Archive for October 2011

Money

The Breakdown in the Relationship Between Economic Growth and Pay

Date: 28. October 2011
Matthew Whittaker and

This post originally appeared on the Huffington Post

With the fragile recovery in the global economy at very real risk of derailment, strategies for growth remain at the top of agendas across the world. But if we look at the period prior to the crisis of 2008-09, it becomes clear that we need to aim to do more than simply return to 'normal'.

Long before the downturn, there was evidence to suggest that increases in GDP were failing to feed through to broad-based improvements in living standards in a range of advanced economies: for too many ordinary workers, 'growth' no longer led automatically to 'gain'. Although the causes of this breakdown in relationship are many and varied, at their heart lays growing wage inequality.

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Bank of England

Occupy the Bank

Date: 26. October 2011
Gavin Kelly and

This post originally appeared on Gavin's New Statesman blog

At last we are getting some hard-hitting ideas about how to reign in and reform free-booting finance capitalism. From those camped outside St Paul's? A new left wing think-tank? Perhaps a leading financier gone-rogue in the manner of Soros or Buffett?

No, nothing so predictable. The new ideas are flowing from that well known citadel of radicalism in Threadneedle Street. It's not just the Bank of England's now familiar, yet still striking, use of aggressive and unorthodox monetary policy that best captures this new disposition. Nor is it the fact that Mervyn King led the way in calling for far-reaching structural reform of the banking system, making it more difficult for the government to recoil from the proposals in the recent Vickers report. In fact, the new radicalism isn't really about the Bank Governor -- rather it's coming from other senior figures working for him.

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obama smaller1

Obama: Mr 99%?

Date: 14. October 2011
Gavin Kelly and

This post originally appeared on Gavin's New Statesman blog

Just a bunch of 'kids and kooks' or the early and messy stirrings of a deeper shift in US politics? That's the question pre-occupying US politicians and assorted commentators from left to right as the one month old occupation of Wall Street spreads to a growing number of cities.

They call themselves the '99%' - representing they say everyone apart from the super-rich and powerful. On the left the nacsent movement has been lionised by Naomi Klein as 'the most important thing in the world' with self-conscious comparisons made to the recent uprisings in Tunisa and Egypt as well as the 'indignados' in Madrid and those on the streets in Athens. In contrast, high-brow centre-right commentators view it as inchoate, unimaginative, and amateurish: all slogan, no proposal. Grow up, put on a suit and do some hard policy work is their message.

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Money in hands

Getting the measure of a better capitalism

Date: 12. October 2011
Gavin Kelly and

This post originally appeared on Gavin's New Statesman blog

Today the Institute for Fiscal Studies has launched an Exocet at the Coalition's claims to be a one-nation government taking a lead on poverty reduction. Nearly all measures of poverty are set to rise over the next five to ten years and the Coalition's policies are part of the cause.

But underneath the headlines the IFS analysis serves a less likely purpose. It provides timely grounds for questioning some of the key measures we use to judge progress in our society. In particular, it raises difficult questions about our reliance on a formula that says 'GDP growth plus poverty reduction' is enough.

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child poverty

Child poverty: We need to rethink our 2020 target

Date: 11. October 2011
James Plunkett and

This post originally appeared on the Independent blog

This morning the IFS published its latest projections for poverty. The stats have been widely reported, with most coverage focusing on the ‘unprecedented’ seven percent squeeze on middle incomes. But perhaps the more surprising figures are those for long-term trends in child poverty. On our current path, 800,000 more children will fall into poverty by 2020, a rise in the child poverty rate from 19.2 percent today to 24.4 percent. That’s the kind of sustained increase in child poverty not seen since the 1980s – and an almost complete reversal of the 900,000 children lifted out of poverty under Labour. It’s a wake-up call for both parties and a chance to seriously rethink our approach to the 2020 target to abolish child poverty.

You might say that, given the current crisis, these gloomy figures aren’t surprising – things will take time to recover and we shouldn’t overreact. But this story, of an economy knocked down and slowly getting back on its feet, simply doesn’t fit the reality. On the contrary, relative poverty is perversely set to fall in the short-term because those in the middle are fairing so badly.

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child poverty

The coalition is actively increasing child poverty

Date: 11. October 2011
Felicity Dennistoun and

This post originally appeared on Left Foot Forward

As has been widely reported, new figures published today by the Institute for Fiscal Studies forecast that the number of children in poverty is set to rise.

Specifically, child poverty will rise continually during the first half of this decade and stay at approximately the same level until 2020, when there will be over three million children living in poverty in the UK. The figures about adults are similarly depressing; by 2015 6.6 million working age adults will be living in absolute poverty.

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childcare slider

U-turn on childcare cuts: is the coalition waking up to its women problem?

Date: 7. October 2011
Gavin Kelly and

This post originally appeared on Gavin's New Statesman blog

Sooner or later something had to give. And today it has. Following much speculation the government has finally announced a change in its planned cuts to childcare, a key area of concern for many working mothers (and fathers). The recent heat about fast falling support for the coalition among key groups of women voters is starting to take its toll.

So £300m has been found to ensure that more part-time workers can claim tax-credit support for childcare without necessitating a further cut in provision for existing claimants. Up until now there had been widespread fear that any extension in support for part-timers would mean yet another cut in childcare support for everyone else.

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Pencils large

Tories dodge a bullet on childcare

Date: 7. October 2011
James Plunkett and

This post originally appeared on the Spectator blog

In the past year the government has proven good at cauterising self-inflicted wounds. This morning’s announcement from Iain Duncan Smith on childcare stems another potential bleeder. His department have found an extra £300m to prevent further cuts to childcare support. It’s a welcome reversal of an ill-advised plan and a narrowly averted political foul-up.

The extra money is needed because of IDS’s big welfare reform project, the Universal Credit. One of the big advantages of the UC is that it will smooth out all those ugly ‘cliff-edges’ in the benefit system, particularly rules that say you don’t get help if you work fewer than 16 hours a week. In the case of childcare the UC will mean 80,000 parents working ‘mini-jobs’ will become eligible for support. Previously, IDS had been trying to make this move on the cheap, by spreading out existing spend more thinly. Today he’s found an extra £300m from the departments ‘Universal Credit implementation fund’ so that he can avoid this Scrooge approach. We should of course ask what else this money might have been spent on. But on childcare at least, it means he can extend support while protecting existing claimants.

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Family debt

Personal debt - the PM should be careful what he wishes for

Date: 5. October 2011
Gavin Kelly and James Plunkett

This post originally appeared on the New Statesman blog

According to reports this morning, David Cameron will use his conference speech this afternoon to call on Britain’s households to pay down their debts. He will say that dealing with debt means not just paying down public debt but also “households – all of us – paying off the credit card and store card bills." Such comments would go beyond the government’s existing argument about the importance of dealing with the public deficit to an argument that about reducing the UK’s levels of personal debt.

What are we to make of this new message? In one sense it fits with the government’s wider narrative of Britain having maxed out the nation’s credit card. In this respect, Cameron’s comments are a statement of the obvious, albeit an important one. The UK’s household debt levels remain crushingly high both by historical and international standards. Sooner or later it’s vital that they come down. The Prime Minister is also right to say that this was no ordinary recession, and that this will be no ordinary recovery.

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Low Pay Britain HP image

Lifting the lid on Low Pay Britain

Date: 4. October 2011
Lee Savage and

This post originally appeared on Left Foot Forward

The National Minimum Wage rose by 15 pence per hour to £6.08 over the weekend, providing a timely boost to the incomes of the very lowest paid workers. On Sunday, new research by the Resolution Foundation put that rise into the broader context of low pay in modern Britain.

Around one fifth of all employees in the UK earn less than the Living Wage, amounting to 5 million workers in total.

Although most – but by no means all – workers now earn more than the legal minimum, millions still earn less than is needed for a minimum standard of living.

Perhaps the starkest finding from the work, though, is that low pay affects some groups far more significantly than others.

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