UK 24th out of 33 in global race for economic growth

The UK is experiencing a slower economic recovery than 23 of the 33 advanced economies monitored by the International Monetary Fund (IMF), according to new analysis published by the TUC on 9th May.

The research, which comes as the IMF begins its two week visit to Britain today, says UK income per head – economic growth that takes account of population change – will not return to its pre-crash level until 2017.

By contrast, income per head in Germany and the US will be over 10 per cent higher a decade on from the financial crisis, while South Asian economies are set to have growth of over 20 per cent.

The TUC says the figures, which are based on the IMF’s latest GDP forecasts, reveal that the UK risks enduring a ‘lost decade of growth’, while many of its economic rivals forge ahead.

With the Chancellor identifying an economic ‘global race’ as the defining challenge for the government, the TUC report shows how George Osborne’s own strategy is causing the UK to fall behind its competitors.

The study also reveals how the UK is emerging from recession at a slower rate than at any time in its recent history.

In 1985, UK income per head was six per cent higher than it was before the 1980 crash. In 1995, UK income per head was seven per cent higher than it was before the 1990 recession. UK income per head is today still six per cent below its 2008 level.

The Chancellor cannot blame Europe for the UK’s economic woes, as the vast majority of the Eurozone’s countries are performing better, says the TUC.

George Osborne faces further embarrassment this week when he hosts a meeting of the G7 finance ministers on Friday. Only Italy are experiencing a slower recovery than the UK among G7 countries.

Recent TUC analyses of the ‘global race’ – available at www.touchstoneblog.org.uk/tag/global-race – have found that the UK is lagging behind most of its G7 competitors on exports, wage growth and manufacturing too.

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George Osborne must heed the IMF’s recent call for the UK to ease off austerity and follow the example of the US by investing in jobs and infrastructure, says the TUC.

The TUC wants to see a large jobs and infrastructure stimulus, including a jobs guarantee and an extensive house building programme to get growth and confidence back into the economy.

TUC General Secretary Frances O’Grady said: ‘We truly are experiencing a lost decade for growth.

‘While other countries are already seeing a rise in economic output, the UK won’t return to its pre-crash level for another four years.

‘The Chancellor’s commitment to self-defeating austerity has prolonged people’s suffering and put the brakes on our economic recovery – so much so that escaping a triple-recession is considered by some to be a cause for celebration.

‘Even George Osborne’s favourite economic institution, the IMF, is calling on him to change course. Without a fresh approach we will continue to trail our economic rivals and bring up the rear in the global economic race.

‘He should start learning from countries like the US whose ambitious programme of investment in jobs is helping to turn its economy around.’

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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

Francesca Martinez on cuts and austerity at the People’s Assembly launch

Click here for more information about The People’s Assembly being held on Saturday 22 June 2013, 9:30am – 5pm at Central Hall Westminster, Storey’s Gate, London, Westminster, London SW1H 9NH.

Click here to sign the War on Welfare petition.

Click here to view Francesca’s full article “Hands off our Public Services” at Huffington Post UK.

Child Poverty Facts and Figures – CPAG

The following has been reproduced with the kind permission of Child Poverty Action Group

There are 3.6 million children living in poverty in the UK today. That’s 27 per cent of children, or more than one in four. (Households Below Average Income, An analysis of the income distribution 1994/95 – 2010/11, Tables 4.1tr and 4.3tr. Department for Work and Pensions, 2012.)

There are even more serious concentrations of child poverty at a local level: in 100 local wards, for example, between 50 and 70 per cent of children are growing up in poverty. (Child Poverty Map of the UK, End Child Poverty, March 2011).

Work does not provide a guaranteed route out of poverty in the UK. Almost two-thirds (62 per cent) of children growing up in poverty live in a household where at least one member works. (Households Below Average Income, An analysis of the income distribution 1994/95 – 2010/11, Table 4.3db. Department for Work and Pensions, 2012.)

People are poor for many reasons. But explanations which put poverty down to drug and alcohol dependency, family breakdown, poor parenting, or a culture of worklessness are not supported by the facts. (For example, G Hay and L Bauld, Population estimates of problematic drug users in England who access DWP benefits, Department for Work and Pensions, 2008, suggest that 6.6 per cent of the total number of benefit claimants in England were problem drug users. While drug misuse may prove to be a key reason this group of people finds it hard to escape poverty, it clearly has no explanatory power for the other 93.4 per cent of claimants.)

Child poverty blights childhoods. Growing up in poverty means being cold, going hungry, not being able to join in activities with friends. For example, 62 per cent of families in the bottom income quintile would like, but cannot afford, to take their children on holiday for one week a year. (Households Below Average Income, An analysis of the income distribution 1994/95 – 2010/11, Table 4.7 db. Department for Work and Pensions, 2012.)

Child poverty has long-lasting effects. By 16, children receiving free school meals achieve 1.7 grades lower at GCSE than their wealthier peers.6 Leaving school with fewer qualifications translates into lower earnings over the course of a working life. (GCSE and Equivalent Attainment by Pupil Characteristics in England 2009/10, Department for Education 2011.)

Poverty is also related to more complicated health histories over the course of a lifetime, again influencing earnings as well as the overall quality – and indeed length – of life. Professionals live, on average, eight years longer than unskilled workers. (Life expectancy at birth and at the age of 65 by local areas in the UK, 2004-6 and 2008-10, Office of National Statistics, October 2011.)

Child poverty imposes costs on broader society – estimated to be at least £25 billion a year. Governments forgo prospective revenues as well as commit themselves to providing services in the future if they fail to address child poverty in the here and now. (D Hirsch, Estimating the costs of child poverty, Joseph Rowntree Foundation, 2008)

Child poverty reduced dramatically between 1998/9-2010/12 when 1.1 million children were lifted out of poverty (BHC). This reduction is credited in large part to measures that increased the levels of lone parents working, as well as real and often significant increases in the level of benefits paid to families with children. (Households Below Average Income, An analysis of the income distribution 1994/95 – 2010/11, Department for Work and Pensions, 2012.)

Under current government policies, child poverty is projected to rise from 2012/13 with an expected 300,000 more children living in poverty by 2015/16.10 This upward trend is expected to continue with 4.2 million children projected to be living in poverty by 2020. (M Brewer, J Browne and R Joyce, Child and working age poverty from 2010 to 2020, Institute for Fiscal Studies, October 2011.)

For more information, please visit the following pages on the Child Poverty Action Group website:

What is poverty
Measuring poverty
The UK poverty line
Measuring poverty – alternative approaches
What causes poverty
The impact of poverty
How can we end child poverty in the UK

http://www.cpag.org.uk/

Child Poverty Action group http://www.cpag.org.uk/

Should Bournemouth Borough Council release more of its mountain of financial reserves?

Bournemouth Borough Council has announced that it will release £23M of its financial reserves to “safeguard services and invest in a variety of schemes” and also “lower council tax by 0.7 per cent to ensure residents will not have to pay any extra this year”. Only time will tell whether the funds being released will actually help the people who are directly suffering under the savage austerity measures being implemented by the government.

Of course any help that the council can offer to relieve the pressure being felt by hard pressed residents within our area is welcome. However, BPACC calls on the council to look at using the abundance of their reserves still left – around £70M – to plug the hole in government funding for charities and support groups, art and community services, road maintenance, subsidised bus routes and services, renovation of school buildings, legal aid, short break or respite care services, disability services such as mobility shops, stopping increases to car parking charges, social care / community transport etc etc etc….

The Council also needs to answer the question why council tax reserves were not made available for the many cuts we have already seen such as the closures of Darracott Day, Malvern, Horizons day care centres or staff cuts at Boscombe day care centre and more recently the proposed closure of Dorset Enterprise.

And lest we forget the cuts / freezes to the wages of many workers employed directly by the council. It can reasonably be argued that as Bournemouth Borough Council is a major employer in the town, cutting or freezing wages or giving below inflation pay increases will have a direct negative effect on the local economy simply because people will be forced to spend less of their earnings within the local community. On top of this, the council has chosen to make hundreds of their employees redundant which has the same effect to the local economy and additionally, due to the unemployment crisis, many of these people will now be in receipt of state benefits and of course no longer paying taxes. A double whammy false economy which although may have a short term positive effect on the council budget sheets, will have long term negative effects upon the local and national economy.

In April 2013, due to the Welfare Reform Act, people will see radical changes to some state benefits:

Bedroom Tax – anyone of working age in receipt of Housing Benefit (HB) who live in Council housing with “spare” bedrooms, will not receive HB for these rooms. This will mean these people will see their HB reduced as shown below and they will be expected to cover the shortfall in their rent out of their JSA – Jobseekers Allowance, ESA – Employment Support Allowance, Working Tax Credits or Child Tax Credits:

  • 14% reduction in Housing Benefit for under-occupancy by one bedroom
  • 25% reduction in Housing benefit for under-occupancy by two bedrooms or more

Council Tax Benefit (CTB) – the government has cut the funding to Local Authorities for the provision of CTB by 10%. It has been left entirely up to local Councils how they cover this budget cut. Bournemouth Council has decided that people of working age, except those on DLA – Disability Living Allowance and some Carers, who receive CTB will pay up 20% of their total bill.

Crisis / Social Fund Loans and Community Care Grants – the govt has localised these loans / grants and the decision making process of delivering them to some of the most vulnerable people in our community is being handed over to the Council. The funding Local Authorities receive from government will not be ring-fenced, nor will there be a ‘statutory duty’ on local authorities to provide a minimum level of service, nor will there be any ‘sanctions’ if a local authority uses the money to plough into other services. Due to cuts they have already faced, Council staff are already under severe workload pressure and it is highly debatable whether more staff will be employed, so it is very likely that this service will be outsourced. Most people are now becoming aware of the problems this can cause with likes of Mouchel, A4E, G4S, ATOS, Working Links who are happy to take taxpayers money but either unwilling or unable to provide sufficient quality of service or value for money. And as with many other things that are happening, if this service is outsourced, it can be legitimately viewed as back-door privatisation of Jobcentres.

Many local public services have already seen their funding from the Council cut and it will be difficult to gauge the effects of these cuts for several years. In most cases, thorough impact assessments have not taken place. As with most policies of this government a hurried swinging axe has fallen down without taking into account the long term hardship and misery it will cause members of our community and the effects it will have on the local / national economy. The govt has set the precedent and unfortunately most Councils are following suit in the way the cuts are being delivered. In most cases the cuts will not ‘help the economy’, in fact they will have the opposite effect and stifle growth causing the country’s economy to continue to flat-line and even that might be considered optimistic. Triple dip recession just around the corner?

It could be argued that the Council are caught between a rock and a hard place, as on the one hand they are having their funding cut by central government who conveniently devolve responsible to local authorities as to how the cuts are implemented and have also removed most of the ring-fencing of budgets which gives local authorities free reign regarding services they choose to cut. On the other hand, of course, the Council will not be able to please all the people all the time. However the question begs, how vociferously are our Councils relaying their frustration and anger about the savage nature of these cuts back to central govt or is it more the case that once you scratch the surface of any rhetoric of objection they are happy to go along with the tory ideology of systematically destroying the safety /support network of many within our community.

Over the last couple of years, prior to the Council announcing which services will be facing the axe, residents have been asked ‘which services would you like to see cut’. However at a time when they were sitting on around £100M of local taxpayers money (now £70M), perhaps the question the Council should have, and should now be asking, is ‘which services that have already faced budgets cut would you like to see have their funding re-instated’.

If you live within Bournemouth Borough and would like to raise any of these issues with your local Councillors, all wards and contact details are shown here. Remember Councillors are elected by you, to serve you; not to blindly follow the decisions or ideology of whichever politically party they have chosen to align themselves with.

Specific information about budgets (and funding cuts) allocated to individual organisations is difficult to come by; even via FOIs (Freedom of Information requests). If you are aware of charities or support groups whose budgets have been cut over the last 3 years, please email us at info@bpacc.co.uk and we will look into the matter further. All information received will be treated in the strictest confidence.

Sources for this post:
Bournemouth freezing council tax by releasing £23m of reserves – Bournemouth Echo
Local Cuts and Closures – BPACC
New council tax reduction scheme aims to protect Bournemouth’s most needy – Bournemouth Echo
Social Housing Size Restriction – Bournemouth Council
Local Council Tax Support Scheme FAQ – Bournemouth Council
Is this the end of the Social Fund in local communities? – Community Links

Right, that’s enough, now what are we going to do about it?

People’s Assembly: Saturday 22 June 2013, 9:30am – 5pm, Central Hall Westminster, Storey’s Gate, London, Westminster, London SW1H 9NH

Click on photo to add your support

Click on photo to add your support

The following has been republished from Coalition of Resistance, posted originally on Mark Steels blog and in the Independent

I genuinely hope that George Osborne does it on purpose. That he descends from the podium after a speech and sniggers to Cameron “I said ‘We’re all in it together’ again. Haaa haaaa, I don’t know how I get away with it?”

He continues to use this slogan, this son of a 17th baronet, worth £4 million and heir to many millions more, as he explains the necessity of cutting public services, libraries, pensions as well as payments to the poor, the disabled, and those who will never inherit a single baronetcy, no matter how hard they train for it.

The crisis we’re all apparently joined in – it’s generally agreed – was caused by the failures, greed and recklessness of a clique we call, for short, ‘the bankers’

Yet the people having to pay for their chaos are not the bankers. They’re the disabled and the homeless, the firefighters and lollipop ladies and anyone who depends on them. Maybe George Osborne believes these were the culprits, that it was lollipop ladies telling kids “Wait by the road a minute, love, I’m just loaning ten million quid on the basis that property values are certain to double every six months forever, and awarding myself half a million as a bonus. Right, now that’s done we’re safe to cross.”

For the poor to pay a major contribution towards the crisis created by the bankers would be a screaming injustice, but it’s so much worse than that. Because one of the few professions that doesn’t have to cough up is the bankers themselves. And to ease their pain of watching everyone apart from themselves suffer, one of the few measures taken by this government that gives more money away rather than less has been a tax cut for the richest one per cent.

There are many consequences of this, among them the fact that many people in Britain now express their feelings about economics with a theory that goes, more or less, “Aaaaaaagh.” Sometimes they go into more detail, adding “The BASTARDS.” And then “Aaaaaaaagh.”

But the coalition’s outrages are only part of the frustration felt by so many. Because there can hardly have been a time when so many people, disgusted by their government, have been at such a loss as to what we can do about it.

Until recently, many people found a home for their anger at social injustice in the Labour Party. But the New Labour years, if we’re being harsh, weren’t all that successful at promoting peace and equality. Although there are Labour members who are wonderfully effective, such as Tony Benn and Owen Jones, many of their activists left or became disillusioned.

Left wing groups have collapsed more spectacularly, in a series of crises that makes you wonder whether their activities are organised by the scriptwriters of Eastenders, leaving another layer of socialists and campaigners in confusion.

But another piece of this jigsaw of frustration is that the basis for an opposition is evident. The government is by no means overwhelmingly popular, and the Lib-Dem part of it widely held in contempt. Anyone who watches Question Time knows the easiest way for a panellist to win a round of applause is to make an angry speech about greedy bankers. When a few hundred activists moved into tents under the ‘Occupy’ banner, they won the sympathy of millions and forced ministers to appear on the news making unconvincing attempts to justify their actions.

When an opposition has appeared credible, it has won an astounding level of support – such as when George Galloway won the election in Bradford, or when Caroline Lucas was victorious in Brighton for the Green Party. Campaigns such as the one in Lewisham to prevent the closure of the A&E department at the hospital have amassed tens of thousands of supporters. But for the most part these moments remain in one area, or pass quickly, then it’s back to yelling at the telly, or if you’re really dedicated, the radio as well.

Would it be possible, I find myself thinking, to bring together those who share these frustrations, to connect with each other?

Some people are already in groups or parties, such as UK Uncut, the Greens or Labour, but I’m sure they’d acknowledge there are many people beyond their own supporters who’d be willing to contribute towards a squabble with George Osborne.

It might be tempting to consider these thoughts, then conclude you’d done your bit by thinking them, and if you wanted to do any more you could occasionally arrange them into a moan. But it seems – since enough people are thinking this way at once – that a genuine movement is possible.

For example Owen Jones, one of the most eloquent opponents of the Coalition’s austerity, is eager to help set up such a network. Salma Yaqoob, who many will know as an inspiring opponent of the war in Iraq, is another. Caroline Lucas, the Green MP, feels the same, as does Laurie Penny, the journalist who wrote powerfully as part of the Occupy movement.

The trade unions are committed to establishing this network, which can link the campaigns, the meetings, the petitions and the squeals of anguish that try to prevent the cruelties of austerity. Almost every major union has pledged to back such a movement, which it will call a ‘People’s Assembly’.

And crucially, many of this large and growingly frustrated TV-abusing section of society have greeted the idea with enthusiasm, and even a hint of optimism. For example a single letter in a newspaper announcing the Assembly attracted hundreds of initial supporters. So this is the plan.

Within the next few weeks a series of gatherings in the biggest cities in Britain will take place to launch the Assembly in each area. From there groups can be set up that will discuss ways to oppose the barrage of attacks coming from the coalition, leading to a People’s Assembly on June 22 in London. You can register for that day here

Many possibilities can open up once the connections are made. A group in one part of the country can discuss how to support a campaign to defend a hospital in another part. Even a joint letter to a local newspaper is an improvement on a lonely individual seethe.

It will be a network that embraces supporters of different groups and parties, as well as those with no affiliations. And it will bring together enough people eager to participate, who would rather do something than nothing, who would rather find themselves alongside others who agree than remain on their own.

The evidence suggests that wherever a community unites and campaigns to defend its hospitals, its libraries, it parks and its people, it succeeds at least in part. The aim of the People’s Assembly will be simply to tap into the vast amount of humanity, imagination and wit of those who wish to curtail the injustices swirling around us, and create a place that we all feel better for being in, and all feel better for having helped to create.

That’s all.

And you can carry on swearing at George Osborne on the telly as well if you like.

So leave a name or a message if you’re interested and we can add it to the many who have already said they are, and to show I’m fair, I’ll even let you leave a name and a message if you’re not interested and think I’m completely round the sodding bend.

UK second last among G7 countries in ‘global race’ for export growth

Reproduced with kind permission of TUC – Trades Union Congress

The UK has experienced the second slowest export growth of all G7 countries since 2010, with only Japan faring worse, the TUC said on Monday 18th February as it published its submission to the 2013 Budget.

With the Chancellor identifying an economic ‘global race’ as the defining challenge of the government, the TUC report shows how George Osborne’s own strategy is causing the UK to fall behind its competitors.

Recent figures from the International Monetary Fund (IMF) show that over the last two years export growth in the UK has been slower than five of its G7 competitors – the US, Germany, France, Italy and Canada. Only Japan, whose economy is still reeling from the 2010 tsunami and earthquake, is doing worse than Britain when it comes to exports.

The Chancellor cannot blame Europe for the UK’s economic woes as the three biggest Eurozone countries are all performing better on exports, says the TUC.

In terms of economic growth since 2012, the UK is ranked just 158th of the 184 countries monitored by the IMF.

Instead, the TUC believes that a combination of self-defeating austerity and a complete absence of a strategy to grow the economy are dragging the UK down.

The TUC Budget submission calls for an immediate stimulus to boost demand. This should include stopping damaging welfare cuts that are reducing people’s living standards – particularly those of low-income families – and reversing cuts in capital spending that have badly affected the construction and housing sectors.

But as well as an immediate stimulus, the TUC submission calls for the government to deliver a proper growth strategy, along with stronger tools to deliver it.

The Chancellor should start by introducing many of the measures championed by Lord Heseltine in his recent report ‘No Stone Unturned’, says the TUC. This should include an active industrial policy, led by a National Growth Council that would also include business and union representation.

The submission also says that the government needs to address another key blockage in the UK economy – a lack of lending to firms outside of finance and real estate. To address this problem the Chancellor should set up a publicly-owned business bank that targets growing industries, such as green technology and high-value manufacturing.

In order to work properly, a new business bank should have sufficient capital says the TUC, and suggests £40bn initially over four years. It should also have the ability to raise funds on capital markets.

The Budget submission also calls for more action to tackle growing pay inequality which, if left unaddressed, could result in most workers receiving no benefit from future economic growth.

The submission proposes tackling soar-away directors’ pay by forcing companies to disclose pay ratios between the lowest, median and best paid company staff, as well as introducing employee representation onto remuneration committees.

The Chancellor can also raise revenues by simplifying the tax system through the closure of tax loopholes, says the TUC. This should include aligning capital gains tax with the top rate of tax and strengthening the proposed General Anti-Avoidance Proposal.

TUC General Secretary Frances O’Grady said: ‘The UK is currently gripped by two big crises – falling living standards and economic stagnation. For all the Chancellor’s talk of the UK paying its way in the world, his own strategy is dragging the economy down.

‘On growth, exports and investment the UK is falling behind its competitors in Europe and across the globe. In order to address this, the Chancellor must announce a change of direction next month.

‘He can start by taking up Lord Heseltine’s proposal for a new growth council and prioritising new infrastructure projects. It is far better to invest in improving our transport and energy networks than to pay for the costs of economic failure that high unemployment and falling wages bring.

‘But the Chancellor also needs to do more to help families suffering through the UK’s living standards crisis. With real wages falling since 2009, the government has heaped on the pressure by raising VAT, cutting welfare support and freezing pay for public servants.

‘Giving low-paid families a few hundred pounds in a tax break is no good if they are also losing thousands more in tax credits and when wages are failing to rise as the economy stagnates. Instead we need to see a reversal of benefit cuts and policies that can secure better wages, including measures to tackle soar-away pay at the top.’

TUC