Wednesday, November 13, 2024
Budget threatens social care in Wales
The organisation, which represents care homes and independent care providers has warned that the controversial measures announced by Chancellor Rachel Reeves pose a “greater threat than Covid” to the sector and fears care homes and domiciliary care companies will inevitably be forced to close:
The only way to avert the impending crisis, according to CFW chair Mario Kreft MBE, was for the social care sector to be granted an NHS-style exemption from the increases to employers’ National Insurance contributions as well as support to meet the other additional costs.
With a 1.2% rise in Employer National Insurance contributions and a cut to the Secondary Threshold to £5,000 alongside the five per cent increase in the Real Living Wage to £12.60, CFW has calculated the sector in Wales faces a £150 million funding hole to plug. In North Wales that amounts to a gap of £40 million.
CFW revealed that 40 care homes in Wales had already been forced to close since the onset of the Covid pandemic, at least four of them in North Wales with a combined loss of 163 beds.
Even before the Budget, specialist business property adviser Christie & Co Wales faced a 10,000 deficit in the number of care home beds Wales needs over the next decade.
It comes at a time when demand is spiralling upwards, with the over 85 population set to double over the next 20 years.
The sector in Wales, said Mr Kreft, was made up mainly of smaller, community based care homes and nursing homes and were typically family-run businesses.
He said: “Without an exemption from these additional and potentially ruinous costs -whether that comes from the UK Government or extra funding from the Welsh Government – many care homes and nursing homes and home care companies face a real existential threat.
“These measures will see average size care homes facing extra costs of tens of thousands of pounds, with larger care providers facing even heftier bills amounting to hundreds of thousands.
“The social care sector already has large wage costs compared to other industries because of the number of workers it needed.
“To put it into context, a typical residential home where people don’t need nursing has a wage bill as a proportion to turnover of about 60 per cent. That rises in nursing homes to 65 per and more.
“For domiciliary care the percentage of wages to turnover is over 80 per cent.
“So when you look at the context of those figures and add it to what we have seen in the Budget, it’s a triple whammy.
“In Wales we won the argument that was insufficient and the Welsh Government through their guidance to local authorities and health boards have provided funds for the Real Living Wage to be paid which is currently £12 an hour outside London and is going up to £12.60, a five per cent increase.
“So most of the people in our care homes, our care workers, are going to get a five per cent increase in their pay packet while others will eligible for 6.7 per cent increase in the National Living Wages.
“But the point is, that is a massive and significant cost on the wage bill.
“And when you add the National Insurance rise, this all amounts to a massive extra cost on the wages bill.
“On top of all of that we have the new measures around inheritance tax which is going to be a major threat to the future security of these family businesses which like the farmers are going to find it difficult if not impossible in many cases to pass them down the generations.
“Added to that there are realistic fears that this will accelerate the haemorrhage of staff from social care to the NHS.
He added: “One way or another, we need to have prompt reassurances that the sector will be reimbursed for these extra costs.
“The social care sector is essentially a support service for the NHS and should be given the same exemption from having to pay the extra NI employers’ contribution while the increased costs of the Real Living Wage should be funded by the extra £1.7 billion coming to Wales from the chancellor’s Budget.
“Basically, if you don’t fix social care, you will never fix the NHS, it’s as simple as that.
Can the Welsh government step in to mitigate these costs and if they do, what services will lose out so they can pay for it.
Tuesday, November 12, 2024
Business betrayal and falling living standards
The paper says that Barclays Bank has warned that the increase will hit workers’ living standards, with economists at the bank claiming that the policy will cause real incomes to take a hit, as companies pass on the cost of the levy through lower pay rises and higher prices. This, they say, will leave people feeling poorer as prices rise faster than wages:
Despite a manifesto pledge not to increase taxes for working people – including NICs, income tax and VAT – the chancellor increased employers’ NICs from 13.8 per cent to 15 per cent at the Budget. She also reduced the threshold at which employers start paying the tax, slashing it from £9,100 per year to £5,000.
In a note to clients seen by The Daily Telegraph, economists at the bank said: “We expect the additional costs implied by changes to employer NICs to lead to lower real incomes, through a combination of higher inflation and lower wages.”
Meanwhile, the prime minister has been urged to take “decisive action” to restore business confidence following the decision to increase employer NICs – something business groups have described as a “betrayal”.
The chancellor argued that the policy, which is expected to raise more than £25bn for the Treasury, does not breach Labour’s manifesto commitment because it does not show up on employees’ payslips.
However, businesses have urged the government to change course, warning that they will be forced to “tighten their belts” as a result of the policy and claiming that some are facing a sevenfold rise in their bills as a result.
John Longworth, chair of the Independent Business Network, described the Budget as “anti-growth”, while Dr Roger Barker, director of policy at the Institute of Directors, said the increase in employer NICs takes “no account of whether a business is profitable or not”.
It comes after hospitality bosses wrote a letter to the chancellor warning that the changes are “regressive in their impact on lower earners”.
Mr Longworth told The Independent that Sir Keir Starmer has “betrayed himself and the nation with his first Budget”.
“He and the chancellor persistently stated (correctly) that wealth creation and growth are the No 1 priorities on which all else depends. The Budget and other policies are anti-growth and will therefore fail,” he said.
He warned that the NICs increase will “either cause job losses, wage depression, or lead to underinvestment as a consequence of profit loss”.
Alex Veitch, director of policy at the British Chambers of Commerce, said the combined impact of the NIC increase and the rise in the national living wage means that some firms are looking at a sevenfold increase in their bills.
There is no doubt that Reeves needed to raise taxes to invest in public services, but the choice of employers' national insurance contributions could prove to be disastrous electorally and economically.
An alternative put forward by Dale Vince, the green energy tycoon who has previously donated £5m to Labour, is a 2 per cent wealth tax. He says that this tax would “barely touch the edges for the very wealthy” and would raise “£24bn for our NHS, for child poverty, to save our planet”.
Over to you Labour.
Over to you Labour.
Monday, November 11, 2024
Why is Labour afraid of the EU?
The paper quotes MEP and former Italian government minister Sandro Gozi, who has been recently elected as the new chair of the 70-strong UK-EU parliamentary partnership assembly (PPA), together with the chair of the Labour Movement for Europe, Stella Creasy MP, who say that failure to reconstitute the PPA since the July general election is an issue that “urgently” needs to be addressed:
They write that since Labour took office, the body, set up in 2021 to scrutinise the workings of the post-Brexit Trade and Co-operation Agreement and build closer working links, has been unable to function because the UK has not taken any steps to establish which 30 Westminster parliamentarians will form the country’s delegation. A parliamentary source, while critical of the government’s failure to appoint new MPs, suggested one reason for the delay was a request from the Conservatives to wait until the conclusion of their leadership election.
Calls for the UK to work more closely with the EU on everything from foreign policy to defence and trade – as well as immigration – have been growing since Trump’s stunning re-election success.
The president-elect has promised to impose substantial tariffs on all US imports in a move that could seriously damage a UK economy already suffering from having lost access to the EU’s single market as a consequence of Brexit. With Trump also talking of ending US funding for Ukraine in its war with Russia, the UK government finds itself in a position of potentially dangerous isolation from both the US and the EU on issues of economic and security importance.
Against this background, senior diplomats and Labour MPs now want Starmer to accelerate moves to get closer to the EU.
Privately diplomats and Labour politicians are astonished and despairing that many such public appointments including new trade envoys have not been named since the election. One key source said: “Whether it is all the trouble at No 10 I don’t know, but it is pretty astonishing.” Another said: “They have just not wanted to have any focus on what they are doing with Europe. With Trump back though that has to change.”
Peter Ricketts, former UK ambassador to Paris and one of the country’s leading ex-diplomats, who was appointed to the UK-EU PPA on its formation, said that he hoped the Starmer government would speed up the building of closer ties with Brussels.
“I would move away from the rather cautious and incremental approach to improving relations with Europe,” he said. “It is really important that we are getting in close and talking much more regularly to the French, the Germans, the Poles, the Italians.
“I think this is less about changing the treaty, which will inevitably take time, and more about working on foreign policy issues such as Ukraine, and on finding practical solutions on issues such as migration.”
Creasy told the Observer: “Trump’s election shows the risks to the UK of going it alone in an uncertain world. We have to rebuild our relationship with Europe as part of protecting the public from the economic, security and climate shocks heading our way.
“Yet the democratic structures designed to do that aren’t up and running as the Government hasn’t set out what will replace the Parliamentary European Scrutiny committee it abolished or appointed people to the UK EU Parliamentary Assembly. With so much at stake we can’t waste any more time – getting this right has to be a priority before the new president is in post.”
Given the precarious position the UK is in, isolated from Europe and facing Trumpian tariffs, it's essential that we repair relations with the EU and the single market. That Labour seem almost scared to engage with the EU is disturbing and certainly not in the national interest.
Friday, November 08, 2024
More pain for trade in post-Brexit farce
The paper says that the introduction of the Single Trade Window (STW), which is designed to reduce friction for traders moving goods in and out of Britain, had already been delayed from late October to January next year, but will now be halted until at least 2026:
The government hoped the STW would simplify border processes after Brexit by creating a single digital platform in which importers and exporters could upload all documentation linked to goods before they are transported.
Companies currently need to upload and submit documents to a number of different departments and agencies before importing and exporting goods, a system which has been criticised for duplication and for being time consuming.
However, the STW has been beset with problems, with the National Audit Office (NAO) warning in May that the launch faced “several major challenges” and the government’s timescales were “overly optimistic”.
The government said on Wednesday that the scheme would be put on pause for the remainder of this financial year, and throughout the next financial year. In a statement to parliament on Tuesday, James Murray, the exchequer secretary to the Treasury, said: “In the context of financial challenges, the government … [is] pausing delivery of the UK single trade window in 2025-26.”
He said it would now consider the role of the STW and provide an update on its future at the spending review in late spring.
The decision marks the latest government delay in implementing elements of the post-Brexit border plans since it was elected in July.
In September, the government pushed back checks on fruit and vegetables coming into the country, to allow more time to study the potential impact.
Last month, the government also announced that it would be pushing back the introduction of safety and security declaration forms on all imports by three months, that were initially meant to come into force on 31 October.
The STW rollout was also delayed until January at that point, but will now be halted until at least April 2026.
The Labour government has promised closer alignment with the EU over trade, including a veterinary agreement which could end new border checks and health certificates for imported meat and dairy goods.
The NAO cast doubt over the government aim of launching the first phase of the £349m scheme by the end of 2024, saying its development was “several months behind its timetable” and that it had “underestimated the complexity of what was required”.
It also said that a 12-month delay in launching the STW could reduce the benefits realised by £866m over 10 years.
So much for Brexit reducing red tape. It has actually increased it where it matters the most, in our trade transactions.
Thursday, November 07, 2024
Calls to rejoin single market to protect UK from Trump's trade war
The paper says that pro-EU campaigners have warned that Britain must urgently rebuild ties with Europe now Donald Trump has been elected:
The former president has threatened to impose tariffs on all imports to America if he returns to the White House, which would cripple the UK and global economy. The US is Britain’s single biggest trade partner by far, above Germany, the Netherlands, France and China.
And Mr Trump has threatened a blanket 10 per cent tariff on all imports, with the levy rising as high as 60 per cent for goods from China. He has said “tariff is my favourite word”, but critics have warned the fallout of his protectionism would be higher prices for consumers in the US and globally.
And, amid fears a solitary UK would face a heightened impact, campaigners called for Sir Keir Starmer to urgently rebuild trade ties with the EU to insulate the country from the trade war that would follow Mr Trump’s re-election.
Former Liberal Democrat minister Sir Nick Harvey said Britain must “make a clear choice to be part of a strong Europe”, both in terms of strength on defence and security and trade and the economy.
Sir Nick, chief executive of the European Movement UK, told The Independent a Trump win could add to the urgent need for Britain to build stronger ties with Europe - but stressed that Europe can no longer reply on protection from the US no matter who wins.
He added: “The time for posturing on the sidelines is over. Sensible conversations are more crucial than ever before, about the damage of leaving the European Union, and what shape our future relationship should take.”
And SNP MP Stephen Gethins told The Independent that post-Brexit Britain is “more isolated than at any other time in the post war period”.
That leaves us more vulnerable in terms of hard security as well as to the impact of a trade war,” he added. Mr Gethins said: “The best means of protecting ourselves and making us more secure is to rejoin the EU, and at least the Single Market. At a time when other European democracies are enhancing security cooperation and deepening trade links, it is the best means of protecting ourselves in a more dangerous world with an increasingly isolationist US that will remain a reality regardless of tonight’s result.”
At present the threat remains one for the future, but as Trump puts his agenda into effect, calls for a rapprochement with the EU may grow more urgent.
Wednesday, November 06, 2024
The two-child hypocrisy
The paper says that MPs can claim almost £7,000 per child each year for up to three children on top of their standard accommodation budget, which can be up to £29,000 a year. However, people claiming universal credit or tax credit eligible for a child benefit uplift cannot receive support for more than two children:
Labour has been under pressure to scrap the two-child benefit cap, including from its own MPs, but Prime Minister Keir Starmer and Chancellor Rachel Reeves have said the estimated £2.5bn to £3.6bn cost is not affordable.
The cap was introduced by the Conservatives in 2015.
In recent years, some MPs have been able to claim up to £40,000 annually for accommodation costs, including additional funding for their children.
They are entitled to apply for accommodation costs to compensate for living and working in two locations – their constituencies and London – worth up to £29,290 a year.
They can additionally claim for up to three dependants – a child under 18 or an adult who needs care – up to a maximum of £6,680 per child or person.
Data published by the Independent Parliamentary Standards Authority (IPSA) show that more than 180 MPs claimed the £6,680 uplift for at least one dependant in the 2022/2023 financial year, the most recent year for which data are available.
According to IPSA, dependants include children up to the age of 18 for whom the MP has parental responsibility or a person claiming disability benefits for whom the politician is their primary carer. The dependant must be registered with IPSA by the MP for the claim to be valid.
The accommodation uplift only includes spouses who meet the criteria of a dependant, such as if the MP is also the primary carer for their partner.
MPs can also claim money to cover travel between their constituency and London for themselves, their spouse and dependants.
In 2022/2023, 21 MPs claimed the uplift for three children, 13 of whom were Conservative MPs and five of whom were Labour MPs.
Given the pressures on MPs and their families, this allowance may well be perfectly justified, but to deny it to rather pooer mothers is just hypocrisy.
Tuesday, November 05, 2024
Tuition fees up but is it enough?
The Independent reports that university tuition fees will increase in England for the first time in eight years putting Labour on course for a clash with one of their biggest voter bases, students.
The paper says that fees have been frozen at £9,250 since 2017 but will now rise in line with the Retail Price Index inflation from September 2025, matching them to the current rate of inflation at 2.7 per cent and leading to an increase to around £9,500:
It comes amid growing concern over the state of the education sector, with many universities facing financial crisis. As many as 40 per cent of English universities are expected to fall into a budget deficit this year.
Earlier this year, Universities UK called for tuition fees to be “index-linked to inflation, not to address the funding shortfall, but to allow fee income to maintain its real-terms value over time”.
NUS vice president for higher education, Alex Stanley, said: “Higher education is in crisis right now. Students are being asked to foot the bill to literally keep the lights and heating on in their uni buildings and prevent their courses from closing down. This is - and can only ever be - a sticking plaster. Universities cannot continue to be funded by an ever-increasing burden of debt on students.”
As I pointed out back in August, the big drop in income for universities however, has come about from a drop in the number of international students, who were propping up the sector. Home Office figures from 2024 showed 16 per cent fewer visa applications were made between July and September than in the same period in 2023.
Abolishing the visa restrictions, introduced in January by the Tories, which bar most overseas students from bringing family members to the UK and which is putting off so many students from coming to the UK to study, could have been a win win for colleges, while leaving English students without the extra burden of a fee increase.
Why has the Labour government refused to do this?
Monday, November 04, 2024
New Tory leader channels Boris Johnson
The Guardian reports that families bereaved by the Covid pandemic say they feel insulted by Kemi Badenoch’s claim that the Partygate scandal was “overblown”.
The paper adds that the new Conservative party leader also told the BBC that Boris Johnson had fallen into a “trap” of breaking lockdown rules that should never have been introduced, ignoring the fact that these rules actually saved lives:
Nazir Afzal, a former chief crown prosecutor for north-west England whose older brother Umar died of Covid while self-isolating, said Badenoch’s words could not gloss over the horrors of the pandemic.
He said: “Ms Badenoch needs to remember that people were dying and being stored in industrial fridges while those in government partied in breach of the rules that they created for the rest of us. It was a question of trust a
Naomi Fulop, whose mother, Christina, died in January 2021, six days before one of the Downing Street parties that was found to have broken the rules, said Badenoch’s comments were “insulting and extremely painful”.
She said: “It is not possible to overblow the impact of those in government partying while my mother died alone. We then had to have a very restricted funeral, as did thousands and thousands of other people.”
Fulop, who is a member of the Covid-19 Bereaved Families for Justice UK group (CBFJUK), added: “I think she’s trying to appeal to people who don’t agree with lockdowns. She’s deeply misguided, because nobody is pro lockdown. Lockdowns are something that you have to have when everything else has failed.”
Fulop also claimed Badenoch’s comments risked undermining public trust in any future government’s public health messages. “All the scientists say there will be another pandemic, it’s a question of when not if, so this absolutely undermines public trust in government and public health messaging, which is very concerning,” she said.
Fulop added: “Badenoch said the Tory party needs to have an honest conversation about what’s gone wrong and one of the big things that went wrong was Partygate so I’m quite mystified that she doesn’t realise the impact that’s had on families like mine and the wider public.”
Matt Fowler, whose 56-year-old father, Ian, died of Covid in April 2020, said: “It sounds as if she’s is trying to cover over the failures of her party which is horrifying and insulting. It shows a complete lack of empathy or self-awareness that does an incredible amount of damage to public trust.”
Fowler, who is also a member of CBFJUK, said: “The fact that ministers were breaking safeguarding rules that were put in place specifically to protect people, while other people were obeying those rules and not being able to say goodbye to loved ones, was horrible. It was thumbing the nose at the general public.”
Dr Simon Williams, a behavioural scientist and public health researcher at Swansea University, said Badenoch’s remarks were “disgraceful”.
He said: “Research has shown that Partygate and others scandals really did have an effect on public trust in government and particularly public trust in the rules. So as well as being offensive, it’s very unhelpful to try to retrospectively minimise the impact of Partygate.”
He added: “There was a real sense that those who set the rules were flouting them or bending them and that really undermined the public message, so there are trickle on effects for saying this was all overblown.”
So far it doesnt look as if Badenoch is going to be the saviour the Tories are looking for.
Sunday, November 03, 2024
A step back in tackling homelessness
This is because, as the Observer reports, low-income renters will continue to struggle to afford housing costs after Rachel Reeves’s decision to freeze the amount of housing benefit they receive in the budget, placing many of them in danger of losing their accommodation altogether and putting the private rented sector out of reach of those without a well-paid job and a home.
The paper says that Liz Kendall, the work and pensions secretary, confirmed on Thursday that local housing allowance (LHA) – the localised rates that determine how much housing benefit claimants are entitled to – will be locked at the current levels until 2026:
LHA has failed to keep step with rising rental costs for more than a decade. The Conservative party froze it for seven out of the last 12 years, before increasing rates earlier this year.
Cara Pacitti, senior economist at the inequality thinktank Resolution Foundation, said of last week’s budget: “We were really disappointed not to have seen an increase in local housing allowance, to support low income renters with their housing costs.
“LHA was increased to match local rents last year,” she said. “Since then, we’ve seen 8% rental [price] growth. That’s obviously totally unsustainable and, for a lot of families, that’s going to mean really significant gaps between the housing support they’re given and the private rents they’re trying to pay.”
Research by the Joseph Rowntree Foundation showed that private renters relying on LHA to pay for their homes will be on average £243 worse off a year as a result of the freeze, and £703 worse off by the end of parliament if rent prices continue to rise.
According to the Office for National Statistics, average UK private rents rose by 8.4% between September 2023 and 2024.
“The LHA freeze was in the [budget] small print,” said Ben Twomey, chief executive of Generation Rent. “But that is going to affect 4.6 million people who receive LHA. That seems to us to be a choice made by the government that denies support to those most in need of it.
“Half of those people receiving LHA have children who depend on them,” he said. “So it’s really going to cause major problems in terms of driving people into poverty, driving people into homelessness and increasing rent arrears.”
Chris Norris, policy director at the National Residential Landlords Association, said the rise in rents is being driven by landlords exiting the market and creating a rental shortage, as well as rising costs incurred and increased regulation. “They’re rising because costs have really gone up over the past couple of years.”
Norris also said the chancellor’s budget decision to raise stamp duty on second homes and buy-to-lets from 3% to 5% would stunt the number of private rentals on the market. “Simply put, it’s just more expensive to add stock to the marketplace,” he said.
Rented properties in the private sector are an important component in the fight against homelessness. If the government fails to adopt policies that make it affordable and encourages landlords to stay in the market then they are working to eradicate homelessness with one, metaphorical hand tied behind their back.
Saturday, November 02, 2024
Charities under pressure from Labour's tax hike
The paper says that although the NHS and councils are protected from the impact of the rise in employers’ national insurance contributions (NICs) announced in Wednesday’s budget, charities that provide services say the increase means they will face “existential” financial pressures:
Family doctors and pharmacists – who provide NHS-funded services as private providers – also demanded they be exempted from the rise, saying the extra NICs costs could force a reduction in primary care services.
Ministers are under pressure to intervene to prevent a financial crisis among charity providers, including those delivering high-cost care to adults with learning disabilities, severe autism, complex needs and severe physical disabilities.
The backlash over NICs has thrown fresh light on the crisis facing social care, which took a backseat in the budget compared with the NHS. The health service got an extra £22.6bn, while councils in England received just £600m more to cover adult and children’s social care.
The Liberal Democrat leader, Ed Davey, has called for social care providers to be exempt from the NICs rises, while the Labour backbencher Rachael Maskell called on ministers to consider the impact of the increase on GPs, care providers and hospices.
“We know that these contracted health and care services have been through a lot of financial strain under the last government, and they too need to fix their foundations and build stability for the future,” Maskell said.
These issues will apply in Wales as well, though we are still waiting to hear how the Welsh Government will mitigate the extra costs for councils and the NHS.
Friday, November 01, 2024
IFS says further tax rises may be needed
The Guardian reports that the leading experts in public finances believe she could be forced to top up her tax plans to avoid real-terms cuts in some areas, including councils, the justice system and prisons:
The IFS said that while Reeves had provided a substantial short-term funding boost to unpick “unrealistic” Conservative plans, she had pencilled in cuts to unprotected departments after the next financial year that were more than likely to need revisiting.
Paul Johnson, the director of the IFS, warned that Reeves’s £40bn tax-raising budget would mainly go towards steadying the government finances rather than paving the way for big improvements in public services.
He said the chancellor was gambling that either a short-term splurge in public spending could clear backlogs in the system, helping to bring down future costs, or could be hoping for stronger economic growth to bail the government out. “[But] if nothing else changes in the forecasts, particularly if we continue not to increase petrol duties, I think other taxes will likely have to rise,” he said.
Saying the spending plans amounted to “pretending” that Labour would splurge in the early years before reining in spending in future, he said: “That’s not going to happen. The spending plans will not survive contact with her cabinet colleagues.”
“I am willing to bet a substantial sum that day-to-day public service spending will in fact increase more quickly than supposedly planned after next year,” he added.
The IFS said that while the spending increases announced by Reeves appeared big relative to the previous government’s plans, this was in large part because “their plans were unrealistic”.
Johnson said: “Despite the apparent scale of the increases, this is not going to feel like Christmas has come for the public realm.”
In her budget on Wednesday, the chancellor set out a real-terms increase in day-to-day spending on public services of 4.3% this year and 2.6% next year, before pencilling in a rise of 1.3% each year.
“It would be odd to increase spending rapidly only to start cutting back again in subsequent years,” Johnson said.
Reeves may have to break a few more election promises on tax to get on top of this.
