Policy pitch: Divert money from Tax Credits to Lifelong Training Accounts

Have you ever heard the following?
“The government should stop subsidising exploitation wages.”
“I work hard for my money. Families on child tax credits need to get up off their backsides.”
If you’ve canvassed on council estates you probably have. And, no doubt, the #labservatives have too, which is why both of them supported massive cuts to welfare.
There are good reasons for continuing with in-work benefits. The policy of both Labour and the Conservatives is to raise the minimum wage and cut benefits. This will result in employers replacing lower paid employees with automation; reorganising their business to employ fewer, more highly paid, staff; and moving jobs overseas. They may also find ways to avoid the minimum wage by subcontracting to the self-employed. All this could be very bad for the employment prospects of those with low skills. Far better to pay in-work benefits.
At the last election, the Liberal Democrats championed the cause of benefits. Both Labour and the Conservatives proposed cutting them. There was strong support for Liberal Democrat policy from experts such as the Resolution Foundation, the IFS and the Economist. However, we failed to sell this to the electorate.
When budgets are tight, if a policy does not have public support, perhaps we should consider other policies which bring similar, perhaps greater benefits, and which will have wider support in the community.
Vince Cable has already proposed lifelong learning accounts. A good policy, though I suggest we re-name them lifelong training accounts. But with an existing deficit, an ageing population adding to budget pressures, and so many other priorities, will the electorate believe it could happen?
Diverting money from Tax Credits to lifelong learning would be controversial. Existing Conservative and Labour policy of cutting benefits will reduce the standard of living for those on low incomes. So, in the short term, would this policy. However, it would also focus resources on addressing the underlying cause of low incomes. For too many, the school system has not given them the skills they need to thrive in the modern work place. We often hear that we need to invest in lifelong learning, to keep our skills up-to-date, and so ensure that we have good jobs all the way through to retirement. Unfortunately, in the main, it is the high-skilled who do this, and the low skilled do not.
This policy would be a way to prioritise the real reason for stagnant living standards. It would not just be about providing the funds, but also about changing behaviour and attitudes.
It might work as follows:
1) Money would be explicitly redirected from tax credits to these accounts. Some of the Government’s existing reductions in benefits would continue, but the money would then be shifted to lifelong training. The controversy surrounding this could be useful in itself, in raising awareness of the new accounts, and sending a powerful signal of the importance of raising skills
2) The accounts would have the appearance of a bank account, in the name of the individual, so that they would feel a sense of ownership
3) The money could be spent on any approved training course which the individual wanted. This might be numeracy or literacy lessons, information technology training, languages, or indeed anything else that is currently taught at school or in college. It would also be used for training which is more directly related to work. I think the options should be as wide as possible, as long as the training would help employment directly: courses in brick-laying, book-keeping, perhaps even how to be a tattoo artist. It could be different from the approach of the Singapore government, which tightly defines what courses are supported with public money. Giving people more freedom to choose their own training should increase motivation and take-up
4) The training courses themselves would have to be regulated. The reputation of this initiative would soon be damaged if bogus courses were created, as a way to siphon off training funds for other purposes, or if the courses were of very low quality, and so brought no meaningful benefit to those attending
5) The money directed into the accounts would have to be spent within a fixed period of time, perhaps five or ten years. If it were not spent, the funds would be reclaimed by the state. This would then free up more funds for future funding of lifelong learning, but mostly it would be to encourage take-up. The policy would actively encourage people to use the funds. Reminders would be sent to those with unspent training funds, to remind them that they must “use it or lose it”
6) The initiative would also encourage people to use their own money for training, by encouraging employers to match fund those of their workers who were willing to partly pay for their own training, and by match funding from the state itself
7) It could also allow employers to use the funds for company-specific training. Someone with unspent lifelong learning money could even mention this in a job application, as a way to increase their chance of employment
8) As this money would be redirected from some income-related benefits, it would be targeted at those on low wages, the very people who are most losing out to globalisation
The initiative would aim to
– foster a national culture of lifelong learning
– help people to make the modern world work for them, especially those who fear globalisation and new technology
– provide skills that modern business needs
– give support for those on low incomes in a way that has more support in the wider population
– provide support in a way that respects the dignity of the individual, rather than tell them what it can be spent on
Many people feel trapped in dead-end jobs; that they have no way of improving their options. As a country, we need to stop just talking about lifelong learning. This needs to be a priority not just for the highly skilled, but for everyone.
In the Social Democrat Group, we don’t form policy. The above idea will have faults, so I hope others will give feedback on how it can be improved. I already know that some other members of the Social Democrat Group committee disagree with parts of it. But that’s fine. We all need to start putting out our ideas, debating and disagreeing with each other, within the Lib Dems and beyond; and so help the wider centre-left to develop a programme to tackle the alienation of so many in our society.
We have already started a joint seminar programme with Policy Network, which aims to discuss this kind of issue. If you want to know more, please sign up for information.

* George Kendall is chair of the Social Democrat Group, which is being formed to celebrate and develop our social democrat heritage, and to reach out to social democrats beyond the party. He writes in a personal capacity.

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

80 Comments

  • Steven Duckworth 28th Sep '17 - 3:48pm

    Interesting piece, George. I think it is exactly the sort of thinking we need to challenge ourselves to undertake. I hope as the Social Democrat Group we can start to stimulate these kinds of debate.

    I’d be more comfortable divorcing the two issues, as I think training accounts are a fantastic idea, but I would be nervous about doing it of the back of welfare cuts. Not least because I think Labour won’t make the same manifesto mistake again.

  • Lorenzo Cherin 28th Sep '17 - 4:10pm

    George

    What is the reason and meaning of diverting from to?

    Are you suggesting reducing the earnings threshold for receipt of them, or reducing the amount.

    I do not support either but the first is tolerable the second wrong.

    We should not be diverting from one pot for those worse off to another deemed more acceptable.

    This is social engineering.

    Rather social democratic not very Liberal.

    Education is not an alternative to food on the table and other basic necessities.

  • Matthew Lynch 28th Sep '17 - 4:23pm

    This is an excellent idea. It’s already in use similarly with the new childcare account, although thus you pay into and get a 20% uplift. Having an education account could also cover things like retraining after redundancy, especially if employers were required to pay in. It could also help people going into a trade rather than further education etc in place of apprenticeships.

    It could also help steer people into specialisms where there is a lack of talent, helping the country better adapt to a fast and ever-changing world.

  • Elaine Woodard 28th Sep '17 - 4:32pm

    Hi George, how can it be Lifelong Training if it is time-limited to 5 to 10 years? You could be cutting off funding just when someone actually needs retraining.
    As to whether it’s a good idea or not, it sounds plausible but I’m not an expert so would want to hear more comments from those who are much more knowledgeable than I am.

  • Peter Watson 28th Sep '17 - 6:21pm

    “Vince Cable has already proposed lifelong learning accounts. A good policy, though I suggest we re-name them lifelong training accounts.”
    I think this is an important distinction and more than just a renaming. “Training” implies something vocational, the development of skills, and an emphasis on employment. “Learning” sounds much more general and, however personally enriching it might be, less directed towards employability.

  • Nigel Hunter 28th Sep '17 - 7:09pm

    What is to stop people spending this fund on luxuries? It will have to be paid seperately and monitored so it is used correctly.

  • Peter Martin 28th Sep '17 - 7:46pm

    @ George,

    You’re taking what is known as a “supply-side” approach to the problems of unemployment and underemployment. The idea is that if we train up those with low skills and give them better skills they’ll then be offered a job. We are creating a supply of something that someone should want to buy. That can work but only if the jobs are there in the first place.

    To balance the supply-side, and no-one is saying that training isn’t a good thing, we need to consider the demand side too. We have approximately a £2 trillion pa economy. That means it needs £2 trillion pa of SPENDING to keep it going. The government spends say £800 million and the rest of us spend £1.2 trillion. If we want 2% growth in the economy and 2% inflation we have to have £2.08 trillion next year. So we need to find some extra spending from somewhere to get the growth so that the people with the extra skills find suitable jobs.

    This can come from one of three sources. More Government spending. More private sector spending. More export spending.

    You’d probably disapprove of more Govt spending.

    You’d probably disapprove of trying to encourage everyone else in the private sector to borrow more. Which is the only way they can spend more.

    You probably wouldn’t disapprove of of getting more exports. But every government I can remember has promised this but the current account deficit has stayed stubbornly high. In any case not everyone can fix its economy by exporting more. The world needs countries like the UK which are net importers.

    So have you considered the demand side? Or, are you one of these right wing economists who think it doesn’t matter?

  • Little Jackie Paper 28th Sep '17 - 9:35pm

    ‘This policy would be a way to prioritise the real reason for stagnant living standards.’

    For a moment I closed my eyes, allowed my self to drift away into a pleasant doze and all of this sounded wonderful. And then I woke up. Mr Kendall, the fundamental problem in the picture is the devaluation of labour. Having skills is wonderful – if you still have to use them in three jobs at the same time to put a roof over your head then there’s a problem. All those years ago I really shouldn’t have bothered with anything passe like education – I should have just got a load of debt and lobbed it at the property market.

    I suppose we could all go on training courses to teach us how to be BTL landlords!

    What is needed is the revaluation of labour. One of the reasons for the UK productivity problem is that labour is dirt cheap and returns flow elsewhere. This article just seems to miss that point.

    Peter Martin – You are, I think, right. However on exports it is worth remembering that the UK is, despite it all, something like the 10th biggest exporter in the world. We sell plenty of ‘stuff’ abroad. The problem in the picture is that despite that export performance we still import ever more. Now obviously we can only sell London so many times. But reducing the reliance on imports is essential. Mr Kendall’s point about skills in part flows from it – the skills need somewhere to go otherwise you just get wage arbitrage and the best-qualified coffee-shop workforce the world will ever know.

    Now obviously there is a question here about how far exporting jobs to the A8/A2 whilst importing their people is a price worth paying for the European Ideal – but a question perhaps best left for another day.

  • It is a shame George Kendall has not listed the Conservative cuts to Tax Credits since the 2015 general election with estimates of the savings being made. It is very likely George would want to include the cuts to Universal Credit (not forgetting the Philip Hammond changes which reversed some of the George Osborne cuts) which he hasn’t mentioned. Then there is the Benefits freeze which also affects in-work benefits. The correct policy is to reverse all the cuts as they hit the poorest in society, we should have the correct policies not increase inequalities because it is popular.

    It is a good policy to increase the National Living Wage and it has the knock on effects of reducing a person’s benefits (Tax Credit or Universal Credit). It is bad for the government to subsidize wages. It is a good thing that businesses bring in more automation and increase productivity. I remember there were rules that stated that someone who works for one employer at the same address for a period of time cannot call themselves self-employed. When was this law repealed?

    If increasing the National Living Wage increases unemployment the correct policy is for the government to be the employer of last resort and to provide free training courses for those without a job.

    By all means call them Lifelong Training Accounts. There is no reason to apply an arbitrary time limit on when the funds can be spend, an age limit might be better say 65. I suggest that everyone is given £3,000 at their 18th, 19th, and 20th and 21st birthdays and then £5,000 at their 21st, 31st, 41st, and 51st birthdays. The money should be usable on anything taught at university and courses which are provided by private companies or any training provider that employers use to train their staff.

    @ Peter Martin

    As always you make some interesting comments. If the government was providing free training to anyone without a job who wants it and paying other unemployed people extra money for taking a job of “last resort”; this would provide some extra demand and increase government spending.

  • Katharine Pindar 28th Sep '17 - 11:31pm

    However valuable it may be to institute lifelong training accounts – which I understood was to compensate the 60% who don’t go to university, and might be funded to some extent by a graduate tax – I am horrified that any Liberal Democrat could propose paying for them by ‘reducing the standard of living of those on low incomes’, by any degree and for any length of time. It’s very bad that benefits have been frozen or cut. It’s awful that Food Bank usage has increased. Fortunately our party’s policy is to help those on benefits, and I’m with Lorenzo Cherin and Michael BG on this. We don’t propose things that are wrong because people on the doorsteps want it, George, for heaven’s sake – as chair of the Social Democrat Group you have now put me off the concept of your group.

  • Peter Martin 29th Sep '17 - 7:24am

    @ George,

    If this country doesn’t become higher skilled and doesn’t have higher productivity, the state will simply not have the tax revenues to address other social justice issues.

    Yes, we need, or perhaps would like, everyone to be better educated and have an increased level of skills. Yes, we would like them to become more productive. But we need to think about this. Increased productivity nearly always comes through increased automation, as with your driverless cars example. Similarly, if we equip supermarkets with automatic checkouts we need fewer check-out workers. The workforce of the supermarket become more productive.

    In a sensibly organised society that’s a good thing. We can arrange for the displaced workers to do something else which we currently “don’t have the money for”. And/or we can reduce working hours. However, we aren’t very good at that. Workers are justifiably scared that increased productivity will just lead to increased unemployment.

    The problem for government isn’t “hav(ing) the tax revenues to address other social justice issues”. If we have increased productivity then we need increased wages so that everyone can afford to buy the extra things that are produced by the more productive economy. The economy needs more money to be actively circulating. If government intervenes to create and spend that money into the economy without the extra productivity we’ll probably get too much inflation. But if we get the extra productivity and the government doesn’t increase total spending then we’ll end up with too much unemployment.

    So the workers’ fears about productivity and automation leading to unemployment will turn out to be quite justified.

  • Peter Martin 29th Sep '17 - 8:14am

    @ George

    “I believe we should increase spending. I’m in favour of a penny on income tax for the NHS and further wealth taxes…”

    Why do we want to have wealth taxes? If we want to reduce the level of inequality in society then they probably are a good idea. But we need to do our sums. A wealth tax on mansions, for example, might just raise a couple of billion pounds. That’s really neither here nor there in relation to the scale of the NHS issue.

    What will a penny on income tax raise? There’s no point trying to calculate it on the back of an envelope: If 20p in the pound raises £N billion, will 21p will raise £1.05N billion?

    No it won’t, because the increased tax rate will depress the economy and reduce not just the tax take from income tax but all other taxes too! Unless we do a full computer simulation of the entire economy, if that is indeed possible, we just don’t know. It’s even possible that increasing income tax will depress the economy to such an extent that the total tax take falls.

    The only sensible criteria for more or less spending, higher or lower rates of tax, is inflation and the level of economic activity in the economy. If we need more spending on the NHS we can have as much as we like providing it doesn’t cause inflation. When we start to make demands on the economy that are impossible, then inflation will become the rationing mechanism. Then is the time to raise taxes or cut back spending.

  • Martin Walker 29th Sep '17 - 8:20am

    I totally disagree with this proposal.

    I don’t agree with the opening premise that it is better to pay in work benefits than raise the Minimum Wage (the scare stories in here are similar to those peddled by the Tories before it was introduced).

    More pertinently, I totally disagree with the suggestion that the state should push or keep people in poverty so that they can, without any choice, pay for activities which may help them get out of poverty.

    It’s profoundly illiberal, it’s punitive, and it wouldn’t even work because aside from the short term worsening of poverty, a huge proportion of those penalised would never access the opportunities on offer (even if they were of any use, which I doubt).

    I’d be horrified if the Lib Dems ever adopted a policy like this.

  • martin Walker.
    I tend to agree. I would also add that we have a particular form of capitalism that on the one hand makes it more profitable to ship jobs out and import cheap labour. We’re are not offshoring Internet tech support because of a skills shortage, companies to it because Indian wages are so much lower and in the case of a immigrant labour it is not high skilled jobs either, it’s employment that used to deliver in work on the job training. Forklift drivers, builders and so on.
    The reason politicos tend to fall back on training and education is because it’s sounds vitreous in-itself. No one can disagree with the principle, but you’re left mumbling what’s to stop other countries providing the same training cheaper whilst still providing workers on much lower wages? Also it’s a way of shifting the blame. No. we’re not using cheap labour and offshoring because it keeps overheads down, means more money for us and we can bypass organised labour. it’s because you guys lack “skills” and need to modernise/become-serfs-again-like-in the good-old-days.

  • ………………………….There are good reasons for continuing with in-work benefits. The policy of both Labour and the Conservatives is to raise the minimum wage and cut benefits. This will result in employers replacing lower paid employees with automation; reorganising their business to employ fewer, more highly paid, staff; and moving jobs overseas. They may also find ways to avoid the minimum wage by subcontracting to the self-employed. All this could be very bad for the employment prospects of those with low skills. Far better to pay in-work benefits…………………….

    This sounds almost identical to the Tory/Business argument every time an increase in the minimum wage is mooted…
    UK wages, no matter how low, cannot match those of the third world…Every penny spent on subsidising wages comes from taxation; money which cannot be spent on other things…Higher wages mean more tax revenue (VAT, etc); we should be seeking to do the exact opposite of your recommendations..

  • Peter Martin 29th Sep '17 - 1:58pm

    George,

    “You say that trade imbalances are inevitable, and, despite our long having a very high trade deficit, we should let it increase further.”

    Hang on a minute, George! Where did I say that? There’s two ways to look at trade deficits. If we want a lower trade deficit we have to lower the pound’s value. Maybe peg it to the euro at a rate of about 1:1. The BoE could do this very easily. It just creates pounds for anyone who wants to buy them for one euro.

    And why would they want to buy them? The only reason would be to buy our exports. That would fix the problem but there would be howls of protest from those who like a having a higher pound. Holidays in Spain would be more expensive for a start!

    So the alternative is to have a higher pound, learn to love the trade deficit and not worry about debts and deficits quite so much.

    But you can’t have it both ways!

    I sometimes think you only make these kinds of misrepresentations, and there are others, because you don’t really understand what I’m saying!

  • Peter Hirst 29th Sep '17 - 4:24pm

    Robing Peter to feed Paul will always be controversial. We need both lifelong training and tax credits. I think an incentive to limit families to two children might help fund them though it goes up against free choice. Climate change is so serious that it is hard to justify large families.

  • George – I applaud you motivation which I entirely share.

    But … the idea of Lifelong Training Accounts or similar is structurally wrong by which I mean that it doesn’t get to the heart of the problem.

    Think about it: deciding to train is at root an investment decision but NOT just of money; both investment and pay-off also have elements of aspiration, talent, lifestyle, mental health etc. So the aim must be to improve the quality of investment decisions re training in both financial and human terms.

    The aim should be to get the maximum number of odd-shaped human pegs into holes that are right-shaped for them making the biggest winner the trainee and the second biggest the employer. The win for “the economy” is merely the summation of the individual gains so the key is to get it right for each person and firm individually. If it is the financial constraint goes away.

    Also, empowering people and firms to realize their ambition is exactly what we, as Liberals, should be doing.

    So, if we have a system that treats people as obstinate sausages to be pushed through a top-down system that Whitehall deems “good for them” and/or “good for the economy” (complete at school level with truancy officers), then we are going to develop an underclass of those who fell through the cracks. Much of the public ‘investment’ will be wasted and the human dimension ignored. Overall, the result will be perilously close to central planning,

    Alternatively, we can empower people to make their own decisions by innovating to create new institutions and arrangement that align ambition, opportunity and funding. It turns out this is rather easy to do.

    The secret to making this work is to refund employers the costs of training (for approved courses and according to a set tariff for each course/stage) but ONLY when the trainee has completed a discreet stage of the course. Employers would be incentivized to participate by a training levy and then to pick promising candidates and support them effectively in order to get their costs back. Similarly, would-be trainees would have to convince employers they were serious. So the taxpayer would have little risk given that even part-qualifications can be valuable.

  • Nick Collins 29th Sep '17 - 5:04pm

    @ Peter Hirst. Should that be robing Peter to disrobe Paul?

  • Neil Sandison 29th Sep '17 - 5:24pm

    George
    The concept of a lifelong learning and retraining account is not a bad one but i think you went overboard with the detail .Personally i do not think it has to be punitive ,The tories are already doing that with Universal “Discredit”. Which even conservative MPs are finding hard to stomach.Everyone needs train and retrain in a fast and changing economy even those already qualified or looking for a career change as old and outdated sectors of the economy become redundant .Dont overthink the solution and ensure it has some flexability particularly when dealing with learners /trainees who may have multiple needs before they can contribute society or the workplace.

  • @ Katharine Pindar

    It is my understanding that Vince’s Lifelong Learning Accounts would include something towards university tuition fees, hence my £9,000 before age 21 (I was not suggesting £8,000 on a person’s 21st birthday, just £5,000 (I forgot to delete the first £3,000).

    @ Peter Martin

    I don’t think George Kendall has ever studied economics and so he relies on the consensus among economists.

    @ George Kendall

    It is disappointing that you think your Lifelong Training Accounts should only be available to the unemployed. I note you haven’t commented on my suggestions for your Lifelong Training Accounts.

    You take a very conservative position with your “If you agree with @Michael BG that we use the government as “employer of the last resort” to resolve any unemployment problems that result from a higher minimum wage; again, I’d like to ask what countries have successfully sustained this in the long term? I don’t think there are successful examples.” If you had been around in the 1930’s you would have been against Keynesian economics and the New Deal because they had not been tried anywhere and didn’t have a record of success. While you think employment has been high, I think unemployment has been historically high since 1979 when the government gave up on trying to achieve full employment. Full employment was achieved in the 1950’s and 60’s in the major economies.

    It is also disappointing that you think it is important to reduce the budget deficit. If you understood Keynesian economics you would know that there has to be a balance between the trading balance, the government deficit and the rest of debt in society as Peter Martin often points out.

    According to our manifesto costings ending the Benefits freeze would cost £3.3 billion, while it is likely to cost less to provide 2 million jobs of last resort (based on people receiving on average £50 more than their benefits).

  • Colin McDougall 29th Sep '17 - 11:13pm

    Good article George although I have some concerns.

    Our new leader has correctly identified that as a nation we need to fundamentally improve productivity in the public and private sector. At present our economy is flat lining in practical terms and this is driving most of our social justice problems including falling real incomes. I saw some analysis that the only reason that productivity has risen at all in the last decade is (1) more people joining the labour markets, (2) people at work working longer hours and (3) foreign workers.

    Life long learning accounts are a good tactical idea but to be honest I think we need much more robust intervention by government to drive improved productivity. If we compare our economy with Germany it is clear the structure and ownership of SME firms is critical plus a commercial investment bank backed by the state. With a long term plan, tactical changes are unlikely to make real progress.

    Social Democrat Group – Committee member

  • @ George Kendall

    You are correct I support reversing the Conservative benefit cuts, plus abolishing the bedroom tax, increasing training. I would expand the training levy to 1% on all organisations who pay more than £1 million a year in salaries. I would also add a foreign skilled worker levy of 1% of their salary to pay for the training of a UK citizen to do that job. I also advocate a graduate tax for those earning above £26,000. I think there should be excessive top salary ratio tax to reduce top salaries to average wage ratios. I support returning corporation tax to 20% (according to our costings raising £3.6 billion a year). I also support the idea that profits made by foreign companies and organisations in the UK should be subject to the same rate of corporation tax. I support the government becoming the employer of last resort and would allocate £1 billion in the first year to fund it. I also think large employees should be taxed if they don’t employ their share of those who have disabilities or long-term illnesses. I support increasing National Insurance to 12% for those earning above £45,000 to help pay for a Citizens Income. Recently I have suggested a gift tax on all gifts above an annual figure at the same rates as Income Tax. In principle I support the Labour Party’s policy of increasing Income Tax for the top 5%, by lowing the 45% allowance to £80,000 from £150,000 and having a new rate of 50% starting at £123,000 (according to Labour it will raise at least £6.4 billion (about the same as increasing all rates by 1% which I don’t oppose). National Insurance could be expanded to all income and not just earnings. It is not a problem to increase government revenue. They are political choices and as a liberal I think we need to do a lot more to reduce economic inequalities and as you are a Social Democrat I think you should agree with that aim and be prepared to make the same political choices.

  • Peter Martin 30th Sep '17 - 8:19am

    @ George,

    “……. and then advocated increased state spending which would suck in even more imports, I assumed you were advocating an even higher trade deficit. Sorry for my mistake. I didn’t realise you were advocating that the Pound cease to be a floating currency.”

    You’re at it again! More misrepresentation. The world does need the net importers. If every country was like Germany and insisted on running an export surplus, the world trade system would break down. The arithmetic obviously doesn’t allow it.

    The German Bundesbank knows this very well. That’s why they buy up the bonds of their customers (the US and UK) in large quantities so that we both can continue to be good customers. But it’s entirely in their hands. If they and German politicians decide Germany should be a net importer then we couldn’t do anything about it. If other countries like Denmark and China did the same then the UK trade would be more in balance. Unless we could persuade someone else to supply us with lots of real things and just take our IOUs in return.

    This nothing to do with the pound being a floating currency.

    Whether the Government should or shouldn’t spend more is a political question. But if you are advocating that productivity and production be increased, you need to answer the question of who is going to buy it and where the money is going to come from. The big net exporters do have lots of UK pounds and maybe you can persuade them to buy it. If so, the very best of luck to you!

  • Katharine Pindar 30th Sep '17 - 5:15pm

    I am reading all this with great interest but am not qualified to join in the economic debate. I have only one question to add: what difference will it make to the economy if British workers are allowed, or even encouraged, to continue to take jobs and perhaps start up businesses in the rest of the EU? And contrariwise, what if Brexit prevents them?

  • George – Lifelong Training Accounts make those eligible into “money on legs” and that’s not likely to end well for either account holders or taxpayers.

    Some account holders will justifiably need more training than the entitlement covers. So what happens then?

    At the other end of the spectrum some won’t want to take up their entitlement but to a persuasive course provider they are a profit opportunity. There’s an unhappy precedent for this.

    Some years ago the then government decided the economy would benefit if more people were computer literate so it introduced a scheme whereby providers were paid for anyone they put through a course leading to the ECDL (European Computer Driving Licence) which is a perfectly good course – no problem there.

    Take up was good but it turned out to be very largely spurious. Dodgy providers discovered all they had to do to get payment of (from memory) nearly £300/head was get a signature on a form. They were supposed to provide a textbook and deliver a course and some did but many only provided the textbook, some not even that.

    Eventually the government had to cancel the scheme with great embarrassment and a very substantial loss to the taxpayer.

    Now you could argue that it should have been set up better and that’s true but it would have needed a new bureaucracy and lots of regulations to match which is just what I think most people are fed up with not to mention that it would have created an expensive overhead.

    In a related way I suspect one eventual result of student loans – making them also “money on legs” – will be to distort the priorities of those running universities. In the US there is a well-established trend for top administrators to take more leaving less for the academics and I fear that trend is coming here. Is this a factor in the growing pension deficit? Time will tell.

    http://www.bbc.co.uk/news/uk-40763577

  • @ George Kendall : “This policy would be a way to prioritise the real reason for stagnant living standards. It would not just be about providing the funds, but also about changing behaviour and attitudes”.

    I rather thought “the real reason for stagnant living standards” was a combination of Government austerity policy (in which some Lib Dems did not exactly distinguish themselves) and exploitative pay from greedy employers”.

    But then – as a radical Liberal going back to 1962 – and as a Food Bank Trustee going back to 2015 – what do I know ?

    You can’t read much J.S. Mill – or even David Owen’s SDP Memoirs – on an empty belly George.

  • Peter Martin 30th Sep '17 - 9:30pm

    @ George,

    Qualifications? OK. My first degree was in Physics then did a postgrad M.Sc. in Electronics and my day job ever since has been as an Engineer. So, like you, no formal qualifications in Economics.

    So I’ve tried to tackle the subject of how the Economy works in the same way as I would any engineering/scientific problem or question. So the flow of money in the economy is like the flow of electrons in an electrical circuit. The electrons are created in a battery. Money is created by government. The electrons move around the circuit and are collected at the other terminal. Money moves around the economy until it is collected in taxes etc.

    And why would it not get collected in taxes? Because someone hangs on to it and saves it. So this explains why not all money comes back. There’s nearly always a deficit.

    One thing that everyone learns when studying Physics is to beware of “common sense”. What might seem like “common sense” doesn’t always give the right answer. I think this is especially true in economics. Our common sense tells us that being in debt is a bad thing because, for us, it is. But if we look at the bigger picture of the sectoral balances we can see that someone has to be in debt, someone has to hold the liabilities so others can hold assets. That someone, or something, has to be government.

    It’s not that difficult. It’s not that hard to understand – unlike Quantum Mechanics! I always had a bit of a problem with that!

  • Peter Martin 30th Sep '17 - 10:12pm

    @ George,

    Maybe you missed it but I criticised Vince Cable for using the phrase “magic money tree”. The reality is that money is created by government and it circulates around the economy until it is collected in taxes. So raising taxes doesn’t really give the Government any more money. It just reduces the number of transactions that any particular unit of currency is involved in before it gets back to Govt.

    So when Vince Cable says something like “For starters, Liberal Democrats will continue to argue for another penny in the pound on income tax to pay for it. That means more than £6bn extra each year for the NHS and social care”

    He is, not to put too fine a point on it, talking cr*p!

    Imagine we are pumping water into a tank. There is an overflow in the tank so that the water coming out of the overflow has always to be equal to the water pumped in. Then someone comes along with a bucket and fills it and saves that for their own use. So we get now less coming back than we pumped in. The deficit is exactly equal to what that person removes and saves for later use with his bucket.

    So Vince Cable comes along and say we need to get more water back out of the tank. So we lower the overflow level (that’s the same as raising taxes) and initially we do get more water back but the water level falls. (that’s the same as the economy having less money). Very quickly the water going back to government falls back to what it was. The person with the bucket is still filling it and causing a deficit in the flow.

    So Vince then has another bright idea. He suggests that we all have to live “within our means” and now he’s going to reduce the amount of water being pumped into the tank so that it equals what is coming out. But we still have the guy with the bucket….

    Do you see the stupidity of it all?

  • @ George Kendall

    I have not criticised you for not having a formal qualification in economics and I don’t think one is needed. I have criticised you for accepting the neo-liberal economic consensus and particularly not understanding Keynesian economics. With more study you could fix these things. I studied economics at “A” level and as part of my diploma in Business and Finance (as you have asked) and have an interest in it, as everyone interested in politics should.

    You could do with some patience. I always respond back, but I am not always very quick at doing it.

    If you understand that economics is not a true science and all predictions need to be taken with a huge pinch of salt you should not rely so heavily on the neo-liberal consensus but be open to other views.

    I don’t recall Vince ever writing an article for LDV and if I read an article of his and disagreed I would post my disagreement, But I don’t think he would respond as he couldn’t be bothered to reply to my email with questions when he was standing to be leader of the party (last year many candidates in our internal elections unlike Vince did answer my emailed questions and with some we exchanged a few emails). I did comment on Caron’s article “Five quick observations about Vince’s speech” [https://www.libdemvoice.org/five-quick-observations-about-vinces-speech-55314.html#comments] and pointed out Vince’s movement away from deficit reduction.

    The Keynesian model for the economy makes sense and therefore government deficits are not a bad thing. The argument for reducing deficits during periods of non-full employment should only be made within the context of confidence. This is why it was silly of Liberal Democrat MPs to think the UK was like Greece in 2010 and to support the Conservative economic programme of cuts (which I have been saying for some time).

    I have pointed out that you have misunderstand the IFS critic of Labour’s tax and spending policies. You should remember that Labour’s costing document provided £48.6 billion of income to go with their £48.6 billion of increased expenditure and included nearly £4 billion in reductions to the OBR figures to take account of changes in behaviour. This is proper budgeting and no different from our own and Vince was silly to say “For them budgeting is just a bourgeois hobby.”

  • I took your idea, Lifelong Training Accounts and radicalised it: making them available to everyone; putting a value on them; and wanting employment training free for the unemployed. As I have said you take a conservative position and I think you should just accept this criticism because you state you don’t support schemes that have not a proven record of success and believe that pilot schemes should be done first. As I stated you would not have supported Keynesian economics in the 1930’s or the New Deal.

    Before we went to the same university George, the UK economy was often run to reduce balance of payment deficits (stop-go economics). Therefore it is possible that the natural deficit in our balance of payments has been with us since the Second World War and is not caused by either Barber’s “Competition and Credit Control” (which I learnt about while studying Commerce at school) or the recent increase in household debt. The National Debt was reduced from 237% of GDP in 1946 to 47% in 1978 by having an economic policy of full employment not balanced budgets or deficit reduction (the debt increased from £23.6 billion in 1946 to £79.5 billion in 1978).

    I have forgotten what you studied at university, please can you remind me. If it was an art subject did you always agree with the consensus? I know I didn’t, I was persuaded by the arguments presented.

  • Peter Martin 1st Oct '17 - 8:04am

    @ George,

    I’m not contemptuous of economists like Keynes, Lerner, Kalecki, and Godley. They, and many others, have pretty much got it right.

    You are also right to say that much of Economics is driven by human behaviour which can be unpredictable. But earlier on you’ve made the assumption that the cause of the trade deficit is excessive levels of debt. We can’t know it is this way around for this very reason. It could equally well be, (and I would argue it probably is!) that the cause of excessive debt is the trade deficit. What we can say, for sure, is that there is an accounting relationship, which is true to the penny, that the UK’s external deficit has to be matched by someone in the UK doing the borrowing.

    Where Vince and all the other neoliberals go wrong is to think that reducing the level of borrowing will reduce the trade deficit in a benign way. It can only do that by depressing the economy. Unemployment and underemployment will rise. Then we’ll be poorer and won’t be able to afford quite so many imports. It’s not really a solution.

    If countries like Germany, Denmark, Switzerland, Singapore, China etc insist on running export surpluses, which they achieve by currency manipulation, then someone in the world has to run the trade deficits. That’s largely us and the USA. That, again, is a very simple to see accounting relationship.

  • Peter Martin 1st Oct '17 - 8:25am

    “For them budgeting is just a bourgeois hobby.”

    If we’re talking about a local council, then there is such a think as a “budget”. Its income is largely independent of its expenditure. It can’t create money. It can only borrow it. We know that lending to anyone else but central government can be risky, which is why government often guarantees bank deposits against default. So lenders will demand a higher interest rate as an insurance against possible default. It makes sense to “balance the books” wherever possible.

    But for central government the word “budget” is a misnomer. What ever it spends comes back in taxes unless it is intercepted and saved along the way. Its income is highly dependent on its expenditure. Cutting its spending is cutting its income. Raising taxes is cutting its income. Tax rises depress the economy.

  • @ George Kendall. Thank you for your courteous response, George, although I’m afraid I still disagree with you.

  • Peter Martin 1st Oct '17 - 4:35pm

    @ George,

    Anyone who talks in terms of a “magic money tree” is a neoliberal!

  • @ George Kendall

    You again are mistaken. I understand why someone can make that mistake as I often do when I am depressed. I never called you a Conservative or a Neo-Liberal. I stated that you were conservative rather than radical and that you accepted the neo-liberal economic consensus rather than explore what others say to discover if what they are saying is likely to be true. I remember being surprised by what Peter Martin was saying, I then went back to basic Keynesian economics and discovered he was correct. You however dismiss it without engaging with it on its own terms. You accept that you are cautious and I just used a different word – conservative.

    Your wrote, “if a scheme has never been tried before, then I believe in pilot studies – as should apply with the training accounts idea.” Which is why I call you conservative and you call yourself cautious. I am not a great supporter of doing pilots first I am not aware of the evidence ever being used correctly afterwards – Poll Tax piloted in Scotland then implemented in England and Wales, Universal Credit piloted first and now being rolled out across the UK, trials of Basic Incomes producing many benefits but not rolled out anywhere.

    I am challenging your cautiousness and calling on you to be radical. I note you didn’t respond to my claim I was radicalising your Lifelong Training Accounts or to the range of government revenue raising ideas I put forward.

    I was watching a TV programme last week, “Egypt’s Great Pyramid: the New Evidence” in which they were saying that the prosperity of Egypt was caused by the Pharaoh’s public works (i.e. the building of the Great Pyramid). Keynesian economics was successful in the 1950’s and 60’s. Modern Keynesian economists do not blame Keynesian economics for the problems of the 1970’s but other factors. You didn’t comment on my evidence from the UK economy between 1946 and 1978 where the National Debt increased by 336.8% in pounds but reduced by 80.2% in terms of GDP by pursuing the economic aim of full employment. It was also the period of the greatest reduction in economic inequality. These things are related.

    I do not know of any country that has had a policy of being the employer of last resort. Please can you let me know which countries had this policy and when and why according to you it failed in its aims?

  • One of my questions Vince didn’t answer was did he consider himself a Keynesian, followed by what he thinks about the government being the employer of last resort.

    It is an interesting question – is Jeremy Corbyn a Keynesian. When he states he wants full employment he is, but when he or his supporters talk of balancing the budget he is a neo-liberal. Having the government as the employer of last resort is an alternative to full employment and it is likely to cost less (and I have only recently become a supporter of the idea [thank you Joe Bourke]).

  • Katharine Pindar 1st Oct '17 - 5:33pm

    It’s been worthwhile, it seems to me, to have this discussion about Lifelong Learning or Training Accounts. I guess our economist Leader will flesh out the idea as he sees it. I like the idea of a lump sum being available to all young people for this purpose, and perhaps some of Michael B.G.’s radical proposals will serve to pay for it. I have to admit I am still baffled by some of Peter Martin’s reasoning (things going round in a balanced way in the economy doesn’t seem to leave any incentive to take any action), so perhaps, as I think George said, the physics way of looking at it doesn’t really apply.

    But I suppose that, as Peter wrote early on, it’s no use training people unless there are jobs for them to go to, so presumably for employers to be closely linked with college provision is important. I know of it in my area so perhaps that is developing well .

    I still come back to thinking of the importance of our hoped-for Exit from Brexit, because young people should continue to be given the chance to find worthwhile jobs in the rest of Europe, and perhaps there should be some interlinking of job opportunities in the same way that students have the possibility of studying in another EU country through the Erasmus programme. I wonder if that could be a possibility worked on, if we do stay in, in the context of developing and extending the co-operation of the nine EU countries, including ourselves of course, outside the Eurozone.

  • Peter Martin 1st Oct '17 - 5:45pm

    @ George,

    “I think our conversation may be turning more into an argument than a debate”

    Maybe you would like to rectify that by addressing some of the points that Michael BG and I both raised.

    Like: Where is the spending is going to come from to expand our economy? The policy of all three main parties in the last couple of decades has been to let the private sector do the extra spending. To this end interest rates have been reduced and reduced until are now at 0.25%. Maybe they’ll be back up a little soon. I suspect the thinking is just that they are too close to zero for comfort.

    So there’s no more scope there. You are clearly against more government spending to expand the economy. We’d all like more exports but liking is one thing. Expecting an increase is another.

    What is your suggestion, George?

  • @ Katharine Pindar

    I will try to explain Peter Martin’s “things going round in a balanced way in the economy”. When discussing these things it is assumed we are looking at the situation when in equilibrium. This assumption does not mean things can’t change and it does mean actions can be taken. (In Peter’s example he did have change, the person collecting the water – not spending but saving). If we start from the basic model we have total expenditure in the economy = total output of the economy, there are no savings, no government and no outside trade. Savings, Imports, Exports, Government Income and Expenditure can be added. Peter Martin has grouped them so instead of having Imports and Exports on opposite sides he just has the balance of payments deficit, instead of government spending and income he just has government deficit and instead of investment and savings he just has private debt.

    It can be expressed as:
    C + S + T + M = C + I + G + X
    Or when home consumption is removed
    S + T + M = I + G + X
    Savings + Govt Taxes + Imports = Investment + Govt Spending + Exports

    Then you can have:

    Imports – Exports = Investments – Savings + Govt Spending – Govt Taxes.

    This website might help – https://www.tutor2u.net/economics/reference/circular-flow-of-income-and-spending.

    Keynes stated that if Government spending is increased there would be more demand in the economy and this could increase the amount produced in the economy (however in our case it also increases imports).

  • Peter Martin 2nd Oct '17 - 9:03am

    @ Michael BG,

    I didn’t really understand the “things going around in a balanced way” question, so thanks for your help on that using the equations for the National Accounts. They aren’t a matter of opinion. Everyone in the Economics profession accepts them but there are just a few who say they Accountancy should be separate from Economics. Ann Pettifor, perhaps surprisingly as she’s normally pretty good, has said:

    “The concept of sectoral balances belongs to the sphere of accounting, not economics. I am not comfortable with it.”

    She doesn’t say it’s wrong though! Sometimes new ideas aren’t meant to be that comfortable.

    @ George,

    I understand your comment:

    “My priority in this thread is to discuss life-long learning, not macro-economics.”

    but the two aren’t as separate as they might first appear. Those of us who have been lucky enough to have been in relatively secure employment will probably know that most learning is done informally in the course of our jobs. Many of us would have started our working lives when computing was in its infancy. The first PCs had only something like “C:/” visible on an otherwise blank DOS screen. Most people took one look and thought “Now what?”. But we learned how to use them with the first spreadsheet and word processing programs without much, if any, formal training. There was always someone around who knew a bit more than you and in turn you’d help others in the workplace who were having difficulties.

    It’s when the macro economics is faulty and those jobs no longer exist that we find we have an increasing problem of lack of skills on our hands. The longer anyone is without work the less employable they become. A training account probably isn’t going to fix that.

  • Peter Watson 2nd Oct '17 - 9:55am

    @Peter Martin “The longer anyone is without work the less employable they become. A training account probably isn’t going to fix that.”
    On reflection, and with some reluctance, I find myself agreeing with you.
    At the start of the thread learning / training accounts seemed like a ‘no-brainer’ but your comments have given me pause for thought. Starting with a degree in chemical engineering, over the years the work skills I have learnt have been while in employment, either on the job or alongside it (e.g. career-relevant study with OU). Simply providing those out of work with funds to purchase training does not feel proactive enough to make a difference.
    I find myself warming to the notion of the government being an “employer of last resort” with this coupled to providing on-the-job training. I can’t claim to understand the economic implications of such an intervention and I suspect that it is probably too statist for many Lib Dems.

  • George (comment 1/10 @ 1:21 pm)

    “How can we give those in need of training the dignity of choosing from a wide range of training, without the risk of bad training…?”

    I like that, especially “dignity”. Let’s add a partial wish list of other features (with apprenticeship-type contexts in mind):

    1. Trainees and employers must be in the driving seat, NOT the Treasury or quangocrats.

    2. Courses must collectively cater for all abilities from the most able and motivated to the least.

    3. Courses will combine on-the-job training with book learning (evening, day or block release); the proportions to vary by course and stage of course.

    4. Training must be top quality; UK qualifications should be the envy of the world and in demand internationally (NB: export opportunity).

    5 Entry requirements should be demanding giving schools a teaching target for the majority not going to university.

    6. Courses must be demanding meaning easy to fail; some will end up Part Qualified – but PQ has surprisingly high value.

    7. All courses must be open to all ages to allow for training/retraining at any life stage with no limit on numbers of courses done.

    8. There must be an examiner/provider split. Those who set and examine course should not provide training. Bad training providers will be exposed and eliminated.

    9. Courses must work for small employers as well as large (NB: strong implications for course administration).

    10. Government would reimburse course costs to employers according to a set tariff but only after the candidate successfully completes a stage. Employers would have to recruit suitable candidates, pay their costs and support them effectively or they wouldn’t get reimbursed.

    Given the above, trade associations should take the lead and be the awarding bodies. They should also be governed by their members (NB: co-operatives have solid Liberal roots) who are the people most aware of the ever-changing requirement for training in their field.

    For convenience call these trade associations “Guilds”. They would governed by a “Guilds Act” comparable to the Companies Act.

    Fantasy? No just a modest development of how accountants do it – a way with a long and proven track record.

  • @ Peter Martin
    “so thanks for your help on that using the equations for the National Accounts”.

    No problem. I have seen somewhere on the internet a diagram that uses water flow to explain it, but I don’t have link.

    You can still get to a DOS like screen with its C:\> Now called Command Prompt. Lots of DOS commands still work.

    @ Peter Watson

    The government being the employer of last resort should not be seen by Liberal Democrats as “too statist” as it is Keynesian (thanks to Joe Bourke for providing the link) – as stated by Pavlina R Tcherneva in “Full Employment: The Road Not Taken” – http://www.levyinstitute.org/pubs/wp_789.pdf.

    If I have understood Joe Bouke correctly he sees people being paid the minimum wage as it seems does Tcherneva, while I see it being more like Employment Training of the 1980’s and 90’s where a person gets extra money on top of their benefits (in 1990 it was £10 plus travel costs and rent if living away from home, I suggest £30 plus travel costs and rent if living away from home). One million people on this scheme receiving on average £50 a week extra would only cost £2.6 billion a year extra (about 0.337% of total government expenditure in 2016-17).

  • George – Thanks for the detailed reply – some follow-up observations.

    2. Catering for the least able. It’s horses for courses. Ability is partly IQ, partly genetic (bricklayers must be STRONG), partly mental state (drive, motivation etc.) and partly interest. This speaks to a need for diversity so everyone can find something that will suit them. So, if you like working outside don’t do accountancy. Within accountancy you can do Chartered (high on book learning) or Accounting Technician (basic skills). You can aim to work in professional practice (Chartered or Certified), in industry (Cost & Management) or the public sector – all are run by their own association (‘guild’ in my earlier comment).

    It’s not hard to imagine a parallel system being developed in other sectors such as building trades.

    3. We shouldn’t obsess about book learning; there are some who just don’t take to it – and some jobs that really don’t need a lot – bricklaying perhaps? A good system will accommodate all comers.

    4. There’s a reason people buy BMWs not Trabants. Top quality is not expensive; poor quality is. Training should be a good investment for both employee (who makes the effort) and employer (who provides the demand).

    A big national problems (never discussed) is that the Treasury understands only cost and not return on investment. If there is a good return the cost is repaid many times over even before factoring in social and mental health benefits.

    5. As I said I was specifically talking about apprentice-type contexts. But, measuring schools by academic results and how many go to university especially Oxbridge, it must be hugely demotivating for the 60% for whom this is not a realistic option. For them it amounts to being not-so-subtly defined as a failure. Schools need realistic targets for their kids: the deal becomes get GCSE maths and you can get on the (very demanding) heating engineer course, without it you have to take a lesser option.

    There should be a no-age-limit alternative for those who don’t succeed at school. With that in place we could lower the school leaving age to 16 or even 14. Keeping unwilling teenagers imprisoned in school is wasteful and simply wrong.

  • 6. Employers will be incentivised to ‘quality control’ (for motivation as much as any particular ability) their trainee intake. Ultimately, if quality is to be maintained there will be some who do fail but they will have the consolation prize of being PQ.

    7. Agreed. On life-long learning we simply must walk the talk. And when it comes to multiple courses (even in different fields) then we must assume that the individual is the only one who can judge the return on effort and has persuaded an employer of that. We can be certain of a much higher success rate with this approach than if quangocrats called the shots.

    8. Universities look to be providing a cautionary tale of how important the examiner/provider split is. Now that students are “money-on-legs” grade inflation has taken off since last year’s results are this year’s recruitment campaign – over 40% now get firsts!

    9. Actually a well designed system will, within limits and subject to its legislative framework, be largely self-regulating. Administration is delegated to ‘Guilds’ and other key decisions are pushed down to individuals – formally-speaking employer and would-be trainee but in practice also parents, teachers etc. It’s important that everyone understands how “The System” works just as they already do for university choice and entrance.

    10. If there isn’t an employer there isn’t a job. However, we shouldn’t rely on employers being “sympathetic”. Training has always been recognised as a ‘market failure’ – i.e. the incentive is for employers to cheapskate and freeload on others’ efforts. The solution is a training levy set at whatever rate just pays for last’ year’s costs. Bad employers would then subsidise good ones – and no doubt draw appropriate conclusions!

    But – and this is important – the point of the levy is just to incentivise employers. The decision to train MUST be driven by investment considerations which are different – see (4) above – or we are wasting our money. The economy should find its own level of investment rather than the Treasury deciding.

    Also I would expect a ‘rising tide’ effect – more skilled employees would enable skills-constrained firms to expand and that would float more boats – increase the less skilled jobs.

  • @ George Kendall

    I suggest you read the article – http://www.levyinstitute.org/pubs/wp_789.pdf – Tcherneva gives examples of India, Argentina and South Africa.

    These people should not be doing work which would normally be done, and it shouldn’t be work in competition with private companies. Tcherneva states the work should be suitable to each individual (clearly not demeaning) and I would add it has to be voluntary. Tcherneva also states that these people are the ones who are unlikely to find work especially at the height of the economic cycle. It would be work that the government or local government normally does. Joe Bourke I think has suggested that working for charities could be included in the scheme.

    Tcherneva states these people would be the ones employers are reluctant to employ, “at-risk youth, the formerly incarcerated, the long-term jobless, stay-at-home moms (sic)” and I would add those who are disabled or have long-term health issues. I would see the point as providing this work so these people are seen as employable. Tcherneva states, “the mark of unemployment is itself an obstacle to obtaining a job. In the eyes of the employer, forced idleness even for a short period of time makes hiring the jobless a risky proposition due to the loss of skill. For example, nine months of joblessness translates into shaving off four years of work experience (Eriksson and Rooth, forthcoming)” (page 3). Tcherneva I think based on Minsky states that when there are inflationary pressures caused by full employment then the government employs less people as the employer of last resort. This would happen because according to them private employers would hire these workers at a premium above the fixed Employer of Last Resort wage (and I would suggest these people would no longer be a risky proposition but would have recent work history and experience and up to date skills).

  • George – I just signed up for the Social Democrat Group so you can follow up via that if you prefer.

  • Katharine Pindar 4th Oct '17 - 1:46am

    This wonderful discussion has kept me up late, in amused identification with the subject, because it is so very middle-class and so very Lib Dem! However, as a former employee of the Open University as well as an OU graduate, I have been feeling that Gordon and George will surely be needing to draw teaching providers into serious consideration of these questions – representatives from the FE sector which is itself so much in need of support, and perhaps from UTCs. Best wishes for your further work on an important subject.

    George, thank you for coming back to me. I still have to oppose any suggestion of funding coming from cutting back benefits, of course, and any idea of giving way on questions of principle because of doorstep protest. But the thread is worthwhile. I share your doubts, b.t.w., on the state being the Employer of Last Resort.

    Michael B.G., thank you for taking the time to provide me with a lesson on basic economics! Sadly lacking from both my degrees, and I did follow the link you provided and am somewhat enlightened. But I do wonder about the merit of seeking full employment, when in our western society people must move in and out of jobs and careers and house/family-keeping, with flexibility and freedom, and some necessary periods of not being in paid employment, voluntary or involuntary. Enough for tonight!

  • Peter Watson 4th Oct '17 - 10:58am

    An important challenge of any system would be to ensure that trainees are able to practice their new skills.
    With learning on-the-job this is straightforward, but if the goal is to help people to move into employment (or into new employment) then they will need ongoing support / top-up training / etc. until they have a suitable job opportunity.

  • Neil Sandison 4th Oct '17 - 11:29am

    Who benefits most from a well educated ,flexible and resilient work force .the reply is obvious business .So whats the most sensible way business can contribute to the life long learning and retraining account ,should there be an employment premium like the education premium with industry as a whole making a contribution to some of the funding rather than punitively impacting upon the student .once bitten twice shy on that one i think .

  • @ Katharine Pindar

    Thanks for commenting and letting me know you had read my piece on the flow within an economy.

    Full employment is not compulsory and does not imply that everyone has a job, what I hope we can provide is a job for everyone who wants one. Between 1948 and 1975 the percentage of people who wanted a job but didn’t have one ranged from 1% to 5.1%. 1% was only achieved in 1951 and 1955 (figures from https://www.ons.gov.uk/ons/rel/lms/labour…/unemployment-since-1881-pdf). You are correct there will always be people in society who are not in work and are not seeking work for various reasons and achieving full employment does not affect their freedom to make that decision.

    @ Neil Sanderson

    In my comment of 30th Sept 12.58am I stated my support for increasing the current Apprenticeship Levy from 0.5% on an employer’s total pay bill to 1% and on companies and organisations with a total pay bill of £1 million rather than the current £3 million.

  • George – some further observations.

    I agree: enforcing quality is key. Exams are of course a form of regulation. They don’t have to be written but can be ‘apprentice pieces’. In many/most cases continuous assessment by the employer would be part of the mix.

    On funding employers SHOULD provide funding in the first instance but be able to claim it back from government according to a preset tariff but ONLY after a complete stage (normally full year’s learning) has been passed. That’s so employers (a) have “skin in the game”, (b) support trainees properly and don’t treat them as cheap labour as many do now and (c) as an anti-fraud measure.

    I think you’re right that would push employers towards the most promising candidates.

    That might seem backwards but (as I’ve argued on Simeon North’s article of 4/10) the context is investment not welfare so it’s completely different. Actually it will work for the less able because it frees up opportunities for them and expands the market generally plus creating good role models. If the investment is, on average, successful then there is no limit to the funding that should prudently be supplied via government debt. (NB: The Treasury appears to have forgotten this basic rule).

    I share your concern for those struggling the most. The answer is, I think, in several parts.

    Firstly, there should be opportunities for every type of ability. I would totally fail at anything involving music – it’s not my talent. But almost everyone has some talent for something – the system should be accommodative to them finding that talent.

    Ditto for every level of ability. Every business works at multiple levels.

    Then there is mentoring. I had (we lost contact) a very good friend who by his own admission was the worst boy in the sink school in one of the roughest corners of West Yorkshire. He was quite clear: he was saved by the mentoring he got as an apprentice from a tough-minded boss who (his words) “knocked some sense into me”.

    Incidentally, I think that’s one reason any scheme absolutely must work for small businesses because (a) they are collectively the biggest employer, and (b) they are more likely to creates role models in the community and at work.

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 AvatarSimon Shaw 18th Jun - 10:20am
    @Cassie "David Raw… And the relevance/usefulness of your remark to 2018, to Brexit, to TM cynically linking extra NHS cash for England (only) with Brexit…...
  • User AvatarSimon Shaw 18th Jun - 10:13am
    @Peter Martin "Dianne Abbot was widely criticised for attempting a similar back-of-envelope type calculation as yourself when she mentioned recruiting 1000 police officers who were...
  • User AvatarPaul Walter 18th Jun - 9:49am
    Thank you David. I wasn't trying to undermine you. I don't treat comments exchanges as a sort of game. I have plenty of other things...
  • User AvatarLyn N 18th Jun - 9:32am
    @Cassie Quite. The Lib Dem’s as a minor partner in a coalition are only ever going to be able to soften the actions of larger...
  • User AvatarGlenn 18th Jun - 9:30am
    Military spending is not just about defence. It's about selling arms and expertise. It can kill people, which I'm pretty certain is not a public...
  • User AvatarCassie 18th Jun - 9:24am
    @David Raw... And the relevance/usefulness of your remark to 2018, to Brexit, to TM cynically linking extra NHS cash for England (only) with Brexit... is...