Archive for May 2012

Cameron must quickly rediscover progressive conservatism

Date: 28. May 2012
Gavin Kelly

Conservatives’dismal spring has served to remind us how a political project, however painstakingly put together, can easily come apart. It also appeared to mark the end of David Cameron’s modernising agenda.

Progressive conservatism – a hazily defined attempt to forge a centre-right politics that is socially liberal and green on the one hand and concerned with improving the plight of the disadvantaged without invoking the big state on the other – seems to have disappeared before it was ever fully formed.

Surprisingly few tears will be shed in Westminster. For many on the right, it was always a project to be sneered at in private and tolerated in public so long as Mr Cameron rode high in the polls. For much of the left, progressive conservatism was an oxymoron masquerading as an electoral project. “Same old Tories” was the instinctive retort.

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Can Deregulation Fix Britain's Childcare Challenge

Date: 23. May 2012
Vidhya Alakeson

This blog originally appeared on the Huffington Post

At the start of this week Conservative MP, Elizabeth Truss, published her proposals for reducing the high costs of childcare in Britain. At the heart of her proposals is a drive to reduce regulation on the childcare industry. Truss has two main ideas: a relaxation of ratios so that a single childcare worker can look after more children and replacing the Ofsted registration and inspection scheme for childminders with accreditation through agencies as in the Netherlands. This, Truss argues, would lower the barriers to becoming a childminder and bring many people who are at home looking after their own children into the profession. The National Childminding Association could not have hoped for better marketing than it has had from Elizabeth Truss. While she is right on the importance of childminders, her proposals are not the answer to the affordability challenge facing working families.

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Clegg’s new tone on the economy

Date: 23. May 2012
Gavin Kelly

This post originally appeared on Gavin's New Statesman blog

It’s not every day you open the paper to read about a cabinet minister – one who isn’t the Chancellor - holding forth about the ‘instruction’ that has been given to the Treasury on a key aspect of economic policy. Nor we should we suppose that Nick Clegg elected to give the interview to the FT only to use this line due to a slip of the tongue.  It tells us something.

The specifics are about whether the Treasury should use its ‘balance sheet’ to enable a ‘massive’ increase in infrastructure spending (on housing and transport).  The timing reflects the wider context. The last few weeks have been unkind for the Coalition’s favoured economic narrative. The return of recession has been the key event but hardly the only one. The election of President Hollande, the continued euro-zone crisis, President Obama regularly appearing on our TV screens talking about jobs and growth, a Labour reshuffle that was seen to help unify different shades of economic opinion, and now the IMF saying (once again) that further action may be required, including fiscal stimulus, if the economy doesn’t pick up – all these have unsettled the Coalition.  

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Chill out about the debt bubble? Not yet.

Date: 18. May 2012
Gavin Kelly

This post originally appeared on Gavin's New Statesman blog

What role did high levels of household debt play in generating the crash and what do they mean for our economy over the next few years?

Well-worn questions, you might think. And no shortage of people have asserted answers.  Following 2008, a whole new crunch-lit genre of books emerged to explore this. There is – or perhaps, was – something of a post-crash orthodoxy that the rise of easy credit, fuelled by run-away rewards for the super rich, and a squeeze elsewhere, encouraged ever greater borrowing.

A favoured narrative, often echoed by the coalition, is that debt ballooned as consumers (and home buyers) went on an irresponsible binge – it was all demand-led.  Others argue, particularly in the US, that exploding debt reflects an act of policy – whether explicit or implicit – to increase the supply of easy credit for low and middle income groups who were seeing their wages stagnate.  From this perspective, it was less a story of families living beyond their means and more about coping when their means stopped growing.

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Non-compliance with the National Minimum Wage

Date: 17. May 2012

This guest post is by Sir Robin Wales, Mayor of Newham

The introduction of the National Minimum Wage (NMW) is widely regarded as one of the most impactful policies of recent decades. Its success as a policy is illustrated by the fact that the need for a minimum wage is rarely questioned any more, even as the government looks to repeal other areas of business legislation. This is great achievement, and the debate has now moved on to discussion over what level the minimum wage should be set at to cover living costs.

These debates are important. But, as the Resolution Foundation has highlighted, with them we have lost sight of a vital issue: enforcement. What many people do not realise is that there is a hidden economy operating where workers are still not receiving the NMW. Without improved enforcement of the law these abuses will continue.

The London Borough of Newham is today publishing research showing that in Newham a shortage of job opportunities combined with a lack of skills, confidence and knowledge of the NMW means workers end up in informal jobs paying measly wages.

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Debt and inequality conundrums

Date: 15. May 2012
James Plunkett

This post originally appeared on the OECD blog

How did inequality and household debt interact in the run up to the 2008/09 financial crisis?  Today, a new report by NIESR for the Resolution Foundation provides new evidence on that question for the UK. The new analysis confirms the severity of the borrowing situation of low income households in Britain before the crash and raises difficult questions about patterns of consumption in an era of high inequality.

The report’s key contribution is to dig beneath headline figures for household debt to describe the borrowing picture for households at different points in the income distribution. It’s well established that UK household debt, in common with many other countries, ballooned in the late 1990s and 2000s, with the aggregate savings ratio—the percentage of household disposable income that is saved—turning negative in 2008 for the first time since records began. Yet so far these headline figures have been something of a black box. 

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Living wage – coming to a city near you

Date: 10. May 2012
Gavin Kelly

This post originally appeared on Gavin's New Statesman blog

The last time a letter left on a desk caused such a stir it involved an exchange between two senior politicians about the future of the country’s finances. This time the note was from a group of Whitehall cleaners to Iain Duncan Smith asking him to make good on his commitment to make work pay and make his department, DWP, a living wage employer. The fact that it so caught the public mood says something about how the question of low pay has risen in salience. 

This is in no small part due to the success of the living wage campaign, a grass-roots movement formed just over a decade ago, to push for a decent wage – above the minimum wage - for workers. It has helped shine a light on the rising problem of in-work poverty. In an era when there are many structural forces bearing down on low pay – from shifts in technology and trade to the continued demise of collective bargaining and the real terms falls in the minimum wage - the momentum behind the campaign for a living wage is a rare example of at least some countervailing pressure.

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Too fast, too slow – how the passing of time is shaping politics for Cameron and Miliband

Date: 8. May 2012
Gavin Kelly

This post originally appeared on Gavin's New Statesman blog

Two years into the life of the coalition and all the sudden the passing of time seems like Ed Miliband’s best friend and David Cameron’s worst foe. For a government that has lost its footing, facing an opposition learning how to benefit from the stumbling and fumbling, the long expanse of time left in this parliament will be starting to feel less like an opportunity to develop and deliver an agenda and more like an ordeal to be survived.

It’s not just the slow motion horror of the six weeks since the budget or the likelihood that the next few weeks, dominated as they will be by the Leveson inquiry, will feel like a very long stretch indeed for Jeremy Hunt and David Cameron. It’s the six budgets and autumn statements the coalition parties have to negotiate before the next election; the thirty seven months of enervating governing grind to get through; and the fact that come the next election it will have been a full 23 years since the Conservatives won outright, an observation that is weighing increasingly heavily on the Tory ranks who sense their prospects of doing so next time aren’t brightening. A lot of politics is still to happen even before the parliament reaches half-time – and the second half is littered with all manner of political, economic and legal icebergs.

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A tax on aspiration?

Date: 2. May 2012
Gavin Kelly

This post originally appeared on Gavin's New Statesman blog

Governments, like individuals, often like to believe their varying instincts and aspirations all fit comfortably together even when they don't. They prefer to try to keep these tensions under wraps and sometimes don't even like to admit them in private to themselves. And the coalition is a case in point.

One of its favourite claims is that, despite the fact that all sorts of welfare support is being removed from families on middle incomes, when it comes to the very poorest they are doing more than their predecessors. The pupil premium usually gets a mention here, followed by the expansion in student support for the most disadvantaged.

Another cherished claim is that punitive marginal tax rates for those struggling on modest incomes seeking to earn their way up will be reduced - a point  made with great passion by David Cameron in his 2009 Conservative party conference speech when he railed against an example of a 96 per cent tax rate hitting a single mother.

 

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