we’ll be calling on communities and campaign groups nationwide to join our campaign for a new economic settlement that involves and works for the whole country.

‘The next election is likely to be fought over the economy and our living standards crisis. We want to see decent jobs, fair pay, good services and a stronger voice at work at the heart of the plan to deal with these big economic challenges.’

TUC Campaign Plan 2013: Five steps towards a future that works

TUC Campaign Plan 2013: Five steps towards a future that works

Download the plan (pdf format 5.2MB)

Construction sector has shrunk by 10 per cent since coalition took office, says TUC

Press release from TUC

Commenting on figures released on 25th April by the Office for National Statistics (ONS), which show that the UK economy grew by 0.3 per cent in the first quarter of 2013, TUC General Secretary Frances O’Grady said:

“The Chancellor has set the economic bar so low that avoiding the UK’s first ever triple dip recession is considered good news.
”Today’s figures have taken us back to where we were six months ago, and not much further on from when the Chancellor started his austerity experiment.

“The economy is flat-lining, unemployment is growing and the much-needed rebalancing of the economy, away from financial services and the South East, has failed to materialise. It’s no surprise we face a housing shortage when the construction sector is now nearly 10 per cent smaller than when the Chancellor took office.
“The government’s economic policies are still failing on every measure that matters to people.”

TUC

Benefits in Britain: Separating the facts from the fiction

Fiction: Welfare reforms are just about benefit cuts
Fact: Simply not true. The attack on our welfare state is hitting a whole range of services – privatising the NHS, winding up legal aid for people in debt and closing SureStart centres and libraries. All this will make life poorer for every community.


Fiction: There are families living on benefits where generations have never worked
Fact: Despite research from various organisations, no evidence has been found of families with three generations which had never worked. Less than 1% of families have two such generations which have never worked, although such families had wide ranging problems which made it both difficult for the parents or the children to find employment. Contrary to government claims about endemic worklessness, four in five people who claim JSA come off the benefit within six months.


Fiction: People believe that some 27% of the Welfare Budget is claimed as a result of fraud
Fact: The actual figure is 0.8 % whilst tax avoidance and evasion is estimated at anywhere from £30bn to £120bn.


Fiction: Those on benefits have made a lifestyle choice and are shirkers
Fact: 20.3 million families, (64%, of all families) are in receipt of some benefit, 8.7 million of them are pensioners. These benefits include Child benefits, Working / Child Tax Credits, unemployment, disability and sickness payments plus State Pensions. There are currently around 6.1 million people looking for full time work; this figure consists of 2.6M registered as unemployed; 1.3M “underemployed” adults who are in part-time work because they cannot find full-time work; 2.2M unemployed people who want work but have not actively sought it for six weeks. At the same time, there are only around 460,000 job vacancies. Contrary to government claims about endemic worklessness, four in five people who claim JSA come off the benefit within six months.


Fiction: More of the Welfare Budget is being spent on the jobless than on the needy
Fact: Since the global credit crunch crisis in 2007/8 and ongoing economic depression the percentage of welfare spending up has been pushed up. The biggest increases have been due to Pensions and Housing Benefits. The £54BN increase from 2001 to 2011 is mainly due to inflation linked benefits, such as Pensions, Housing Benefits. This period has also seen the introduction of many ‘in work’ benefits.

Of the 1,008,000 benefit claimants that have been out of work for three of the last four years, around 40 per cent have been claiming Jobseekers’ Allowance (JSA), a further 30 per cent are lone parents with children under seven claiming Income Support (IS) while the remaining 30 per cent are either claiming Employment Support Allowance (ESA) or are in the process of being assessed. All ESA claimants are unable to work. Those on the work-related activity group are expected to be able to work eventually but are not-yet-fit-to-work.


Fiction: The benefit cap of £26,000 per annum will help reduce the overall Welfare Bill
Fact: The cap will only affect a small number of people with some 58,000 seeing their benefits reduced by 2014/5. Many more families are losing a range of benefits irrespective of the cap.


Fiction: The welfare reforms are targeted at the ‘shirkers’ not the ‘workers
Fact: There are 2.8 million workless families of working age. Due to welfare cuts, 2.5 million will face a reduction of £215 per annum. There are 14.2 million working families and 7 million of these will lose some £165 per year. There will be reductions in Child Benefit and Council Tax relief which will increase the costs of non- working families by £140 and working families by £132. So “they are all in it together. Workless and working poor alike.”


Fiction: Reducing the welfare bill and the ‘dependency culture’ will improve the growth rate of the country
Fact: There is no evidence to support this. What is needed is to target the State Support in such a way that it creates opportunities for training, improves mobility, provides adequate child care but above all we need to see a living wage and some degree of rent control if the housing benefit and the working Tax credit is to be controlled. The welfare bill has not increased as a result of a growing ‘welfare dependency’. The number of people on unemployment, lone parent and incapacity benefits is over a million less than in 1990.


Fiction: Too many people have too many children
Fact: In 2011 there were just 130 families in the UK with more than 10 children. Only 8% of benefit claimants have three or more children. The UK spends much less on unemployment that France or Germany and is at the same level as the EU average.


Fiction: Osborne claimed that there are families receiving more that £100,000 in benefits
Fact: There were no more than five families receiving such a sum. No doubt they are living in London with large families and disabilities.


Fiction: Benefits are too generous
Fact: Really? Could you live on £53 a week as Iain Duncan Smith is claiming he could if he had to? Then imagine handing back 14% of this because the government deems you have a “spare room”. Could you find the money to pay towards council tax and still afford to eat at the end of the week whilst at the same time paying all the utility bills etc? JSA Payments are £71.70 a week for single people (single person under 25 gets £56.25); £71 a week for lone parents over 18 (under 18s receive £56.25); £111.45 a week for couples aged over 18.


Fiction: Benefits are going up
Fact: They’re not. A 1% “uprating” cap is really a cut. Inflation is at least 2.7%. Essentials like food, fuel and transport are all up by at least that, in many cases far more. Benefits are quickly falling behind the cost of living.


Fiction: The bedroom tax won’t hit army families or foster carers
Fact: Yes it will. Perhaps most cruel of all, the tax will not apply to foster families who look after one kid. If you foster siblings, then tough. But these kids are often the hardest to place. Thanks to George Osborne and IDS, their chances just got worse. And even if your son or daughter is in barracks in Afghanistan, then don’t expect peace of mind as the government still has to come clean on plans for their bedroom.


Fiction: Social tenants can downsize
Fact: Really, where? Councils sold their properties – and Osborne wants them to sell what’s left. Housing associations built for families. In Hull, there are 5,500 people told to chase 70 one-bedroom properties.


Fiction: Housing benefit is the problem
Fact: In fact it is rental costs. Private rents shot up by an average of £300 last year. No wonder 5 million people need housing benefits, but they don’t keep a penny. It all goes to landlords.


Fiction: It’s those teenage single mums
Fact: An easy target. Yet only 2% of single mums are teenagers. And most single mums, at least 59%, work.


Fiction: We’re doing this for the next generation
Fact: No you’re not. The government’s admitted at least 200,000 more children will be pushed deeper into poverty because of the welfare changes.
Sources:
Benefits in Britain separating the facts from the fiction
10 lies we’re told about welfare – Guardian
Work and Pensions Secretary guilty again of peddling benefit myths – TUC
‘True’ UK unemployment is 6.3m – TUC