"Apprenticeships" apparently deserve a "week" which was held from 6th to 12th February. Liberal Democrat News celebrated it on 10th February with a front page article in which Vince Cable proudly announced that the government "has prioritised investment in apprenticeships (which) has led to the creation of a record number of apprenticeships combined with tough new standards to drive up quality...(which will)...deliver the world class skills individuals and firms need to get ahead." In the same issue, on the back page , it reported Redcar MP Ian Swales's pride that his constituency has seen "a 91% increase in apprenticeships in the last 18 months."
However, in the Guardian on the same day Polly Toynbee, a founder member of the SDP and thus at one time one of the Liberal Democrats' highest profile supporters, wrote that the government's claims are "almost a lie, at least nowhere near the truth". In fact, she claims, the number of apprenticeships for 16-18 year olds has actually fallen in the last three months, that so many of the so called apprenticeships are 12 week courses from private training companies, with no jobs at the end, and bizarrely, that the figures include an 878% increase in "apprenticeships " for the over 60s!
Who are we to believe?
Showing posts with label Economics and politics. Show all posts
Showing posts with label Economics and politics. Show all posts
Saturday, 18 February 2012
Thursday, 26 January 2012
A Mixed Bag from Clegg
It was heartening at the beginning of the week to read headlines coupling "Bishops and Liberal Democrat Peers" in their alliance to block the benefits cap. Happy to see the party back on the side of,if not exactly the angels, at least their representatives on earth, as well as back on the side of rationality. Unfortunately this welcome sanity and consequent publicity, surely likely to make the party more attractive to all engaged professionally in the area, was spoiled by Clegg's appearing at least once on both radio and television, to say that he was in favour of a benefits cap.
It seems obvious to me that welfare payments should be based on need. Somebody somewhere has worked out what is the minimum necessary to provide one or a group of individuals a basic safety net. I suspect this provision will not be generous. To place an artificial cap on it, so that a group receives less than this basic minimum, is nonsensical and inconstant with either fairness or the standards of a civilised society.
If there is a "rip off" in this area I suspect it is not by families in difficulties but by landlords who charge exorbitant rents. The government would be on stronger ethical ground by tackling abuse in this area rather than pushing the most vulnerable in our society even further below the poverty line.
There is something rather sick about a government which bullies with such enthusiasm the weakest in society and yet seems content with ineffectual noises when it comes to tackling the excesses of the rich. One glaring example: the Chief Executive of RBS receives a salary of £1.2m and there is talk of giving him a bonus of a further £million - both sums beyond the wildest dreams of most of the rest of us. Since RBS is 83% publicly owned its Chief Executive is virtually a public servant and paid with taxpayer's money. Easy for the government to stop this abuse, but somehow there's another law when it comes to facing up to the those at the top rather then the bottom of the pile.
However, on the brighter side, Nick Clegg is expected today to call for an acceleration of rate at which the lowest earners are taken out of paying income tax. Whilst not helping the very poorest, those not in employment, this will provide some relief for the hard-pressed and, by stimulating demand, may through the Keynesian multiplier do something to promote growth and therefore employment.
It seems obvious to me that welfare payments should be based on need. Somebody somewhere has worked out what is the minimum necessary to provide one or a group of individuals a basic safety net. I suspect this provision will not be generous. To place an artificial cap on it, so that a group receives less than this basic minimum, is nonsensical and inconstant with either fairness or the standards of a civilised society.
If there is a "rip off" in this area I suspect it is not by families in difficulties but by landlords who charge exorbitant rents. The government would be on stronger ethical ground by tackling abuse in this area rather than pushing the most vulnerable in our society even further below the poverty line.
There is something rather sick about a government which bullies with such enthusiasm the weakest in society and yet seems content with ineffectual noises when it comes to tackling the excesses of the rich. One glaring example: the Chief Executive of RBS receives a salary of £1.2m and there is talk of giving him a bonus of a further £million - both sums beyond the wildest dreams of most of the rest of us. Since RBS is 83% publicly owned its Chief Executive is virtually a public servant and paid with taxpayer's money. Easy for the government to stop this abuse, but somehow there's another law when it comes to facing up to the those at the top rather then the bottom of the pile.
However, on the brighter side, Nick Clegg is expected today to call for an acceleration of rate at which the lowest earners are taken out of paying income tax. Whilst not helping the very poorest, those not in employment, this will provide some relief for the hard-pressed and, by stimulating demand, may through the Keynesian multiplier do something to promote growth and therefore employment.
Thursday, 15 September 2011
Brownfield sites - a public-private partnership.
A must-read article by by Simon Jenkins, a Guardian columnists who is also chairman of the National Trust, provides a devastating critique of Eric Pickles's plans to "reform" planning laws in order to release protected greenfield land for housing. Among other things Jenkins claims that existing brownfield sites are estimated to have room for a further 3m houses.
A friend of mine who specialises in housing finance tells me that the major reason why builders prefer to build on previously undeveloped land is that the risk is substantially less. Building on brownfield land involves the risk of subsidence due to the possible collapse of old drains and culverts, seepage of noxious gases and other undesirables. If local authorities were to clear and prepare brownfield sites for building, and guarantee them, that would produce a more level playing-field.
That seems to me to produce an excellent opportunity for a viable public-private partnership. As a bonus the public works involved in clearing and preparing the sites would produce an income injection into the economy which would help create the demand for the houses to be built.
Changes in the planning rules may seem small beer compared with the effects of businesses bankruptcies and public services cuts caused by the government's misguided economic policy. But the effect of these falls mainly on present generations. A free for all by greedy developers looking for short-term profit will damage our green and pleasant land, and the quality of life of future generations, for centuries.
A friend of mine who specialises in housing finance tells me that the major reason why builders prefer to build on previously undeveloped land is that the risk is substantially less. Building on brownfield land involves the risk of subsidence due to the possible collapse of old drains and culverts, seepage of noxious gases and other undesirables. If local authorities were to clear and prepare brownfield sites for building, and guarantee them, that would produce a more level playing-field.
That seems to me to produce an excellent opportunity for a viable public-private partnership. As a bonus the public works involved in clearing and preparing the sites would produce an income injection into the economy which would help create the demand for the houses to be built.
Changes in the planning rules may seem small beer compared with the effects of businesses bankruptcies and public services cuts caused by the government's misguided economic policy. But the effect of these falls mainly on present generations. A free for all by greedy developers looking for short-term profit will damage our green and pleasant land, and the quality of life of future generations, for centuries.
Thursday, 8 September 2011
That 50% tax rate
As every student of elementary economics will have been taught, there are two ways of analysing the effect of income tax on effort and enterprise.
One assumes that work is disagreeable and leisure is agreeable. All workers have to do some work but at the margin have the choice of whether to do a little bit more or a little bit less. The higher the net wage (ie after tax) the more attractive work becomes compared to leisure. This is the rationale for paying time and a quarter or time and a half for overtime. A high marginal tax rate reduces the net wage and makes work less attractive. Therefore the worker reacts by doing less work and enjoying more leisure.
The other analysis comes to the opposite conclusion. It assumes that the worker has in mind the income necessary to maintain his/her household's standard of living. Most households live up to their incomes. An increase in the marginal tax rate means that net household income falls. Hence the worker will work more in order to maintain the household standard of living (whereas under the first argument he would say something on the lines of "Sod this for a lark," work less and lower the household standard of living even further.)
There are flaws in both analyses. Both are couched in terms of hours worked and most workers don't have much choice: we are given a job with a stated number of hours and that's it (apart from the possibility of overtime, mentioned above.) Only part-time workers tend to have much flexibility on the number of hours worked, although, of course, some "full timers" can get a second, part-time (evening) job.
A more serious flaw, in my view, is that both analyses assume that the monetary reward is the only or most important factor in determining how hard one works. Beyond earning enough for the basic necessities, this is unlikely to be true for most people. Pride, the respect of one's colleagues, desire for promotion, doing a fair day's work for a fair day's wage, all motivate the employees. Entrepreneurs are similarly motivated, along with aims such as to maintain the reputation of a respected business, to increase the size of the business or market share, fame (for actors, singers, artists etc), to wield more power, gain in prestige, or even have enough to contribute to a political party and get a knighthood.
Empirical evidence suggests that marginal tax rates may affect the amount of work offered by part time "second income" earners (in earlier times usually housewives earning "pin money) but not many others. That high marginal tax rates discourage effort and enterprise is a convenient myth promulgated by the rich.
Personally I would keep the 50% tax rate, introduce it at a lower level and consider even higher rates for for higher incomes. Remember at present it is only paid once taxable income has reached £150 000 a year, Depending on allowances, that's around £3,000 a week. Over half the working population would be in the seventh heaven if they received that amount a month. If we really are "all in this together" then the rich have to play their part, not opt out of the society that enables them to be rich.
One assumes that work is disagreeable and leisure is agreeable. All workers have to do some work but at the margin have the choice of whether to do a little bit more or a little bit less. The higher the net wage (ie after tax) the more attractive work becomes compared to leisure. This is the rationale for paying time and a quarter or time and a half for overtime. A high marginal tax rate reduces the net wage and makes work less attractive. Therefore the worker reacts by doing less work and enjoying more leisure.
The other analysis comes to the opposite conclusion. It assumes that the worker has in mind the income necessary to maintain his/her household's standard of living. Most households live up to their incomes. An increase in the marginal tax rate means that net household income falls. Hence the worker will work more in order to maintain the household standard of living (whereas under the first argument he would say something on the lines of "Sod this for a lark," work less and lower the household standard of living even further.)
There are flaws in both analyses. Both are couched in terms of hours worked and most workers don't have much choice: we are given a job with a stated number of hours and that's it (apart from the possibility of overtime, mentioned above.) Only part-time workers tend to have much flexibility on the number of hours worked, although, of course, some "full timers" can get a second, part-time (evening) job.
A more serious flaw, in my view, is that both analyses assume that the monetary reward is the only or most important factor in determining how hard one works. Beyond earning enough for the basic necessities, this is unlikely to be true for most people. Pride, the respect of one's colleagues, desire for promotion, doing a fair day's work for a fair day's wage, all motivate the employees. Entrepreneurs are similarly motivated, along with aims such as to maintain the reputation of a respected business, to increase the size of the business or market share, fame (for actors, singers, artists etc), to wield more power, gain in prestige, or even have enough to contribute to a political party and get a knighthood.
Empirical evidence suggests that marginal tax rates may affect the amount of work offered by part time "second income" earners (in earlier times usually housewives earning "pin money) but not many others. That high marginal tax rates discourage effort and enterprise is a convenient myth promulgated by the rich.
Personally I would keep the 50% tax rate, introduce it at a lower level and consider even higher rates for for higher incomes. Remember at present it is only paid once taxable income has reached £150 000 a year, Depending on allowances, that's around £3,000 a week. Over half the working population would be in the seventh heaven if they received that amount a month. If we really are "all in this together" then the rich have to play their part, not opt out of the society that enables them to be rich.
Saturday, 14 May 2011
Economic policy based on “unadulterated rubbish.”
In an article in last Sunday’s “Observer” (08/05/11)Will Hutton notes that estimates of the amount the UK needs to spend cumulatively in the next 15 years if we are to meet our climate change targets are in the range of £450bn, but only £70bn is planned.
He comments:
“…the coalition members’ chatter about not leaving huge public debts to our children, or Britain ‘maxing out on its credit card’ is unadulterated rubbish. While this can be expected of parts (but not all) of the Conservative party, better could be expected from the party that is heir to Keynes. I would expect my children to congratulate us on borrowing at today’s interest rates to invest in the infrastructure that will make the country more prosperous and global warming less likely, and accelerate a recovery that is so stuttering, especially as public debt levels in Britain have been higher for 200 of the last 250 years.”
His article concludes: “Orange book liberals have provided cover for a first order economic mistake.”
Unfortunately those of us who take this view, deficit realists, have been drowned out by the Tory spin doctors who have successfully labelled us “deficit deniers.” The truth is that not only are present generations, and especially the young unemployed, suffering from the abandonment of Keynesian policies, but future generations will also suffer as they inherit an economy which is “not fit for purpose.”
He comments:
“…the coalition members’ chatter about not leaving huge public debts to our children, or Britain ‘maxing out on its credit card’ is unadulterated rubbish. While this can be expected of parts (but not all) of the Conservative party, better could be expected from the party that is heir to Keynes. I would expect my children to congratulate us on borrowing at today’s interest rates to invest in the infrastructure that will make the country more prosperous and global warming less likely, and accelerate a recovery that is so stuttering, especially as public debt levels in Britain have been higher for 200 of the last 250 years.”
His article concludes: “Orange book liberals have provided cover for a first order economic mistake.”
Unfortunately those of us who take this view, deficit realists, have been drowned out by the Tory spin doctors who have successfully labelled us “deficit deniers.” The truth is that not only are present generations, and especially the young unemployed, suffering from the abandonment of Keynesian policies, but future generations will also suffer as they inherit an economy which is “not fit for purpose.”
Friday, 13 August 2010
Cameronian cuts cursed - official!
Yet another article from the Financial Times, Future generations will curse us for cutting in a slump, this time by the distinguished economist Robert Skidelsky and former Treasury official Michael Kennedy, argues the folly of the government's slash and burn economic policy. Liberal Democrats should be dissociating themselves as far as politically possible from this barely hidden agenda of ideologically motivated cuts.
Wednesday, 11 August 2010
Two vigorous campaigns?
Regular readers, if there are any, will have noticed that there haven't been many posts recently. This is because I'm very much occupied in having holidays (walking in Wales, enjoying sunshine in Margate and walking in France) and, with another ex-teacher of economics, writing the answers to the questions in an economics text-book. Thus when not away on holiday my head is reeling with such concepts as profit maiximisation and matching Marginal Social Costs and Marginal Social Benefits.
However an item on the 6 o'clock news on Radio 4 yesterday compels me to abandon these frivolities for a while and come back to blogspot.
David Cameron has announced a vigorous campaign to reduce benefit fraud. He claims that this deprives the Treasury of over £5bn each year. However," experts" claim that most of this is the result of error and maladministration and only £1bn is due to actual fraud. Nevertheless, £1bn is a lot of money and we must applaud a campaign try to reduce if not eliminate it and bring the culprits to justice..
However, the same news item pointed out that the Treasury loses £15bn per year on tax evasion. Yes, tax evasion, not avoidance. The government actually encourages tax avoidance for what it sees as good causes such as personal savings by such schemes as ISAS and and charities through Gift Aid, and many of us take advantage of these. But tax avoidance, like benefit fraud, is illegal.
As a deficit minimising as opposed to profit maiximising government, economic logic dictates that the government should now put 15 times more effort into tracking down and reducing if not eliminating this tax evasion and bringing to the culprits to justice (which, in my view, should involve community service rather than a seat in the House of Lords.)
I look forward to it.
However an item on the 6 o'clock news on Radio 4 yesterday compels me to abandon these frivolities for a while and come back to blogspot.
David Cameron has announced a vigorous campaign to reduce benefit fraud. He claims that this deprives the Treasury of over £5bn each year. However," experts" claim that most of this is the result of error and maladministration and only £1bn is due to actual fraud. Nevertheless, £1bn is a lot of money and we must applaud a campaign try to reduce if not eliminate it and bring the culprits to justice..
However, the same news item pointed out that the Treasury loses £15bn per year on tax evasion. Yes, tax evasion, not avoidance. The government actually encourages tax avoidance for what it sees as good causes such as personal savings by such schemes as ISAS and and charities through Gift Aid, and many of us take advantage of these. But tax avoidance, like benefit fraud, is illegal.
As a deficit minimising as opposed to profit maiximising government, economic logic dictates that the government should now put 15 times more effort into tracking down and reducing if not eliminating this tax evasion and bringing to the culprits to justice (which, in my view, should involve community service rather than a seat in the House of Lords.)
I look forward to it.
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