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Archive for September, 2011

Baroness Hanham, Eric Pickles and the landowners’ tax avoidance amendment

September 30, 2011 3 comments
Baroness Hanham, Under-Secretary of State in the Department for Communities and Local Government, and previously leader of Kensington and Chelsea council (1989-2000), tells us she is a huge fan of the localism bill, and especially the community right to buy proposals. 

In the Guardian earlier this month, she says:

The localism bill is a massive transfer of power from Whitehall to local councils and local communities. To the people who care about their local area, know its strengths and weaknesses and have a stake in its future, the bill will free communities to find local solutions to local problems.

This means giving local people a real say in how their community’s views are represented and policies implemented. The community right to buy will give residents the opportunity to save or take over treasured local assets such as shops, pubs and post offices. Local groups who have a bright idea for how a service could be run better – whether it’s meals on wheels, or homelessness support – will be able to put their proposals for running these to the council through the community right to challenge.

This praise in the newspaper may seem odd, though, when you hear Baronness Hanham has submitted a major amendment to that very same bill, which is sponsored by her own government Department.

Even more strangely, the amendment is directly concerned with restricting the community right to buy provisions.

I’ll come to the amendment, but first the back story.

The phrase “community right to buy” does not in fact exist anywhere in the localism bill.  It’s just a government sales pitch.  What the localism bill actually does, in Clauses 76 to 96, is to offer ‘community interest groups’ the opportunity to prepare a bid, via the fairly tortuous process of the compilation of a ‘list of assets of community value’.  It does not set out any requirement for that asset of community value actually to be sold, however large the community value of doing so might be.

The right to bid is offered through the creation of a ‘moratorium’, whereby if an owner of an asset featuring on the list of assets of community value (put together by the local authority) wants to ‘dispose’ of that asset, s/he must give ‘communty interest groups’ the opportunity to put together a bid for it.  At the moment, the time period for the moratorium is not specified, and as it stands this will be announced through regulation at a later date.

So it’s not a right to buy, but it is a right to bid. Which is something.

For Baroness Hanham, however, this is a bit much. The main substance of her amendment is to add a range of exceptions to the requirement set out Clause 63, Para 1, which reads:

A person who is an owner of the land included in a local authority’s list of assets of community value must not enter into a relevant disposal of the land unless each of conditions A to C is met [these conditions relate to the moratorium on disposal during which community groups can register as potential bidders]

 Hanham’s key proposed exception to this process is:

 (a) if the disposal is by way of gift (including a gift to trustees of any trusts by way of settlement upon the trusts).

The amendment carries on for another 7 clauses of exemptions, as a belt and braces exercise in jargon, but the key purpose of the amendment is clear from the word ‘gift’

The purpose of the amendment is to stop the proposed moratorium getting in the way of a key tax avoidance strategy used by landowners.

Tax avoidance is complicated, of course. That’s how tax avoidance specialists make a living, but the key strategy Hanham defends through this amendment boils down to landowners’ practice of transferring their land ownership to family members 7 years or more before they die, thus avoiding inheritance tax.  

How can I be so sure, you may ask, that this is Baroness Hanham’s purpose?  Well, because the key landowners’ lobby organisation, the 35,000 strong has kindly told us what they’re up to. 

In an article in April 2011’s Country Life magazine, the President of the 35,000 strong Country Land and Business Association told his readers:

The proposals [as set out above] may also cause difficulties with tax planning and passing on assets to the next generation.

To date the CLA has lobbied for Part 4 Clauses 71-88 relating to Assets of Community Value in the draft Localism Bill to be removed altogether.  However, it may be that we eventually have to accept some compromise by which the right exists, but in a considerably restricted form.

The President was invited to a breakfast meeting with the Secretary of State for Communities and Local Government, Eric Pickles MP, and raised the issue with him. This meeting was subsequently followed up with a letter setting out the CLA position.

Eric Pickles, remember, is the minister who told local authorities looking for more money to run services that they’ll get a cup of tea, but not much else.  Meanwhile, the President of the landowner lobby gets a full English breakfast and, by the looks of the amendment, the very willing ear of Pickles’ representative in the Lords.

In the end, then, it looks like Baroness Hanham is quietly doing the government’s own bidding through this amendment, and that her Guardian article praisng the (non-existent) ‘community right to buy’ is not only factually wrong, not just brazenly hypocritical at a personal level, but also a part of the government’s wider strategy of lying to the public in the hope they won’t find out.

Baroness Hanham’s amendment will probably be put on 10th October at the next report stage day, though it might slip to the next sitting (12th).  I hope that Ed Miliband in his team , with their renewed commitment to taking on vested interests, will ensure that Labour Lords are out in numbers, showing the Tories up for what they really are – duplicitous, conniving bastards interested solely in defending the status quo while spinning the community empowerment yarn.

 

 

 

Categories: General Politics

Hopi Sen is wrong – Labour is sorry

September 29, 2011 2 comments

When I first stepped into Labour conference I sat down and read the Independent – travelling alone I hadn’t met with many beforehand, so – on that desperation – I read John Rentoul’s column, in which he said:

Sen [Hopi] is one of the best Labour minds and he has written the outstanding essay on the party’s fluctuating state of this conference season, for the online journal Renewal. He says: “We talk about anything but the failure of the last Labour prime minister.”

Really?

I’ve heard nothing but. Ed Miliband labours over past failures (do not excuse the pun), Ed Balls, also.

Today, too, Harriet Harman apologised. She said:

The two Eds both acknowledged – what we all know – that not everything we did in government turned out right. And people need to know that over the past year we’ve taken a hard look at what we did and we’ve learnt lessons.

If party conference this year has been about anything, it has been about apologies. Beyond that, there has been a healthy factionalism – I say healthy because the argument that though Blair was a warrior on the wrong side of history, he still won elections – is still leveled towards the Left as though it has any traction at all.

Blue, Red, Purple Labour – they are all represented, and all willing to account for the failures of the past.

All good stuff. And I’m happy to say that, this time, Hopi Sen is on the wrong of history – and the party is the better for it.

(For more on Harman’s speech, read Shamik Das here)

Categories: General Politics

The spectre of bad debt

September 28, 2011 Leave a comment

Unsurprisingly, much discussion has been had during Labour conference on the budget deficit and how the country can promote growth and create jobs while simultaneously trying to level national debt in a realistic period of time.

Of comparable importance to the level of national debt are levels of personal debt, which have seen a sharp rise in recent times. According to statistics by Credit Action personal debt in the UK (2010) was £1.5 trillion – a figure serviceable in better times, but increasingly a struggle since the recession. In the decade to 2008, average household debt in the UK increased substantially– from 93 to 161 per cent of disposable income – largely accounted for by mortgages – and is set to rise to an average of £81,000 per household by 2015.

The think tank Compass were so bold as to say over-indebtedness was linked to low wages rather than ‘consumerism’. A fifth of the 14 million lowest earners say debt is a heavy burden, more than a third have no savings at all, and one fifth have less than 1,500 in savings. Further still, social housing tenants represent 6 in 10 of the financially excluded, of whom one in 6 have no bank account (which the government should make a universal right).

In times of severe economic difficulty, ways and means of leveling ones personal debt can get extremely difficult. Such circumstances often follow a spike in high cost credit use. Peter Crook, the chief executive of Provident Financial – a short-term, unsecured loan agent – said in 2010 that “We may well see a growth in our target audience”. When we find out who their target audience is, we can really see what drives this market. The Office of Fair Trading’s High-Cost Credit Review (Annex C, p. 36), found that 10.4% of payday customers have incomes of less than £11,100 per annum, and that 49.1% of all customers have incomes of less than £19,200 per year.

So clearly there is a problem, but what is the solution.? Stella Creasy, the Labour Co-operative MP for Walthamstow, has been campaigning tirelessly for months to introduce a credit regulation bill to implement a cap on the total cost of credit – which means not capping the annual rates of interest on a loan, leaving it open for lenders to slap on high administrative fees to redeem their loss, but a cap on how much an individual will pay overall for a loan. Such a move has already been given the cold shoulder by the Tories who are instinctively against the regulation of the banking system – instead calling on more competition in the market – and by the OFT who have claimed a total cap is not necessary.

But the UK is one of only few countries in the world without such a cap. Lenders make money, not from how many times they sell credit to different customers, but on individual customers rolling over on their debts, or even taking out loans to service existing loans. As for initial measures, placing a cap on how many times a person can rollover seems a good short term move, but obliging lenders to fund financial counselling sessions would be an even more radical progression.

Further, linking existing credit unions to a modernised post office could both make the latter more relevant in an email age, and ensure more people are creditworthy and not falling into unserviceable debt.

A savings culture in this country once again needs a boost, and with the Tories scrapping the child trust fund and the savings gateway, it’s clear what side they are on. Debt, as many people – whether rightly or wrongly – will tell you is a necessary evil, and will take years of intervening to overcome; but making credit lending less dubious, and ensuring people don’t fall into severe debt cycles, especially in times of austerity, is the sine qua non for a government and a society committed to welfare.

The Only Way is Ethics – dispatch from #lab11

September 27, 2011 Leave a comment

On the question of emotions, Valdemar W. Setzer once said: “Ethics is not definable”. For the Labour Party today, ethics being undefinable may be helpful. Some who I’ve spoken to at conference are worried about the lack in good ideas circulating – a particular worry given three groupings are battling it out behind the scenes to drive the intellectual backbone of the party. In the red corner is Labour Left, the self-confessed home of ethical socialism and the brainchild of Dr Eoin Clarke, chaired by Grahame Morris; in the blue corner is Maurcie Glasman who represents a return to the traditional, conservatism of the Labour party and of ethical socialism, distinct from the “liberalism” of the Tory/Lib Dem coalition, and the statism of welfare in local communities; and finally in the Purple corner is, well, the purple people and, essentially, Progress, where socialism of any stripe is probably not a top priority, yet ethics is.

The buzzword, thus, is ethics – and I think this is probably sensible. Though someone like Glasman has said it all went wrong for Labour after 1945 (a controversial issue that takes in its sights, not simply welfare, but the top down way in which Labour has traditionally done welfare), what is off the cards is the liberalisation, marketisation and consequently the privatisation of the NHS – a national institution and key kernel to the basic minimum of universal welfare for all.

Other issues around evictions and cutting benefits for disabled recipients has shown the current government’s opposition to the state’s role as guarantor for the civic minimum – to ensure nobody falls through the net.

Of course it’s dressed in a language of freedom from the constraints of the nanny state – but the reality is, we’re seeing a chipping away at the society of the common good, as well as a decrease in a basic set of rights and entitlements that does not, as the Tories might argue, frustrate a burgeoning society.

The problem lies in the fact that ethics, and in some cases ethical socialism, is used without definition – ultimately opening the door open to a myriad of differing perceptions, or confusion towards it.

With Glasman, in what he has written there is something for everyone – but while this is worthy of trying to reach out to different communities of voters, it doesn’t actually help in pinning down what is unique about it. Indeed as was discussed in a Liberal Conspiracy fringe event yesterday, with the New Statesman, the brand of blue labour is toxic, and underneath Glasman’s bluster, there is just a simple message to pole Labour against liberalism and statism – as it was back in the day – and back with a conservative socialism that sees the merit of family and community.

Therefore the problem with Blue Labour is it’s stuck for policy plans – since if Big Society has shown us anything, it is that legislating for greater community vibrancy, is bullshit at best, since that has existed immemorial – and it has a dodgy frontman who says silly things like halt immigration.

The problem with the red corner and Labour Left, is that because ethical socialism is all the rage, and Tawney is universally loved again as some sort of new God – it might receive some of the collateral when the rest of the party realise they have been running on an ill-defined notion of ethical socialism, that has possibly relied on the fact that it means different things to different people (or consistent with Setzer, can have no definition).

About the time Jon Cruddas and others were debating communitarianism and civic republicanism, a decent definition of ethical socialism, what it meant for the party and what it meant for people in communities, began to resonate with people. Like then, the Labour Party is still having an identity crisis – but what is crucial today is that it has emerged at the same time as what I think Glasman has rightly recognised as a “liberal-led coalition” – by which he means a coalition that is essentially for liberalism, and ultimately against the kind of conservatism that he leans towards; one which sees in the traditional a kind of family-based socialism.

In sum, Glasman is baffling, and often controversialist – something fine for an academic to be, but not so helpful for politicians (and Anthony Painter made this point, during a debate on blue labour, that what he worries about is how Glasman’s bombast will affect the image of Ed Miliband). Though the smaller of three competing colour schemes, Labour Left is well placed to posit a sensible and operational definition of ethical socialism where one is lacking today – and in doing so, will surely add a dose of rigour that many are looking out for in their party.

Categories: General Politics

Ed in the clouds about ‘grown up’ markets

September 26, 2011 1 comment

Ed Balls (Independent interview), 26th September 2011:

He dismisses claims that any change to the cuts strategy would be counterproductive because it would spook the financial markets, saying they are “grown up” and want a credible plan.

Or maybe they don’t.  Maybe they want a big recession instead.

City of London trader Alessio Rastani, 26th September 2011:

For most traders, we don’t really care that much how they [governments] are going to fix the economy, how they’re going to fix the whole situation. Our job is to make money from them. Personally, I’ve been dreaming of this moment for three years. I have a confession. I go to bed every night and I dream of another recession…..

Governments don’t rule the world.  Goldman Sachs rules the world.  does not care about this [Eurozone ] rescue package, neither do the big funds….

Ed really, really does need to move on from the idea that ‘the markets’ are made up of a broadly benevolent bunch who really just want stability. 

They don’t.

It is in the interests of a significant section of the financial elite to have instability, because our honest friend Alessio says, that’d when hedging and other techniques come into play so that those with the power and resources to play the game make big money at the expense of the powerless.

Why did the markets react so negatively to Operation Twist in the US? The already conventional wisdom is that they weren’t reassured by it, and that their ‘animal spirits’ were lowered by the continued threat of recession.

But I posit that the real reason for their negative reaction is that, led on by Alessio’s ‘Goldman Sachs and other big funds’, they realised that Operation Twist, by focusing its measures more directly on the real economy than ‘traditional’ QE does, was not to their advantage, and that they could send a ‘signal’ to governments that what they really want is more traditional QE.  As Chris Dillow has noted of the UK’s QE experience:

[M]ost of the money printed by the Bank stayed in the financial system, rather than affect[ing] nominal GDP.

Ed Balls’ speech: the verdict from the left and the right – dispatch from #lab11

September 26, 2011 Leave a comment

Ed Balls today did exactly what he was supposed to do: he offered something by way of a plan to boost jobs, created a soundbite on Labour’s economic plan (“fiscal responsibility in the national interest”), apologised for what Labour got wrong in the past (75p pension rise, the abolition of the 10p tax rate), put the boot in Osborne’s unworking plan and ended on  high note – as opposed to Vince Cables pessimistic one during the Liberals’ conference (a point picked up by George Eaton earlier).

But will he convince? To the right (of the party and beyond) it will have provided no challenge to the theory that Labour is a party fit to govern only when there is money to spend, and that the Tories (or fiscal conservatives on the Labour Right) are the choice of the day for austerity measures. Balls outlined some interesting ways to promote growth and jobs, recognised shortfalls such as cutting the future jobs fund, but admitted a Labour government would not be able to reverse every Tory spending cut.

To the Left, his opposition to strike action over pensions will smack of a cuts agenda apologism. Further, his statement on sold-off banks’ windfalls, which he initially sounded sceptical of, before stating that he will use any to reduce the deficit, will appear very unradical, and at worst comfortable with the failing national banking system. As Eaton says: “some on the left would prefer a radical commitment to mutualise the banks and turn them into engines of growth.”

Overall the speech spelt out some interesting plans, proved that Labour was thinking ahead, and that under his direction it will not introduce a Tory-lite programme. For example the one-year small firms national insurance tax holiday for taking on extra workers seems like a very sensible policy as a means of countering the terrible mess being created by the Tory-led government. But despite the glimmer of hope, it is only relatively better, and it is not a radical overhaul. In some places it is ridiculously unambitious given the state we’re in, and in other places it appears unwilling to challenge at all.

But it will curry favour, will attract attention, and it will prove wrong the objection that Labour are playing a long term game to keep mum until the next election.

 

Invest to save – dispatch from #lab11

September 26, 2011 Leave a comment

Full employment was once the preserve of the Left, an almost unattainable goal through which success was achieved only in the process of trying to bring it to fruition – in other words nobody assumes that any time soon, such goals will be achieved, but at least trying will reap its own rewards.

Today, it’s a priority of everyone (but George Osborne of course). Flicking through a copy of the Mirror today, I find a double page spread where directors and chief executives of Britain’s top companies are asked what they would do to change Britain – a major theme of which was getting people back in employment, particularly young people for whom depression and other severe mental health issues are all but guaranteed with long term worklessness.

The supposed cost-benefit analysis that money saved on payroll, and an ideological aim to keep some out of work to depress wages and curb union influence, is too rich for the likes of the Chief Executive of McDonalds and 02 these days. Such is the power of the coalition to send the wealthiest 1% down the road of social democracy.

The rewards, to be sure, are from getting people back to work. As Eoin Clarke has pointed out, “In total, the cost to the state of one person being unemployed is c.£13,448” – which weighed against the cost to create jobs should incentivise a government employing austerity measures to make work a priority.

Eoin continues:

if as the OBR predicts, unemployment hits 3million the total cost to the state would be more that £200,000,000,000 (£200bn) per parliament.

Similarly, £100bn is lost in the economy every year as a consequence of sickness (which was the equivalent of the total GDP of Portugal in 2010, as Phil Gray, Chief Executive of the Chartered Society of Physiotherapy told The Work Foundation’s conference fringe). As he also pointed out, muscular-skeletal issues are two times as likely to bring about long term work absence than mental health. So what can be done to try and help this issue?

Assessments for fitness to work have been floated as an idea (Phil Gray hopes that the DWP and the DoH will soon be putting out pilots for such assessments), which means that people will be able to do a limited amount of their normal daily duties at work, with help from their employers, benefits of which include less people being homebound, and the loss in the economy is decreased.

Overall, the main point to take away is that investment in targeted muscular-skeletal services, and mental health services, will ensure that people get back to work. Further, getting more people back into work is its own reward, and will save money. In short, the government needs to invest and spend to save, not commit to short term savings that end up costing the state more on increased cases of poor mental health, housing benefit, JSA and other costs attributable to having 2.5 million out of work.

In so many ways the coalition’s economic solutions will fail – and this issue of jobs and the welfare of people is another case in point.

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