Gasping Local Government.

 

 

In the  previous post I reported my answers to “Labour List’s” question , what do think are the three  most important priorities that should be in the Budget at the end of this month.  They are:

1.    End the Two Child Benefit Cap (I’ve gathered since that the Household Benefit Cap also need lifting)

2.    Significantly increase the funding of local government.

3.    Restore the Aid Budget to at least 0.58% of GDP, and publish plans to  get back to 0.7% asap.

There are further and better particulars in today’s Guardian (03/10/24) about the strains under which local government is currently operating.  See:

https://www.theguardian.com/society/2024/oct/03/rising-cost-of-social-services-in-england-putting-arts-and-youth-services-at-risk-say-councils

 

To summarise, by law Councils must provide:

·       Educational services;

·       Children and adult social care;

·       Waste collection;

·       Public health;

·       Planning and housing services;

·       Road maintenance;

·       Libraries.

In trying to maintain these statuary duties, since 2010 Councils have been forced  to reduce or even abandon “nice to have” services such as:

·       Sure Start children’s centres;

·       Youth clubs;

·       Leisure centres;

·       Arts projects;

·       Museums;

·       Parks;

·       Libraries;

·       Theatres.

A government spokesperson has said: “Despite the inheritance left, (we’re hearing a lot about that) “we will work with local government to fix the foundations and get them back on their feet. . . ”

 I presume M/s Reeves knows.

 

What should be in the Budget?

 

This morning’s “Labour List” asked me to fill in a questionnaire on what I thought should be in the budget.  I was asked for one “most important” item and then for two further suggestions.

Off the top of my head, my responses were:

Most important.

End the Two Child Limit on Universal Credit.  It is unconscionable  that this very rich country should be punishing children via this immoral and ineffective piece of gesture politics.

Next.

Give a significant increase to the grants to local government, graded according to their needs (“levelling up,” to coin a phrase.)  Local government  is responsible for various vital services, including provision for care of the elderly and the requirements of children with special needs.  Local government needs building up, not made to further reduce  services already stretched to the limit, thus taking the blame for the incompetence of the (previous?) central government.  Such an increase would also signal further devolution – a movement away from the centralist view that “Westminster knows best.”

Thirdly

Raise the Overseas Development Assistance budget to at least 0.58% of GDP  (see previous post for the argument) and announce plans for restoring it to 0.7%.  As even David Cameron said:  “The UK will not balance its books on the backs of the poorest.”  (27^th May 2011)

There was no provision if the questionnaire for further suggestions.  The above are short term.  I’d like to see some tax(es) increased NOW to invest in  the building of a sustainable green infrastructure, and the creation of a Commission to examine the UK’s taxation structure, with a view to switching away from “goods” (such as work) to “bads” (such as pollution) as Paddy Ashdown argued years ago, and from income to wealth (see Phillip Collins’s article on “Hand-me-  down economics” in the August edition of Prospect.

ODA: a test of Labour's moral compass

Way back in the 1960s a significant part of the way we “swung” was an enthusiastic campaign for the countries in the rich “Developed World” to allocate 1% of their National Incomes  for the reduction and eventual elimination  of poverty in what we then called the “Third World.”  This succeeded to the extent that by the end of the decade, the United Nations was sufficiently convinced to pass a resolution in which the governments of the rich countries agreed to devote 0.7% of their national incomes to Overseas Development Assistance (ODA).  The other 0.3% was expected to come from the private sector and charities.

Sadly, for the rest of the century (all of thirty years) only a handful of rich countries, primarily Sweden, the Netherlands, Norway and Denmark, actually hit the 0.7%  target.  The UK, even during  the virtuous Blair-Brown years (1997 to 2010) never quite made it, (though they did set up a separate government Department for International  Development - DfID) and it was not until the much maligned Coalition, of which we Liberals were part, and on this issue probably the driving influence, that the target was achieved.

The Conservative Leader and Prime Minister, David Cameron, still in his “Hug a hoody” mode, was sympathetic, and, in spite of the strains on the public purse caused by repairing the ravages of the 2008/9 financial crisis, proclaimed:

“The UK will not balance its books on the backs of the poorest.”  (27^th may, 2011)  

A year later he resolved:

 “The argument of the heart is even when things are difficult at home we should fulfil our moral obligations to the poorest of the world. There are still more than a billion people living on a dollar a day,”

So, lo and behold, 43 years after having supported the UN Resolution, the British government actually reached the 0.7% target in 2013. 

The Coalition then cemented the  target into law in 2015.  Mr Cameron, now perhaps with a touch of the Borises, couldn’t help boasting about it and declared:

“If Britain can do it, others can.”

Sadly, his successor but one, was made of less stern stuff, and the Tory government of 2020 cut the ODA budget from 0.7% to 0.5%.

 

As a result, development projects in health, education, and infrastructure have been scaled back.

Worse was to come.

It has recently been revealed that a significant part of the  0.5% budget meant for ODA has been diverted to the Home Office  to finance accommodation for refugees and asylum seekers in this country.  The amount now spent in the poorest countries is  a mere 0.36% of GDP: only just over half the proportion Cameron boasted about.   This has led to cuts 37%  in education projects, 39% in health, 42% in humanitarian support and a massive 58% on water and sanitation.  (For the effects of this last one see posts on this blog on the 19^th November, Word Toilet Day, in the past few years) .

The above percentages are taken from an article by Larry Elliot in the Guardian, 16^th September, 2024.  https://www.theguardian.com/business/2024/sep/15/one-more-item-labour-to-do-list-repair-uk-aid-budget. The article concludes with the following suggestions for the Labour government to implement.

1.     1. At least maintain ODA at the 2003 level of 0.58% of GDP (before some of it was syphoned off to the Home Office).

2.    2. Give a more honest report on what , of the ODA budget, is actually devoted to ODA.

3.    3. Explain in detail what in fact are the  “circumstances” which will “permit” the 0.7% to be restored.

4.    4. Recreate the Department for International Development as an independent department with its own cabinet minister (the Tories merged it with the Foreign Office)

5.    5. Join an international campaign to tackle “unsustainable debt.” ( Some counties in the “Global South” are forced to spend more on debt servicing to hedge funds than they spend on education and health)

6.    6. Press the IMF to create more SDRs ( Jim Callaghan’s "paper gold”) to be shared among the poorest countries.

That’s a challenge for the Labour Government and a test of its moral compass.

 

(A heart-rending article in today's Guardian by Malawi's Minister of Health describes the crises the country is experiencing, not least outbreaks of cholera  and malaria, as a result of catastrophic flooding  and serious drought in recent years. See

 

PS ( *24th September) The Debt Justice group, of which I am a paid up supporter,  held this protest at the Labour Party conference.  I hope they were heard. 

https://mail.google.com/mail/u/0/#inbox/FMfcgzQXJQKRNdwWVrHQsKBkbsTlcWxC?compose=new

 

 

 

 

 

https://www.theguardian.com/global-development/2024/sep/23/malawi-climate-crisis-paying-with-our-lives-acc )

Investment, investment, investment.

A letter* in Yesterday's (16th September 2024) Financial Times from Lord (Gus) O'Donnell, a former cabinet secretary, Oxford Professor (emeritus) Simon Wren Lewis and several other eminent economists  called upon the government to revise its "fiscal rules" to permit  massive public investment in order to repair our existing broken public realm and create a new and sustainable future energy supply.

They claim that:

"To follow through on [current]  plans would be to repeat the mistakes of the past, where investment cuts made in the name of fiscal prudence have damaged the foundations of the economy and undermined the UK’s long-term fiscal sustainability."

You have to feel sorry for the Labour government.  Where-ever you look you find vital services crying out for extra expenditure to make them minimally functional, never mind spanking new and worthy of the sixth richest economy in the world.. The most obvious currently in the news are:

The Health Services (see Lord Darzi's report, and top of most people's list)

The Care Services (don't really exist, despite Johnson's claim to have had an "oven-ready" plan)

The justice, prison and probation services (to deal with the rioters, and the 1 700 existing prisoners released early to make room for them)

The Universities( many about to go bankrupt)

 Just about all local government services.

Provision of social housing

Schools built of crumbling concrete, with teachers leaving in droves.

Potholed roads.

. . . .and plenty more .

The GO'D letter, with its suggestion of a revision of the fiscal rules, implies that we should finance the "decade of renewal" promised by Sir Keir Starmer by fixing all of the above through  government borrowing.

Fine.

But if that isn't acceptable, why not finance it out of taxation?

The latest statistics I can find show that, were the UK's national income shared equally between every man, woman and child, we should receive £33, 260 each per year.  In other words a family of four would receive £123,040 a year.

I give these figures not to suggest  that that's how the national income should be divided (talent, enterprise hard, long or unpleasant work should all be rewarded,) but to show that we really are very rich.  There is no shortage of resources.  We can afford it.

Nor does our government  already take too much of our incomes.  On average it is 33.5% of the National Income  The German and French governments take more.  They are not exceptions but typical.The governments of the EU's 14 largest and most developed economies take on average 39.9% of their nations' incomes - over  6% more than the UK.

 So there's plenty of room for an increase.

Unfortunately the Labour Party, desperate to win the election, boxed themselves into a corner by promising    not to raise the principal taxes, income tax, NICs or VAT.  But there are plenty more (as Gordon Brown discovered when he became chancellor in 1997 - some of which most of us have never heard of.)

Professor Richard Murray of Sheffield University has a list.  Let's hope Rachel Reeves is studying it ready for the 30th of next month

Either way, via revised rules or additional taxation, it is vital that the government finds ways of investing in the public realm now.  The alternative of waiting for "growth" to provide additional finance is a nonsense.  

If we don't invest the growth won't come.

 

* I tried to give a link but when I pressed he button instead of the URL all I got was this:

 Please use the sharing tools found via the share button at the top or side of articles. Copying articles to share with others is a breach of FT.com T&Cs and Copyright Policy. Email licensing@ft.com to buy additional rights. Subscribers may share up to 10 or 20 articles per month using the gift article service. More information can be found here.
https://www.ft.com/content/a8fcf263-8506-4b1c-aace-3d3d1743dc55

 
Hoity-toity.

Tell me the old, old story

Sir Keir Starmer promised us "Change" but the political debate is drifting dangerously towards what my father used to call "The same old over again."  Minister after minister sends most of her/his interview time on the media telling us what a mess the Tories have left behind, Conservatives distort the debate with dubious claims about "two tier Keir" (the fatuous suggestion that right wing demonstrations are more strictly policed than left wing ones) and that a lord and Labour donor has paid for Starmer's suits and glasses during the election campaign (which,even  if true, is hardly comparable to the VIP line for Tory  mates to make a fortune out of the COVID pandemic).  

Sir Keir has devoted his first major Downing Street address to emphasise the case.  Let's hope that will put an end to the moaning.

We, the electorate,  know that the Conservatives, after fourteen years in charge, have left the public realm - from the NHS, care system , local government, the armed forces, law and order, courts and prison system, the BBC and the arts, -  in dire straits.  Labour,  Liberal Democrats, Greens, and Nationalists where appropriate, have made the point,we have given our verdict and kicked them out.

Now we need a positive, constructive debate on how to put things right.  It will be a long process, Sir Keir is probably correct in suggesting it will take at lest two parliaments.

But  it will not be painful.  

It should be a joy.

We believe the "adults" are back in charge.  Let's roll up our sleeves and enjoy  rebuilding a caring, comfortable, effective and  efficient society that can work with other nations and international organisations to preserve our environment and spread peace and prosperity throughout the world.

Of course it will cost money.  But even if the government take a few pounds more from our incomes and wealth in order to pay the price, most of us (I'd estimate about four fifths,) will not suffer pain.  Mild inconvenience perhaps, cutting from three to two bottle of wine a week, postponing the second foreign holiday, wearing last year's outfit for this year's season, walking or cycling instead of driving.  Plenty left over to compensate the 20% at the bottom of the pile.

Rather that spreading gloom, the Labour leadership should use its PR machine to make it fun. 

If fun is to hard even for these masters of perception management, then at least a privilege to take part.

Farewell to the universal Pensioners' Winter Fuel Allowance

 Although I am a recipient of it, and have been ever since it was introduced, i think Rachel Reeves is quite right to scrap the pensioners' universal  Winter Fuel Allowance.  It has been a profligate waste of public money from the start.  

I have no idea what the proportion is, but I suspect at least half of us, and possibly more, are very comfortably-off on a combination of our state pension, work pension and, in some cases, interest and investment income.  We need this  extra boost like a hole in the head.  (At least one of my friends calls it his "wine wine allowance.")*

The people who do need the Allowance, and indeed much more, are those who are dependent on the state pension alone.  However, M/s Reeves has decided to limit it to those receiving Pension Credit (for which a lot of those entitled to it don't apply) or other benefits.  Critics, quite rightly, say this is not enough.

To me the simplest solution would be to continue to pay the Allowance to any pensioner whose total income is below the income tax threshold.  In other words, not to pay it to pensions like me who do pay income tax. The Treasury already has the information: there is no need for the dreaded "means testing."

At the moment the "personal allowance" or amount of income we receive tax free, is £12 500 per year.

The "New" state pension is just below that threshold at £11 502 per year

The "Old" state pension is well below it at £8 814 per year.

So all would be covered.

If the saving  gained by not paying the Allowance to the comfortable is considerable, then the amount for those who do need it could be increased.

In the long run the source of the problem is that state pension in the UK is woefully low by international standards.  It France it is  above the equivalent of £18 000 a year, in Spain a whopping £32 000.  Like so much else we need a root and branch reform of the way we finance our pension provision so that all are assured of an adequate income in retirement.  This would need something like a Royal Commission and could include consideration of a Universal Basic Income.

* Nor do we need the extra £10 at Christmas which dates from the days of Sir Alec Douglas-Home (he called it a "donation") and stilt less the extra 25p per week  we get when we reach 80, but the Treasury still sends them.  What does it cost to administer these bonuses?

 

Taking part in Democracy

 

 

I suppose that the UK’s 2024 General election will be best remembered as the one it which Labour replaced a Tory majority of 80 (but dwindling) with their own stonking majority of  172.  However, it should in my view be equally memorable that for the fact that only some 52 %* of the adult population took part in it.

This should be a cause of considerable worry.  As a political anorak or nerd  I find it almost incomprehensible that, in spite of all the fuss, drama, gaffes, debates, reports, leaflets, and exhortations and reports which have saturated our news outlets, half the adult population just couldn’t  be bothered to take part.

Some may have positive reasons.  Some religious groups, for example, believe it is wrong to take part in “worldly affairs.”  But for most I suspect it is either a belief that , whoever wins, it won’t make much difference (and they have a point) or, more seriously, that the system simply doesn’t work for them.

We need to see the present riots (thankfully taking a lull mid-week – let’s hope it lasts) in this context.  Of course, many factors have contributed to the riots, not least the drip, drip, drip of poison fed into the system to distract attention from the failures of the government and direct it to  the scapegoating of “others.”

 But another is that our supposed democracy has degenerated into a system in which every four years or so, the major parties engage in an unseemly auction which offers packages of bribes of what is “best for you and people like you” and then, having won, act as an elected dictatorship  to reward their supporters accordingly.

In 1961 the newly elected President J F Kennedy concluded his inaugural address with the famous peroration: “Ask not what your country can do for you – ask what you can do for your country.”

This ideal features little if at all in our politics.  The top-down “winner takes all” see-saw system is no longer fit for purpose (if it ever was).  As outlined in previous posts we need a root and branch reform our system which will involve fairer elections, an executive controlled by parliament rather than vice-versa, genuine devolution to the regions and localities, so that decisions are made at the lowest practical level and the overwhelming majority of people can feel involved in the system and able to influence it.

It is called “participatory democracy.”  It would be nice to think that somewhere in the minds of our new parliament  are the glimmers s of ideas to move in its direction.

 

·       *The official figure for the turnout is 59.8%, but that is the percentage of those registered to vote.  The 52% is an estimate based on including also the number of adult residents who are not on the registers.