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Friday, August 27, 2010

What is fairness?

Neil O'Brien has a fascinating riposte to the Institute of Fiscal Studies in this morning's Daily Telegraph, which suggests that the analysis was rather limited in its scope and in its understanding of fairness:

One issue is that the IFS report looks only at the effect of tax and benefits, not people's incomes – in other words, what the state does for people directly, rather than what it helps them to do for themselves. This ignores not only policies aimed at getting the economy moving and cutting unemployment, but all the other things the Government does. On this analysis, if you shut down every school in the inner cities, stopped helping people to find work, and spent the money on higher benefits, you would, apparently, be "progressive".

A second problem is that there is no consideration of growth. If the Government manages to double everyone's incomes, that would not count as "progressive". But inequality is not the whole story: people's standard of living matters, too. A couple of years ago, I discovered that, between the mid-1990s and the mid-2000s, the incomes of the poorest 10 per cent of the population had grown eight times faster in Ireland than in Sweden (and six times faster in Britain), because the country had enjoyed faster growth. As a result, free-market Britain and Ireland had a smaller proportion of the population below the absolute poverty line than social-democratic Sweden. Increasing the size of the pie matters as much as how you slice it.

A third problem is that the IFS approach is a snapshot. If you give people more benefits, they will be better off today. But if that encourages them to stay on benefits, rather than find work, they will be poorer tomorrow. "The question to ask," as Nick Clegg wrote, "is what its dynamic effects are, particularly across the generations. How does it increase opportunities? Will it unlock the poverty trap or deepen it?"

The final problem is even more profound. The kind of analysis the IFS used – which Gordon Brown used to adore – offers policy-makers the comforting illusion that they can accurately control social outcomes using the tax and benefits system, that social justice is just a mouse-click away. Every one of Gordon Brown's Budgets was designed to lead to a nice curve on the IFS's graphs, showing how the poor were set to gain more than the rich. But something must have gone wrong with the spreadsheet: despite all the lovely graphs, society became more unequal under Labour. Being "progressive" turned out to be a rather empty concept.

Nick Clegg wrote yesterday that achieving fairness was more than just benefits and taxes, but about spreading opportunity. That means creating jobs but also reducing the cost of living for people on low incomes, and making housing affordable. It is about making our estates safer, fixing pensioner poverty, and removing the disincentives to save for our old age. It is also about attracting high value, high wage jobs for the future.

It is a massive challenge and I am not convinced that any government could meet it, but whilst we remain locked in the idea that poverty and inequality is best tackled through benefit dependency then we will fail. After all, Gordon Brown tried that for thirteen years and all he achieved was a more unequal society.
All this woolly talk of "fairness" invites criticism in all honesty. If you define what you are trying to do so loosely, you will always fail to meet peoples' expectations.

The Economist nailed it: http://www.economist.com/node/16485338
"Nick Clegg wrote yesterday that achieving fairness was more than just benefits and taxes, but about spreading opportunity."

One thing that would have a big impact and cost very little is legislating to ensure that good schools recruit a % of their pupils from council house estates outside their catchment area.

How come we don't hear about this simple way of 'spreading opportunity' from the elites in the Lib-Dem party?

Could it possibly be they really don't want to spread opportunity to people on low incomes?

Fine to yap on about helping families on low incomes, but let's not really take concrete steps that won't cost much but could really spread opportunity - perhaps because the elites don't want their kids mixing with council house kids?
It is not the role of government to run schools on behalf of governing bodies or education on behalf of LEAs. However, one thing the coalition is doing is introducing the pupil premium, directing millions of pounds of new money at some of the poorest and most disadvantaged kids so as to give them the opportunity of a better start in life. I think that example of putting our money where our mouth is meets your criteria.
Well you took your time in addressing the issue considering how long the IFS report has been in the public domain. But besides the third-party rationalisations, do you persoanlyy think it is fair that the poorer households will suffer greater financial strain after 2012?
Any proposal to reduce unemployment is merely am aspiration So you can not claim that this is progressive. Your governments plans (Yes your government plans) to force people off disability benefits and on to the jobseeker allowance (thereby cutting their income) is clearly regressive as it does not create jobs not even the mythical ones that you aspire to in order to substantiate your claim.

When it comes to the unemployed the attitude at Westminster is to label them as shirkers thereby hiding their and the previous governments failure to create work.
Blaming the unemployed for being out of work is not the answer.

But what do you expect when neatly all the senior Lib-Dem ministers (including Nick Clegg) were contributors of the “Orange Book” which shifted the parties policies sharply to the right.
How long I take to address an issue is a matter for me. I write what I feel like writing and when I have something to say.

As I have said elsewhere and in this post I do not accept the basis of the IFS report. I do not accept that poorer families will suffer greater financial strain in 2012. In fact one of the facets of the budget was that it made it easier to get people on benefits back to work by raising the personal allowance. This took 50,000 Welsh low earners out of tax altogether and cut £170 off the tax bill of many more.

The coalition will also be restoring the earning link for pensioners, giving them a minimum increase of 2.5% and putting more money into tax credits for the poorest children.

Glynbeddau, reducing unemployment is both an aspiration and a policy objective. You cannot substantiate your claim that it won't happen.

As I have blogged before the proposed changes to Welfare benefits, whereby we simplify the system and work on the basis of a guaranteed income will not just help people get back to work by removing the poverty gap but also help those who rely on these benefits.

You may consider that a life on generous state benefits is desirable but I do not and there is nothing progressive about advocating it. If people are genuinely unable to work then the state will support them, but if they cannot then we should do everything we can to find employment and help them sustain it.

As for the Orange Book, you clearly have not read it. You have accepted a media myth based on two chapters of a substantial publication that included contributions from social liberals such as Steve Webb.
"You may consider that a life on generous state benefits is desirable"

Try living on benfit before you make such a statement.

Try looking at the directgov website and see how many jobs there are available.

I have read the Orange Book. It is mostly an argument for the free market with a few sops to those on the left of your party: But Clegg's contribution is largely for a gentler form of Thatcherism and reflects current Tory thinkking.No wonder he took you into coalitiomn with them
Respectfully Peter, poor kids from council house estates are often locked-out of attending good schools, and extending catchment areas through "spending power" does not amount to the state running a school, the LEA/governors still run the school, but they must recruit say 10% of their kids from council houses estates regardless of catchment area.

This won't cost millions and frankly throwing millions in some vague (typical Lib-Dem way) at schools is not going to fix the problem of poor kids from poor families living on council house estates not being offered places in good schools.

So the Lib-Dems are still on the track of throwing millions at 'spreading opportunity' while simple effective steps, that would not cost anywhere near the amount you speak of, won't happen.

So the elites that yap on about helping the poor ensure their kids don't mix with council house kids.

As to your comment, "... putting our money where our mouth is meets your criteria”; it's not your money and it does not go anywhere near meeting my criteria. I want to see kids from poor housing estates get into good schools; will 'your' millions of pounds do that?

What Wales has now is a massive problem with kids without qualifications and not in a job or training. Basically, many of these kids have given up - they lack the confidence and hope that they can do well. But a big part of that was because of the school they had to attend. It is not like they lacked brain power, but many of them were destined for the scrap-heap because of where they lived - they never could get into a good school and never experienced the benefits of going to a good school that expected them to do well, that challenged them.

We have programmed them to feel that the world is against them, that they are not expected to ‘make much of themselves’. It is, imho, borderline criminal through the use of catchment areas to deny these kids from the get-go exposure to good quality teaching and aspirations that they can do well, that they will do well. These kids falling of the production line of bad schools lack independence/confidence. Access to professions like law and medicine – ‘Phew, what is that.”

We call them NEETS.
I have lived on benefit and they are not generous. However, my reference was to what you seemed to be arguing that they should be more generous so as to provide a substitute for work.

The argument is that we will be seeking to create more jobs. You may have given up on that but we have not.

If you have read the Orange Book then you know that you are misrepresenting it for party political reasons. I think you know why we went into coalition and it had nothing to do with ideology and everything to do with providing stable and liberal government, something we have achieved.
Sorry, typos ... "These kids falling of the production line of bad schools lack independence/confidence"; "of the" should have read "off the". Opps.

PS we should thank Peter Black AM - he at least opens himself up to, at times, hard feedback. He is a hard working AM.
I notice that you don't mention who Neil O'Brien actually is. As Mandy Rice Davies once said 'He would say that wouldn't he'. As you are quite aware he is the Director of Policy Exchange which is the 'flagship think tank of the centre right'. That doesn't make his comments invalid but he is hardly an impartial analyst with no axe to grind unlike the IFS. Look at the Policy Exchange website and see the endorsements from key Tories including Osborne and another member of the Treasury team.From him to agree to any criticism of the Coalition budget when many of its ideas originated in the musings of his think tank would you could argue be 'unthinkable'!
FAIRNESS is something the well endowed, the powerful and the privileged (education, opportunity, genetics) will endeavour to set a benchmark or paradigm in either there or societies behavoiur to those not well endowed or powerful or privileged.
Jeff, perhaps you should state who commissioned IFS's revision of their first thoughts on the budget.
Frank the IFS is a highly respected independent organisation not attached to any political perspective. To argue that the IFS produced a report to suit the views of those who commissioned it is pretty desperate stuff.The independence of the IFS is one of the reasons why its arguments regarding the regressive nature of the budget were quoted by much of the media this week. Policy Exchange ,on the other hand, is a think tank which looks at issues from a centre right political perspective. There is nothing wrong with quoting the views of Neil O'Brien or anyone else for that matter from the centre right but please let's have none of the nonesense that he is some sort of objective observer of the political scene. The problem with the budget from a political perspective as many right wing commentators have pointed out is that in order to placate the Liberal Democrats Osborne had to put a spin on it that it was 'progressive'.Right wing Tories are not worried that it isn't 'progressive' because their aim is to reduce the deficit asap and reduce the role of the state. If you lost the spin battle on this one just wait until the cuts start to hit public services in Wales. I'll watch with interest to see how my Liberal Democrat Focus leaflet in next year's Assembly election puts the spin on that one. I suppose it will be all the fault of Labour and Plaid in the Assembly.
Actually it is mostly the fault of Labour in Westminster who got us in this mess in the first place.
Peter> this seems to be something along the lines I suggested: “Fair-banding” admissions schemes as reported in today's Telegraph newspaper.


If we are going to help kids who through no fault of their own are born into poor families on council house estates then we need such admission policies that are not tied to catchment areas.

It is critical for boys and girls on council estates to be freed from the 'lock-in' based on catchment areas.
I agree with my fellow FCHL concerning accessibility to good schools for poor kids. However those schools should be the ones where they live. This can be done in a number of ways. First remove tenure so that poor teachers should go. furthermore make pay based on performance (not just on scores I will say). My wife teaches at a blue ribbon school with 75% non English speaking, they have a 80% test score rate, which has made them a "Blue Ribbon" school. What it requires is good leadership.

You and Clegg dont seem to understand the fundamental point the IFS is making. If you are somebody without a job this budget hits you very hard indeed whereas it barely touches people in the top 10% who are in work. Even if your deeply flawed neo liberal economic policy works and more employment is created, there will still be hundreds of thousands of unemployed people who cant get jobs or cant work who will have lost more income proportionately (8%)at the bottom than rich people at the top (1%). In other words it is a regressive, unfair budget of the like we always see when right wing parties are in government. Clegg was quick to lay claim to IFS reports when it suited him emphasising their eruditeness and independence. Other confirmatory reports are on the way from other respected bodies are all these to be rubbished too?
I do not think we can help where we are starting from, which after all is where Labour left off. We understand perfectly well the point IFS is making which is why we are trying to reform welfare benefits to make it easier for people to get back to work and to create an environment where it is easier for firms to create jobs.

I do not recognise the concept of a neo-liberal economic policy, this is not ideological it is about practical measures to help get the economy moving and to create a climate where people can get off benefits.

Your point about Clegg and IFS can be matched by the fact that when Labour were in power they rubbished the IFS reports. The fact is that this is crystal ball economics predicting what will happen in 2012. There are two budgets before then and a lot of water under the bridge to redress the balance.
Peter you will be blaming the crisis in Ireland and Greece on Labour next. Labour might have made mistakes but at the same time it made the right call when the crisis hit the UK. Unlike the Tories who opposed every single measure to stabilise the economy. There is an issue regarding the size of the public sector and the structural deficit but in reality the bulk of the public deficit issue is due to the economic downturn and the fall in output and therefore tax revenues. To blmae it all on the policies of the Labour government between 1997 and 2010 is just playing paryy politics. After all who said in their manifesto in this year's elction 'We will begin our term of office with a one year economic stimulus and job creation package.' It wasn't Labour. In fact it was the Liberal Democrats although we now know that Clegg didn't believe this and misled the British public. By adopting the approach of 'My Coalition right or wrong' there is a real danger that the name of the game will be to give the Liberal Democrats a 'bloody nose' first and then take on the Tories. At this rate I cannot see anyone in the Labour Party,for example , campaigning for a'yes' vote in any AV referendum. The change didn't have much support when it came out of the blue party policy to support a referendum. In the aftermath of the Aussie election and with the Tory big guns opposed I really can't see AV getting through.You are right to say that we have to look at budgets over the next few years but the first budget which was regressive did set the template. The only changes that I can see are if there is the potential for a double dip recession and then Osborne will have to look for plan B. What was interesting on the weekend was an article whcih showed how much the Treasury civil servants were enjoying this atmosphere of cutting the public sector. Government departments with one exception were also it seems playing the game of finding the 25% cuts. The one exception was the Welsh Office which offered up only a 5% sacrifice. I wonder why or do they realise the consequences of the 25%?
Jeff, there were international dimensions to the recession but it did not hit every country in the same way, nor was the British debt entirely down to this. Labour lived on borrowed money for 13 years, they failed to regulate the banks and they ignored warnings about the unsustainability of their economic policy. Clearly, they are culpable.

As for AV, is Labour really going to abandpon a key manifesto pledge out of spite? How petty.
Peter I just don't see AV as 'a key manifesto pledge' for most Labour Party members.There are supporters such as Peter Hain but I would say for most it either isn't an issue or they are hostile.Obviously the views of the new Leader might have some bearing on the party's attitude to the referendum but if I were a betting man I would say that for the majority the AV referendum will be a seen as a chance to pass judgement on the first year of the Coalition. Can you honestly see many Labour voters splitting the ticket and voting Labour in the Assembly election and yes to AV particularly when the message from the Labour Assembly candidate will probably be to vote no? I can't. Throw in the bulk of the Tory Party arguing for the status quo and it looks to be dead duck even before you have started. The shambles in Australia and the fallout from October 20th are hardly the ideal conditions for a positive yes vote. Many British voters will probably see the Australian result if Labor form a government when the Liberal/Nationals had a majority of the first preferences as not reflecting the will of the voter and frankly pretty perverse.
Jeff, I am astonished by that admission especially when Gordon Brown himself put the constitutional agenda, including AV at the heart of his appeal to the electorate in February of this year.

The Telegraph (http://www.telegraph.co.uk/news/election-2010/7137107/Gordon-Brown-outlines-proposals-to-ditch-first-past-the-post-voting.html) reported on 2 February that Gordon Brown said that the switch to the Alternative Vote system could be part of a "new politics" which would restore public trust in Westminster in the wake of last year's expenses scandal.

It went to say that in a wide-ranging package of planned reforms, he also confirmed that a draft Bill to create a democratically accountable House of Lords will be published within the next few weeks.

That seems to be pretty key to me. For Labour to now abandon that commitment would just confirm the hypocrisy and pettiness that we all know that your party is capable of.
Peter face up to the facts that changing the electoral system is not an issue for most Labour Party members and never has been. The majority are very comfortable with FPTP and those who show an interest in PR such as myself are very much in the minority. The Brown promise on AV really reflected the opinion polls rather than conviction. As for 'Hypocrisy and pettyness' all political parties as we all know can be guilty of this. Your problem now is in many ways bolied down to one word 'Clegg'.On the weekend the Mail published the second instalment of Chris Mullin's new diary. Here is one quote from the article " I have been acquainted with all of the past 5 Liberal or Liberal Democrat Leaders and he is by far the shallowist." Mullin is a pretty mild mannered individual respected by many in the Labour Party. Most Labour Party members would concur with his assessment of Nick Clegg. Perception and political myth are great motivating factors for political activists as your comments about the Labour party shows. As soon as Nick Clegg argues for AV that will be enough to send the majority of party members and many party supporters into the 'no' camp on the issue of AV. By the end of this Parliament he will in the eyes of many Labour Party activists have become the symbol for the Coalition cuts and in the world of poltical mythology he will probably fulfill the same role as Ramsay MacDonald did in the 1930s for so many activists.
Jeff, it takes a peculiar form of arrogance to reject your own manifesto, your principles and the National interest for partisana dn tribal reasons. I see Labour has not changed despite the efforts of Blair and Mandelson,
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