Author Archives: Michael Berwick-Gooding

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 https://www.libdems.org.uk/sconf19-consultation-paper-137. 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 https://www.libdems.org.uk/sconf19-consultation-paper-137  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” (https://www.jrf.org.uk/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% https://researchbriefings.parliament.uk/ResearchBriefing/Summary/CBP-8458  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 <https://www.libdemvoice.org/not-even-a-tin-of-baked-beans-a-visitor-shows-the-need-for-radical-reforms-59181.html> the report by Philip Alston the UN’s Special Rapporteur on poverty and human rights on poverty in the UK <https:www.ohchr.org/Documents/Issues/Poverty/EOM_GB_16Nov2018.pdf>.

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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How we could abolish relative poverty in five years

Do we want to abolish relative poverty in five years? Here’s one way we could do it.

In December the Joseph Rowntree Foundation published its report UK Poverty 2017

The report states:

14 million people live in poverty in the UK – over one in five of the population. This is made up of eight million working-age adults, four million children and 1.9 million pensioners. 8 million live in families where at least one person is in work.

The question for Liberal Democrats is how can we eliminate relative poverty over the course of a five year Parliament.

The JRF report defines relative poverty as “when a family has an income of less
than 60% of median income for their family type, after housing costs”. They set out levels of income (after Income Tax, National Insurance and housing cost have been deducted) needed for different types of family units:

Family type £ per week, equivalised,

2015/16 prices

Couple with no children 248
Single with no children 144
Couple with two children aged 5 and 14 401
Single with two children aged 5 and 14 297

Source: Households Below Average Income 2015/16, table 2.2db

It is depressing to recognise that poverty among pensioners is increasing (from 13% in 2011/12 to 16% in 2015/16). In 2015/16 the Pension guarantee was set to £151.20 for single people and £230.85 for couples while the pension rates were only £115.95 (single) and £185.45 (couples). To eliminate poverty for couples we could increase the couple rate by 1.5% above the normal increase for 5 years (totally 7.73% compared to a shortfall of 7.43%)

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An economic policy for 2022 and beyond.

There are many reasons why our vote collapsed after five years of government but perhaps the most important was our ditching the economic policy of our 2010 manifesto, which included an economic stimulus in the first year of government, a promise to create jobs for those who needed them and implied that we would only reduce the deficit when the economic recovery was secured. What we actually did was reduce government spending straight away and took money out of the economy with a 2.5% increase in VAT. During the Coalition government the news reported that there was a double-dip recession (later upgraded). On our watch unemployment increased from 2.5 million in May 2010 to 2.71 million in November 2011. The highest percentage since November 1995 and the greatest number since August 1994. Even in May 2015 with 1.85 million unemployed we failed to provide a job for everyone who needed one.

The current economic consensus has given up on trying to achieve full employment and sees the NAIRU (non-accelerating inflation rate of unemployment) as the lowest level possible. This is often seen as in the region of 5%. The last Labour government and the Conservative party accept the NAIRU but also want to make it difficult for those unemployed to claim their benefit as a means of saving money. As Liberals we value each and every person equally and don’t think less of a person because they have difficulties in finding work or meeting the bureaucratic conditions required for those wishing to receive out of work benefits. As Liberals we must have an economic policy to achieve full employment. We know from history that economic inequalities reduced the most between 1945 and 1979 when UK governments tried to achieve full employment. No Liberal Democrat should find it acceptable for there to be more than 1 million people unemployed in the UK.

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According to Article 50, once it has been triggered there is no way back

treatyIt is Liberal Democrat policy to hold a referendum on the terms of Brexit, but I think it is clear from reading Article 50 and the High Court judgment that once we have notified the European Council that we are leaving there is no method to stop us leaving.

Article 50 of the Treaty reads:

  1. Any Member State may decide to withdraw from the Union in accordance with its own constitutional requirements.
  2. A Member State which decides to withdraw shall notify the European Council of its intention. In the light of the guidelines provided by the European Council, the Union shall negotiate and conclude an agreement with that State, setting out the arrangements for its withdrawal, taking account of the framework for its future relationship with the Union. That agreement shall be negotiated in accordance with Article 218(3) of the Treaty on the Functioning of the European Union. It shall be concluded on behalf of the Union by the Council, acting by a qualified majority, after obtaining the consent of the European Parliament.
  3. The Treaties shall cease to apply to the State in question from the date of entry into force of the withdrawal agreement or, failing that, two years after the notification referred to in paragraph 2, unless the European Council, in agreement with the Member State concerned, unanimously decides to extend this period.
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Can the Liberal Democrats provide a vision for Britain that the disaffected can support?

A few weeks ago Liberal Democrat Voice published an article by Lord William Wallace entitled Could Trumpland reach Britain in which William Wallace argued that we need to firstly “pay more attention to ‘the bottom third’ of society.” He identified that “what used to be called ‘the white working-class’ has deserted the Democrats in the USA” and spoke of the rise of Marine le Pen in France and UKIP in Britain.

Lots of liberals talk of the rise of inequality over the last 30 or so years. However few if any talk of the major causes of this – firstly the rejection of managing the economy to provide full employment where everyone will have a job. Some people talk of their experience in the 1960’s and 70’s by saying you could hand in your notice on a Friday and within a week you would have a new job and some would say by Monday or Tuesday they would have started their new job.

Secondly the increase in the mobility of labour. In Britain we have seen this most clearly from the 2004 EU enlargement, but in worked in favour of British building workers in the 1980’s who went to West Germany as in “Auf Wiedersehen, Pet

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Opinion: A radical, liberal vision

Liberal democratsNick Clegg has set out his Liberal vision and I think it is inadequate as I see his vision as mainly about pursuing less pure liberal economic policies and education. Education policy has been a big part of our appeal. A penny on income tax for improvements to education was a good policy. It resulted in the Labour government putting a penny on National Insurance to pay for improvements to education. The pupil premium in 2010 has been implemented by the Coalition government. However we shouldn’t reply on education policy …

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