Labour: Is It Really ‘Anti-business’?

In the closest and most hotly-contested election for a generation, politicians are going to throw a lot of mud at each other. The Conservatives and their supporters have mastered this art very well: they believe that if they take a line and repeat it often and loudly enough, it will become the prevailing view, even if there is little evidence to support it. They’re trying that now. By screaming that Labour is stuck in a ‘seventies mindset’ and is ‘anti-business’, they hope to undermine Labour’s economic credibility.

To be fair, Labour is fighting on its most radical manifesto for a generation. Vested interests have a lot to fear from us. Labour has committed to break virtual cartels that exist in energy and transport markets; crackdown on corporate tax dodgers and exploitative zero-hours contracts; control speculation in land and housing and a large uprating in the minimum wage.

Will these measures cost businesses? Only those who are bad corporate citizens. Good businesses already pay fair taxes and wages. Good businesses add value to our economy through innovation and hard work, not profiteering. Good businesses welcome real competition.

Labour is a vibrant, democratic political movement and we exist to serve the people of Britain, not the CEOs and shareholders. Except in the City of London, people have the vote, corporations do not. Our aim should not be to prioritise business over other concerns for the sake of it (or, as with the Conservatives, because Monaco-domiciled businesspeople have given us large donations) but to help business as partners in the British economy. Labour has every interest in helping business create British jobs, innovative new products and services and drive investment. And that’s exactly what the next Labour government will do.

Would an anti-business party commit to keeping Corporation Tax rates at the lowest in the G7 economies? (Rates that are too low, in my opinion) Would it slash the business rates that are crippling small enterprises? Would it fight so hard to keep Britain in the European Union citing ‘trading benefits’? Would its Business spokesman introduce the Small Business Saturday campaign?

Every businessperson from the start-up entrepreneur to the billionaire shareholder has nothing to fear and everything to gain from a Labour government as long as they are committed to social responsibility and playing by the rules.

These are the people corrupt interests want you to imagine when they throw claims about ‘anti-business’ approaches around. They don’t want you to think of HSBC, which was caught hiding its clients’ money from billions of pounds of tax liabilities (and then given a ‘get out of jail free card’ from the same Tory ministers who say we can’t afford extra NHS funding). They don’t want you to think of Amazon, which has been shameless in its abuse of employment rights and tax regulations. And then there’s Rupert Murdoch, who has been allowed to do more or less as he likes because of his ownership of four national newspapers. Ed Miliband has so far been very bold in making that point, but the attacks on him from those with interests in this rotten section of the business world are only going to get fiercer as polling day approaches.

As the attacks intensify, Labour must not waver. Some figures from the old days of New Labour have called for ‘concessions’ and a more moderate tone. In other words, they call for abandonment of some of the more radical proposals. I think that would be a huge mistake.

British politics today is a world away from the scene that existed 20 or even 10 years ago. Today, the electorate has become tired of leaders who are too scared to act to end injustices inflicted by the wealthy and the powerful. It is all too easy to criticise the problems created by modern capitalism. But empty words and bland generalisms will no longer cut it with the voters. They want a government that is not afraid to act. I hope Labour is bold enough to be that government.

Advertisements

This Isn’t 1992, Mr Cameron

The Conservative Party is well aware that the next few weeks will be a rare opportunity for them to smash through Labour’s somewhat thinned poll lead (currently 7-10%) before the Opposition gets its house back in order next month.  The Conservative Party knows that time is running out for it to regain the initiative, with the General Election now barely 20 months away. The Conservative Party understands that it has an unpopular record in Government and an unappealing vision for their second term, and so will have to lean heavily on negative campaigning to win.

Not that I’m opposed negative politics outright- I’m in the Labour Party, after all- but I do think that the point of going into politics should be the realisation of a vision of a community, nation or world that is improved in a meaningful way. Politicians should aim to inspire first, and attack opponents second.  I think failure to do this is a major factor in the disillusionment of many with British politics: 1992 was won on the basis that Labour couldn’t be trusted with power; 1997 on how terrible the last Tory government was; 2001 and 2005 on the claim that the Tories are evil; and finally 2010 on the spurious claim that New Labour dragged the country into recession.  We haven’t got a problem as acute as that in the US in which it seems an election cannot be won without spending billions of dollars on highly personal attack ads, but negative politics in any form will have a corrosive effect if it dominates the national consciousness for long enough.

I am thus disappointed, but not angry, that the Conservatives will be adopting a very similar election strategy to theirs in 1992. The overriding theme of theirs is that a Labour Government would hit voters heavily in their pockets. Instead of ‘Labour’s Tax Bombshell’, they have launched this website, ‘Cost of Labour‘, which generates an astronomical figure that Labour would supposedly cost you, based ona few questions on your lifestyle, if they came to power.  I strongly recommend giving it a whirl, but don’t supply your real email address, unless you want to be showered with Tory propaganda emails! Now, I could rant about how they have intentionally misinterpreted Labour’s policies and how other figures were based on New Labour plans that will never be implemented, but I don’t have to. You know the facts already. What this website has illustrated to me is the fatal error of the Right in assuming that the economy is a zero-sum world.

In a fiscally conservative view, the economy will grow at a certain rate regardless of whether a government spends 40% of GDP (the average for western European states) or 25% of GDP (a little lower than the figure in Bush-era America). In their eyes, the public sector can only consume, rather than grow, a nation’s wealth. No value is placed on social goods or investment in people. In short, they advocate false economies. For example, failure to provide a good education to deprived children limits a country’s skills base, increases poverty and crime, and ultimately leads to higher unemployment. £1 shaved off tax bills in 2005 will could easily cost a country £10 over the following few decades, while wasting volumes of human potential in the meantime.

So if the Conservative Party claims that the cuts needed to avoid a 2% rise in Council Tax are justified, we need to make them think again.

 

A Devisive And Regressive Subsidy

 

I am one of the harshest critics of the UK’s Coalition Government. To claim otherwise would require monumental self-deception. However, I do place a good deal of emphasis on viewing my political opponents fairly, and accepting that most people have positive intentions- however misguided I consider them to be.  And as such, I seriously believe that Coalition ministers think their Childcare Tax Credit scheme will help parents. However, I doubt that its introduction a month before the approaching General Election is a coincidence, and the way in which it favours high earners is a coincidence.

Under the scheme, the Government will allow parents to buy childcare vouchers up to the value of £4,800 per child (aged under 12) per year. The government will then top up the balance by 25%, provided both parents are in work and earn no more than £150,000 each. Unsurprisingly, this has provoked wrath from families with stay at home parents, full time carers, and those who are puzzled that the Government have taken cash Child Benefit from households on £50,000 a year only to subsidise childcare for those on up to £300,000 a year. Also, there are justified claims that 20% subsidy for childcare is far too little assistance for those who can only access Minimum Wage jobs, for example.

In Britain we have done a lot to encourage mothers in particular to return to work at ever shorter intervals after they have given birth. It is only right that women should have a free choice as to whether to resume their careers promptly after having a child or to care full time for their young children. However, we are now failing to provide that choice. Instead, through the withdrawal of financial and societal support for stay at home parents of either gender we are now forcing toddlers into full-time childcare regardless of their parents’ wishes. In my view, the state should support parents in either course they should take, and do away with the insulting perception of stay at home mothers as unintelligent and stay at home fathers as ‘unmanly’ as the unenlightened prevailing stereotypes suggest. It is not the role of the government to dictate how parents bring up their children, and yet sadly the Childcare Tax Credit is another step towards this. The obvious question to ask here is: why does a stay at home parent need childcare? That is because it is encouraged for both the wellbeing of parents and children that some part time attendance of nursery takes place before entry to school.

Then there is the unfortunate fact that the Coalition is robbing Peter on £50,000 a year to pay Paul and his wife on a combined £300,000 year. Childcare can take a large bite out of the income of even a middle class household, and such blatant redistribution of money from these people to well-paid City executives is simply unjust and should be challenged. Would it not be simpler and fairer to subsidise childcare- and properly, at more than 20%- at source? I advocate the Norwegian system in which parents are charged a flat rate of about £2 an hour on a pay-as-you-go basis, and offered further means tested subsidy where it is most needed. Local authorities would take over nurseries and after school clubs directly, and remove the often large profit margins which have helped inflate fees so much over recent years. Such a scheme would cost several billions of pounds a year, but the economic benefits of increasing the disposable income of hard up families are vast and would do much to boost economic growth. Is this not a better alternative to a token subsidy that discriminates against large groups of people in this country?

 

If You See Gid(eon), Tell Him…

It emerged recently that the Chancellor has ordered officials to draw up plans for privatisation of the publicly-owned 83% share of the Royal Bank of Scotland by 2015, despite the fact that this will probably mean a multi-billion loss on the bank’s bailout in 2008. George Osborne hopes to sweeten the £14 billion loss that will result by issuing “parcels” of shares to every taxpayer or voter in the country, hopefully in the few months immediately before the General Election.

It is clear that, if  the Conservatives are unhappy with having the National Health Service under public ownership, they are even less happy with having a bank under our control. Aware of the political toxicity of being seen to “deliver poor value to the taxpayer” by selling RBS and Lloyd’s shares prematurely, both the Brown and Cameron governments have attempted to run the banks at arms length from the state, rightly causing outrage when ministers failed to tackle excessive executive pay at the business. Osborne has reached the conclusion that the only way to stem the political damage is to privatise the bank as soon as possible- a conclusion which seems based less on facts and more on ideology.

If the proposals went ahead, every voter or taxpayer in the country would in 2015 be given 100-or-so RBS shares to do with as they please. There are important questions to be asked about the definition of “taxpayers”- would disabled benefit claimants, for example, be granted their share? What about workers on the Minimum Wage whose wages fall below the tax threshold? Knowing the Coalition’s record in neglecting these groups, I suspect that we already know the answer.  Even if they make the “fairer” choice, and distribute shares to all voters, then are Scottish 16-17 and a 1/2 year olds who voted in the 2014 referendum but are ineligible to vote in the general election entitled?

The move is highly regressive in nature, for the simple reason that the poor will have little option but to sell the shares immediately. If a household is struggling financially, the logic of “a bird in the hand is worth two in the bush” will apply. The exploitative industry which markets payday loans to such groups will no doubt offer “instant ca$h” purchasing of the shares from them, taking inflated commissions in the process. In short, the massive government loss will be individualised instead, but with the burden once more being felt by the disadvantaged- those who have lost the most from the banking crisis and its effects in the first place.

The government hopes that it can rid itself of the controversy of allowing state-controlled bank to act unfairly, and provide a politically valuable bribe- and yes, this amounts to shameless bribery, especially when timetabled so close to an election- to the electorate at the same time. It is notable that Osborne and Co adopt a rhetoric of fiscal discipline and “prudence”, and yet feel able to square this with giving away a £30 billion+ payout while simultaneously slashing public spending in a failing attempt to shrink the budget deficit.  Surely it would be more in keeping with the fiscal plan to pay down the National Debt with the proceeds after allowing RBS shares to reach pre-bailout levels?

Of course, at a time in which business and mortgage lending is limited, competition in the banking sector is virtually non-existent, and the ethical conduct of banks is widely regarded as unacceptable, a much fairer alternative presents itself. RBS could be taken into full public ownership, and then run as a “People’s Bank”, on a not-for-profit basis (as long as the People’s Bank is not run at a loss, competition law can easily be met).The surplus liquidity controlled by RBS would be utilised to free up credit for people, business, and infrastructure projects. Though one bank can only have so much of an effect on its own, it would also force competitors to raise their game. Would the economic value of creating a real standard-setter for the banking industry, one dedicated to working in the public interest, not be worth more to us all than a botched £300 bribe?