Thursday, November 21, 2024
Rebuilding the Quango state?
The jury is still out on the eventual bonfire of these bodies but it was not a process, as far as I'm aware that was followed in England. Now, it appears that we have come full circle with Keir Starmer's Labour government creating or overhauling 17 state agencies in their first few months in power to help them deliver on manifesto promises.
The Guardian tells us that an Institute for Government report has warned of some of the pitfalls when setting up government agencies from scratch, saying: “Successfully creating a new public body is difficult and entails high fixed costs in terms of time, budget and leadership focus.”
They found the price tag of creating a new government department can be £15m in set-up costs, plus £34m in lost productivity:
Matthew Gill, the author of the IfG report, said: “Public bodies – from the National Wealth Fund to the National Care Service – will be central to the Labour government’s success. But they are hard to build well and many questions about the funding, governance and remit of the 17 bodies so far announced remain unanswered. Our report provides a guide, based on lessons learned that have not been clearly set out before.”
The new government has wasted no time in bringing forward legislation to set up bodies such as the Fair Work Agency and the Armed Forces Commissioner.
However, there is little detail on the costs, with the impact assessment for the new Fair Work body stating: “It has not been possible to estimate … the set-up costs of the FWA associated with bringing together existing enforcement bodies [or] the costs associated with new state enforcement responsibilities including the enforcement of holiday pay regulations.”
Other bodies, such as the football regulator, will ultimately be paid for by an industry levy. The impact assessment for the legislation said: “The set up costs will initially fall to the exchequer. Once the regulator is operational, levy payments are expected to fund the regulator. The levy will claw back the majority of costs incurred during the set-up of the regulator, and will also cover the ongoing running costs of the regulator.”
Some public bodies promised by the Labour in its manifesto, including the Ethics and Integrity Commission, have not yet been established or detailed in legislation yet.
The IFG said most new governments set up new public bodies and that between 2000 and 2023, between two and 12 public bodies were established each year – although a much greater number have been abolished.
Setting out 10 lessons for setting up public bodies successfully, it said it was necessary to define its mission clearly, pointing to the Independent Commission on Civil Aviation Noise (ICCAN), which was abolished within three years because politicians, civil servants and leaders never agreed what it was for.
It also highlighted the need to build support, giving the example of the Trade Remedies Authority (TRA) that was cut back two years after launch because new ministers were less committed to the value of a technocratic body shielding ministers from producer lobbying.
The IFG also said it was key for a public body to be resourced at the right level, pointing to the UK Health Security Agency, which faced financial uncertainty and big cuts in its first year, frustrating recruitment, even at board level.
Promising to set up these bodies is easy, but it is an expensive and time-consuming process and they don't always deliver. We shall have to see if this time will be different.
Wednesday, November 20, 2024
Consequences
The Guardian reports on analysis which shows that 50,000 more people will be in relative fuel poverty next year – and another 50,000 by 2030 as a result of this cut.
The paper says that the government's own analysis has found that cuts to the winter fuel allowance could force 100,000 pensioners in England and Wales into relative fuel poverty, as ministers come under mounting pressure over measures in last month’s budget.
They add that the figures, which are rounded to the nearest 50,000, take into account the impact of housing costs, but not of thousands more people claiming pension credit since a government campaign earlier this year. The analysis was published in a letter from Liz Kendall, the work and pensions secretary, on Tuesday, just as temperatures plunged and parts of the UK experienced their first snowfall of the year:
Downing Street admitted in September it had not done an impact assessment before making the change, although Labour said in opposition that such a move would lead to the deaths of 4,000 people. Kendall’s letter on Tuesday marks the government’s first attempt to quantify how many pensioners will be seriously affected.
The analysis shows that by 2030, 1% of those who have lost their allowance are likely to be pushed into relative poverty – defined as households with less than 60% of that year’s median income. This will have the effect of putting up the relative pensioner poverty rate by 0.6 percentage points.
Only half that number will be force into absolute poverty, however, defined as households with less than 60% of the median income of 2010/11.
The cuts to winter fuel allowance are unpopular with Labour MPs and supporters. One MP defied Labour whips to vote against the cut in September, while another 12 missed the vote without permission. Later that month, party members voted for a motion calling on ministers to reverse it.
The Scottish Labour leader, Anas Sarwar, pledged to reinstate payments in Scotland should his party win the 2026 Holyrood election, saying it would mean a “fairer system” for Scotland and show the public that “we have listened”.
The pledge comes days before another set of council byelections in Glasgow and after polling suggesting the unpopularity of UK government policies is harming Scottish Labour’s vote. At the general election Scottish Labour was well ahead of the SNP, but that lead has collapsed.
Sarwar said he had been “clear from the outset” that he thought Reeve’s pension credit threshold was too low and that he planned to reintroduce a universal payment for all pensioners, but tapered like child benefit is so that wealthier people receive less.
Caroline Abrahams, charity director at Age UK, said: “This government announcement confirms what we always knew: brutally rationing winter fuel payment, as ministers made the choice to do, will swell the numbers of pensioners already living below the poverty line – this year and into the future.”
Along with inheritance tax and employers national insurance contributions this is going to be one of the main political battlegrounds over the coming winter.
Tuesday, November 19, 2024
Budget sapping consumer confidence
The paper says that a survey by S and P Global Market Intelligence showed that consumer confidence dropped this month after households said the outlook for the economy had deteriorated and the prospects for their own finances had worsened:
The consultancy said the government had failed to build on the underlying improvement in consumer sentiment seen in the months before and after the general election.
Goldman Sachs said in a separate report that the increase in employer national insurance contributions (NICs) announced in the budget, raising £20bn for the Treasury, would force employers to pass on some of the cost in lower wage increases.
Analysts at the investment bank said they believed wages growth would slow as a result.
“We expect consumer spending growth to moderate in the second half of next year as real disposable income growth falls back,” they said. “This partly reflects slowing real wage growth; we expect private sector pay increases to cool, partly because of the employer NICs increase being passed on to consumers.”
S and P Global Market Intelligence said that since a high point in July, consumers had spent the rest of the summer and autumn more buoyant about their finances over the next 12 months than in the period before the Covid pandemic.
However, the survey in November found the “ongoing pressure on household finances has resulted in squeezed spending, higher debt and lower savings”.
The consumer sentiment index – a mix of surveys tracking consumer financial wellbeing, the jobs market, household spending, savings and debt – fell from 47.3 in October to 46.9 in November, where a number below 50 indicates contraction.
Chris Williamson, the chief business economist at S&P Global Market Intelligence, said: “A key concern going forward will be the labour market. Rising incomes and busier workplaces have underpinned much of the improvement in consumer sentiment over the past two years, but job security is showing signs of waning.
“Any intensification of job worries, spurred perhaps the recent measures announced in the budget, including higher employer national insurance contributions, could result in a further loss of consumer confidence. This would likely in turn hit consumer spending and economic growth.”
The Goldman analysts said they feared mortgage rates would drift higher as the Bank of England signalled high interest rates would be in place for a longer period.
Rachel Reeves may have to wait some for the growth she needs if she is to invest higher tax revenues into public services.
Monday, November 18, 2024
Time to stop the money laundering
Transparency International estimates that £1.1 billion worth of properties in London are owned by individuals tied up in money laundering. Now, leading political campaigners have said that the UK’s offshore financial centres must fall in behind plans to stop “dirty money” by publishing registers of corporate ownership, as the UK Government seeks to reverse this trend:
Labour’s Dame Margaret Hodge and the Conservative MP Andrew Mitchell hit out at “dither and delay”, ahead of this week’s summit between UK government officials and overseas territories, such as the British Virgin Islands (BVIs) and Cayman Islands, in London.
In an editorial for the Guardian, they accuse overseas territories and crown dependencies, such as Jersey and the Isle of Man, of trying to water down or ward off measures designed to counteract money laundering and other illicit transactions.
“We know all too well that the overseas territories and crown dependencies play a pivotal role in helping crooks and tax dodgers launder and hide their dirty money,” Hodge and Mitchell said.
“Dirty money underpins corruption, crime and conflict. It causes immense harm at home and abroad, enabling serious and organised crime and diverting resources needed for vital public services.
“Public registers, and the scrutiny that they bring, are the best antidote to the scourge of illicit finance.”
Mitchell and Hodge are understood to have corralled support from dozens of MPs across the political spectrum to ramp up the pressure before the joint ministerial council. The two-day event starts on Wednesday.
“We must stop the dither and delay of recent years and pierce the veil of anonymity that protects criminals and kleptocrats,” they said.
The duo accused offshore centres of reneging on a promise to introduce public registers by December 2023.
A key point of contention is whether the registers would be open to everyone or only those with “legitimate interests”, such as anti-corruption campaign groups.
Some overseas territories are opposed to fully open registers and British lobbyists have been working with them in an effort to persuade the government to accept a “legitimate interest” compromise.
The UK has acted as a refuge for this sort of activity for too long. The government must do everything it can to change this and use what powers and influence they have to make the overseas territories follow suit.
Sunday, November 17, 2024
Setting the financial speculators loose
The Mirror reports that our new Chancellor of the Exchequer, Rachel Reeves believes that the financial crisis era curbs have “gone too far2, and is seeking a lighter touch regulation of the City and the banks:
The Chancellor, delivering her first Mansion House speech, signalled lighter touch regulation of financial firms following restrictions imposed after the 2008 banking meltdown.
Ms Reeves has written to the UK’s City regulators telling them to “ensure a greater focus on supporting economic growth.” The Treasury insisted “high regulatory standards will be maintained” but rules should be “rebalanced” to drive growth and competitiveness.
David Postings, chief executive of industry trade body UK Finance said: “I strongly welcome her support for the sector.”
Ms Reeves’ aim for lighter touch regulation, delivered to the great and good of the City, comes with Labour’s number one priority to grow the economy in order to boost public spending and improve people’s living standards. But her recent Budget, which saw a number of tax raids on business, has drawn widespread criticism.
Another key measure to drive growth announced last night was reform of the pension system with the aim of unleashing up to £80billion of investment. They include speeding-up pooling of the near £400billion in local authority pension schemes into eight “megafunds”, whose firepower could be more easily deployed for infrastructure spending, from energy projects through to housing.
Louise Hellem, chief economist at business lobby group the CBI, said: “The UK has the second largest pool of pensions assets in the world so finding ways to reorient them towards long-term investment in businesses and infrastructure could drive economic prosperity.”
Amanda Blanc, chief executive at financial giant Aviva, said: “This is just what we need. Rebalancing regulation to be pro-growth will be a real boost to competitiveness, spur more investment in the UK and deliver better value for customers. Let’s get moving quickly on this crucial agenda.”
But independent pension expert John Ralfe warned the shake-up could expose pension savers to greater risk, adding; “If it goes wrong, they suffer.”
Rocio Concha, director of policy and advocacy at consumer group Which?, criticised another announcement by Ms Reeves, to review the Financial Ombudsman Service after what she called "lobbying by the industry". She added: "For its financial regulation plans to succeed, the government must look beyond the boardrooms of the City of London and listen to millions of consumers who have been struggling through a painful cost of living crisis. The Chancellor must ensure they are not further exposed to poor treatment at the hands of the financial sector."
It was precisely this sort of stand-off regulation that led banks to overreach and which caused the crash in 2008 in the first place, plunging us into a recession that we still haven't fully recovered from. What could possibly have led Reeves to believe that anything will be different this time?
Saturday, November 16, 2024
Bank of England chief warns of Brexit consequences
The paper said that speaking alongside the chancellor at the annual Mansion House dinner in the City of London, Andrew Bailey spoke about the importance of economic growth and outlined the impacts of the UK’s departure from the single market on trade:
While he said he takes “no position on Brexit per se”, he added: “But I do have to point out the consequences”.
“The changing trading relationship with the EU has weighed on the level of potential supply”, Mr Bailey said.
“The impact on trade seems to be more in goods than services, that is not particularly surprising to my mind.
“But it underlines why we must be alert to and welcome opportunities to rebuild relations while respecting the decision of the British people”.
“The picture is now clouded by the impact of geopolitical shocks and the broader fragmentation of the world economy,” the Bank chief added.
The remarks come one week after Donald Trump swept to victory in the US presidential election, with many economists questioning the potential impact of proposals to hike tariffs on all US imports.
Such a move could put pressure on UK goods prices, contributing to rising inflation, experts have suggested. It has also triggered renewed calls for closer ties with the EU.
Last month, Treasury minister Tulip Siddiq warned that 60 per cent of the impact of Brexit is yet to materialise in a damning assessment of Britain’s departure from the European Union.
The Treasury economic secretary cited Office for Budget Responsibility (OBR) forecasts that the economy would shrink by 4 per cent in the long run due to Brexit, as well as warning that Britain’s imports and exports would end up 15 per cent lower than they would be had the UK stayed in the EU.
Rachel Reeves, meanwhile, used her Mansion House speech to argue that restrictions imposed after the 2008 banking crash “went too far”.
In an attempt to regain the trust of the finance sector, Ms Reeves will pledge to ease banking regulations and unveil the first-ever financial services growth and competitiveness strategy.
In his address, Mr Bailey also said the UK has experienced weaker productivity growth since 2008.
“We need to encourage business investment in the UK,” he said.
Let's hope the government is listening.
Friday, November 15, 2024
Is Wales' homeless crisis spiralling out of control?
Shelter Cymru have just published a shocking report that lays bare the housing crisis facing local councils in Wales.
The report says that demand for temporary accommodation in Wales has grown dramatically in recent years. In March 2021 there were 3,729 households in temporary accommodation, by March 2024, this had risen to 6,447 households. Currently more than 11,000 people are living in temporary accommodation in Wales, including almost 3,000 children:
Across Wales local authorities are struggling to cope with the impact of this level of demand, and many have shared with Shelter Cymru the challenges of finding suitable temporary accommodation to meet people’s needs. As part of our work to further understand the impact of rising temporary accommodation demand Shelter Cymru issued a Freedom of Information Request to all 22 Local Authorities in Wales in the summer of 2024. This report explores the results of these alongside publicly available information and shows that:
• The cost of temporary accommodation in Wales has more than doubled since 2021. The Wales-wide bill for temporary accommodation in 2020/2021 was over £41million. This has risen to over £99million in the last financial year, 2023/2024.
• The cost of temporary accommodation is increasing at almost double the rate that demand for temporary accommodation is rising. The number of households accessing temporary accommodation has increased by 75% in the period covered by this FOI request while the cost of temporary accommodation has grown by 140%.
• A central factor in these dramatically rising costs appears to be local authorities’ increased reliance on private sector provision to meet the needs of people in their area. Across Wales, over half of the people in temporary accommodation are living in B and Bs, hotels, holiday accommodation (such as static caravans) and private sector rental homes. In 11 of our 22 Local Authorities, more than two-thirds of people in temporary accommodation were in options provided by private sector businesses and individuals (Stats Wales, March 2024).
• Conversations with local authorities and people living in temporary accommodation show that these private sector options are routinely of higher cost and lower-quality than alternatives. A spokesperson from one local authority noted that hotel and B and B owners are “charging us more than they could charge tourists in the off-season and their hotels are full year-round housing people who would otherwise be homeless here. They know they’ve got us over a barrel.”
At the heart of these figures are people. People stuck in extended stays in hotels where they don’t have the cooking facilities to meet their family’s need. People waiting for adapted properties who are struggling to navigate unsuitable B and Bs. Families and children in noisy and unsettling environments that are damaging their mental and physical health.
Our current approach to temporary accommodation is dysfunctional. It is seeing large sums of public money being transferred to private businesses and individuals as local authorities struggle to meet the demands of our housing emergency. While 51% of our temporary accommodation placements are in private provision, conversations with local authorities suggest that the inflated costs of private sector options mean that considerably over half of the £99million spent on temporary accommodation last year went directly to private profits.
We need long-term solutions that ensure people have access to permanent homes to reduce the need for temporary accommodation. However, we know that this will take time, and that people are also suffering now, which is why we propose that long-term approaches be partnered with pragmatic steps in the medium term. This approach will help to retain public funds for public good and improve the experiences of people and families in temporary accommodation right now. If Welsh Government considered the recommendations in this report, it would enable local governments to take greater ownership of temporary accommodation provision – resulting in more suitable and better quality options for people who need it while bringing down the cost.
We cannot continue to rely on privately owned temporary accommodation to fill the gap left by a long-term failure to deliver the homes we need. Doing so not only fails to ensure people are provided with the level of accommodation they deserve but also provides some organisations the opportunity to capitalise on our homelessness crisis.
In summary we need more social housing, but in the short term we need good quality, publicly owned temporary accommodation to cut costs and to properly support families and individuals. How the Welsh Government reacts to this report will be critical.
In summary we need more social housing, but in the short term we need good quality, publicly owned temporary accommodation to cut costs and to properly support families and individuals. How the Welsh Government reacts to this report will be critical.
Thursday, November 14, 2024
Big Brother?
The paper says that calls have been mounted for live facial recognition technology to be halted amid questions over accuracy and privacy. They add that the software - currently being deployed in London, South Wales and Essex - allows officers to scan the faces of passers-by and check them against watchlists:
Several MPs raised concerns about software misidentifying innocent members of the public - particularly Black, Asian and minority ethnic groups. Labour MP Bell Ribeiro-Addy said: "We're veering dangerously close to becoming a police state with levels of surveillance that would only be deemed acceptable in the most autheritarian police states. It's not a matter of 'those with nothing to hide have nothing to fear', it's a matter of our basic privacy."
She pointed to research by campaign group Big Brother Watch which found 89% of facial recognition alerts to date wrongly identified members. Tory Shadow Home Secretary Chris Philp said current software is far more accurate.
Ms Ribeiro-Addy told a Westminster Hall debate: "People of colour are already disproportionately stopped and searched and the use of potentially flawed technology will only increase the rate at which ethnic minorities are stopped, further damaging trust in police in this community."
And she questioned effective it is, stating: "As far as I've been made aware it hasn't produced a substantial number of results. Our constituents are effectively being placed under constant surveillance and the notion of their presumed innocence has effectively been undermined."
MPs heard that vans with the specialist facial scanners are able to scan people in crowds. If they are not on a police watchlist, their biometric data is deleted within half a second.
If they do match, a police officer approaches them and asks them for ID. The technology - which identifies people by measuring dozens of features on their face - has been controversial, with campaign groups demanding it is withdrawn.
Lib Dem Bobby Dean said: "It's clear from the room that there's many, many doubts. We should think about halting the use of this technology until we've cleared up those doubts."
I agree. There needs to be a full review of this technology, how it is used and safeguards put in place before it is redeployed, if it is redeployed at all.
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.
