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.

After dealing with housing costs we need to turn to living costs. We need to ensure that those living on benefits are living at the national poverty level and not below it. The Joseph Rowntree Foundation in its report, “UK Poverty 2018”, states the following as the poverty line for different household types in 2016/17 excluding housing costs (amounts per week):

  • Single person no children                 £148
  • Single person with two children      £306
  • Couple with no children                    £255
  • Couple with two children                  £413

Before 2012, benefit rates were increased by the Consumer Price Index (CPI) inflation rate each year. For the years after April 2016 these are 1% for April 2017, 3% for April 2018 and 2.4% for April 2019 cumulatively making 6.5%, see “House of Commons Briefing Paper CBP 8458”.

The rates after being increased by inflation (CPI) for April 2019 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

Therefore we need to increase the single person’s benefit level to £157.62 up from £73.10 a week; and the couple rate to £271.58 up from £114.85 a week (including the couple’s guaranteed pension rate currently £206.65 a week). From the above figures we can calculate how much benefit a person should receive for each child: £439.84 – 271.58 = 168.26; divided by 2 = £84.13 a week. Therefore the amount for each child should be increased from the existing various rates to £84.13 a week.

Philip Alston recommends the following reforms to Universal Credit:

  • Eliminate the five-week delay in receiving the first payment;
  • Facilitate alternative payment arrangements;
  • Examine if monthly assessment periods is the correct period.

Our Federal Policy Committee will shortly be publishing a policy paper “A Fairer Share for All”. Hopefully, it will include all of these suggestions so we have a policy which will end relative poverty in the UK, but it is very possible they will not all be there to sufficient levels to end relative poverty in the UK.

* Michael Berwick-Gooding is a Liberal Democrat member in Basingstoke and has held various party positions at local, regional and English Party level.

Read more by or more about , , , , , or .
This entry was posted in Op-eds.
Advert

113 Comments

  • Thanks for posting this, Michael. I hope our leadership candidates and our DWP spokesperson pick up on it and on the Alston Report. Thus far the Lib Dems are the only political party not to mention the Alston Report.

    To indicate the scale of things, my local council area food bank fed 5,489 people in the last twelve months of whom 2,124 (39%) were children. 32% of the referrals were due to benefit changes or delays (universal credit) and 29% due to low income. We expect a spike when the school holidays begin.

    The Trussell Trust give a UK wide break down of the scale of things on their web site. Here’s a link for the TT figures (showing increase in foodbank usage in Scotland) https://www.trusselltrust.org/2019/06/27/new-figures-released-trussell-trust-reveal-21-increase-emergency-food-parcels-children-scotland-last-summer/.

  • Katharine Pindar 3rd Jul '19 - 2:17pm

    It’s very good to see that Michael is focusing here on the urgent issue of the worsening poverty in our country, which affects more and more working people as well as retired folk, not least as he explains through their housing costs. Much needs to be done to restore frozen benefits and correct punitive measures, which is what the unreformed Universal Credit has felt to be, so far, for many people.

    These and many related issues have been brilliantly illuminated by the UN Rapporteur Philip Alston, whose report Michael references, and I am asking both our Leadership candidates to endorse this report and follow up the recommendations there. Tackling poverty and inequality in our country surely ought to be priorities recognised by both of them, and the means of doing so such as Michael suggests here fully accepted..

  • @ Martin. Have you read the Alston Report, Martin ? Here’s the last para of the intro. Do note the last sentence – though it makes embarrassing reading for former Coalition Ministers :

    “And local authorities, especially in England, which perform vital roles in providing a real social safety net have been gutted by a series of government policies. Libraries have closed in record numbers, community and youth centres have been shrunk and underfunded, public spaces and buildings including parks and recreation centres have been sold off. While the labour and housing markets provide the crucial backdrop, the focus of this report is on the contribution made by social security and related policies.”

  • Thank you Lorenzo Cherin, David Raw and Katharine Pindar for your supportive comments. Lorenzo if you are of working age and not in work and living in rented accommodation you will be living below the poverty line, and I think our party should not only believe this should not happen, but have policies to ensure it does not happen.

    Joseph,

    As liberals we should use the relative poverty measurement in the UK, as living in relative poverty in the UK reduces the freedoms and liberty of people.

    The JRF state, “Where people cannot work for good reasons, the social security system should be there to prevent them from falling into poverty”. This means that benefit levels should pay for 100% of a person’s housing costs and to give them benefits at the JRF poverty line income increased by inflation.

    However, this is a start and of course we can go further. Apart for the first and fifth of the things you list that are JRF calling for, does not the party already have such policies – increasing the work allowances for Universal Credit, the pupil premium, and expanding childcare funding?

    Martin,

    My article is not about curing the housing crisis, it is about poverty. Articles on LDV are limited in size. I have set out previously that our target for 100,000 new social homes to be built a year is too low. Shelter have stated we need to build 3.1 million more social homes over the next 20 years. I have stated that 104,000 should be our five year target, with 136,000 a year in year ten and 167,000 in year 14 and each year thereafter.

  • Housing benefit first. Without any kind of cap, housing benefit is a blank cheque for private landlords to charge what they like.
    Someone in London a few years ago moaned to me that it was unfair the benefits cap was £26k, because of housing costs there.
    I have never earned that much, never will. And I am now earning considerably less, with no help from the state (nor have I ever had any).
    Yet I pay tax to pay the mortgages of private landlords and boost their investments.

    2.’It is not liberal for the state to tell people how many rooms they can have to live in. ‘
    It is if the state is footing the bill. I’d like an extension built on my house: anyone going to pay for it? The Bedroom Tax is clumsy, the idea behind it isn’t.

    3.’ with employers encouraged to support and train their lowest paid staff to allow them a chance at moving into better-paid jobs’
    Er, who then fills their existing poorly paid jobs?

  • Simon McGrath 3rd Jul '19 - 9:28pm

    this is a strnage article – the heading is about realove poverty but the measures are about actual poverty. If we leave the EU and there are a lot less well paid jobs in the City relative poverty will improve – is that what the author wants?

    On this point ” It is not liberal for the state to tell people how many rooms they can have to live in” no one is telling anyone how many rooms they can have. Its surely right though to say someone whose home is paid for by the taxpayer cant have a 5 bedroom home if they only have say a partner and one child ?

  • David Becket 3rd Jul '19 - 9:55pm

    If the Bedroom Tax was only applied if the person(s) concerned had been offered a suitable alternative locally then it could be classed as a liberal idea to solve a social problem. Charging the tax without offering alternative accommodation is a rip off the poor Tory Tax. We should not have let them do it, and we should promise to change it if in power.

  • Cassie,

    People make decisions on where they live based on their circumstances. If they then become unemployed then the state should not force them into poverty when they are dealing with the lack of a job. Even if their circumstances mean that they do not have a job for a long time the state should not force them into the expense of moving. However, I would not object to the state saying that if you lived in a two bedroom house when made unemployed and you move you cannot move into a three bedroom house unless your needs require it (and this would include having to up size because no two-bedroom homes are available).

    I do not see this as a charter for people to up size when living on benefits, it is about providing them security and ensuring they can live in their existing home while dealing with the problem of not having a job.

    Simon McGrath,

    Looking at the ONS figures the average weekly total pay increased every year from £313 in 2000 to £520 in 2018 accept from 2008 to 2009 when it stayed at £435 (https://www.ons.gov.uk/employmentandlabourmarket/peopleinwork/earningsandworkinghours/timeseries/kab9/emp). Therefore it seems that the financial crash did not reduce average earnings.

    It is not right to tell a couple with one child living in a five bedroom home that they have to move home because both of them are not working. This is not to say that it is wrong for the state to say we will pay your moving costs and a bonus to downsize, as the choice would still lie with the family. This is really about whether there are circumstances where the state should tell adults that they have to move out of their present home. As a liberal I don’t think there are. I think the choice on whether to move or not, should lie with the family and the family should not be forced to move because they can’t afford to pay 100% of their rent.

  • Joseph Bourke 3rd Jul '19 - 10:24pm

    Michael BG,

    the JRF foundation does not use the governments relative poverty measure of people in relative low income – living in households with income below 60% of the median in that year. They previously used a measure based on a minimum income standard but have more recently adopted a new measure https://www.jrf.org.uk/blog/we-have-new-way-measure-poverty-now-act-solve-it This was the standard used in the Alston report. It goes beyond relative income by taking into account core living costs and people’s wider resources
    The JRF report recognises that benefits are only part of the solution albeit a crucial part. It is important to be clear about the causes of poverty and have policies is place to effectively address them. This article https://www.economicshelp.org/macroeconomics/inequality/causes_poverty/ identifies the main causes of relative poverty in the UK as:
    – Inequality in wages – low skilled workers stuck in low paid jobs
    – Unemployment and long-term economic inactivity – no wage income, reliant on benefits
    – HIgh renting costs
    – Debt and debt repayments

    This article also discusses causes https://borgenproject.org/five-main-causes-of-poverty-in-the-uk/ highlighting five points: low pay;lack of basic numeracy and skils; domestic violence, substance abuse or underemployment;nadequacies in the benefits system; and living costs, principally the cost of housing, food and utilities.

  • Nonconformistradical 3rd Jul '19 - 10:31pm

    @Michael BG
    “My article is not about curing the housing crisis, it is about poverty.”

    I cannot see how you can address one without the other.

    Our housing crisis seems a classic example of the definition of inflation – too much money chasing too few dwellings – be they bought or rented. If you increase benefits without increasing available dwellings isn’t there a risk of increasing rents?

    And I agree with Cassie – if the state is footing the bill for someone’s dwelling costs it has a right to a say in what size/type of dwelling it will pay for.

  • “Ending relative poverty in the UK is easy”

    Maybe it is just me, but in these post-Brexit days anytime someone in politics tells me how “easy” something is, my hackles rise.

  • Picking up Martin’s point about housing, it’s seems obvious that Local authorities should be empowered and properly financed to rebuild social housing.

    Back in 1923/24 The Wheatley Housing Act (which had qualified Liberal support) allowed central government to begin to provide subsidies to build public housing. This created employment in a depressed construction industry and provided homes at affordable rates for low-income families. By 1933, over half a million council homes had been built in the UK. It was a small but greatly influential legacy from the first Labour administration.

  • Joseph,

    I am using the 2018 JRF definition of what the poverty line is (please see article).

    If benefits paid 100% of housing costs then high rents would no longer be a cause of poverty. If the basic benefit levels were at the poverty line as defined by the JRF then no one out of work would live in poverty.
    If the basic benefit levels were at the poverty line as defined by the JRF and benefits were reduced at the rate of 63 pence for each pound increase in income with a decent disregard then no one working would live in poverty.
    Debt is more problematic but there are measures to get out of debt, and it would be possible for a government to regulate the market more to help those who have problems with debt.

    I do advocate increasing the National Living Wage to 70% of medium earnings with regional rates based on 70% of regional medium earnings.

    Nonconformistradical,

    The level of rents are set by market forces. If 3.1 million more social homes were to be built this should bring downward pressure to bear on rents. Do you have any evidence that paying housing benefit at 100% of the rent increased rents before 2008?

    How is it liberal for the state to tell someone they have to move out of their home?

    Ad,

    Ending relative poverty in the UK is easy, all it needs is the political will. I wouldn’t try to do it in one year, but I think it could be done over five.

  • Joseph Bourke 4th Jul '19 - 1:38am

    Michael BG,

    The poverty indicator used in the 2018 JRF report is when a family has an income of less than 60% of median income for their family type, after housing costs (AHC). The the source of the data is Households Below Average Income 2016/17, table 2.2db, http://www.gov.uk/government/statistics/households-below-averageincome-199495-to-201516.
    The purpose of the new Social Metrics Commision measure is to avoid arbitary distinctions such as ‘relative’ and ‘absolute’ poverty and to adopt a common agreed measure of poverty.
    The new poverty measure is about whether people have the resources to meet their needs. We mainly think of resources in material terms: so, income from earnings, investments, benefits etc but also savings that are instantly available if needed to cover an unexpected expense.
    Needs are defined in the context of the society we live in. It covers things like food, clothes, a decent home and other things that you need to be part of society or your community, e.g. the bus fare to work, being able to buy your partner or child a birthday present of some kind, a child being able to go swimming or get to a local sports club.
    Other factors that are important are costs. Many people are swept into poverty because of high housing costs, high childcare costs or the additional costs that many disabled people experience. The relevance of the new poverty measure is that it shows how the housing market, childcare market and labour market locks people into poverty. It also highlights where policy should be focused to loosen the grip of poverty by choosing to change the way those markets work.

  • Nonconformistradical 4th Jul '19 - 7:45am

    @Michael BG
    “The level of rents are set by market forces. ”
    Exactly!!! But your article does not address this.

    “If 3.1 million more social homes were to be built this should bring downward pressure to bear on rents. ”
    Exactly!!! But your article does not address this.

    Hence my stating that I cannot see how you can address the poverty problems you seek to address without addressing the housing crisis at the same time.

    If you try to do so you should not expect to be taken seriously.

  • Steve Trevethan 4th Jul '19 - 11:40am

    How objective are “Market Forces”?
    Might “The Market” be affected by advertising, input from the corporate media and the economic paradigms affecting or controlling dominant legislators and their backers etc?

  • Sue Sutherland 4th Jul '19 - 1:43pm

    This article is very welcome Michael and it’s interesting to look at poverty per se because the causes can then be stated clearly. Low wages, housing costs and sudden interruption of income seem to be the main three. Unfortunately if we just proposed that housing benefit should cover all housing costs the result, as Cassie suggests, under the present system of providing housing, would be a huge boost to private landlords and a corresponding huge rise in government spending on housing.
    The whole housing fraternity made a mistake when they recommended that private landlords should be given a financial boost so they provided housing that local authorities and housing associations could not. IMO they should not be providing a substitute for social housing, although I do think they have a role to play in enabling young people to be more mobile than they might otherwise be.
    Going back to public expenditure, it is difficult to persuade a government that wishes to limit public spending to both invest in more housing and pay increasing amounts on housing benefit. However, someone has to do this soon or the problem will simply worsen as demand outstrips supply.
    With regard to low wages it seems to have been accepted by various governments that the general public should top up low wages through benefits. Again this leads to the same kind of situation as the one with housing, in that the private sector gains unfairly from public support.
    As to a sudden change, or even a gradual change in circumstances then government needs to be much more flexible in providing financial support or means by which people can contribute to their own personal safety net, rather than be the cause of a change in circumstances as is happening with Universal Credit.
    So I’m afraid that I agree that it is more difficult to solve the problem of poverty than you suggest, Michael. However, if we have that as a major aim and view other issues such as public versus private provision as a lesser political motivator than has happened over the last few decades, then I think we Lib Dems should be able to improve people’s lives and reduce the imbalance between the rich and the poor.

  • I rather disagree with Joseph Bourke’s observation that “defining poverty is the first hurdle to overcome”. I think that first hurdle is to start with the finishing line –where would we like to get to (not equal income for everyone, ), and consider how to get there. (I speak as an engineer, not an economist or politician.)

    An article on 6th May in the Guardian was headlined “UBI doesn’t work. Let’s boost the public realm instead.” That is socialist, not Liberal thinking; and I believe it is mistaken, since UBI has not been tried. As Liberals, farming the fertile hinterland between Left and Right, we must not dismiss UBI, perhaps half bamboozled by the calamity of Universal Credit.

    At present a Government juggles things to even them out and get a politically acceptable redistribution of incomes, taxing the well-off to subsidise the less fortunate. This emerges as little bits of this here and that there, a complex and nigglesome business — a new Benefit, a shift in a tax rate or threshold etc. The result seems to please no-one very much, but is, apparently, deemed tolerable by HMG — with its eye, of course, on future elections.

    If we lived in a proper democracy, that might be ok. Let’s forget the political dimension for a moment and assume that the present picture is basically tolerable, and consider how best to change it. That, surely, can only be done if we begin by redistributing the tax revenue. That cannot be difficult: we know how much the tax take is, a datum. Now let’s redistribute it in a better way — a way not of niggling dribs and drabs, but of general but limited largesse.

    “Better”? Still steering clear of politics if poss, how shall we give every household a decent home and enough to eat, to go with their free schooling and Health Service and Library, if all we’ve got is the tax-take? We’ve got enough, today, but very unfairly spread.

    Then share out what’s left over, perhaps in proportion, kind of, to individual ‘merit’, in terms of contribution to communal wellbeing.

    And call it UBI? No: call it the National Income Dividend (NID).

    [This is based on the ONS figures for the effect of taxes and benefits on household incomes, 2015/ 2016. Very clear diagrams.]

  • Joseph,

    The Government link you gave didn’t work for me. Please post a link to the Social Metrics Commission figures for their poverty lines for different family types?

    Please note that my article is about ending relative poverty in the UK.

    Are you saying that making the changes I suggest would not end relative poverty in the UK?

    Nonconformistradical and Martin,

    If someone is saving for a deposit to buy a home I think it is unlikely they are living in poverty. Poverty is about the current situation and if a person can afford their current living costs not if they can afford some future living costs. Can you provide an example where someone would still be living in relative poverty after all of my suggestions have been implemented?

    Sue Sutherland,

    You make a couple of interesting points. However, doing what I suggest would end relative poverty in the UK and would be a liberal solution. The government would then need to deal with the issues you raise. As I have suggested building more homes should help to keep rents under control. I think the party has accepted that councils need to provide more social homes as they did in the 1970’s.

    I agree that the government should not subsidise wages. Increasing the National Living Wage as I suggest should reduce the amount of benefits needed. Party policy is already to increase the other minimum wages faster than the National Living Wage to bring them into line.

  • Michael BG,

    I don’t believe that poverty can be ended by the single measure of cash transfers for the reasons expounded in several comments above. Additionally, as we saw with the financial crisis benefits payments based on inflated tax revenues from housing and financial services booms or greatly higher levels of redistribution will not survive an economic downturn or change of government. The causes of poverty need to be tackled at its roots.

    Polly Toynbee writes in her article https://www.theguardian.com/commentisfree/2018/feb/26/welfare-system-beveridge-75-years
    “From Tudor poor laws to Victorian workhouses to universal credit, the same political dilemmas face all welfare policies: how to prevent starvation without the moral hazard of encouraging dependence. Beveridge was wary of the predicament. His plans meant you pay in when in work, draw out when in need, earning rights through contributions. This moral basis was instantly politically attractive.

    It never worked like that and never could. Housing benefit was left out: it defeats every system. From the start too many couldn’t pay in – those not in work or mothers – yet still needed means-tested national assistance, while older people drew pensions from day one. All governments cling to vestiges of national insurance, by now mostly a sham, because residual belief in it makes it a more acceptable tax. Politicians strive to reinvent social insurance to rekindle faith in benefits, but they always stumble on the same Beveridgean dilemmas: complex lives don’t fit neat solutions.”

    The JRF five-point plan is, I believe, well thought through, and wide enough in scope and ambition to have a significant impact. Although it is an expensive plan in terms of initial outlays, compared to the social and economic costs of persistent poverty it is both justified and rational. Coupled with the social metrics commission research it presentsc a solid foundation for marshalling political support around poverty alleviation.

  • Martin,

    ” I could not think of any way that an incoming populist government would not sell off the housing stock at give away prices.

    This is essentially what happened before and I cannot see how it might be prevented in the future.”

    One possibility is sell it off right away to any eligible tenant that wants to buy the building, but keep hold of the land as a source of continuing ground rents for local government housing revenue accounts.
    The key aspect is to ramp-up the stock of housing being built to meet demand. Whether the property is owned publically or privately should not make a difference as long as new construction (both public abd private) is keeping pace with increased demand over and above the level of the existing housing stock.

  • Katharine Pindar 4th Jul '19 - 8:06pm

    Your judicious acceptance of the Joseph Rowntree Foundation five-point plan and the Social Metrics Commission research as ‘means of marshalling public support around poverty alleviation’ is good to read, Joe, but to me lacking in one major respect. Such an approach is totally lacking in emotional appeal. Yet there are thousands of people in our country struggling from day to day and not getting the help they need. I would like to see our party commit to a new Beveridge-type social contract, as compassionate as rational, and declare firmly that the conditions many of our fellow-citizens are having to endure are conditions which we will no longer permit.

    We are anticipating having some say in Government in this country before long. This is a standard we should fly, a mission we should commit to here and now, as Liberal Democrat members, as a collective of people who will not wait to see what our leaders choose to say, but will urge them to lead us forward with passion as well as the reasoned arguments we now know well. Professor Alston demonstrated the combination that we need, and his Statement as well as his Report – both well furnished with footnotes from our charities and thinktanks – can be our testament.

  • Roger Lake,

    Having an Universal Income is a liberal idea, but if it not set at £157.62 a week for an adult and £84.13 a week for each child and housing costs are paid on top for those not earning enough it will not solve poverty.

    The population of the UK is about 65.5 million about 15 million are aged 18 or under. Therefore the cost of just paying the Universal Income as I set out would be about £480 billion, which is about 22.5% of GDP. In 2017 excluding housing benefits of £25 billion and other social services spending of £35 billion we spent £203 billion. (The guaranteed single person pension is £167.25 a week which is £9.63 above the poverty line. So paying every adult £157.62 a week would be a reduction for some single pensioners, but couples would be £59.99 a week better off than now.)

    Joseph,

    There are lots wrong with how the figures are worked out if they were to be used as the minimum which a family would need to live on. The single person rate is £1.77 a week under the rate I am using, the single person with two children £3.65, the couple with no children £3.15 and the couple with two children £4.83. I think my figures should be used to base benefit levels on, because the amount of liquid savings can be taken account of by other means rather than reducing the base rate for everyone.

    Do you accept that the basic benefit levels should be increased to the slightly lower Social Metric Commission’s figures?

    Once you define poverty in financial terms the solution is to ensure no one has an income below that level. It is simple to increase benefit levels to do it. However, this does not mean that the social inclusion should not be addressed as well.

    Many suggested solutions to poverty do not do so, better education and training will never solve poverty. If the wages of a care worker are not sufficient to live above the poverty level then that person being better educated and trained will not increase their wages.

  • Joseph,

    I think your interpretation is mistaken.

    The government is not using the Social Metrics Commission figures. The ONS stated, the “DWP will publish experimental statistics in the second half of 2020 that will take the current SMC measure as a starting point and assess whether and how this can be developed and improved further to increase the value of these statistics to the public. This assessment will include the wider measurement framework covering the depth, persistence and lived experience of poverty.”

    And “These experimental statistics will be published in the second half of 2020, after and in addition to DWP HBAI statistics. We remain committed to publishing HBAI in line with our statutory duties.”

    So the government is still using the figures I am using and are going to develop new experimental measurements after June 2020.

    The first recommendation of the Alston report is “Introduce a single, multidimensional measure of poverty”. This is not the same as what you have stated.

    You have not answered my earlier questions: “Are you saying that making the changes I suggest would not end relative poverty in the UK?”

    Can you state how my suggestions would not end relative poverty in the UK?

    We can’t let our policy be determined by what the Labour Party and the Conservative Party would have as a policy. Increasing minimum wage levels and building more homes can be carried out at the same time as we ensure that benefit levels are set so no one receiving benefits lives in relative poverty.

    I am sure you remember that in my previous article (https://www.libdemvoice.org/taking-a-leaf-out-of-onwards-book-moving-away-from-neoliberal-economics-61082.html) I pointed out that Conservative MP Neil O’Brien states that the government should spend an extra £190 billion over the next four years out of the £238 billion available. Increasing basic benefits to the level I suggest would cost more than £30.8 billion and less than £47.9 billion a year. £47.9 billion is only 2.2% of current GDP and quite affordable over four years.

  • Peter Martin 5th Jul '19 - 8:38am

    @ MichaelBG,

    “The reason someone is living in relative poverty is because they don’t have enough money.”

    More correctly it is that they don’t have access to enough of the real things that we can buy with the money. I seem to remember that Robert Tressell made the same point in his novel: the Ragged Trousered Philanthropists. The ‘hero’ of the novel Owen, made the argument that a person stranded on a desert island would be poor even if he’d found a chest of gold. He’d be much better off is he had some fishing gear and a box of matches. Owen’s work mates thought he was crazy for always supposing unrealistic scenarios. But RT was just showing how hung up everyone was on the money question. They still are!

    “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 ………… “employment alone is insufficient” to lift someone out of poverty.”

    We can look for another answer.

    Employment, from our own personal POV, is usually seen as a way of earning the money to buy the goods and services we need. So if we need to go off on a railway journey we need the money to buy the ticket. But the railway doesn’t just run itself. The trains need drivers and guards. The signals need operating. The track has to be maintained etc. Having the money is no good if the railway isn’t running properly. It will only work properly if people make it work properly.

    So we need to look at employment as way for everyone to make a contribution to society. Forget ‘benefits’. Let’s look at wages and salaries. Let’s make sure that everyone who wants a job can have one, making a positive contribution to society, and then receive their fair share of the goods and services, that they themselves have helped create.

  • @ Peter Martin. I agree with your last paragraph, Peter.

    Do you agree with the Chartered Institute of Personnel and Development that the gap between the top 100 FTSE chiefs and average wages is widening rapidly , and what do you think should be done about it ?

  • Wage differentials are mostly a matter of supply and demand as the BofE article explains
    https://www.bankofengland.co.uk/knowledgebank/why-are-football-players-paid-so-much
    “Football players are more valuable than ever. The world’s best paid player, Lionel Messi (of Barcelona) earns over £7m a month. That’s nearly 600 times the salary of the Prime Minister. There is a method to this madness: the economic theory of supply and demand.”

    Clubs like Real Madrid, Barcelona and Atletico de Bilbao are owned by “socios/members” who elect a president to run the club.
    Every 4 years the members of the club vote to choose a new president between the others members.

    FTSE 100 companies are owned by shareholders who appoint a Chairman and board. The board recruits executive managers/directors on behalf of the shareholders to run the business. The difficulties arise with what is called the ‘agency problem’. When share-ownership is widespread and there is no dominant shareholder to hold the board to account. the directors can largely set their own compensation among themselves. Under present company law, shareholders are not required to approve executive compensation packages in advance. This is an area where corporate governance needs to enhanced.

  • Peter,

    Increasing the benefit levels to the poverty level would remove everyone out of relative poverty. Not everyone can work but they should not be left in poverty. Employment is not the only way a person can contribute to society.

    Increasing the benefit levels to the poverty line does not mean that the government wouldn’t be able to have a Job Guarantee scheme or to run the economy to maximise employment. I agree that everyone who wants a job should have one but this doesn’t mean that benefit levels can’t also be set at the poverty line.

  • @ Joe Bourke “Wage differentials are mostly a matter of supply and demand as the BofE article explains”.

    Oh no they’re not. It’s a matter of who controls the decision making in any particular organisation.

    Go and ask Sir Philip and Lady Green about it. If you’re a FTSE director you can decide/ influence what you get – if you’re a cleaner working for Amazon or an outsourced NHS cleaning contract company you can’t. You might try to demand but you certainly can’t supply.

  • Peter Martin 5th Jul '19 - 6:06pm

    @ Michael BG,

    “Not everyone can work but they should not be left in poverty.”

    I agree. But we need to be looking at what people can do rather than just writing them off as “unfit for work”. For example, only a small percentage of Down’s syndrome people are working but many could function in many jobs. If people with DS want to work then they should be treated the same as everyone else.

    But of course there has to be a recognition that there are those few who genuinely aren’t capable of doing anything at all and they would of course qualify the benefits you have in mind.

    https://www.bbc.co.uk/news/blogs-ouch-32613957

    “Employment is not the only way a person can contribute to society.”

    If people are contributing then there should be a mechanism whereby whatever they are doing should be classed as employment. Then they can be paid accordingly.

  • @ Joe Bourke I was aware of all that and I don’t know why you thought you had to explain it to me.

    The point of principle remains – it’s not supply and demand, it’s who has the power to call the shots that gets the dosh.

  • Joseph,

    Your Negative Income Tax is not based on families but on individuals and therefore like Universal Income would cost more but give less to the poorest. Also some people choose not to work because the family is well off living on one income. A Negative Income Tax will benefit such a family.

    In the two examples the first person ends up with £21,150 and the second with £23,600 and the person not in work ends up with £16,250, which as you say is £312.50 a week and a couple having only £625 not £650. As people have to pay their rent from these amounts it would be like having a benefit cap of £25,000 and this would be worse than the existing benefit cap which doesn’t apply to those in work. Do you know how much this would cost?

    I think it would cost more and leave more people living in relative poverty.

    I thought you were supportive for setting the benefit levels at the Social Metrics Commission’s figures.

    Peter,

    But of course there has to be a recognition that there are those few who genuinely aren’t capable of doing anything at all and they would of course qualify the benefits you have in mind”.

    Does this mean that for some people you would support benefits being at my suggested levels?

    Wouldn’t it be bureaucratic to have to assess the value of everyone’s non-paid contribution to society and then pay them accordingly?

  • Peter Martin 6th Jul '19 - 8:26am

    @ Michael BG,

    I wouldn’t call them “benefits”. If someone was incapable of working, for whatever reason, I’d term it “sick pay” which could well be at or higher than your suggested levels. Of course, we would have the problem of deciding who was genuinely sick and who wasn’t. Just like we have now!

    Broadly speaking I would advocate moving from having a relatively large pool of unemployed and underemployed workers to a smaller pool of workers on a JG but I do appreciate that there could be a few devils in the details to be exorcised.

    If there was any bureaucracy it could be run by those on a JG! So for example we could pay all those people who are now doing volunteer work in schools and hospitals etc. I believe Citizens Advice Bureaus are largely run on volunteer effort. So we can pay all those who help in that. On the other hand we wouldn’t pay someone to play golf every day.

  • Peter Martin 6th Jul '19 - 8:41am

    @ David Raw,

    Yes you’re quite right to be sceptical that the law of supply and demand is the deciding factor when it comes to a CEOs pay. The earning ratio between a CEO and a typical employee in any large organisation can be a factor of a 1000.

    That’s obviously because they set their own salaries. The level of remuneration typically isn’t even dependent on success. A normal worker can, dependent on length of time served, be made redundant at any time with just a few weeks pay. If the share holders wish to replace a failing CEO there’ll no doubt be a clause in his contract requiring a multi-miilion pound payout!

  • Katharine Pindar 6th Jul '19 - 10:14am

    Having read the comments considering alternatives such as UBI, Negative Income Tax or financial recompense for all sorts of socially acceptable work, I still think Michael’s proposals for ending relative poverty seem the best ones. If his proposals for paying out £47.9 billion a year over four years, making £191.6 billion in all, is not very much more than the £190 billion over four years proposed by, of all people, a Tory MP (Neil O’Brien), then surely it should be manageable. Michael states his suggested figure is only 2.2% of current GDP. Is that not acceptable? I suppose though we have to assume that Brexit does not happen, as it would reduce the prospect of GDP continuing steadily to grow.

  • Peter Martin
    Why not just leave the decision about who is genuinely sick to the medical profession and cut the political aspect out. Coz, I dunno about you but when I’m ill I seek a medical diagnosis from a doctor and not the opinion of a bureaucrat working to a tick sheet.

  • Nonconformistradical 6th Jul '19 - 11:19am

    For once I would agree with Glenn in the posting at 6th Jul ’19 – 10:37am

  • Innocent Bystander 6th Jul '19 - 12:57pm

    David,
    Will these controls on high salaries apply across the board? I mean will Chelsea FC be told how much they can pay their players?
    In the end, the owners of a company (shareholders for quoted ones) decide who they appoint to lead their companies, and what they need to pay to get them. If they are forced to reduce salaries and the company fails, who is to blame? The shareholders or the government?

  • joseph Bourke 6th Jul '19 - 1:58pm

    Executive compensation packages escalate for much the same reason that top football players packages keep rising. Boards of publically listed companies tend to use external compensation consultants to develop packages and external headhunters to recruit executives most often from other companies. It is a limited pool at the highest levels and competition for executives with a suitable track record by risk averse boards pushes pay ever higher.

  • Peter Martin 6th Jul '19 - 2:08pm

    @ Glenn,

    “Why not just leave the decision about who is genuinely sick to the medical profession….”

    Yep. That’s fine by me.

    “Executive compensation packages escalate for much the same reason that top football players packages keep rising.”

    Except that the footballers have measurable levels of skill. So when I used to play it was for free! Georgie Best who played at the same time was paid quite a lot, by the standards of the time, because he was lots better than me! But how do we measure the skill level of a CEO? Just what qualities do they need to have to do their jobs well?

  • Peter Martin 6th Jul '19 - 2:32pm

    @ Katharine Pindar,

    “If his proposals for paying out £47.9 billion a year over four years, making £191.6 billion in all, is not very much more than the £190 billion………”

    The problem with these back-of-envelope calculations is that they assume everything else in the economy stays the same afterwards. But will they?

    At present, as the OP quotes Philip Alston as saying “employment alone is insufficient to lift someone out of poverty.” So, yes, theoretically, we could increase benefits for those who aren’t working so that everyone is above the poverty level, but that would reduce the incentive for anyone to work legitimately in a low paid job. It would make much more sense to claim benefits and pick up a bit extra here and there on a cash-in-hand basis.

    Looking at the bigger picture, our society functions, as it does, because lots of people get up in the morning to do their jobs. So there are lots of things that need doing. Including some that should be done but aren’t because we supposedly don’t have the money. At the same time we have 1.5 million unemployed and about three times as many more underemployed. What’s the sense in that?

    So it would make much more sense to include everyone in the workforce who would like a job and then share out the rewards in a more equitable fashion afterwards. Just how equitable it has to be is a matter of political opinion. But whatever we decide, a basic minimum hourly income has to be defined. That will of course be the hourly income on the Job Guarantee.

  • Joseph Bourke 6th Jul '19 - 2:59pm

    Peter Martin,

    I served a director of our local football club for a number of years. The player budget was based on the highest level we could pay while maintaining solvency. Solvency was largely based on a good cup run and at least one televised game in the season. The alternative was relegation and a deepening financial crisis. Any manager that kept the club in the relegation zone for more than a couple of months was terminated with a compensation package and a new manager brought-in.
    The great majority of executive managers earn no where near the pay pf FTSE CEO’s, just as the great majority of foottballers will never earn anywhere near the pay of premiership footballers. The corporate world works in much the same way. Therein lies the problem. The focus of short-term profits undermines long-term investment. Much of the higher levels of corporate pay are based on stock-options and success is measured based on the ability of the CEO to increase stock prices. The quickest and easiest way to do this is through share buybacks, not increasing investment and profits. By borrowing at low rates of interest and replacing shares with debt, earnings per share can be doubled or trebled overnight. Polices like quantitative easing and ultra-low interest rates incentive this kind of financial leveraging.
    More corporate debt means higher interest payments have to be paid from profits squeezing down wages generally.
    The answers lie in structural reforms around more patient finance capital that does not force a focus on short-term returns and corporate governance that provides shareholders with greater cope to set the limits and terms of executive compensation packages.

    As for football. That is a different world. Most clubs tend to be loss-making and rely on the patronage of wealthy owners to survive But when it comes to a choice between having a fan-owned club struggling with finances or a wealthy owner who can bring–in top players ad win trophies, fans will choose the latter everyday.

    If the share price is

  • Peter Martin 6th Jul '19 - 4:00pm

    @ JoeB,

    Those who wish to apologise for the ultra high levels of pay of CEOs are always very quick to compare them with professional footballers and quick to use the ‘supply and demand’ argument.

    My working life was as an electronics engineer. All the time I was doing that job from when I started in my early twenties to now, when I’m semi-retired, the story I’ve heard is, and has been, that the UK is continually short of engineers. That hasn’t meant that I, or anyone else I knew, could go out and command a six figure salary in the job market! Not in the UK at any rate! Sure, I earned enough to live on, and changing jobs was always easy but what about those laws of supply and demand? 🙁

    It’s the same for nurses too. It’s the same for carers. It’s even the same for fruit pickers. We are supposed to have shortages of all. But their wages and salaries aren’t fantastic as a result. What seems to work for CEOs and footballers doesn’t work for the rest of us!

  • Peter,

    You can call them whatever you like but the press will call them benefits.

    As you are not a liberal I assume your Job Guarantee scheme is compulsory. However, there would be a period of unemployment before a person started a JG. Do you think that a person should have an income below the poverty line during this period?

    For people on a JG or doing voluntary work what would you pay them? Would they receive less than the poverty level?

    How would you deal with the 4 million workers who live in poverty?

    Katharine,

    The £47.9 billion figure is a maximum. I am not advocating increasing the rates over one year, but four. If done equally the extra cost would be set at a maximum of £12 billion (less than 0.6% of GDP) a year which is very close to the £11.7 billion figure Joseph Bourke states our existing policy would cost. The total cost would therefore be 12+24+36+47.9 = £119.9 billion.

  • Peter Martin 6th Jul '19 - 4:49pm

    @ Michael BG,

    “As you are not a liberal……..”

    I’d bet I was good deal more liberal than most on this blog as measured by any sensible two dimensional test such as

    https://www.politicalcompass.org/

    “I assume your Job Guarantee scheme is compulsory…….”

    No it would be voluntary.

    “However, there would be a period of unemployment before a person started a JG. Do you think that a person should have an income below the poverty line during this period?”

    The precise details of how a JG scheme would have to be decided by the democratic process. For my part I would suggest that everyone should be allowed a reasonable period of time on generous benefits to find another job if they lost a previous one. Three months? Six months? To be discussed.

  • Peter Martin 6th Jul '19 - 5:10pm

    @ Michael BG

    “For people on a JG or doing voluntary work what would you pay them? Would they receive less than the poverty level?”

    It wouldn’t be down to me but my suggestion would be to calculate what each worker contributes to the GDP on average. This is approximately US$40k pa per person so must be around $120k pa per worker. So if the JG rate is set at 20% of that it would be $24000 per worker or about £20k pa per worker. 20% should be ‘affordable’. Maybe you’d like to do some similar calculations?

    “How would you deal with the 4 million workers who live in poverty?”

    Maybe that could be 25%?

    As I’ve said the GDP per person is quite high for the UK. We just have to decide how to share it out equitably but without removing the incentive for everyone to get on and do well. I would have thought that kind of approach would be right up your Liberal Democratic street!

  • Innocent Bystander 6th Jul '19 - 5:16pm

    It’s perfectly valid to use the colossal salaries of footballers and BBC talking heads as comparisons. If the Stick-it-Tite Glue Co. want to pay their CEO £10m what busines is that of mine? It’s their head on the block if they screw it up.
    If the wages of those at the bottom are low it’s due to other issues, like mass imigration, globalisation and the automation of unskilled work. All of which need to be addressed seperately. If Stick-it-Tite were forced to cut their CEO’s salary, who thinks they would give Willie the mail boy an immediate raise?
    My beef is with those who think the taxpayer should invest in skills. The aforementioned should divert that massive salary to train the skills they need from their own pocket.

  • Peter Martin

    Do you think of yourself as a liberal and not a socialist then?

    I am glad that your Job Guarantee scheme is voluntary. I thought in the past you had said it was compulsory.

    Are you saying that someone who is unemployed before going on a JG should receive an income at least at the poverty line? (Just as you said that someone too ill to work should.)

    Even if you set your “salary” for JG and voluntary workers and you maximum for those on benefit at £25,000 per adult there would still be some people in the UK living in poverty, particularly single parents who pay rent.

    I don’t understand why you are content for anyone in the UK to live in poverty. Please can you explain why you do?

  • Peter Martin 6th Jul '19 - 7:16pm

    @ Michael BG,

    I’ve always thought of myself as socialist. But that doesn’t mean I’m not in support of liberal policies on race, sexuality, freedom of speech etc.

    Look we share the same aims here. It’s just a difference of emphasis. Maybe it’s my more leftist view that we should aspire to the principle of ‘to each according to their need and from each according to their ability’. The thrust of Lib Dem policy totally ignores the second part. From each we don’t require anything at all!

    I’m saying that the UK is sufficiently wealthy for no-one, whether or not they are ill, should be on the poverty line. I take your point that £25k might not be enough in certain circumstances. Most people might think it was too much especially if nothing was required in return.

    If you think that needs increasing then we can discuss it. But, whatever figure we might move to, we are more likely to get it generally accepted if it’s not just money handed out for nothing.

  • Joseph Bourke 6th Jul '19 - 9:30pm

    Katharine,

    The onward report by Neil Obrien https://www.ukonward.com/wp-content/uploads/2019/05/ONWJ7142-Firing-on-all-cylinders-report-190530-WEB-1.pdf argues that the Conservative should adopt a new fiscal rule and maintain borrowing over the next few years as both Labour and Libdems have argued . Instead of seeking to reduce debt as a share of GDP, it would merely target that it remain flat or falling.
    The report assumes pressures for more spending on public services could add between £10–20 billion to public spending each year and advocates policies such as
    returning school spending to its real terms peak per pupil and on investment in the police and prisons that would add something in the order of £6 billion a year.
    Obrien’ approach to generating business investment is focused around aligning Corporation Tax headline rates with Ireland at 12.5%, increasing capital allowances and creating new allowances. Corporation tax cuts would cost around £12billion a year and investment allowances £9 billion a year. An increase in the threshold for National Insurance for working people with children advocated would cost just over £4 billion and moving to what is called “Universal Credit Plus” would cost around £7 billion
    The report notes “Clearly, it would not be affordable to implement all of these different policies in a single year.
    This paper ends “Britain is an ageing society, which has just been through an increase in government debt which is unprecedented in the period since the second world war. Because of difficult decisions taken over the last nine years there is now scope in the next few years to respond to the needs of public services; to strengthen the foundations of a growing economy and raise employment and living standards for lower income households. None of this takes away from the dramatic longer term fiscal challenges facing Britain and all other ageing developed countries. What it does allow us to do is to send a signal that post Brexit Britain is open for business; to respond to the pressures that have built up over nine years of spending restraint, and to ensure that working people on lower incomes start to feel strong benefits from growth.”
    The welfare spending in the report is costed at £7bn for Universal Credit + £4bn for increasing the NI threshold i.e. approximately the level f cists associated with Libdem welfare policies.

  • Peter,

    It now appears to me that your only objection to ensuring no one lives in poverty using my suggestions is that you don’t think my suggestions would be popular. That is not an argument I would hope to see any party member make. My solutions are possible to implement and can be achieved without creating a new benefit system.

    You have already conceded that those who are not well enough to work and those recently made unemployed should receive an income which ensures they are not living in poverty. If your only real objection is that you couldn’t support my suggestions without there being a Job Guarantee scheme introduced at the same time, then you should just say so.

    Joseph,

    Do you accept the Onward report that there is at least £190 billion which could be spent in the next four years?

  • Katharine Pindar 7th Jul '19 - 1:27am

    Joseph, in mentioning O’Brien, I had of course read the article discussing the Onward report by our colleague Michael BG https://www.libdemvoice.org/taking-a-leaf-out-of-onwards-book-moving-away-from-neoliberal-economics-61082.html, as well as most of the 233 comments which followed, in many of which you participated. Thank you for your summary of O’Brien’s argument.

  • Michael BG,

    The onward report argues that “We must not allow debt as a share of the economy to rise in normal times, especially because we face severe long term spending pressures from an ageing society in the coming decades. However, there is currently some scope to cut taxes and increase spending in a prudent way in the near term while keeping debt as a share of GDP falling. So the current set of fiscal rules and the plan to reduce debt sharply should be replaced with a more expansive single fiscal rule: to keep debt to GDP falling gently in normal years when there is no recession.”

    How much additional public spending can be undertaken is largely a question of how far borrowing can be safely utilised without driving up inflation or interest costs. The IFS has published a summary of the issues in advance of the spending review https://www.ifs.org.uk/publications/13854
    “The government has already committed an extra £20.5 billion to the NHS by 2023–24. Given other existing commitments on defence and aid, the path for over half of day-to-day public service spending (£156 billion in 2018–19) has already been largely decided.
    Before setting individual departmental budgets, the Chancellor needs to decide how much to spend in total. Due to pre-existing commitments, the overall size of the ‘spending envelope’ will determine how tight settlements will be for ‘unprotected’ areas. The latest provisional totals imply an increase in overall day-to-day spending, but cuts to areas outside of the NHS, defence and overseas aid.”

    Both Labour and the our party have committed to running a balanced current budget and utilising borrowing capacity to invest for the long-term. The conservative party approach as evidenced by both leadership candidates is to utilise borrowing capacity primarily to fund tax cuts and tax reliefs for business investment with some additional funding for welfare, schools, policing, prisons etc.
    Funding welfare payments from borrowing is a precarious strategy. We need serious investment to raise wage levels and sustainable increase in social security provision funded should, in my opinion, be funded by tax redistribution.

  • Joseph,

    You write that both the Labour Party and our party has signed up to the idea of all that needs doing is keeping debt as a share of GDP falling. You recognise that the Onward report by O’Brien allocates the vast majority of his £190 billion to tax cuts. Then why is it so hard for you to answer the question, “Do you accept the Onward report that there is at least £190 billion which could be spent in the next four years?”

    Does your last post mean that there are some circumstances in which you would support increasing the basic benefit levels to the Social Metric Commission’s figures?

  • Peter Martin 7th Jul '19 - 8:11am

    @ Michael BG,

    “that you don’t think my suggestions would be popular. That is not an argument I would hope to see any party member make. ”

    Maybe that is where Lib Dems have been going wrong for many years? Like it or not, we do live in a democracy and so there’s no point sitting in an ivory tower advocating polices which are never going to win general acceptance. I think Joe B previously made the point if ending poverty was that easy it would have been done before. It’s not going to happen by just increasing benefits.

    Having said that it’s not ultra difficult but it does require a different approach. We need to move towards the concept of inclusivity. This simply means that, yes, we will offer everyone a living wage but we will require something in return. We are doing ourselves a favour too. We aren’t wasting available resources.

    I can’t see why Lib Dems have a problem with this. At least ask those Down’s Syndrome people who have unemployment rates of 80% + before rejecting the idea out of hand.

    @ JoeB @ Michael BG,

    “We must not allow debt as a share of the economy to rise in normal times, especially because we face severe long term spending pressures from an ageing society in the coming decades.”

    A typical neoliberal mistake. An ageing society is probably a society that has an increasing number of pensioners. They’ll have saved in their pension funds and those pension funds will have bought government bonds. That’s extra debt for the govt.
    As people expect to live longer they are willing to save more . Again that’s more debt.

    We can see that’s happened already in Japan which has a debt to gdp ratio of 236%. Japan is probably the new ‘normal’. If we don’t accept that the only alternative will be to depress the economy to such an extent that people generally will be too poor to save even if they want to.

  • chris moore 7th Jul '19 - 9:23am

    The government is not obliged to sell the bonds to take up such demand.

  • chris moore 7th Jul '19 - 9:46am

    Better that they do not, after all…..

    Japan being a very good example.

  • Peter Martin 7th Jul '19 - 11:19am

    @ chris moore

    It’s only a problem if we think its a problem. The Government could alternatively offer a small interest bearing account to enable people to save. Possibly the Treasury economists could even think of a reason why it shouldn’t be counted as debt.

    It really makes no difference in the end. One way or another savers will put their money in when they aren’t spending it and withdraw it later when they do.

    Its better for the government to enable people to save this way. If they don’t the savers will simply store high denomination notes in a safe. This is happening already in the Eurozone. Then governments really have no knowledge of the movement, or lack of it, of money around the economy.

  • chris moore 7th Jul '19 - 12:24pm

    The government isn’t obliged to offer low interest savings accounts to soak up demand.

    I agree some savings may end up under the bed. But some will seek more useful destinations than bonds or government savings accounts with derisory interest (or negative interest.)

  • Peter Martin,

    Japan already has a serious problem with pension funding as this Japan Times article notes https://www.theguardian.com/world/2008/sep/12/japan. Relative poverty rates in Japan are higher than comparable industrialised economies.
    The same demographic problem is emerging in all aging societies as this article on unfunded pension liabilities in California noteshttps://www.zerohedge.com/news/2018-04-23/pension-crisis-gets-catchy
    As people retire they draw down their savings and pension funds. The UK already has a very low household savings rate. It may very well become negative as baby boomers retire and spend their pension savings.
    A much larger retired population will be relying on a proportionally smaller working population to produce goods and services while paying out half of their net earnings in rent. That’s unlikely to be sustainable.

  • Peter Martin 7th Jul '19 - 3:19pm

    @ JoeB,

    Any country with a high ratio of non-workers to workers will always have a resource (lack of) problem. This is the key reason why we need to do everything possible to make sure that everyone who wants a job can have a job. Paying out money for nothing in the form of a UBI makes no sense at all.

    It’s the people doing their jobs that keeps the wheels of the economy moving. We should not get distracted with non-issues like deficits and debts to deliberately create a low growth economy in a vain attempt to reduce those deficit.

    If there turns out to be a problem in future with people wanting to spend their savings the possibility will be that the economy will start to overheat. Then will be the time to increase taxes and reduce government spending. Not now. That will simply stop the savings being created in the first place as the economy tanks.

  • Peter Martin 7th Jul '19 - 3:45pm

    @ chris moore,

    If you discourage everyone saving in pounds they’ll simply swap to another currency and save in that instead. That will drive down the pound’s exchange rate.

  • chris moore 7th Jul '19 - 4:48pm

    I was thinking of Japan and the yen.

    Overall, a weaker yen would help in japan, I think.

  • Peter,

    Ending relative poverty in the UK is as simple as setting benefit levels at the poverty level and ensuring that housing benefit pays 100% of a person’s housing costs so they don’t need to use the basic benefit to pay their rent.

    Your position seems odd. You don’t argue that my method would not work. Your argument is my solution would not be popular. I am not aware of any of the three main political parties advocating my policy, so it might be popular enough to be implemented. (You support unpopular policies such as not worrying about the size of the government’s borrowing. So it seems to me illogical to object to my suggestions just because they will not be popular.) You support benefits being at least at the poverty level for those too unwell to work and for those who have recently been made unemployed.

    If the government runs the economy to minimise unemployment and provided a job guarantee to those unemployed for more than six months why can’t you support my solution for ending relative poverty in the UK even if it is as unpopular as your advocated economic policy?

  • Peter Martin 7th Jul '19 - 6:01pm

    @ Michael BG,

    “……. why can’t you support my solution for ending relative poverty in the UK”

    It’s not a solution that can work. It’s an extension of 50s style welfarism. Essentially this is an extension of the argument between those who advocate a UBI and those who advocate a JG.

    https://basicincome.org/news/2018/01/professor-argues-job-guarantee-basic-income/

  • Peter,

    My solution is not a UBI. It is indeed the restoration of the 1950s safety net. Also my question included a JG. Philip Harvey in the interview you link to seems to support paying benefits according to need as well as a JG, as I do.

    Why wouldn’t setting the benefit payments to the poverty level and paying 100% of the rent not work to raise everyone out of relative poverty?

  • Peter Martin 7th Jul '19 - 10:28pm

    @ Michael BG

    You’re assuming that you can just change one thing and nothing else will change. You’re ignoring human nature.

    For example, say we have a collection of ten individuals living in on an island. Nine of them are doing quite well but are working hard for their rewards. They may have boats to fish. Some land to farm. Our tenth person doesn’t have a boat and he/she doesn’t have any land. So, sure you can argue that this person would be fine if everyone else shared out what they had more equally. This would mean that they’d do almost as well as, if not better than, everyone else but wouldn’t have to do anything for it. BUT, you’d have to get everyone else to agree and I’d say that was unlikely.

    You would have a much better chance of improving this person’s lot if you came up with a plan to lend them a boat and/or some land so that they’d have a chance to work and share the rewards like everyone else. Their extra work would increase the total GDP of the island so there wouldn’t be any need for anyone else to be much, if any, worse off than previously.

    And we see exactly the same thing in our own society. I mentioned a figure of £25k pa and you made the point that this may not be enough!! The reaction of nearly everyone I know would be that if someone was offered £25k pa from the state in ‘benefits’, with nothing required in return, that would be totally unacceptable. Most people have to work a 40 hour week plus a bit of overtime to earn that sort of money. That’s just about double the present minimum wage.

    The voters will tell you that you’re crazy. If, somehow, you were to implement it, they would want to quit their jobs and demand £25 k pa for doing nothing too!

  • Peter,

    You assumptions are wrong. The tenth person should be someone who is too ill to work. Then you would agree that the nine should be taxed so the tenth does not die. You still seem to think I am taking about a UBI and I am not. I have also linked in the idea that there would be a Job Guarantee scheme. In my post of 4th July 8.49 I pointed out that the extra cost of a Universal Income at the poverty line would be about £277 billion a year and it would involve a decrease in income for single pensioners. I am not advocating a UBI!

    I can only conclude that you don’t have a rational argument why my solution would not work, all you can say is people wouldn’t support it. It appears you fear that lots of people would choose to be unwell or unemployed so they could live on the poverty line rather than choosing to work and have earnings well above the poverty line. Do you understand that with the basic benefit set at the poverty line it would be impossible to be in work and to live below the poverty line?

  • Peter Martin 8th Jul '19 - 9:38am

    @ Michael BG,

    Not all people who are unemployed are “too ill to work”. You don’t want to discuss the question of people with Down’s Syndrome and other disabilities who are often unfairly written off. Not so long ago that attitude would have been extended to people like Dr Stephen Hawking. But if they genuinely are “too ill”, there is no reason why they shouldn’t be on extended sick leave.

    The observation that people wouldn’t support your scheme is as rational an argument as any. Providing unconditional benefits to the tune of over £25k p.a. to raise a person above what you consider to be the “poverty line” is just a non-starter politically.

    I accept that it would be difficult enough if we did impose some conditions. But that would at least be a feasible political policy to run with.

  • Peter,

    I accept that it would be difficult enough if we did impose some conditions. But that would at least be a feasible political policy to run with”.

    This looks like a grudgingly acceptance that my suggestions would work.

  • Peter Martin 8th Jul '19 - 1:17pm

    @ Michael BG,

    “This looks like a grudgingly acceptance that my suggestions would work.”

    Would it? Suppose we offered every homeless person sleeping in Cardboard city in London a new house or flat. Hey presto, that would solve the homeless problem! Yes for a day or two until those who were housed were replaced by lots of other people with housing problems, including probably some from the EU, who’d previously not been in quite such dire straights but who’d want the same treatment. Especially if you were guaranteeing them at least £25k p.a.

    So there has to be a more systematic longer term approach to problems of poverty. It may sound heartless but I learned very quickly when I was India that handing out money for nothing to street kids didn’t solve anything at all. Initially it looks like there are just a couple but very quickly there’s a couple of hundred!

  • Innocent Bystander 8th Jul '19 - 1:45pm

    Is there a limit on “100%”?
    It’s just that I rather fancy moving into a nice 2 bedroom flat on Park Lane, wot I just saw.
    And it would be my hoooman right and truly Liberal if the govt. would pay 100% of the rent.
    A bargain at £15,145 pcm.

  • Peter Martin,

    Why are you not engaging with my suggestions but instead are setting up things to attack which I haven’t suggested?

    As I said the £25,000 is your figure and not mine. Homelessness is not dealt with in my OP.

    Paying people benefits is not the same as giving money to children in India and you should understand this.

    I am surprised that you have chosen not to engage in a discussion of what I actually am suggesting.

    Innocent Bystander,

    Please point out where I have stated that the state should pay the rent on a property which you don’t currently live in? Please see my comment to Cassie on 3rd July 10.22pm above.

  • Innocent Bystander 8th Jul '19 - 8:14pm

    Thanks Michael, I read that so if I move in Monday and become unemployed Tuesday that will fit your conditions (as long as I’m employed when living there first you said).
    You didn’t define “long”, so I’m fine, many thanks.
    Park Lane will suit me as all my clubs are in Piccadilly.

  • Innocent Bystander,

    You could be renting a two-bedroomed terraced house in Markfield Avenue, Manchester for £795 per month. Assuming you have a partner and a child (born after 6th April 2017) if you became unemployed your Universal Credit would be £730.56 a month, but you would only receive £521.34 a month to pay your rent. Do you think that you should try to live on £456.90 a month which is £105.44 a week? I think you and your family should have £355.71 a week to live at the poverty line after you have paid their rent. What do you think?

  • Innocent Bystander 9th Jul '19 - 8:00am

    Michael,
    You may have detected a spot of devilment in my ambitions to live in Park Lane. I wouldn’t want to live there (terrible traffic noise and snooty neighbours).
    I merely, like others, have tried to point out that a proposal to pay 100% of rents will
    a) attract those who will really take advantage (cf. like me)
    b) raise rents even more as landlords loot the gullible state.
    c) be ridiculed or just ignored by the media/ voters
    It would work if, but only if, you could separate the deserving from the undeserving ( but that is the challenge for all state benefit programmes).

    It would be far better for the state to buy that house in Markfield Avenue rather than encourage greedy landlords to plunder the taxpayer. However, of course, state owned housing has its own set of “issues”.

  • Mick Taylor 9th Jul '19 - 8:13am

    The trouble with views like those expressed by Peter Martin and (not so) innocent bystander is that they do not seem willing to consider that the punitive approach to unemployment, disability and sickness that have pervaded political thinking for so long are illiberal, uncaring and should be changed.
    Michael BG and others are trying to get to a solution where no-one shall be enslaved by poverty. And yes, it will cost money and yes some taxes will need to be raised to pay for it, but they are vital if the desperation of the left behind is to be alleviated and they start to feel part of society again.
    In my lifetime a whole range of jobs that used to be done by what was then known as the working class have gone, swept away by mechanisation and the digital revolution. If the multi national corporations and the mega rich get their way these jobs will either not be replaced at all or – as seems increasingly the case – be replaced by insecure low paid work. or outsourced to countries where wages are low.
    The objections to the plan put forward by Michal BG are specious and often don’t address his proposals at all. What we need as a party is to champion the poor, the low paid, the unemployed and those with disabilities so that they can share in the great riches our country produces and not be left to languish in poverty.
    Where are Mr Martin’s and Mr Bystander’s proposals to allow this to happen?

  • Nonconformistradical 9th Jul '19 - 9:09am

    “Michael BG and others are trying to get to a solution where no-one shall be enslaved by poverty. And yes, it will cost money and yes some taxes will need to be raised to pay for it, but they are vital if the desperation of the left behind is to be alleviated and they start to feel part of society again.”

    Yes. But how do we achieve this without introducing more opportunities for unscrupulous landlords to put up rents – and hence move poverty thresholds upwards?

  • Innocent Bystander 9th Jul '19 - 9:33am

    Mick,
    I thought Michael eloquently articulated the problems and showed genuine concern, both much to be admired.
    However, concern is one thing but workable solutions are quite another, both in social care and economic regeneration.
    Those who take have needs and take out of the collective tax pot have a genuine case but those who put into the pot need to know that their contribution which they could have spent on themselves is being properly spent and not just making landlords even richer, which will be the certain consequence of the state paying 100% of rents.

  • Mick Taylor 9th Jul '19 - 1:34pm

    Nonconformistradical: what is wrong with some control over rents? Why even parts of the USA have it! If we are serious about eliminating poverty then rent control must be part of the armoury. Oh, and make it illegal not to rent to people just because they are on benefits.

  • Innocent Bystander 9th Jul '19 - 1:52pm

    There are no easy answers. Rent controls have their own problems. On the day they come in the population is divided into two. Those who already have a rental contract have won the lottery. They can relax knowing their accommodation is both secure and far below what a free market would charge.
    But there is the other group. These are the ones still looking for a place to rent. They now have to find someone who can afford to buy a place and generous enough to let them live in it, in perpetuity, and at a much subsidised cost.
    The landlords ‘trapped’ when the controls come in have no choice but to grimly suck it up. But new landlords? building or buying new properties to offer? No chance.
    The current average waiting time for those looking for an apartment in Stockholme is 15 years.

  • Innocent Bystander,

    I would expect those who rent property to do financial checks. It might not be so easy for someone earning less than £408,800 a year to rent that property in Park Lane. If the person is single I would expect the owner to want to see evidence that the person has an income above £425,000 a year.

    In the OP I wrote, “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”. On 3rd July at 8.39pm I pointed out that we should build 3.1 million new social homes in the next 20 years. Many private landlords will not rent to those who receive benefits.

    Considering these factors it would not be unreasonable to have the scrapping of the LHA at some future date as party policy.

    According to the ONS the average hourly rate in London in 2018 was £18.69 making average earnings £38,875.20 a year, which nets down to about £2558 a month. Would you expect this person to pay rent in London at £1353.11 a month for a two bedroom home? If not what should the maximum rent which the government should pay for a two bed roomed property in London be?

    Nonconformistradical,

    Before 2008 100% of private rent was paid, therefore it seems reasonable that the pre-2008 situation can be restored. Before 2011 the rate was the median i.e. the 50th percentile not the 30th. I don’t think there is any evidence that landlords renting to Housing Benefit tenants try to increase rents above the rates to non-Housing Benefit tenants.

  • Innocent Bystander 9th Jul '19 - 6:44pm

    Michael,
    You can expect what you like but I made a little side deal with the landlord when your 100% rent scheme came in. We are both quids in and I have complied exactly with your conditions. Thank you from both of us.
    State owned housing is a more promising step forward but that needs costing and controlling. I remember the era when poor couples moved into council housing and after a few years they advanced in their careers to the point where they could easily afford to move to unsubsidised housing. But, of course, didn’t. I know of many couples who lived in the same council house all their lives despite ending up on two large incomes, two nice cars and foreign holidays.
    “Evidence” of landlords raising rents to exploit the state would be hard to come by. I would suppose that the signs would be steadily increasing rents in the private sector.
    BTW I concede and admire your genuine concern but I am an engineer and have spent my career knowing what I want to achieve but then having to compromise to deliver something.

  • Innocent Bystander,

    I am not convinced when you did your deal with your new landlord, but it sounds like an illegal activity, which was not what you were suggesting earlier. I would expect that fraud would be investigated and those carrying out fraud to be prosecuted, fined and imprisoned. I don’t understand why your landlord would take such a risk when they would receive 100% of the market rent anyway.

    Please could you answer my question, “what should the maximum rent which the government should pay for a two bed-roomed property in London be?”

  • Innocent Bystander 10th Jul '19 - 7:44am

    Michael,
    But you said the landlord wouldn’t rent to me. So I fixed that. Now you say he would have rented all along anyway. What fraud? You agreed to pay 100%, and didn’ t specify any controls or limits so there is no fraud.
    But no matter, I was simply demonstrating that there are plenty of ways the unscrupulous would take advantage of a 100% offering which, I imagine, was why it was quickly abandoned before.
    As to rents in London, I wouldn’t know as I can’t afford to live there, but I don’t agree with the taxpayer paying rents to private landlords anyway. It just drives rents up all across the rental market. It must, it can’t do anything else. It would be better for the state to provide housing itself, for those needing it, but on the understanding that if they became prosperous enough to enter the private housing market they did and leave the state owned house for those genuinely in need.
    As I said before I recall working every hour I could get to pay off my mortgage early and took the children on holiday in a tent while work colleagues in council houses went to Spain.

  • Innocent Bystander,

    “But no matter, I was simply demonstrating that there are plenty of ways the unscrupulous would take advantage of a 100% offering which, I imagine, was why it was quickly abandoned before.”

    It seems that since 1948 the state has given assistance to some to pay their rent. Housing Benefit was introduced in 1982 and fully rolled-out by 1988. As I said the LHA system was introduced in 2008. The payment of 100% of the rent was not abandoned quickly.

    The unscrupulous often break the law, this doesn’t stop the law being passed.

    I agree with you more social housing is needed, that is why I support the Shelter aim of building 3.1 million new social homes in 20 years.

    I don’t think it would have been liberal to make people more out of their council homes in the 1960s, 70s and 80s because they could afford two cars, buy a new one every two years and take holidays abroad (in places like Spain).

  • Innocent Bystander 10th Jul '19 - 3:29pm

    Michael,
    But why is it liberal to make people who are already working all hours to pay their private sector housing costs also pay to provide subsidised housing to those who manifestly no longer need it?
    This needs to be fairly discussed. Thatcher did not get elected just on the votes of toffs and bosses. Millions of working people, who have a proper sense of fairness, voted for her and many of these resentments are what handicaps your well meant plans and prevents general acceptance even today.

  • Innocent Bystander,

    Housing Benefit was introduced and completely rolled out when Thatcher was PM!

    I don’t consider council houses as subsidised housing as council housing accounts were not allowed to be subsidised from the general account.

    I can’t imagine anyone forced you to buy a house and extend yourself so you found it difficult to pay your mortgage. I imagine you decided to buy a house and decided on the size of your mortgage, as I did. I know I clearly decided to extend myself as much as possible to get on the housing market. No one forced me. Being free to make such decision is liberal. Having the choice not to make that decision and to live in a council house is liberal.

  • Innocent Bystander 10th Jul '19 - 5:33pm

    Michael,
    How is it liberal to expect the other residents in a town to buy a house you can choose to live in even if you could afford to finance your own?
    It’s no value playing ping pong over this. The other residents do get a choice. At the ballot box. Voters are moving away from your agenda and the really desperate are suffering from clumsy voters who don’t lack compassion but want sense, not Santa Claus.
    Those in need should be helped to the fullest extent but those whose shoulders are as broad as the rest of us should carry their own weight and leave state owned housing for those who need it, not just would prefer it.
    Anyway, I give up now.. I most fear a Corbyn govt next, then economic catastrophe then a draconian right wing backlash.
    But thank you for the civilsed discussion.

  • Innocent Bystander,

    Liberalism can be seen as “free from restraint”. Therefore restraining people from renting is illiberal. Today social housing is more limited than in the 1960s, 70s and 80s and people are restrained by the rules councils have regarding who they will house. I am not sure having too high an income is a current restraint, but those who can afford private accommodation are less likely to be housed by the council because they will have found private accommodation sooner than when they would be housed by the council.

    I don’t know how the state would ensure no one was living in rented accommodation is they could afford a mortgage. But if the state could I know it wouldn’t be a liberal policy. I don’t think the majority of voters are calling for a change in the law to ensure that those who can afford to buy a home should be excluded from renting a property.

  • Peter,

    You have stated that those with a health condition which means they can’t work should not live in poverty “But of course there has to be a recognition that there are those few who genuinely aren’t capable of doing anything at all and they would of course qualify the benefits you have in mind” (5th July 6.06pm).
    You have stated that those unemployed “should be allowed a reasonable period of time on generous benefits to find another job” (6th July 4.49pm).

    Therefore you should be able to answer yes to this question – If the government runs the economy to minimise unemployment and provided a job guarantee to those unemployed for more than six months can you support my solution for ending relative poverty in the UK?

    I don’t understand why the logic of your first two positions do not lead you to answer this question yes.

  • Peter Martin 11th Jul '19 - 6:34pm

    @ Michael,

    Yes.

    With the proviso that I clarify what is meant by a ‘voluntary’ job guarantee. This can mean several things. It can mean that those choosing not to take the job will get:
    1) Nothing 2) The present level of social benefits 3) Your enhanced level.

    Some MMTers mean nothing! I wouldn’t go that far. I’d keep the present level of benefits as an option but I would only extend it to your extended benefits beyond a six month, or whatever was the agreed period, except for those who qualified as being unfit for work.

  • Peter,

    Thank you for finally answering my question. Therefore it seems that our difference is that you see some people as deserving and some as not deserving. I don’t consider that as liberal.

    I don’t think a Job Guarantee scheme is voluntary if refusal costs the person money. There is a world of difference from receiving more money when in a JG and having one’s benefit reduced because you felt that the JG was not suitable or you just didn’t fancy doing it. It would be like having a benefit sanction.

  • Peter Martin 12th Jul '19 - 7:04am

    @ Michael,

    “Deserving” ? Like we all deserve to be supported in comfort without having to make any contribution at all? That would be illiberal?

    LibDems don’t seem to have any problem with the NAIRU. When was the last time we heard any prominent LibDem speak out against the concept? Or even mention it? How many LibDems even know what it is? Where the ‘liberality’ in that? JoeB who, apart from the LVT, pushes the official LibDem neoliberal line thinks the economy is close to full capacity anyway. He thinks 4% unemployment is good enough.

    But you can’t support a Job Guarantee on the grounds that a refusal might “cost the person” if your extended benefit system were to exist? Except it doesn’t exist and probably never will! So, in reality, a JG won’t cost anyone anything by their refusal.

    Have you considered how your extended benefits system will affect the NAIRU which most LibDems do implicitly support? The NAIRU works, albeit cruelly and not very well, as a counter inflation measure because people are worried that if they aren’t compliant they’ll lose their jobs. Then they’ll end up as one of the 1.5 million who are unemployed or as one of the 4 million who are underemployed on ZHCs.

    Take away that worry and the ”discipline’ of the present neo-liberal system is taken away too.

  • Peter,

    Liberalism values each human being equally and therefore liberals should not see some people as deserving and some as undeserving.

    Do you really think that living at the poverty line is living in comfort?

    I think the Liberal Democrats were still advocating full employment at the 2005 general election. I think it was after this that the economic liberals captured economic policy in the party and accepted that unemployment should be kept within the Non-Accelerating Inflation Rate of Unemployment (NAIRU). The social liberals have not re-captured economic policy yet, but with Vince retiring as leader and if Jo is elected leader there is hope we can.

    I think most people would like to be able to buy the odd luxury, not have to worry about how to pay for a new home appliance if the odd one breaks and to afford a holiday away from home every year. Living at the poverty line denies them all of these. I also think that most people of working age would prefer to work than not for reasons other than economic – for social acceptance; to do something useful.

    I do support a voluntary Job Guarantee scheme and a free training scheme for those unemployed. I do believe it could exist with benefit levels at the poverty line. I would expect that those doing either a training course or in a JG would be better off financially than those who choose not to. This is because I would pay their travelling costs and give them say £50 on top of their benefits (a bit more generous that the old Employment Training scheme c. 1990s).

  • Peter Martin 16th Jul '19 - 9:03am

    @ Michael BG,

    I thought I might just list some advantages of the JG over your suggestion of improved benefits. Most of these arguments also apply against a UBI

    1. Social Benefits are intrinsically inflationary and do not increase productivity the way a JG does.

    2. SBs do not engage people for job readiness and can facilitate long term unemployment and ultimately unemployability.

    3. SB do nothing to force the private sector to improve wages the way the JG forces the private sector to compete for workers on price.

    4. It is unconditional as it is paid without a requirement to work or to demonstrate willingness-to-work. JG makes productive work out of tasks that are normally performed by volunteers or left undone.

    5. There are psychological advantages of being actively engaged in a Job Guarantee providing nationally funded but locally administered community jobs suited to the skills and preferences of those involved. This benefits people’s mental heath and well being. Workers have a feeling of inclusiveness ie being part of the community.

    6. SBs divides society on the basis of earned and provided income.

    7. SBs do nothing to encourage disabled workers to enter the workforce. Unemployment rates of people with Downs syndrome are in the region of 80%+
    https://www.bbc.co.uk/news/blogs-ouch-32613957

  • Peter,

    You have a real difficulty in accepting that it is right to pay benefits at the poverty line. Do you understand why you think it is OK for the state to allow someone to live below the poverty line?

    You still seem to think it is an either or situation; that it isn’t possible to have basic benefits at the poverty level and have a voluntary JG scheme. I don’t think this is true and I would gradually implement both together over a number of years.

    Please explain why increasing basic benefits to the poverty line would be inflationary?

    Please explain how a JG increases productivity?

    If the unemployed are not given the help and support they need to get back into work they are less likely to get back into work, but this has nothing to do with how much they receive in benefits.

    Please explain how a JG “forces the private sector to compete for workers on price”?

    Increasing minimum wage rates or having full employment are the best ways of ensuring employers pay their staff higher wages.

    We don’t require those of retirement age to work. We don’t require those too unwell to work. These are good things.

    There should be an expectation that the unemployed have the willingness to take a suitable job within one hours travelling distance of home and to demonstrate they are trying to find work or make themselves more employable. If they can’t do this they would need more support to help them do so.

    A JG scheme should not be workfare. It should not be about doing the jobs which no one does currently. It is not a cheap labour scheme.

    People can gain the same mental health and self-worth benefits from doing voluntary work as you think they would get from a JG.

    Do you really think pensioners are divided from those who work?

    Having benefit levels at the poverty level would ensure that those who have disabilities have a better life and would make working only a few hours a week (with the correct disregards and taper) economically beneficial for them. A JG might not provide the jobs that suit disabled people, especially if the focus is on cheap labour and doing the jobs no one currently does now.

  • Peter Martin 16th Jul '19 - 2:54pm

    @ Michael BG,

    I thought you were aiming to get everyone above the poverty line. But now you’ve settled for just on for the poverty line?

    The system we have at the moment depends on having some people below the poverty line. These are the unemployed and the the underemployed in our society. This is the way the capitalist system disciplines the working class to ensure a level of compliance. Its the basis of the NAIRU theory. ie If the working classes have it to easy they’ll just ask for higher and higher wages. If you’d had a more Marxist background you’d probably understand that without my having to explain it to you! 🙂

    So yes it’s a nice idea, and not at all surprising that it should come from a well meaning Liberal but just handing out money can remove some individuals from poverty but it can’t work in general because the system depends on it.

    So, what can be done? I think we both agree that a system that relies on having this pool of unemployed and underemployed to discipline the workers and prevent inflation is immoral. That’s where the JG comes in.

  • Peter Martin 16th Jul '19 - 2:55pm

    @ Michael BG (cont),

    “Please explain why increasing basic benefits to the poverty line would be inflationary?”

    Because they’d spend it!

    Please explain how a JG increases productivity?

    In the short term they’d be doing something for their money. Training would be a large part of the JG especially with younger people who might lack skills and experience. Maybe 60% work. 40% days in college. This increases a worker’s productivity in the longer term.

    “People can gain the same mental health and self-worth benefits from doing voluntary work as you think they would get from a JG.”

    Have you checked with anyone on this point? Of course, if anyone wants to not collect their pay packet they wouldn’t be compelled to.

    “Do you really think pensioners are divided from those who work?”

    Why should they after a lifetime of contribution? The JG isn’t about making everyone work until they drop.

    “A JG scheme should not be workfare. It should not be about doing the jobs which no one does currently. It is not a cheap labour scheme.”

    Agreed. If a JG scheme were in existence, and I was looking for work, I’d probably put myself forward to help with the local canal restoration society for part of the time and help out in the local schools for the rest. People should be allowed to choose what they do if they can show it has a value to society.

  • Peter,

    In the OP I wrote, “We need to ensure that those living on benefits are living at the national poverty level and not below it”. My view has not changed. If someone lives at the poverty line they are not living in relative poverty.

    You are mistaken. Between about 1947 and 1973 Keynesian economics achieved full employment in the UK. Therefore the system can work with full employment and does need there to be a large pool of unemployed to control inflation.

    You know that increasing the money in the economy does not have to increase inflation. This is why I don’t advocate doing the increase in basic benefits in one year. You know that I believe that the government should only increase its spending not funded from taxes within an 3% annual growth envelope.

    Government provided education and training does not increase productivity. It is investment that increases productivity. Making someone employable and then that person being employed can increase the amount produced, but this is not an increase in productivity.

    I have done voluntary work and therefore know first-hand how that can increase a person’s mental health and self-worth. I have also been on a government scheme and know that it does not necessary result in increased mental health and well-being. I don’t expect anyone on a JG to get a pay packet, just increased benefits.

    As you don’t think that pensioners who receive benefits are divided from those who work, it is possible that this could apply to those on other benefits.

    You haven’t yet answered – Please explain how a JG “forces the private sector to compete for workers on price”?

  • Peter Martin 16th Jul '19 - 10:29pm

    @ Michael,

    Possibly you’re right in saying there will only need to be a small pool of reserve labour. Maybe 2%. Perhaps 3%. Could be 4%. We’ll have to see how we go. Whatever the number it’s better they are on a JG than unemployed or underemployed on a ZHC.

    Please explain how a JG “forces the private sector to compete for workers on price”?

    I’m surprised you have to ask. If the JG pays £N p.h. the private sector isn’t going to get many takers if they are offering only £(N-1) p.h.

    “Government provided education and training does not increase productivity. It is investment that increases productivity.”

    I think you’ve been taking too much notice of JoeB !

    A person paid to do nothing has zero productivity. By definition. If we pay a person to do something then there has to be an improvement. Productivity is a useful concept if we are thinking about actually, er, producing something. But its not so clear cut with many workers. What is a park worker producing? He’s mowing the grass, planting flowers and keeping the local park looking good. Exactly the kind of person who local councils have been getting rid off. So the park then starts to look not so good. How do we measure that lost ‘productivity’?

    So we replace him with a JG worker and the park starts to look good again. That has to be a benefit to society surely.

  • Peter,

    It is better that a person does not live in poverty. If benefits are at the poverty level then ZHC are less of a problem. A JG is not going to help someone too unwell to work but benefits at the poverty line would.

    I understand that some people mistakenly think someone on a JG would be paid an hourly rate wage. I don’t think this will happen because for some it wouldn’t be enough. As I have stated those on a JG will get benefits plus an extra amount and I have suggested £50 and their travelling expenses.

    As I suggested you have confused increased production with increased productivity. If a company employs an extra person it is likely that their total production will increase. However how much each person produces (the productivity) is likely to stay the same (but I think Joe might say productivity could decrease because of diminishing returns). To increase productivity the amount produced by each individual needs to increase. This is done normally by buying new equipment.

    I am also concerned about your concept of what work people should do on a JG. Have you any experience of restoring canals or helping out in a local school? How would doing these roles assist you in getting a job in your normal occupation?

  • Peter Martin 17th Jul '19 - 8:03am

    @MichaelBG

    I think we’ve just about exhausted this topic for now! Pavlina Tcherneva has probably done the most work on the JG.

    https://www.pavlina-tcherneva.net/job-guarantee

    Having said what I’ve said, you might be surprised to learn I do have some reservations of my own. It’s not about forcing people who are too sick into the workforce. I’m happy to leave that to the medical professionals.

    Rather its about the status of JG workers. Will they be allowed the same rights and privileges as all other workers? What about if workers are fired but then rehired under a JG scheme? Will their pay and conditions be the same?

    So there are some problems to be resolved but it’s an idea worth exploring.

Post a Comment

Lib Dem Voice welcomes comments from everyone but we ask you to be polite, to be on topic and to be who you say you are. You can read our comments policy in full here. Please respect it and all readers of the site.

If you are a member of the party, you can have the Lib Dem Logo appear next to your comments to show this. You must be registered for our forum and can then login on this public site with the same username and password.

To have your photo next to your comment please signup your email address with Gravatar.

Your email is never published. Required fields are marked *

*
*
Please complete the name of this site, Liberal Democrat ...?

Advert



Recent Comments

  • User AvatarRichard Underhill 17th Jul - 11:36am
    "safely to the moon and back" is the key element of President Kennedy's objective. It follows that humans should not be sent to Mars unless...
  • User AvatarPhil B 17th Jul - 10:45am
    Sue - thanks for that, I have to admit I was wondering much the same. I can stretch to the idea that a Liberal party...
  • User Avatartheakes 17th Jul - 9:54am
    I failed to get a comment published about the Cardiff by election, simply saying being a Con/Lib Dem marginal it would be interesting. Was a...
  • User AvatarDavid Raw 17th Jul - 9:47am
    @ Michael 1 "It’s the truth that UC was not implemented (or virtually not at all) under the coalition and indeed most of those that...
  • User AvatarGordon Lishman 17th Jul - 9:09am
    Paul Barker: “I don’t want to sound defeatist but”. That statement sounds a but unlikely, considering the tone of your usual contributions.
  • User AvatarRichard Underhill 17th Jul - 9:05am
    It may be necessary to win Brecon and Radnorshire twice in quick succession. Please be very nice to the local people, even if they are...