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.
Thursday, October 31, 2024
Labour's stealth tax on public services
Opposition politicians have quite rightly attacked the impact of the increase in employers' national insurance contributions on business and whether this measure breaches a Labour manifesto promise. For the record, I think it is a breach, that it will have an impact but that the Chancellor needed to raise money somehow to fill in the financial black hole she inherited.
I also think that if she was going to break a promise, she should have gone the whole hog and put up income taxes for higher earners, while doing away with the Tories freeze on tax thresholds, but that's another story.
The investment in public services is also welcome, if it is properly directed. Throwing money at the health service to increase capacity and cut waiting lists is much-needed, but if the government don't fix social care as well then it will prove to be an ineffective short-term measure.
Wales gets an extra £1.7 billion through the Barnett formula from this budget, most of which I expect to be given to health, but the budget also contains significant costs for public services, effectively clawing back large sums of money for the Treasury.
The public sector is most probably the biggest employer in the UK and that means that any change to employer's national insurance contributions will hit them hard. Potentially, hundreds of millions of pounds will have to be paid back to the UK government, money that might otherwise be used to improve or consolidate services.
In Swansea, an initial, back-of-the-envelope calculation by the head of finance has priced it tentatively as now costing 2.5 per cent for the council's average worker, not just that headline 1.2 per cent uplift. The Institute o Fiscal Studies came to the same conclusion of 2.5 per cent per median 30k worker. That is a total hit on one council of £7 million pounds, of which £2.4 million will come out of school budgets.
Multiply that by 22 in Wales and then add in the health service, who employ huge numbers of people, universities, who are already looking at making redundancies, the further education sector, Natural Resources Wales and countless other organisations set up to manage public services. And the n apply it to the rest of the UK.
All the indications are that whatever, Rachel Reeves gave in extra cash to these services will be ameliorated by this extra tax. Not so good news after all.
The investment in public services is also welcome, if it is properly directed. Throwing money at the health service to increase capacity and cut waiting lists is much-needed, but if the government don't fix social care as well then it will prove to be an ineffective short-term measure.
Wales gets an extra £1.7 billion through the Barnett formula from this budget, most of which I expect to be given to health, but the budget also contains significant costs for public services, effectively clawing back large sums of money for the Treasury.
The public sector is most probably the biggest employer in the UK and that means that any change to employer's national insurance contributions will hit them hard. Potentially, hundreds of millions of pounds will have to be paid back to the UK government, money that might otherwise be used to improve or consolidate services.
In Swansea, an initial, back-of-the-envelope calculation by the head of finance has priced it tentatively as now costing 2.5 per cent for the council's average worker, not just that headline 1.2 per cent uplift. The Institute o Fiscal Studies came to the same conclusion of 2.5 per cent per median 30k worker. That is a total hit on one council of £7 million pounds, of which £2.4 million will come out of school budgets.
Multiply that by 22 in Wales and then add in the health service, who employ huge numbers of people, universities, who are already looking at making redundancies, the further education sector, Natural Resources Wales and countless other organisations set up to manage public services. And the n apply it to the rest of the UK.
All the indications are that whatever, Rachel Reeves gave in extra cash to these services will be ameliorated by this extra tax. Not so good news after all.
Northern Rail stuck in the 1970s
The paper says that the shocking admission came as Northern mayors were grilling the rail operator on its poor performance on Wednesday, with issues raised including staffing problems, underinvestment, bad communication, and a lack of coordination with other parts of the sector – which has all led to repeated cancellations and growing anger among passenge:
When Andy Burnham put to the rail official that he had heard Northern is still using fax machines, they argued that it was an issue of “depth and complexity” that would require a change in the agreement made with colleagues – a point disrupted by the incredulous Greater Manchester mayor.
The Financial Times reported Mr Burnham posed the question over the use of fax machines: “Can that possibly be true?” to which the official responded, “It is very much true, chair.”
The mayor demanded an explanation, “How? How on earth is that the case in 2024?” with the official replying: “That is a very fair and reasonable question. It’s our challenge to get rid of them. We have plans to get rid of them.”
Mr Burnham stated: “You could do it tomorrow.” And the official agreed – but when the mayor asked if the operator was going to, they admitted it was not, “because the tools we use to get information and messages to our crew rely on faxes, amazingly. We will get there before we’re forced to because fax technology, in telecoms terms, turns off. Our plan that we’re putting forward...”
Mr Burnham interrupted: “People will say: ‘How come we have three decades of privatisation when money was being poured into the railway and you are still communicating via fax machines in 2024?’”
The official admitted: “It is a very fair question. Our job is to get rid of them. Our job is to unleash the full potential of emerging technological revolution,” but added that the “right agreement with our colleagues” needs to be reached.
The mayor responded: “I hear what you say but it tells me though that your modernisation plan, like your training plan, is moving nowehere near fast enough. You could get rid of this stuff tomorrow. You could put in place IT to support people to communicate differently.”
What hope is there for public transport when organisations like Northern Rail appear to be stuck in the 1970s in the way it administers its business?
Wednesday, October 30, 2024
Post-Brexit border checks putting food security at risk
The paper says that a joint letter from the Fresh Produce Consortium (FPC) and the Horticultural Trades Association (HTA) has called for an urgent meeting with the government over the continued problems their members face when importing plants and cut flowers under the current border system:
The letter, from the HTA, which represents garden retailers and growers, and the FPC, which represents 700 fresh produce suppliers and distributors, comes six months after new post-Brexit border checks on plant and animal products coming into the country from EU countries were introduced.
From 30 April this year, plants for planting and some cut flowers coming into Britain from the EU became subject to checks at border control posts across Britain.
Before this, plants were inspected at their point of destination, meaning nurseries and growers could store them in controlled environments on site.
The border changes, brought in to mirror the checks on British exports going into Europe, were intended to improve Britain’s biosecurity and prevent the spread of disease between plants in the country.
However, in their letter the two groups said trade in edible plants, such as fresh fruit and vegetables, and non-edibles including finished plants, bulbs and seeds, had seen “significant challenges”, with importers facing rising costs, increased risk of delays or damage to orders, as well as cumbersome paperwork.
It added: “This situation has led to reduced consumer choice, strained business relationships, a tarnished UK business reputation, diminished confidence in border processes, compromised food security, and setbacks in achieving our environmental targets.”
The letter sets out 10 immediate actions from the government that could improve the flow of goods from the EU to Britain, while also protecting businesses from increased costs:
These included agreeing a plant health agreement with the EU based on mutual recognition of standards, removing barriers in the current border control post system that stop inspectors carrying out checks after 5pm, while also calling for inspections to meet the agreed four-hour service level agreement set by the government.
It has also called for the removal of the £145 common user charge (CUC) fee at the government-run border control post in Sevington, Kent, which processes all checks coming through the Port of Dover and Channel tunnel.
The letter says the charge should be halted for 12 months while a review of the economic impacts of the border policy is carried out.
Those arguing for Brexit in 2016 claimed that it would reduce red tape for businesses. in fact the opposite is the case and as a result business owners are struggling.
Tuesday, October 29, 2024
Who is paying the price for Labour's caution on energy?
Having started from the position of promising an energy revolution, with a proposed £28 billion a year investment on green energy projects like offshore wind farms and developing electric vehicles, Labour first muddied the waters, then it u-turned to promise just £15 billion a year, now it is penalising pensioners by making them choose between heating and eating, while all the noises coming from government implies that we will be lucky to see that amount committed to the plan.
The Politics Home points out that one of Labour's few unashamedly ‘retail’ promises in the Labour manifesto, that families’ average energy bills would be up to £300 lower by the end of the decade is now in jeopardy.
The website says the recent increase in the energy price cap – as well as the decision to remove universal entitlement of pensioners to winter fuel allowance – has put that pledge in the spotlight. And that, although Ed Miliband, the Energy Secretary, seeks to use the recent rise in wholesale gas prices to underscore the case for ending fossil fuel energy in the UK by 2030, thus freeing ourselves from a notoriously volatile market and ensuring that British families can benefit from reliably cheap renewable energy, there is no indication as to who is going to pick up the bill:
With many facing a winter of uncertainty, there are concerns that some decarbonising costs could be passed on to consumers too, who will then be expected to stump up even more money – at least in the short term. “The investment needed to get there will mean that in the interim there’s a risk of higher bills,” says Alex Belsham-Harris, head of energy consumer markets at Citizens Advice.
And if the short-term vagaries of the energy market are difficult, they are dwarfed by the challenge of moving the nation off gas boilers and onto clean alternatives like heat pumps. Lower-income households will inevitably find it a challenge to pay for any additional costs, however small, to decarbonise their homes. “What’s happened in the past is paying for net-zero policies through levies has actually made low-income households disproportionate sponsors of those policies when they’re not necessarily getting the benefits,” warns Copeland. “The government has to make it easier for the poorest to make this a just transition. If we don’t, the poorest will suffer most,” urges Lord Deben, former chair of the Climate Change Select Committee.
A No 10 source agrees that you cannot put the cost of the transition onto the taxpayer. “Our whole country, pretty much, is dependent on fossil fuels to heat their homes and we need to change that,” says a Labour MP, who explains that local authorities should be given powers, alongside third-sector partners, to offer green upgrades to households that can be paid in instalments to avoid upfront costs.
“You need to do it at scale because if you leave it to individual consumer choice you will end up with very high costs, either for the consumer or the state,” they add.
"We’re obviously going to have to mobilise a lot of public and private investment behind this if we’re going to be able to deliver it at scale and in a way that really delivers benefits for consumers, not just in security, but in their back pockets through bills too,” says Strathern. So far, just 250,000 out of 28 million households have had heat pumps installed, likely in part due to a costly installation process.
“There are ways of structuring the financing of this kind of thing that will keep the costs for consumers down,” maintains the Labour MP, but doesn’t explain what these might be. “It could only be done either through massive energy bill increases for consumers or through massive tax rises,” says Conservative peer Lord Hannan, adding, “neither of those is really a credible option.”
And the cost of installation isn’t the only issue. “Your costs don’t always reduce if you use a heat pump instead of a boiler – in fact they can increase,” says Copeland.
But the Labour MP counters: “They don’t have to be expensive to install, and they don’t have to be expensive to run, if you get the regulatory framework right, and that’s what the government needs to be doing.”
For pensioners the cost of decarbonising their home would simply not be worth the upfront costs. “If you haven’t got many years to live, you’re not going to have time to be able to reap the financial rewards of moving to a more energy efficient home and a lot of older people are in that position,” points out Caroline Abrahams, director of Age UK.
“It is an utterly unachievable project,” argues Hannan, who predicts the 2030 target will not be reached. “When we get to the expense of having to replace boilers and so on, I think attitudes will change very quickly. I wouldn’t be at all surprised if Ed Miliband is the first Cabinet minister to resign,” he says.
“This might seem like a foreign concept, but it’s because we have chosen not to embrace a strategic approach to decarbonising our energy system and that’s what we’re going to do,” insists the Labour MP.
The decisions that will be announced in tomorrow's budget and over the next few months will be crucial in determining whether this energy revolutionn can be achieved, or whether it will prove too expensive and too difficult for the government to commit too.
Monday, October 28, 2024
Investment in public services must be key aim of budget
To be fair, some of the speculation about what is likely to be in Rachel Reeves' speech is likely to be right, if only because she and her colleagues have been slowly releasing details in an effort to soften us up. It's also the case that Labour have painted themselves into a corner on this one by announcing straightaway that they found a £22billion black hole in the nation's finances, while at the same time tying their own hands in closing this gap by promising not to raise income tax, VAT or national insurance paymeents, all measures that could quickly deal with the deficit.
I don't want to get involved in the speculation, except to say that from a government point of view, this must be one of the most ineptly managed lead-ins to a budget for some considerable time. When you have ministers from Keir Starmer downwards, tying themselves in knots, while struggling to define what working people are, just so they can create some fiscal room for manoeuvre, then you know that they are in trouble.
One article I can identify with is this one in the Guardian. This quotes a poll of 500 UK business leaders undertaken on behalf of the TUC, which found that UK businesses are losing staff working time because of waits for healthcare or caring duties due to underfunded public services.
The paper reports that more than half of these business leaders said workers had to take time off in the last year because of problems accessing public services:
The TUC said the extent of time lost to public service pressures showed that the government should spend more on repairing services. While higher taxes tend to be unpopular with businesses, the union body argued that better public services would help UK companies to grow by allowing workers to be more productive.
The polling, carried out by Opinium, suggested that 35% of business leaders – ranging from small business owners up to management of large businesses – had staff absent while waiting for hospital treatment, and 17% for mental health treatment.
The Institute for Public Policy Research, a thinktank with close links to Labour, has previously argued that poor health is holding back the UK economy. It said last month that the 900,000 people lost to the labour force since the coronavirus pandemic would cost HMRC £5bn in lost revenue this year.
Caring duties were also a drain on time, with nearly a fifth of bosses saying staff took time off to fill in for social care for an adult relative, while 17% said workers took time off because they were unable to find childcare.
This poll underlines once again how our care system is broken and how it is pulling the health service down with it.
If Rachel Reeves does just one thing on Wednesday then she needs to start putting this right. Our public services are in a parlous state and the failure to invest in them is damaging our economy. Sorting that out must be a key objective of this budget.
