Author Archives: Michael Berwick-Gooding

What Jeremy Hunt should include in his autumn statement 2023

The autumn statement will be on Wednesday. The economy faces three problems: inflation is still above the 2% target, economic growth is too low and forecast by the Bank of England to be zero next year, and unemployment is rising. Inflation was 4.6% in October, and unemployment rose by 159,000 in September to 1.464 million, an increase of 0.5% to 4.3%.

It was announced in September that borrowing was £11.3 billion less than forecast in March. Some are forecasting that the Chancellor of the Exchequer will have £15bn ‘headroom’ instead of his forecast of £6.5bn.

The most …

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Ending deep poverty by April 2029

At our Spring Conference in York we passed a policy which stated, we would ‘end deep poverty within the decade’.

This commitment has made it into the pre-manifesto passed at Bournemouth along with establishing ‘an independent commission to recommend annual increases in Universal Credit to achieve it’.

Also at York we passed that we would fundamentally reform the welfare system ‘by introducing a Guaranteed Basic Income by increasing Universal Credit to the level required to end deep poverty within the decade and removing sanctions’.

Ending deep poverty in the UK means ensuring that no-one has an income below the deep poverty level. Every year the Joseph Rowntree Foundation publish a UK poverty report. And on page 115 of this year report they set out the deep poverty thresholds:

Household type Deep poverty threshold (50% of median) weekly
Adult, with no children


Lone parent with two children, one 14 or over and one under 14


Couple with no children


Couple with two children, one 14 or over and one under 14



The current levels of Universal Credit for people over 25 are:

  • £85.09 a week for a single person and £133.57 for a couple.
  • Child benefit is £24 a week for the first child and £15.90 for each child after that.
  • The child elements of Universal Credit are £72.69 a week for the first child if born before 6th April 2017 and £62.21 for the second child.

This means that a lone parent with two children as above receives £259.89, which is £23.11 below the deep poverty line, and a couple with two children receives £308.37, which is £73.63 below the deep poverty line.

Our policy is to increase Universal Credit and the legacy benefits by £20 a week as soon as we are in government. If we then increased the single person’s rate by the rate of inflation in April 2025 and by £7.98 a week plus the rate of inflation every April thereafter, by April 2029 they would receive £137.01 in real terms. The couple rate would need to be increased by £20.61 a week for the four years after 2025, plus the rate of inflation, taking their rate to £236.01 a week in real terms.

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How to tackle the cost-of-living crisis and the recession

The government is not providing the same level of support from April as they have this tax year. From April an average household and pensioners, not on pension credit, living in a band A to D Council Tax property will have £1050 less support for their energy bills than this year. Someone on benefits next year will only receive £900. If they live in a band A to D Council Tax property they will have £800 less support for their energy bills than this year.

To ensure people are not worse off next tax year than this year the government should restore the energy price cap back to £2500, restore the £400 for all households; increase the £300 for pensioners to £450; and increase the income tax personal allowance and the National Insurance threshold to £13,040, which will provide those earning above £13,040 with £150.40.

To help finance this measure and ensure that those on above average earnings do not benefit to the full extent from the support the government should introduce a temporary new Income Tax rate of 22% for those earning more than average earnings (£38,000) and increase temporarily by 2% the higher tax rate to 42% and the additional tax rate to 47%. When the energy support ends these temporary rates should be abolished.

Also to help finance this the government should adopt our party’s policy of closing the loopholes in the current windfall tax by ensuring it applies to super-profits accrued since October 2021; scrapping carve-outs that allow oil and gas giants to offset their tax liabilities against investments they were going to make anyway; and setting a target of raising no less than £10 billion over one year, in line with similar taxes implemented in other European countries.

The government should also extend the energy support for businesses for another 12 months until 31st March 2024.

The support for households is likely to reduce forecast inflation by 1% and extending the current energy support for businesses is likely to reduce forecast inflation by a further 2%.

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How we should have responded to the 2022 Autumn Statement

Assuming that the Chancellor of the Exchequer had stabilised the money market last month, his main task was to try to ensure we are in recession for the shortest period possible by reducing inflation while not deflating the economy. Therefore his biggest concern should have been the energy price increases forecast for next year. He failed to deal with this issue adequately. He has said that ending the price cap freeze would increase inflation by 5%.

He has increased the energy price cap from next April by £500 to £3000 and this means that every household has to find this £500. This will also allow inflation to increase by 1% – see page 15 of the OBR report (PDF). He has failed to provide enough support for households for next year. He has scrapped the £400 for every household and the £150 for those in Council Tax band A to D properties. List of the help available next year and current support (PDF).

These means that a pensioner if they have the average household energy bill will have to find a further £1050 to pay for their energy. However the new state pension is only increasing by £972.40 for the year. Where are they supposed to find the extra money to pay the £1,050 extra energy bill and the increased prices of everything else?

A couple on Universal Credit will have to find a further £800 to pay for their energy but the 10.1% increase in Universal Credit is only £637 for the year. Where are they supposed to find the extra money to pay the £800 extra energy bill and the increased prices of everything else?

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Jeremy Hunt continues with the Conservative Government’s trashing of the economy

While it was right for Jeremy Hunt in his statement on Monday to cancel £32bn of the mini-budget it was wrong to end in April 2023 the energy cap price freeze. It is predicted that the energy price will now increase to £4,347 in April 2023. This is an increase of 73.9% which is much higher than the 54.2% increase of April this year which might have been the cause of the 2% increase in inflation in April. Therefore by ending the energy cap price freeze inflation might increase by 3% in April 2023. Jeremy Hunt stated that the energy cap price freeze would have reduced inflation by 5%.

If the support is only for the poorest in society then average households will have to find £2247. For someone on average earnings of £32,084 this is about 8.7% of their net earnings. Most people can’t afford to find 8.7% of their salary to pay for energy on top of the general inflation rate in the economy of over 10%. These pressures on household income even without the Bank of England increasing interest rates making them worse will lead to an economic recession possibly in the region of a 5% decline in the size of the economy.

Jeremy Hunt has talked of public spending cuts and this will have a further adverse effect on the economy. He should have gone further with the mini-budget reversals and cancelled the changes to Stamp Duty, the increase in the Annual Investment Allowance to £1 million, and the wider reforms to investment taxes which next year would have increased government revenue by £3.8bn and more after that according to government figures.

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Can the UK recession be avoided?

Just before polling day the Bank of England published the May Monetary Policy Report as well as increasing the Bank Rate to 1%. They expect the Bank Rate to continue to increase and peak at 2.5% by “mid-2023”. They state, “That predominantly reflects the significant adverse impact of the sharp rises in global energy and tradable goods prices on most UK households’ real incomes and many UK companies’ profit margins.” They expect unemployment “to rise to 5½% in three years’ time”.

They state, “CPI inflation is expected to peak at slightly over 10% in 2022 Q4, which would be the highest rate since 1982”.

“Total real household disposable income is projected to fall in 2022 by the second largest amount since records began in 1964 before picking up thereafter” they forecast. Total demand in the economy will fall below total supply by the fourth quarter of this year. They quote an ONS survey of March where 42.5% of people, “said they had cut spending on non-essentials” due to lower real incomes.

This means that people will be able to buy fewer things. Demand for items will decrease. This leads to businesses producing less and unemployment increasing.

The Monetary Policy Committee produce different projections based on different assumptions. Their main projections are based on the assumption that the Bank Rate “rises to around 2½% by mid-2023, before falling to 2% at the end of the forecast period”. However, they also state that, “In projections conditioned on the alternative assumption of constant interest rates at 1%, activity is projected to be materially stronger than in the MPC’s forecasts conditioned on market rates. As a result, unemployment remains close to its current rate over the forecast period, instead of rising by around 1½ percentage points. CPI inflation is forecast to be significantly higher, with inflation projected to be 2.9% and 2.2% in two years’ and three years’ time respectively.” Also economic growth in the second quarter is higher – in 2023, 0.3% compared to 0%; in 2024, 0.6% compared to 0.2%; and in 2025, 0.9% compared to 0.7%. With their main projections they forecast negative growth of 0.2% in the first quarter of 2023 and 0.8% in the third quarter. Also with this forecast it is likely that economic growth in 2023 will be either zero or close to zero.

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What we should have been saying in our response to the budget

On Thursday I received an email from Dan Schmeising giving me a link to an “exclusive budget briefing” setting out our reaction to Wednesday’s budget.

The budget briefing states:

  • Provide at least the full recommended £15 billion to fund the catch-up needed in Education over three years.
  • “Double the Warm Home Discount on energy bills and extend it to everyone on Pension Credit and Universal Credit”.
    Why haven’t we included extending it to the legacy benefits? The Warm Home Discount is currently a £140 refund on a person’s energy bills if they receive particular benefits.
  • Implement (it is implied) our 10-year plan to insulate homes.
  • “Invest £150 billion into a Green Recovery Plan to promote active and zero-emission travel, protect our countryside and clean up our air. This will be paid for by taxing the wealthy and frequent fliers – not the less well-off”.
    We don’t say we want to do this over three years and if we want to split the money evenly into £50 billion a year or invest £30 billion in the first year, £50 billion in the second and £70 billion in the third. We don’t say how much the extra taxes will raise.
  • Restore spending 0.7% of our Gross National Income on Overseas Development Aid.

The budget briefing includes, “The Local Government Authority projects councils will be facing an £8 billion black hole in their budgets by 2024. The Tory Government has responded with… £4.8 billion.”

This £4.8 billion is £1.6 billion a year. But we don’t say we would provide the £8 billion and we should.

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An Alternative Budget – a budget for the poorest in society

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Rishi Sunak will be presenting his autumn budget on 27th October. Currently inflation is rising with wages increasing up to 7% in some sectors, quantitative easing is due to end at the end of the year. Rishi Sunak has stated he wants to reduce the deficit.

The economic outlook is not clear, but I think Rishi Sunak should assume that the increase in inflation will only be short-term and the government and the Bank of England will not need to take any action to reduce inflation. The ending of the Covid support schemes will reduce government spending by £100 billion. While household savings have increased, I don’t believe all of these savings will be spent into the economy next year, or will be large enough to make up for the £100 billion being removed from the economy.

Therefore I believe that the Chancellor should not remove all of the £100 billion from the economy but should commit to continue to spend up to £40 billion of it. I suggest he should make the following changes above the normal upgrades and what has already been announced.

Benefits are due to increase in line with the inflation rate of September which was 3.1%. The triple lock on pensions has been suspended for next year, so instead of pensions increasing by 8% (the expected increase in earnings) they will be increased by 3.1%. As the party now supports a UBI we should be moving towards the idea that a couple receives twice the amount as a single person. Therefore I would make an exception for the couple’s Guaranteed Pension and instead of increasing it by 3.1%, increase it by 8% to £291.92 a week. This would move it from being 1.53 times the single rate to 1.6.

Party policy to scrap the ‘bedroom tax’ and the benefit cap should be implemented.

If the Local Housing Allowance rate was restored to the 50th percentile more than 32,000 households would be lifted out of relative poverty including more than 35,000 children (based on Crisis 2019 figures). Therefore the Local Housing Allowance should be increased to the 40th percentile from April 2022 and the 50th from April 2023.

These four measures should remove many pensioners from poverty.

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Why our new policy on extending the £20 Universal Credit to the legacy benefits is important

On Sunday morning Conference agreed to not only make the £20 a week Universal Credit uplift permanent but to also extend it to the legacy benefits, such as Employment and Support Allowance and Jobseekers Allowance.

When the £20 uplift for Universal Credit was introduced it was stated that about half of claimants were on Universal Credit and half still on the legacy benefits. It will cost about the same to extend this uplift to those on the legacy benefits as it did to implement for those on Universal Credit. Most of these people on legacy benefits then are still on them now. There are many good reasons for people to wish to stay on them rather than transferring to Universal Credit.

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Questionable reasons that Federal Conference Committee give for rejecting motions

We pride ourselves on the idea that party members make policy at Federal Conference. There is an idea that any member can write a motion, get the required support, and submit it to Conference and the members will then discuss it. This is not quite reality. The 30th June was the deadline for submitting motions for Federal Conference.

Imagine you have spent weeks working on your motion. You submitted it for drafting advice and have made some of the suggested changes. You got the support needed to submit it and have submitted it. Now you wait to hear if it was selected. (You are not told when a decision will be made, but you expect it will be within a couple of weeks or so.)

In the report on the selection of motions meeting of Federal Conference Committee for last September’s Conference, we can see that eight policy motions were selected, with two more reserved for motions on Europe and Covid, and two for emergency motions. Plus a couple of business motions and a couple of consultative sessions.

There were 32 policy motions rejected. So, after all that work your motion is rejected. The odds are against you. Oh well, there are always amendments to work on once the agenda is published.

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Call for an email campaign to influence the March budget

Last year I emailed Rishi Sunak suggesting some policies for his summer economic statement, which incorporated some improvement to working-age benefit including making permanent the £1000 Universal Credit increase and some economic actions. I think these were far too radical for the Conservatives, so this year I am calling on him to:

  • Extend the £1000 temporary increase in Universal Credit to April 2022 and consider making it permanent;
  • Increase the Benefit Cap by £1000 plus £1105 to cover some of the increase in LHA rates brought in last year (based on the difference between the non-London average for Category D rates) and the inflation uplifts for the last year (1.7%) and this year (0.5%) so the unemployed can benefit from these recent changes. When rounded to the nearest pound the new couple rates would be increased to £22,557 for outside London and £25,623 for London.
  • Make it illegal for anyone to be evicted if they pay the LHA rate they receive and consider what actions can be taken to reduce rent levels and increase LHA gradually back to the 50th percentile.

I think we should email Conservative MPs asking them to write to Rishi Sunak asking him to do these things.

If you agree with me you might wish send an email to your Conservative MP similar to the one below.

I wrote:

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The case for a partial UBI

My local party proposed an amendment to the Conference UBI motion setting a medium-term aspiration. We proposed that the UBI level together with existing working-age benefits should equal either the Social Metrics Commission or the Joseph Rowntree Foundation calculations of what a sufficient income for a person is to meet their basic requirements. It was not selected for debate. The reason given was that the Federal Conference Committee thought that it could restrict the implementation options to be considered by the Federal Policy Committee! This seems to me to be an odd reason. I think Conference should have been given the opportunity to set out what level of UBI they are aiming for even if it is only an aspiration for the medium-term which would have given lots of wriggle room to FPC.

When considering a UBI we need to be aware of the gross costs of any proposal and not be misled by the idea that a scheme is affordable because we can make huge changes to the tax and national insurance system we have today.

The Social Metrics Commission state that a single person needs £157 to meet all of their basic needs excluding housing. The gross cost of setting a UBI at this rate would be just over £353 billion. If instead the working-age benefit level was increased to the poverty line of £157 for single people and £271 for a couple, this would cost in the region of £53 billion. A difference of £300 billion.

Some people suggest that a UBI can be paid for with a Land Value Tax. When we agreed to the replacing of business rates with a Commercial Landowner Levy, our name for this land tax, we set the rates at 59% in England and 67.5% in Wales of the ‘land rental value’. We stated that we would raise £25 billion a year from this tax. The maximum rate we could tax the rental income from land is 100% and this rate would only increase government income by less than £17 billion. A small fraction of the cost of a worthwhile UBI but a useful amount in paying for increasing the working-age benefits only.

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Reducing the size of the Federal Board and giving power to the members

Last week Mark Valladares wrote an article – ‘How the Party is managed – can you be democratic and efficient’ and some in the comments called for a smaller Federal Board.

The Thornhill 2019 Election Review talks of a Federal Board of 40+ members (page 34) which is too large to be a ‘realistic decision-making body’ (page 22) and implies that during a governance review this should be reduced (pages 24 and 49).

Mark Pack in his report on the July Federal Board meeting states that the Federal Board has a membership of 43. The Constitution sets out a …

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Who gains from Rishi Sunak’s Summer Economic Statement?

It is easy to criticise Rishi Sunak’s Summer Economic Statement for not doing enough. The Chancellor had a difficult task to assess what size of economic stimulus would be effective.

His main aim was apparently to create jobs for those who had lost them or will be losing them soon. But the very disappointing because it doesn’t deal with the realities of the situation for lots of businesses. Social distancing is very likely still to be in place after October, so it just will not be possible for many businesses to provide their services to as many customers as before lockdown.

He should have included a new coronavirus staff retention scheme (turnover based). It should have provided a proportion (say 80%) of the difference between the takings of a business in a month compared to the relevant month in 2019, for businesses that can demonstrate that because of social distancing they can’t deal with the same number of customers.

Rishi Sunak reported that £4.6 billion of consumer debt has been paid off and households have increased their bank deposits by £25.6 billion. This means there is the potential for more than £30 billion (about 1.5% of last year’s GDP) to be spent into the economy when households have confidence restored.

With an economy valued at £2000 billion I believe the maximum economic growth per year with which the UK can normally cope is about £60 billion. Therefore an economic stimulus of £30 billion at this stage is about right.

Instead of allocating up to £9.4 billion for his Job Retention Bonus scheme, I think Rishi Sunak should have used the amount to increase all working-age benefits such as Universal Credit, Family Tax Credit, Jobseekers Allowance and Employment and Support Allowance by £20 a week, the same value as his temporary increase of Universal Credit and Family Tax Credit in March. This would have targeted the money to the poorest in society who are most likely to spend it and to the areas where more of these people live. Giving employers £1000 per worker retained is not going to do much to encourage them to retain the most marginal workers, and will do very little if anything to increase demand in the economy.

A lot of the £5.6 billion for infrastructure projects is not new money and includes maintenance projects. £900 million is for shovel-ready projects in England in 2020-21 and 2021-22. But some of this, maybe the majority, will not be spent until the next financial year. We must hope that most of the £5.6 billion will go into the areas worst affected by job losses.

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What we should now be calling for

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On Friday afternoon Rishi Sunak announced that the government would pay up to 80% of wages up to £2500 a month. That is £30,000 a year. He hopes that HMRC will be able to pay all the grants applied for by the end of April. Coronavirus Business Interruption Loans will be available from Monday. Hopefully this will mean that every employer will be able to get the money they need to pay their workers up to £576.92 a week.

He has restored the value of the Local Housing Allowance to the 30th percentile of local rents: the reduced rate from 2011. (It had been the 50th percentile before this.)

However, he is not doing enough for those having to claim benefits. He is only increasing some benefits by £1000 a year (£19.23 a week). A single person’s Universal Credit is increasing from £73.34 a week to £92.57 a week and from 6th April it will be £93.82 a week. Statutory Sick Pay is currently £94.25 a week rising to £95.85 from 6th April.

While the help for those who are still being employed is adequate, it is inadequate for those who are going to have to rely on benefits. The party must call for more to be done for these people.

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Thoughts on the budget – Part 2

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This is the second of two articles looking at last week’s budget. The focus of this article is the action the government announced to deal with the coronavirus.

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Thoughts on the Budget – Part 1

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This is the first of two articles looking at last week’s budget.

Looking at the headlines of the budget there is much to welcome and support:

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Can the Greens’ Universal Basic Income tackle poverty?

The Greens in this election are promising in their manifesto “a Universal Basic Income, paid to all UK residents to tackle poverty and give financial security to everyone”. They state that their Universal Basic Income (UBI) will replace the current benefits system. And they will phase it in over five years. The rates are £89 per week for working age adults, and £178 per week for pensioners. They will provide an unstated amount as a supplement for people with disabilities and lone parents. For families earning under £50,000 there will be £70 per week for each of the first two children and £50 for each additional child. However, it seems they are not paying Housing Benefit to new claimants once UBI has been introduced. Their manifesto states that they will, “Continue to pay Housing Benefit to those who received it before UBI was introduced, so that they can cover their rent (page 50).

For those in full time work the £89 a week is in fact only £40.92 a week because the Income Tax Personal Allowance of £12,500 would be scrapped.

They estimate the cost of the UBI, the supplements and free childcare at £86.2 billion. They state they will provide 35 hours of free childcare for all from the age of 9 months. This is more than we are promising because we are only providing free childcare for working parents for children aged 9 months to two years. This is estimated to cost £12.3 billion in 2024/25. Therefore the Greens are spending less than £73.9 billion to introduce their Universal Basic Income while abolishing Housing Benefit for new claimants.

The Greens benefit reforms will leave most people who would qualify for benefits today in poverty. Using the Joseph Rowntree Foundation’s figure in their
“UK Poverty 2018” updated by inflation for April 2019 the poverty levels excluding housing costs per week are:

Single person no children £157.62
Single person with two children £325.88
Couple with no children £271.58
Couple with two children £439.84

Turning to the Greens’ proposals these are what people would receive if not working:

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Restoring the benefit cuts – a look at our manifesto and the Labour Party’s manifesto

In 2017 we proposed spending more than the Labour Party on reversing some of the benefit cuts since 2010. This year the Institute for Fiscal Studies after looking at both of our manifestos concluded, that while we both increase benefit spending “to around its 2010 level … this money doesn’t go as far as it used to, because of underlying pressures pushing up benefits spending, including rising housing costs and a bigger population. Taking these into account, these pledges would only reverse around a quarter of discretionary cuts to benefits since 2010.”

According to the Labour Party’s costings they plan to increase spending on working-age social security by £8.4 billion by 2023/24 (page 4). (They just give a total without breaking the figures down.) In their manifesto they state they will scrap the benefit cap and the two-child limit, they will split benefit payments for couples, and they will restore fortnightly payments and paying the housing element directly to landlords (page 73).They will also end the ‘digital only’ approach for claiming benefits. All these reforms were suggested by Philip Alston the UN Rapporteur on extreme poverty in his report this year. Furthermore, they will scrap the bedroom tax and increase the Local Housing Allowance by an unspecified amount, end Work Capability and PIP Assessments and make sure these are done “in-house”. They will restore the extra money for those in the Work-Related Activity Group receiving Employment and Support Allowance cut by the Conservatives.

The Labour Party claim that they “will eradicate in-work poverty in our first term by tackling the structural causes of poverty and inequality, such as low pay and high living costs, while raising the floor provided by our social safety net” (page 59 of their manifesto). I couldn’t find in their manifesto what they would increase benefit levels to. I believe for a couple, one of which works 16 hours a week on Labour’s new National Living Wage of £10 an hour, for their income to reach the poverty line the couple’s benefit level would need to be increased by just over £46 a week (about 40%) even assuming work allowances were restored to their 2015 level for people without children. I estimate this would cost in the region of £11 billion a year.

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A Fairer Share for All – a missed opportunity

At our Conference next month we will be discussing the policy motion and paper A Fairer Share For All.

What I particularly like is the policy to have “a £50 billion capital Rebalancing Fund to address the historic investment disparities between our regions and nations”. (I proposed a motion on poverty last year and it included a Rebalancing Fund but it was rejected by Federal Conference Committee.) 

The policy paper is not radical enough. It does not call for the end of relative poverty in any timescale. Also it does not include all of our existing policies as set out in our 2017 manifesto, such as reversing the cuts to Employment and Support Allowance for those in the Work Related Activity Group; 

It is unclear about what it wants to increase the benefit levels by. Existing policy is to increase benefits by the CPI rate of inflation each year, but the policy paper only states we would consider this “if more needs to be done (2.2.15 and 2.2.16). Other policies in this category are restoring the benefit level to its 2015 real value and increasing it by the increase in median earnings if higher than the CPI rate of inflation (2.2.16). 

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Ending relative poverty in the UK is easy

Recently I have seen a couple of comments on LDV which state that ending relative poverty in the UK would be a difficult and complex thing to achieve. They are mistaken.

The reason someone is living in relative poverty is because they don’t have enough money. The answer, therefore, is to ensure that benefit levels give them enough to pay all of their housing costs and have enough left over to be on the poverty line and not below it. As Philip Alston, the UN’s Special Rapporteur on extreme poverty and human rights in his report points out “employment alone is insufficient” to lift someone out of poverty.

Already we have a system which reduces benefits by 63p for every pound earned, but 4 million workers live in poverty. This is because the gain from working is not enough to lift the person out of poverty. If they were already out of poverty when living only on benefits then no one working could be living in poverty.

We need to ensure that those living on benefits have enough money to pay all of their housing costs. Scrapping the benefit cap helps, as would increasing Local Housing Allowance in line with local rents (both party policy). However, they don’t go far enough. Local Housing Allowance was introduced by the Labour government in 2008. It sets maximums for housing benefit depending on local rents, and sets out what type of accommodation different types of families can have.

It is not liberal for the state to tell people how many rooms they can have to live in. It is not liberal for the state to force tenants into debt arrears. It is not liberal for the state to force someone to move house when they experience difficult times such as when they become unemployed.

It is liberal for the state to pay 100% of the housing costs of those on benefit. Therefore we should have as our long-term aim scrapping the LHA and in the meantime increase its value above the bottom 30% of local rents. (I expect this is the main reason that 1.9 million pensioners are living in poverty). The least we should do is reduce the single person age down to 25 from 35, so a single person aged between 25 and 34 should no longer be forced to live in shared accommodation.

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Taking a leaf out of Onward’s book – moving away from neoliberal economics

On 31st May a Tory think tank, Onward, published a report entitled ’Firing on all Cylinders’ written by Neil O’Brien, a Conservative MP since 2017 who was previously a special adviser to George Osborne, former Chancellor of the Exchequer. O’Brien calls for a new fiscal rule “to keep debt to GDP falling gently in normal years when there is no recession.”

He suggests that the national debt to GDP ratio should be kept near to its current level of 83.3% and not be reduced to 73% in 2023/24 as planned. By doing this he estimates that the government would …

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A fairer share for all – Part Four – Improving working life and skills and investing in local services

This is the fourth and final part of my looking at the consultation paper, A Fairer Share for All. In part three I have set out my thoughts on the work allowance thresholds.

Turning to minimum wages, I believe we need to have regional minimum wages set at 70% of each region’s medium earnings. In 2020 the National Living Wage will be 60% of medium earnings. I believe that it would take about 7 years to increase the regional rates to 70% as some may have to start below 60%.

We should have a policy of providing free training or a guaranteed job to everyone who has been unemployed for more than 6 months. This should be voluntary. The training should be in an area where there are unfilled jobs within a reasonable travelling distance of the claimant. The guaranteed job should be so that the person keeps their skills up to date and not just to give them a job to do.

The paper states, “A 2016 government estimate that 51% of rural households do not have access to a bus route, compared with 4% of urban dwellers. At the same time, 30% of bus journeys outside London are undertaken by those with elderly or concessionary passes”. It also says that “it is now vital to ensure that traditional bus and rail links within and between our smaller towns and rural areas are properly funded to enable everyone to access services and employment opportunities”. However, the paper doesn’t set out that we should increase funding to local government so they can run rural bus services or that we should provide more rail links between towns. It doesn’t even say we should be building better rail links across northern England between Lancashire and Yorkshire.

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A fairer share for all – ending poverty in the UK. Part Three

On Friday afternoon at our Federal conference, there was a consultation session on A Fairer Share for All – consultation paper. The consultation period continues until Sunday 31st March. I think members should email their comments rather than answer the questions the working group asks as I don’t think the questions cover all the areas that need commenting on.

The consultation paper doesn’t talk about levels of benefits (which I have done mainly in a-fairer-share-for-all-ending-poverty-in-the-UK-part-two-60199. The working group asks about reforming or scrapping Universal Credit. I think Universal Credit should be scrapped and replaced with a Working Credit for people of working age in work and all the old benefits kept. This new benefit should keep the 63% taper of Universal Credit but apply it to the new rates of benefit I set out in part two, where for every pound of net income a person loses 63 pence in benefit. However, the “work allowances” should be replaced with disregards and they should be the same for people no matter if they are receiving housing benefit. Instead of restoring the three ‘higher work allowance’ rates of £734, £536 and £647 a month I would replace both the higher and lower rates with £140 a week for claimants with children and those receiving Employment and Support Allowance.

Moreover, instead of the £110 a month for those without children, I would set it at £50 a week for each adult who is in work (therefore if both parents were in work they would have a weekly disregard of £190 a week. I wonder if the taper on housing benefit which would be the last element to be reduced should be higher. A very complicated system would be to apply to say a 70% taper to the first £70 of housing benefit a week, 80% of the next £70 and 90% of the rest (over £140 a week). The new Working Credit could be calculated every two weeks or every month as chosen by the claimant.

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A fairer share for all – ending poverty in the UK Part Two

In part one I set out some of the things missing from our consultation paper In this part, I will set out what we could do mostly for children and adults to remove them from poverty.

Returning to Local Housing Allowance, when introduced the rate was supposed to be the 30th percentile of the local market rates for private rented accommodation. This means that only the 30% cheapest properties in the area are affordable to those claiming housing benefit. Therefore only increasing LHAs in line with local rents does not restore it to the 30th percentile. Restoring it to the 30th percentile is a start, but I think the rates should be increased to the 50th percentile so all properties below the average would be available for people to live in when they receive housing benefit without forcing them into poverty.

Another problem with LHA is the rule which states that single people under 35 are expected to live in shared accommodation as a first step we should reduce this age down to 25.

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A fairer share for all – Ending Poverty in the UK – Part One

A fairer share for all – ending poverty in the UK Part One

In our consultation paper  A Fairer Share for all, we have a section on “reducing poverty and increasing opportunity” which mentions the UN Special Rapporteur “damning statement on the level of poverty in the UK today”.

It doesn’t mention the Joseph Rowntree Foundation’s latest report, “UK Poverty 2018” (” which states the following as the poverty line for different household types in 2016/17 (amounts per week):

Single person no children £148
A single person with two children £306
Couple with no children £255
Couple with two children £413.

These are from April 2016. The CPI rates which benefits should have been increased by were 1% for April 2017, 3% for April 2018 and 2.4% for April 2019 cumulatively making 6.5%  House of Commons Briefing Paper CBP.

Therefore the rates after being increased by inflation (CPI) for April 2019 are:

Single person no children £157.62
A single person with two children £325.88
Couple with no children £271.58
Couple with two children £439.84.

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What policies should we have in response to the UN report on UK poverty?

I am suggesting a replacement for Universal Credit.

We have discussed recently on LDV <> the report by Philip Alston the UN’s Special Rapporteur on poverty and human rights on poverty in the UK <>.

He points out that 14 million people in the UK are living in poverty, 4 million of them 50% below the poverty line and 1.5 million are destitute. How can we be letting this happen when we are the fifth wealthiest country in the world?

It is recognised that Universal Credit is a contributory factor in causing people to live below the poverty line. Therefore we should scrap it and restore all the pre-2012 benefits including the national Council Tax Benefit. We should introduce a new benefit, National Credit, to replace Tax Credits for people in work. We are already committed to restoring the pre-2016 work allowances to Universal Credit. The pre-2016 work allowances should apply to the new benefit: we should go further and increase them for those without another eligibility status so a single person can keep the first £30 a week and the second earner £20.

The taper for the new benefit should be 63%. Everyone receiving the new benefit will automatically be eligible for Housing Benefit if they pay rent, and Council Tax Benefit, if they pay Council Tax, and these will be withdrawn at a combined rate of 63%.

The report also points out that “Universal Credit has built a digital barrier that effectively obstructs many individuals’ access to their entitlements”. This new benefit should be claimable by phone, at a Jobcentre or via the Internet. Claimants must have the choice to be paid either every month or every two weeks. Housing Benefit should continue to be paid directly to the landlord.

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How can we make sure families have enough to live on?

On the Six O’clock News on BBC1 on Thursday there was a report on children living in poverty.

Mark who is a single dad is not working so I suppose we should expect him and his children to be living in poverty. He lost £340 a month because of the benefit cap. It is our policy to abolish the benefit cap but that is not enough to remove Mark and his family out of poverty.

The report correctly states that those who work more than 15 hours are not subject to the benefit cap. Therefore the problem must be the level of benefits.

Corey is working being paid the minimum wage but he and his partner Danielle and their children are living in poverty.

The report states that Corey some months receives no Universal Credit because he can receive two lots of wages in a month. I assume he must be being paid every 4 weeks. On the government web site it states, “If you’re paid weekly, every 2 weeks or every 4 weeks, you’ll receive more than one set of wages during some assessment periods. This means your earnings might be too high for Universal Credit. You’ll be told if they are and whether you’ll need to reapply to continue to get Universal Credit”.

This is a madness. Surely Universal Credit should be paid on the assumption you receive the same amount of wages each week and then if you earn more for a particular week then the amount is adjusted downwards for that week which is being paid on the day of the month allocated to that claimant, but that you don’t end up with no benefit just because there are two pay days in one calendar month.

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What more do we need to try to do to persuade the British people to vote to stay in the EU?

It seems to me that our position on Remaining in the EU is that people will see that we will be worse off outside the EU than in it. When they see the deal which is negotiated, they will have their ‘Road to Damascus’ moment and a significant proportion of the British will want to reject the deal and vote to stay in the EU.

I don’t think that will be happen. The 2016 referendum was fought on a campaign which stated we would be much poorer outside the EU than by Remaining in it. That campaign failed to get a majority of the British people to vote to stay in the EU. I can see no reason why, if there was a referendum in late 2018 or early 2019, the result would be different. We would be doing the same thing as in 2016 and expecting a different result.

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Can we afford a Universal Basic Income?

In the last few years there have been a number of reports which consider the introduction of a Citizens’ Income and how it can be funded. Towards the end of last year I came across the Compass report – “Universal Basic Income: An idea whose time has come?” written by Howard Reed and Stewart Lansley (and partly funded by the Joseph Rowntree Foundation).

Howard Reed and Stewart Lansley in the Compass report set out two schemes for a Citizens’ Income, both of which keep the existing means-tested benefits, the existing State Pension, replaces Child Benefit and increases the higher National Insurance rate to 12% and abolishes the Income Tax Personal Allowance. Their scheme 1 gives children a Citizens Income of £49 per week, adults under 25 £51, adults over 25 £61 and pensioners an extra £41. It also increases all Income Tax rates by 3%. Their scheme 2 increases the Citizens Income rates by £10 and all Income Tax rates by a further 2%.

The RSA report “Creative citizen, creative state: the principles and pragmatic case for a Universal Basic Income” written by Anthony Painter and Chris Thoungpointed out that there were big tax cuts in 2015-16 totally £19.5 billion (including £8 billion to increase the Income Tax Personal Allowance to £10,600) so we should not be too concerned about having a shortfall in funding as the Citizens Income Trust might have of over £10 billion. 

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