Tuesday, 9 October 2012

Greens pull George Osborne apart

From the Green Party website:

There was so much overblown rhetoric to wade through in George Osborne’s Autumn Conference speech that it was almost hard to know where to start. However we have picked out the bits most in need of addressing. Hope you find it useful!

1.“Today in the face of the great economic challenges of our age we here resolve; we will press on and we shall overcome.  We made a promise to the British people that we would repair our badly broken economy. That promise is being fulfilled. The deficit is down by a quarter.”

This morning the International Monetary Fund (IMF) has stated clearly that George has not learned his economics lessons. They conclude that it is the economic policies being followed by Osborne that are destroying any chance of returning to growth. The IMF has confirmed that the result of all 173 “austerity” packages enacted across the world to date was recession. There are two possible explanations: the Tories do not understand the basics of economic theory; or they are deliberately using the economic crisis to advance their political cause of slashing state spending in order to justify further tax cuts for their financial backers.

The deficit has not been reduced as per Osborne’s delusional claims. Instead from April-August this year the deficit actually increased 22% to £61.3bn, £12.9bn higher than in the same period last year.

Molly Scott Cato, Green party economics speaker comments:
'Osborne has spent the past few years whipping up austeria for entirely political reasons. He is now using the mood of public anxiety to slash welfare payments, reduce taxes on the wealthy, and cut the size of the state. This was always the intention of the Tory right and they are working to achieve their narrow political aims while the country as a whole suffers.'

2.“That we support those who aspire, so we can help those most in need. That the cost of paying our debts cannot possibly be borne by one section of society alone.”

One section of society should be responsible for paying of our debts and that is the bankers who instigated this financial crisis. Let us be very clear; this is a banking crisis and should never have been presented by the Tory Party as a sovereign debt crisis. Labour took the decision to bail out the banks and turn the banking debt into a national debt, but it was the Tory government under Thatcher and Lawson who led the way in deregulating the financial markets. Those most responsible for creating the financial crisis have escaped paying any price, whilst the most vulnerable members of our society are made to suffer needlessly to allow Osborne to ransack public services to meet his party’s aims.

But since then, the ability of the most vulnerable, including the nation’s lowest-paid workers, to meet their basic needs has got demonstrably harder. So much so that 15 million people are living below the minimum income standard [LW1] – three million more than in 2008. We know jobs that carry decent wages are an essential starting point in climbing out of poverty – yet part-time and short-term work, while useful, do little to address this. 

The dire state of the labour market, and Joseph Rowntree Foundation’s (JRF)projections, suggest that by 2020 things will get a lot worse unless we have a dramatically different set of policy interventions Budget cuts to local councils hit deprived councils hardest.  A JRF report Serving deprived communities in a recession found that that vulnerable people are being hit with the double impact of faster cuts, and lack of protection. The report also found that local authority spending cuts hit deprived lost most spending power.

Jason Kitcat, Leader of Brighton and Hove City Council says:
“We don’t believe the financial crisis can or should be solved by cutting expenditure on those who most need society’s help, which seems to be government strategy. However, councils face bleak choices as we cannot spend more money than the government allocates. Other councils may toe the line, imposing punitive cuts on social care, welfare and benefits, but our strategy in Brighton & Hove is to refuse to do George Osborne’s dirty work for him and instead we prioritise our spending in such areas as caring for adults, children and the homeless, supporting the voluntary sector and mitigating as far as we can the effects of benefit cuts.”

3. “We've never allowed uncontrolled capitalism free-rein. It was these Labour politicians, not Conservatives, who let the banks run rampage because they didn't understand that to work for everyone, markets need rules.”

What about the line that it was Labour that “let the banks run rampage”?  In 2006, Osborne was indignant about Labour’s financial regulations (proved by the banking crisis to be woefully inadequate), describing them as “burdensome, complex and… [making] cross-border market penetration more difficult.”. He claimed that this was “an age that demands a light touch” towards government involvement in the economy.
Not only is Osborne a few marks short of a GCSE with his economics, but his knowledge of history needs some updating as well. It was the Conservative Party’s ‘Big Bang’ of financial deregulation in 1986 that sowed the seeds of the financial collapse.  As professor Karel Williams explains, "deregulation allowed the City to construct long lines of indebtedness, which are completely beyond technical regulation”.  The decision by Thatcher and her chancellor Nigel Lawson to massively cut regulation of the financial industry created an unsustainable culture of short-termism and greed, the merging of high street and merchant banks, and ultimately, a credit crisis that could shackle generations to come with debts of the banks unless Osborne faces his responsibilities and listens to the warnings of his critics such as the IMF.

1.)     http://www.telegraph.co.uk/finance/2940311/Personal-view-We-promise-simpler-taxation-the-right-regulations-and-good-infrastructure.html
2.)    http://www.publications.parliament.uk/pa/cm200607/cmhansrd/cm061127/debtext/61127-0005.htm
3.)    http://www.guardian.co.uk/business/2011/oct/09/big-bang-1986-city-deregulation-boom-bust

4. “£10 billion of welfare savings by the first full year of the next Parliament.”

Green Party leader, Natalie Bennett, says this is unethical and self-defeating especially in the current climate.
"Further cutting the real rate of benefits, when they are already insufficient for a basic decent life is unconscionable. As the Joseph Rowntree Foundation calculated, the minimum weekly income needed in Britain is £193 for a single person, but out of work benefits deliver just £85.

"It is all very well for the Chancellor to talk of the need to find work, but the fact is that in many areas of Britain there are few or no job opportunities, and what's there is often casualised, insecure and low-paid. And he's planning on penalising larger families whose adult members are out of work. That means penalising children - restricting their life chances when we already have some of the most unequal outcomes in education and life chances in the developed world. However the Chancellor does need to think about benefits - the corporate benefits to large companies that are able to pay large numbers of staff less than a living wage, then rely on the government to top up their profits by subsidising their employees with tax credits. Making the minimum wage a living wage would cut the benefit will, by making companies pay their fair share.”

Welfare savings do need to be made but George Osborne’s speech indicated that he had no understanding that his failure to invest in jobs means that more and more people are forced onto welfare each month. The Green Party believes that the immediate priority is the creation of an extra million jobs and training places. A £44bn package of measures would include workforce training, investment in renewables, public transport, insulation, social housing and waste management.  Which could be funded, for example, with a Land Value Tax as per the Private Member’s Bill recently sponsored by Caroline Lucas.
  1. http://greenparty.org.uk/policies/jobs-2010/jobs-detail.html
  2. http://www.jrf.org.uk/focus-issue/minimum-income-standards

5. “How can we justify the incomes of those out of work rising faster than the incomes of those in work?’

 The question should be: “Mr Osborne, how can you justify an economy in which those who work earn less money every year?”
George Osborne’s pay freezes in the public sector have seen workers’ spending power fall, because as inflation has risen, wages have stood still. Instead of creating a system where working doesn’t pay and using that to punish the most vulnerable the Chancellor should ensure that those who work receive a fair wage.
Incomes Data Service reported in May that the government’s economic policies were also hitting the private sector – which Osborne promised would deliver economic recovery.

It reported that the drop in consumer spending power had led private firms to take ‘fewer risks’ in expenditure – offering below inflation pay increases.

The irony of the fact that this, in turn, led to even lower spending power in the UK economy, and thus a vicious circle of cuts followed by further falling economic activity, leading to more cuts, to which the  the Chancellor  is either ignorant or indifferentThe Green Party believes that the minimum wage should be a Living Wage and thiswill help ensure low paid workers earn enough to provide for themselves and their families and eradicate poverty in Britain for good. The Green Party will fight for a National Minimum Wage of 60% of net national average earnings (currently this would mean a minimum wage of £8.10 per hour).  

6. “We promised the British people we would protect decent public services as we dealt with the deficit, and so we will.”

George Osborne’s claim to protect public services perhaps depends upon how he has defined ‘decent’ – privatising the NHS and education might sound pretty ‘decent’, to some people  wealthy enough to pay for private care and schooling. Here are the facts – under Alistair Darling’s 2009 budget, Labour spent £119bn on healthcare. This would be worth £132bn in today’s money. Osborne, however, spent £130bn on healthcare in his 2012 budget, so he has effectively cut £2bn from the NHS.

Cuts to education are even worse – Darling spent £88bn in 2009, worth £97bn today. Osborne’s 2012 budget spent just £91bn on education, so the Tories have cut £6bn from schools and universities. 

The Green Party believes in investing in public services rather than cutting them, and fights to keep the NHS public, rejecting any form of privatisation in the health service. The Green Party believes that small schools have a greater sense of community and a more positive ethos, which can reduce behavioural problems. The party would create a greater number of smaller schools by breaking up larger institutions into smaller ones. It would provide free school meals for all, and half a day a week of physical activity for every child. Academies would be phased out because we believe it is wrong to allow business and other unaccountable organisations to influence education for their own needs.
  1. http://www.direct.gov.uk/prod_consum_dg/groups/dg_digitalassets/@dg/@en/documents/digitalasset/dg_188581.pdf

7. “We modern Conservatives represent all those who aspire. Whether it's the owner of the corner shop staying open until midnight to support their family, or the teacher prepared to defy her union and stay late to take the after-school club,or the commuter who leaves home before the children are up, and comes back long after they have gone to bed, because they want a better life for them.’

Does Mr Osborne believe that ‘a better life for their children’ will be delivered by a situation in which a parent never sees their children? It would appear so. Why should a commuter have to leave before the children are up and come home after they have gone to bed to provide a better life for them? A report from the United Nation's children's agency UNICEF, found that children growing up in the UK were the unhappiest in the industrialised world, and that parents in more than half the countries surveyed spent more time "just talking" to their children than did those in the UK. The importance of family relationships are vital to child development. Children in Sweden, Spain and the UK, told researchers that their happiness was dependent on spending time with stable families and having plenty of things to do, especially playing outdoors. The research showed, however, that although parents in the UK lose out on time together as a family due in part to long working hours.

The Green Party believes that children deserve a happy childhood and as such seeks to encourage flexible and part-time working. Our proposed living wage rates (above) would help improve part-time as well as full-time pay.

We want to work towards reducing the standard working week to 35 hours, which would allow work to be shared out more fairly and would encourage a good work-life balance for all workers. Every child deserves quality time with their parents and vice versa.
  1. http://www.actionforhappiness.org/news
  2. http://edition.cnn.com/2012/01/25/health/working-overtime-doubles-depression/index.html
  3. http://oem.bmj.com/content/58/1/68.full
  4. http://www.oecdbetterlifeindex.org/topics/work-life-balance/

8. “An enterprise strategy means investing in renewable energy, and opening up the newly discovered shale gas reserves beneath our land. We are today consulting on a generous new tax regime for shale so that Britain is not left behind as gas prices tumble on the other side of the Atlantic.”

Yesterday, Mr Osborne put a marker down to the Tory right and the climate-sceptic wing of his party with his pledge to spark a home-grown shale gas boom, as has happened in the US.

However it is not just The Green Party that is worried by Osborne’s ‘dash for gas’, Redpoint, advisor to the Government’s own independent Climate Change Committee, predicts that a gas-based energy production system would cost the taxpayer £23bn per year more than we pay at present for the same power – without factoring in inflation, so the very foundation of the statement is entirely dubious. The same report, using the Government’s own predictions, along with those of the International Energy Agency, states that “These (groups) envisage rising gas prices in the US and the EU over the next two decades, and a significantly higher gas price in the EU than the US, notwithstanding the potential impact of shale gas.”

UK firms are concerned about George Osborne’s “dash for gas” plans too.
In the last week, more than 60 UK businesses have put their names to two letters, in one of which seven firms threaten to withdraw investment in the UK if green targets are reduced. In the other, business leaders warn such reductions will cause the economy to lose billions of pounds.

Seven firms, including Siemens, Gamesa and Alstom UK, wrote to Energy Secretary Ed Davey, Chancellor George Osborne and PM David Cameron warning they will withdraw investment in the UK if the government relaxes plans to decarbonise the energy industry.

The seven employ 17,500 people and are vital to the development of renewable energy production in the UK.

And more than 50 other companies, including Aviva, Microsoft, Marks & Spencer, and the Co-operative, sent an open letter to Chancellor of the Exchequer George Osborne warning that his energy and environmental plans will lose the UK £110bn in energy investment, as well as £400m in exports in 2014-15 alone.

 Both groups are concerned that Mr Osborne’s insistence that gas, rather than renewable energy, should provide the UK’s power production to 2030 will see it miss decarbonisation targets.”
  1. http://www.redpointenergy.co.uk/images/uploads/Decarbonising_the_GB_power_sector_v1.pdf
  1. http://www.independent.co.uk/news/uk/politics/osborne-offers-tax-breaks-for-shale-gas-8202949.html

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