Afghanistan
As Kabul descends into chaos it is becoming painfully clear that this is largely due to poor political leadership in the West. America – Trump and Biden – bear the lion’s share of the blame. Trump for laying the groundwork and Biden for failing to jettison Trump’s work and the serious miscalculation that the government of Ashraf Ghani could hold back the Taliban tide.
But the Europeans also have to accept a big share of the blame, especially British Prime Minister Boris Johnson. The British were the lead European partner in Afghanistan. They have (or had) the second largest NATO military force and have a historic involvement in the country. President Biden made it clear back in April that he would withdraw US troops by 9/11 at the latest. Boris did nothing. It was not until the Taliban was banging on the gates of Kabul that he started trying to organise European NATO to persuade Biden to remain in Afghanistan or, at the very least, substantially delay US withdrawal. Even then something may have been salvaged if Boris had not been leading the charge. As one former senior diplomat said: “He has virtually zero credibility with the Biden Administration and every EU capital. He is regarded as lazy, untrustworthy and a political lightweight.”
Western diplomats are fleeing Afghanistan in droves. In fact, most of their embassies now stand empty. But that is not the case with the Russians. Their diplomats are operating at full tilt strengthening relations with the Taliban with whom they have been quietly working for several years. Taliban leaders have been in and out of Moscow since for some time, and at one point the Trump Administration was accusing the Russians of supplying the Afghan Islamic rebels with weaponry. The charge was successfully denied. But the change of regime has been warmly and publicly welcomed by the Russians who maintain that the Taliban victory will bring peace and prosperity to the streets of Kabul and hills and valleys of rural Afghanistan.
Part of the reason for the Russian diplomatic offensive in Afghanistan is to fill the political vacuum left by the West and exploit America’s humiliation and discomfort. But there are also practical considerations. Russia retains wide-ranging economic and military interests in the former Soviet republics of Central Asia. It is concerned that instability, Jihadism and a rogue Taliban will destabilise the other Asian stans and encourage Chechen rebels. They are also concerned that a failed state in Afghanistan will result in an increase in the drug trade with Russia. Moscow still has painful memories of their nine-year war in Afghanistan, but practical politics have won the day.
The UK
More signs that Brexit is beginning to bite. It has taken longer than expected, but the reality factor is replacing the fear factor. As predicted by Remainers, it is the lack of EU immigrant workers which is causing the current problem, especially in the agricultural and trucking industries. The two sectors rely on what is classified as unskilled labour to harvest the crops and move those products to supermarket shelves while still fresh. Unskilled jobs have been traditionally filled by immigrants, mainly because they are dirty, physically exhausting, and low-paid and involve long hours. British workers don’t want them. The result is that the number of lorry drivers is down by 20 percent and agricultural workers by at least 25 percent. Supermarkets are seriously worried about empty shelves.
The response of British Home Secretary Priti Patel is “pay more money and hire British workers.” There are several problems with this diktat. First of all, there is already a general labour shortage caused partly by Brexit and partly by Covid. Next, although, agricultural work and truck driving are classed as unskilled, that is a labour fallacy. Anyone who has spent a day picking strawberries or trying to drive a heavy goods vehicle will testify to the fact. So recruiting indigenous Brits will involve a training period. Which means a delay. Then there is the impact that such a move will have on inflation. Increasing the salaries of 320,000 lorry drivers and 176,000 agricultural workers will have a significant impact on wage inflation. It will also substantially increase the cost of products across the entire range of commerce as transport costs are added to the retail price. Already supermarket chains are paying drivers bonuses of up to 25 percent to move goods to shelves before they spoil. Unable to compete with the private sector will be the public sector, which means, for instance, that local councils face the prospect of a shortage of drivers of dust carts to collect rubbish.
China
The cult of Xi Jinping continues to grow. The thoughts of the Great Helmsman (a title now conferred on Xi and previously reserved for Mao) have already been written into the Chinese constitution and Chinese Christians have been instructed to replace pictures of Jesus with smiling images of the Chinese leader. Now Xi’s philosophy is becoming an official and required part of the educational curriculum from primary school right through to the final day of university.
There are 14 main principles to the Thoughts of Xi, but they boil down to unswerving loyalty to the nation, socialism, the communist party, one-party rule, a united China (i.e. absorption of Hong Kong and Taiwan) and the principle of two systems in one state. Cult politics makes it easier to enforce policies when the subject of the cult is hale and hearty. But when the grim reaper makes his inevitable entrance and the cult figure his inevitable exit there is usually a substantial political price to pay. It happened with the death of Stalin and Mao. President Xi Jinping is 68 years old. A healthy 68, but still in the early winter/late autumn of his life.
Mexico
An innovative legal move by the Mexican government has caused America’s gun control lobby to shift its interest south of the border. Mexico has one of the worst gun homicide rates in the world as drug cartels shoot it out between themselves and the federalistas. This should be surprising as Mexico also has one of the world’s toughest gun control laws. There is only one gun shop in the entire country and it only sells low calibre pistols. But the shop and the restrictive gun laws are an irrelevancy as the weapons used by the cartels are smuggled in from the US.
This is why the Mexican government is suing 11 American gun manufacturers in the Massachusetts courts. It will be tough. Gun manufacturers and retailers are protected from law suits by the 2005 Protection of Lawful Commerce in Arms Acts (PLCAA) which says that the gun industry cannot be held liable for the actions of people who buy their weapons. The Mexican government claims that the restrictions of the act do not apply to Mexico because they are not American. If the Mexican government’s suit is successful than gun control enthusiasts will argue that American citizens should be given the same protection from the US gun lobby as foreigners.
* Tom Arms is foreign editor of Liberal Democrat Voice and author of “The Encyclopedia of the War” and the recently published “America Made in Britain". He has a weekly podcast, Transatlantic Riff.
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`More signs that Brexit is beginning to bite. It has taken longer than expected, but the reality factor is replacing the fear factor. As predicted by Remainers, it is the lack of EU immigrant workers which is causing the current problem, especially in the agricultural and trucking industries. `
Easy policy answer – go on the media and say you’ll give these people work visas to come here on a basis that protects the increased wages through current squeezes.
Why don’t you do that?
“Then there is the impact that such a move will have on inflation. Increasing the salaries of 320,000 lorry drivers and 176,000 agricultural workers will have a significant impact on wage inflation. It will also substantially increase the cost of products across the entire range of commerce as transport costs are added to the retail price.”
I wish Remainers would make up their minds. The argument during the referendum, and for a time afterwards, was that EU workers didn’t have a negative effect on wages. Now you are saying they did and some wages for the previously lower paid will need to rise to be competitive in the UK market. Naturally this will result in some higher prices.
So the question is do you want lower paid workers to be paid more or don’t you? As you say “anyone who has spent a day picking strawberries or trying to drive a heavy goods vehicle” knows the reality of what doing these types of jobs entails.
Questions need to be asked about humanitarian priorities when it was possible for a British citizen to be privately repatriated with 94 dogs and 79 cats when thousand of human beings (including some UK citizens) were not. However important our canine and feline friends may appear to be, they are not known to have expressed any religious or political preferences on what sort of regime they wish to live under.
The UK Government – in particular Johnson’s ‘Global Britain’ and the so called “special relationship” with the USA – has become a joke. At the very least there needs to be a full enquiry – assuming enough beachcombers can be persuaded to take part.
Well said Peter Martin. Hopefully it will also force a re-assesment of the apprenticeship system. Force companies to invest in there own industries and stop further education colleges becoming adolescent baby sitting units.
The decision to withdraw from Afghanistan was Biden’s & Biden’s alone.
This was the president that promised to build alliances in Europe & work with allies,at least we now know that was just hot air.
john oundle 29th Aug ’21 – 11:53am:
This was the president that promised to build alliances in Europe & work with allies,at least we now know that was just hot air.
“That was four or five days ago!”
The principle architect of this failure was Donald Trump and the Doha agreement. While Trump and Biden rightly judged the mood of the American publics desire to get out of Afghanistan there was a lack of due care and attention to the means of how to extract the US from the mission.
The major drawdown of combat troops had already been completed by Obama. The model for further withdrawal should have been along the lines of the NI Good Friday agreement – a power sharing agreement negotiated between the Afghan government and the Taliban. That agreement involved International facilitators and like the Doha agreement – release of prisoners. This was the stated aim (if not the intent) of the Taliban prior to the abandonment of the Bagram airbase and fall of Kandahar, after which the opportunity for a military victory was handed to the group.
The lack of participation of the Allies in the negotiations and strategy for withdrawal was a major weakness in the US approach and should be a wake-up call for how Nato is structured and operates.
Afghanistan will revert to an Islamic emirate now where a strict interpretation of Sharia law prevails. That state of affairs may even be welcomed by many poorer rural Afghans in preference to the chaos of ongoing conflict and continuing reliance on foreign forces for their security.
I thought Johnson had built up a good trade agreement with the USA?
How can you expect those lorry drivers, who were caught up last Christmas in being left in their lorries to help?
This is politics at its worst!
I don’t expect President Xi to shuffle off this mortal coil any time soon. The life expectancy for an average 65-year old Chinese according to the UN is 17.3 years and Xi will get better medical care, so he could easily last another couple of decades. The substantial political price may take a long time to become due (remember that Stalin was succeeded by Malenkov, Khrushchev, Brezhnev, Andropov, Chernenko, and Gorbachev before the collapse of the Soviet Union, over 38 years after Stalin’s death).
@ Peter Martin
@ C J Williams
Indeed.
It really riles me to see people who are doing pretty well on decent wages complaining when those on low wages are going to get a little bit more. Suck it up matey!
As one of the women on my allotment site said “remainers are the people who employ cleaners, leavers are the people who works as cleaners”. You can guess her job.
Although I personally feel that people should be paid a decent wage whatever job they do and where ever they come from but I will take bets that this Brexiteer government will be concerned about the inflationary impact such a rise will have on the economy, with an eye on their re-election prospects.
Peter Martin 29th Aug ’21 – 11:16am…………..I wish Remainers would make up their minds. The argument during the referendum, and for a time afterwards, was that EU workers didn’t have a negative effect on wages. Now you are saying they did and some wages for the previously lower paid will need to rise to be competitive in the UK market. Naturally this will result in some higher prices…………..
I wish ‘Leavers’ would make up their minds…’Market forces” mean that a shortage of any commodity, be it specific goods or labour will lead to a rise in prices and salaries. Increased costs will affect prices which will leave ALL those on the lowest wages worse off…
‘Remainers’ predicted empty shelves, labour shortages and rising prices but this was dismissed as ‘project fear’ by the very people who are bemoaning the reality of ‘Brexit’…
Still, why worry? you still have your sovereignty, blue passports and fewer EU nationals; which was the whole point of leaving..
Oh, I forgot to mention the ‘Global Britain’ bit..
@ expats
Mrs Thatcher used to make the same argument against pay rises for the lowly paid. I’m afraid she didn’t have it right either. If you want people on minimum wages to have more buying power they have to be paid more.
There’s no way around that I’m afraid. Economics isn’t always difficult to understand.
Peter Martin 29th Aug ’21 – 5:11pm……….@ expats…Mrs Thatcher used to make the same argument against pay rises for the lowly paid. I’m afraid she didn’t have it right either. If you want people on minimum wages to have more buying power they have to be paid more….There’s no way around that I’m afraid. Economics isn’t always difficult to understand…………….
I’m not sure which argument you are referring to..However, if everyone gets a pay rise then prices rise and it’s ‘devil take the hindmost’ on the pay-rise ’roundabout’!
Your ‘Economics isn’t always difficult to understand’ argument reminds me of H. L. Mencken’s “For every complex problem there is an answer that is clear, simple, and wrong.”..
Anyway, having read many of your posts monopolising the subject of economics..I’ll leave it there!
“‘Remainers’ predicted empty shelves, labour shortages and rising prices but this was dismissed as ‘project fear’ by the very people who are bemoaning the reality of ‘Brexit’…”
Remainers also predicted that wages for those at the bottom would rise… and presented this as something bad. Ref Stuart Rose.
“Still, why worry? you still have your sovereignty, blue passports and fewer EU nationals; which was the whole point of leaving..”
Really? Is that why you still think leave won? You really think it’s all that simple?
It’s no wonder that in the first council elections after the referendum the Lib Dems were completely wiped out where I live. And that’s despite the alternatives being rubbish. They still haven’t recovered… and I don’t think they will for a very long time either at this rate. My mother in law who is now in her 80s, who joined the Liberal Party years ago, and who voted leave is now voting Conservative. My late father who arrived here in 1939 (long time liberal supporter) would be doing the same were he still alive I’m sure – the rest of his family did!
What on earth is the point in having all these consultations if you’re not going to listen to a word people tell you, and if you’re going to repeat the same old tired tropes?
I despair. I really do. I really think that this country needs a liberal party that offers a decent alternative for people to vote for. Something that is socially liberal but not socialist, and not conservative (note the small “c”) either. Sadly, this party seems incapable of listening to the concerns of those outside of academia and the wealthier sections of society. I now read that Waitrose lorry drivers are earning more than lawyers. About time too. They do after all contribute a great deal more to society.
Maybe I’d be best just going elsewhere? After all it seems to be what everybody else is doing… and you just don’t seem to care, so why not.
There’s a historical reason why the Liberal Party shared an orange banner with the Ulster unionists. I would have hoped that kind of absolutist, doctrinaire thinking was no longer to be found among William’s supporters on this side of the Irish Sea at least… I’m clearly wrong.
Adam 29th Aug ’21 – 6:10pm……………“Still, why worry? you still have your sovereignty, blue passports and fewer EU nationals; which was the whole point of leaving..”
Really? Is that why you still think leave won? You really think it’s all that simple?…………..
I’m just taking that from umpteen surveys and reports.. e.g.
“People’s stated reasons for voting leave or remain”
This report includes several different surveys and opinion polls asking Britons why they voted the way they did in the EU referendum. It identifies that the two main reasons people voted Leave were ‘immigration’ and ‘sovereignty’, whereas the main reason people voted Remain was ‘the economy’….
Perhaps you’ll enlighten me as to why ‘Brexit’ really won?
As I pointed out earlier, as a woman on my allotment site said…
I’ve got a mate who’s a roofer. He saw his wages go down to 18,000 pa from 2004 to 2016. Believe me, they used to be a lot higher. And this is for skilled work, out in all weathers. And all the while others cheered at how cheaply they could get the roofs of their second homes repaired. He tells me he’s in for a pay rise again.
Interestingly, the wages of those Poles, Lithuanians and Rumanians who have chosen to make their homes here have also started to rise now too. Pretty good huh?
When you talk about EU nationals, it sounds almost like an abstract concept. For us they’re real people – about a quarter of my street. They are our neighbours. We work with them. We share allotment sites with them. We drink with them and play football with them. Some of us sleep with them.
You keep reading your surveys. I’m sure they’ll tell you all you need to know to start winning elections again. Me? I think I’ve had enough now.
The fact is, we’re grown-ups, and I don’t know about you, but I don’t believe in fairies any more. The world isn’t black and white, with absolute truth and lies. It’s shades of grey, and meanings can vary depending on where you happen to be viewing things from.
Or maybe your right and I’m a blue passport waving xenophobe or summat… maybe I should just go and vote for somebody else. That after all seems to be what every one else where I live is now doing.
> As predicted by Remainers, it is the lack of EU immigrant workers which is causing the current problem, especially in the agricultural and trucking industries.
Agree, so what have the LibDems been doing?
Well, I’ve not seen them shouting about the opportunity for investment in UK residents and young people specifically, only acting as apologists for the Conservatives and neo-liberals.
What is so funny, the response of British Home Secretary Priti Patel is what people would expect the LibDems to be saying; not “we need more foreign workers” to do what are effectively UK internal jobs. Brexit was bad, but it did provide a “once in a lifetime” opportunity to change the direction of our society and economy. It seems the LibDems are blind to the gift horse.
More signs that Brexit is beginning to bite. It has taken longer than expected, but the reality factor is replacing the fear factor.
More to do with our membership of the EU enabling cheap labour to suppress wages making these occupations unattractive as careers – at least for those who aspire to buy a house or start a family.
‘How the wage gap between lorry drivers and cashiers has narrowed in the UK’: [August 2021]:
https://trans.info/en/how-the-wage-gap-between-lorry-drivers-and-cashiers-has-narrowed-in-the-uk-251881
In agriculture, cheap labour has also been used as a substitute for investment in automation – one reason for the UK’s poor productivity. Asparagus harvesters have been around for decades, but news sites still carry photos of gangs of migrants bent double harvesting crops by hand. Soft fruit and berry harvesters are a more recent innovation, but should be considered essential to remain competitive.
I grew up in a rural area and knew people who worked in agriculture. Last century they could afford to buy a house in the village near the farm where they worked. Few agricultural workers can do that today. If they have to move to a town to live then they’re likely to get a job there which is better paid.
As predicted by Remainers, it is the lack of EU immigrant workers which is causing the current problem, especially in the agricultural and trucking industries.
Typically uninformed then. The shortage of LGV drivers has been a growing problem for years and predates Brexit. It’s exacerbated by Covid. It’s also a problem throughout the EU and beyond.
1. During the first lockdown many drivers were laid off or furloughed. Some took early retirement while others changed jobs. Delivering online supermarket orders is less stressful and although it may pay a pound or two less that’s compensated for by a tax-free staff discount on their grocery bill.
2. The average age of a UK LGV driver is 55. Many thousands retire every year and are not being replaced. Due to Covid much training has been postponed and 35,000+ tests have been cancelled.
3. In recent weeks the so-called ‘pingdemic’ has resulted in many drivers being off work self-isolating.
‘Driver shortage is pan-European’ [August 2021]:
https://www.globalcoldchainnews.com/driver-shortage-is-pan-european/
‘Truck driver shortage crisis now spreading across the whole of Europe’ [November 2018]:
https://theloadstar.com/truck-driver-shortage-crisis-now-spreading-across-whole-europe/
The response of British Home Secretary Pritti Patel is “pay more money and hire British workers.”
Good thinking. The government has already resurrected the old Seasonal Agricultural Workers Scheme (SAWS) with a quota of 30,000 temporary work visas for agricultural workers.
So recruiting indigenous Brits will involve a training period. Which means a delay. Then there is the impact that such a move will have on inflation.
Free movement into the UK, where we have draconian restrictions on planning permission, is also inflationary as it pushes up rents and house prices. It hasn’t just damaged the life-chances of British people; it’s also had devastating effects on the countries from which migrants have come…
‘How free movement is wrecking Romania’ [November / December 2018]:
https://www.cpbml.org.uk/news/how-free-movement-wrecking-romania
Adam makes a valid point about immigration. The working classes are often portrayed as socially reactionary but at the same time it is they and not the more affluent and highly educated members of our society who have the most social contact. If disputes occur the racial and/or nationalistic angle can be blown up out of all proportion. As Adam says it isn’t all negative. Relationships develop. Bonds are established. We’ve seen many more mixed marriages, for example, in the working classes long before we’ve started to see this happen in somewhat better known families!
The upper middle classes, including some Labour politicians, often move away and/or do what it takes to get their children into the right schools where their children can share a desk with the ‘right’ other children. It’s often more about social class than race but they are hard factors to separate in our society. In other words the more liberally minded and more affluent sections of society may be better at the theory but they have more difficulty with the practical issues.
The question of how much immigration was a factor in the Brexit vote can, to a large extent, be answered by looking at the voting patterns in areas of high immigration like London and comparing them to low immigration areas like the less affluent areas of the North. The argument that Leavers weren’t primarily motivated by Economic factors doesn’t stack up.
Having said this we know that economic difficulties will cause racial and other social tensions. If someone hasn’t got a job or isn’t doing too well financially, whereas they were doing OK at one time, they are going to look for answers. The problem for Remainers has been the economic austerity neoliberal mentality that we’ve seen right throughout the EU and not just in the UK.
At best they failed to challenge it meaningfully, at worst they went right along with it.
Another issue…?
https://www.independent.co.uk/news/business/comment/niesr-brexit-means-losing-control-uk-employers-a7796836.html
“It is perhaps no surprise that low-skilled employers are fearful of migration restrictions given their reliance on migrants to fill vacancies. Employers don’t prefer migrants, though they do value their higher levels of education and work-readiness, often described as “work ethic”, and they especially value their flexibility in sectors with fluctuating demand.”
Not that I’m regarding driving an HGV as a low-skill job. And the training can’t be skimped – peoples’ lives might be at risk. All too many motorway crashes seem to involve at least one HGV possibly plus other vehicles.
And is there another issue – ‘job for life’ – still in play? Is there a reluctance among some British people to try some field of work other than that in which they already have some experience? Would the building industry be better off if people had a broader range of training rather than just e.g. bricklaying? So that when demand for one skill is low they can earn while practising another skill they have acquired which happens to be in greater demand at that particular time?
Thanks Tom for a thoughtful blog. Concerning our employee shortage this could be an opportunity to rebalance our economy. We do not value certain jobs such as agricultural workers, truck drivers and some public service workers as much as we might. If the market prevails (as some Conservatives still think) then Patel is right that improving their pay and conditions will help reset that balance. What is unfair about people doing unwanted jobs being valued and paid more?
Often the Guardian doesn’t get it at all right but this can’t be said when Larry Elliott is writing their articles.
“So what’s so wrong with labour shortages driving up low wages?”
“For those who are part of Britain’s casualised workforce Brexit isn’t flawed – quite the opposite”
Not so low wages will also help the neoliberals solve their so-called “productivity puzzle”. The answer isn’t difficult. Hint: Who would bother to buy a dishwasher if servants to do it the old fashioned way were as cheap as the ruling class would like them to be?
https://www.theguardian.com/business/2021/aug/29/so-whats-so-wrong-with-labour-shortages-driving-up-low-wages
I do wonder if suppliers need to look at their business models – does such a large proportion of the goods we buy really need to be transported long distances by road in HGVs? How much could be transported by rail if we only had a decent rail freight system?
Also https://www.bbc.co.uk/news/business-58339182
“A company which supplies food to care homes and restaurants says it is taking “drastic action” to try to get round the shortage of UK lorry drivers.
The boss of Country Range said the group was buying smaller vans in the face of “significant” problems caused by a lack of qualified HGV drivers.”
“Speaking to BBC Radio 4’s Today programme, Ms Rose said Country Range was “taking drastic action such as buying smaller delivery vehicles to make sure that we don’t have to have people with specific HGV licences to drive them”.”
@ Nonconformistradical “Speaking to BBC Radio 4’s Today programme, Ms Rose said Country Range was “taking drastic action such as buying smaller delivery vehicles to make sure that we don’t have to have people with specific HGV licences to drive them”.
The recipients of such delectable haute cuisine could, of course, have their’healthy food’ cooked fresh onsite at the premises where they consume it. It would taste better, reduce the carbon footprint, improve the quality and provide local employment.
I can still remember a lengthy stay at the Royal Infirmary in Edinburgh ten years ago when I was faced with a plate of tepid soggy Brussel sprouts and what passed for a leather omelette.The meals for patients were ‘prepared’ in Wiltshire, transported frozen by HGV 400 miles to Glasgow for storage and finally transported by HGV another 50 fifty miles to Edinburgh where it was eventually stored, unfrozen and then ‘cooked’.
All this, of course, part of Tony Blair’s ‘modernising’ PPI contractual blueprint, but it’s still in force as far as I know. It’s time Wee Alex Cole-Hamilton and the Scottish Lib Dems did some carbon footprint homework and started campaigning on these common sense carbon footprint issues instead of leaving it all to the Green Party. It might actually be more popular than propping up the Unionism of Union Jack Johnson.
The labour supply issues are multi-faceted. As Larry Elliott notes in his article “…increasing the supply of overseas workers also boosts demand. The new employees are also consumers and spend the money they earn like everybody else. The extra demand creates more jobs, although mainly in low-paid sectors.
Against this backdrop, it is perhaps unsurprising that Brexit divided the nation in the way it did. If you were in a relatively well-paid job and not at risk of being replaced or undercut by a worker from overseas, you were likely to vote remain. The Polish plumber was cheaper, the Lithuanian nanny was better educated, so what was not to like?
If, on the other hand, you were part of Britain’s casualised workforce, needing two or more part-time jobs to get by, you were much more likely to vote leave, on the grounds that tougher controls on migration would lead to a tighter labour market, which in turn would push up wages”
The Low Pay commission makes it recommendations based on the state of the economy – how many people are in work, what’s happening to everyone’s earnings and how much they are having to pay for essentials such as food and housing. Most jobs pay well above the minimum wage with around 5% of jobs actually paying the minimum.
The sectors that are currently most impacted are those that have always struggled to recruit British workers, even during times of high unemployment i.e. the agricultural sector. meat processing plants, HGV drivers and the hospitality sector https://www.theguardian.com/business/2021/aug/25/the-anxiety-is-off-the-scale-uk-farm-sector-worried-by-labour-shortages.
The government appears to be banking on the end of furlough in September and withdrawal of the £20 Universal credit uplift to ease Labour supply problems. Perhaps it will to some extent, but not enough if past experience with filling these types of jobs is anything to go by and crucially it is also dependent on no resurgence of the Coronavirus pandemic.
It’s interesting to find this party so concerned about employees…
After all, when Vince Cable was Business Secretary he wanted major ‘reforms’ to their conditions of employment e.g, the introduction of tribunal fees for employees making claims against employers ( later ruled unlawful by the Supreme Court in 2017)…Vince Cable called for increased deregulation and labour market ‘flexibility’, the scrapping of the Working Time Directive, implementing exemptions from health and safety inspections for shops, pubs, and offices, changes to employment laws, proposing to reduce employee compensation for unfair dismissals, etc…All this long before ‘Brexit’ or Covid..
Still, that was the bad old LibDem party (in government) not the caring LibDem party (in opposition)..
Currently having a few days in Edinburgh, which resembles a massive building site, a bit like Berlin was in the 1990s after reunification. There must be some money around north of the border. (Cue for a debate on monetary policy, including the Barnet Formula, between Messrs Martin and Bourke?)
I’m pleased to see that Tom Arms’ work is at last bringing results – 30+ posts ain’t that bad! Most of the discussion on wages, Brexit etc has gone way over my head; but one thing that Tom wrote in his section on Afghanistan is so true. In all the blame gaming, let’s remember, please, that the person who lit the touch paper is currently working on his golf handicap in Florida, while also working on another run for the White House – unless litigation and criminal prosecution get him first!
@ Joe,
You quoted extensively from Larry Elliott’s article but you chose not to include this:
“For those who have nothing to fear from open borders, labour shortages are evidence Brexit is flawed. For those not so fortunate, it is doing what it was supposed to do.”
We would both probably agree that increased immigration need not be detrimental to those at the lower end of the pay scale. In MMT terms we would say that an increased supply of available labour would have a deflationary effect on workers’ wages. This would allow the government to run a more expansionary fiscal policy.to compensate, without the risk of higher inflation.
As it was, the Coalition government did just the opposite and ran a contractionary policy in a misguided attempt to reduce the deficit. So lower paid workers were hit with a double whammy of higher competition and a declining number of reasonably well paid jobs to compete for.
So there’s no surprise they voted for Brexit. It’s all your own fault – to be blunt about it.
Peter Martin,
Brexit is doing what virtually every economist in the country predicted – depressing UK economic growth at a time when it is struggling to recover from the Pandemic,
If MMT spokespersons say that increased immigration would have a deflationary effect on workers’ wages or lead to increased unemployment, then it is simply repeating the long ago disproved Lump of Labour fallacy https://www.investopedia.com/terms/l/lump-of-labour-fallacy.asp
It is the entry of 1 billion Chinese workers and their output to the global marketplace that has had a deflationary effect on wages and prices across the developed world.
The coalition government did not run a contractionary fiscal policy (cuts in some areas of spending were offset by increases elsewhere with overall increases in year on year spending). Robust economic growth was restored in the years preceding the Brexit referendum. That is why the budget deficit reduced and unemployment fell back to pre-crisis levels by Mid 2015. The reason why an expansionary fiscal policy was pursued are discussed in this article https://blogs.lse.ac.uk/politicsandpolicy/austerity-ending-hypothesis/
“…It is important to remember that, in most areas, Osborne back-loaded the most severe spending cuts, having quickly wised up to the economic devastation of his ‘plan A’ in 2010. The buck, he figured, would stop with his successor. Osborne probably reckoned that the economy would be back on its feet by that point, but he did not count on Brexit (at least not until it was too late).”
The UK is not a centrally planned economy where the government can move human and physical resources around at will. It is a mixed market economy that competes Internationally with other developed economies for global market share. The state bids for resources in the same pool of labour from which private firms seek to employ staff. It must compete for resources on those terms and fund its permanent long-term spending via taxation. As a major employer the pay of public sector workers is a significant determinant of average wages in the economy. The level of spending on public sector wages, supplies of goods and services, redistribution and welfare will ultimately determine the level of taxation required in the economy.
Joe,
MMT doesn’t go along with the lump of labour fallacy but neither does it ignore that money, in the form of net credits, originates from Govt. If we make the argument that extra workers are also extra consumers and will spend their wages, which is fair enough, we have to appreciate how their wages will be paid in the first place.
The point about cheap Chinese products is another reason for not running a contractionary fiscal policy. If Govt ministers are fretting about the deficit, cutting public spending and raising VAT to 20% then they are squeezing the economy. It’s contractionary. Period. It was a misapplication of a counter inflation policy. If the Govt were wanting to cut inflation, which they did, that should have been their stated intention.
All money spent into the economy, unless it is lost or burnt, must come back in taxes eventually. If Govt cuts its spending it cuts its income too. The deficit may fall or it may rise. It’s a hit and miss policy over which it has no control.
It’s too difficult to separate the Brexit and Covid effects at the moment. Many of the problems we see in the UK are replicated in the EU and elsewhere at the moment. I can’t imagine how anyone would argue that a shortage of truckers in the USA is down to Brexit, for example. but maybe some on LDV might want to have a try!
https://edition.cnn.com/2021/05/29/economy/truck-driver-shortage-pay-hikes/index.html
Joe Bourke 30th Aug ’21 – 11:18pm:
Brexit is doing what virtually every economist in the country predicted – depressing UK economic growth at a time when it is struggling to recover from the Pandemic.
‘Gross domestic product growth rate forecasts in selected European countries in 2021’:
https://www.statista.com/statistics/1102546/coronavirus-european-gdp-growth/
‘UK exports to EU soar 20% since Referendum. Who needs EU’s Single Market?’:
https://facts4eu.org/news/2021_aug_UK_exports_soar
This wasn’t what “virtually every economist in the country” predicted prior to the Referendum.
Joe Bourke 30th Aug ’21 – 3:58pm:
Most jobs pay well above the minimum wage with around 5% of jobs actually paying the minimum.
The distribution of pay rates appears to have become less progressive since 2004…
Low and high pay in the UK: 2019 [October 2019]:
https://www.ons.gov.uk/employmentandlabourmarket/peopleinwork/earningsandworkinghours/bulletins/lowandhighpayuk/2019
Figures for 2020 are distorted by Covid…
‘Low and high pay in the UK: 2020’ [November 2020]:
https://www.ons.gov.uk/employmentandlabourmarket/peopleinwork/earningsandworkinghours/bulletins/lowandhighpayuk/2020
It may be illuminating to compare the UK with the Isle of Man where their Work Permit system prevents free movement of most cheap labour into the country…
‘Results published for the Isle of Man Earnings Survey 2020’ [May 2021]:
https://www.gov.im/news/2021/may/06/results-published-for-the-isle-of-man-earnings-survey-2020/
In Afghanistan, as the evacuation chaos ends, I’m struck yet again by ‘intelligence’.. It seems to have been able to accurately identify a planned ISIS attack near the Kabul airport Abbey gate entry point but seems to have failed to identify the complete take-over of Afghanistan, in a matter of days, by the Taliban…
It also seems that our ‘special relationship’ is further strained by the US claim that Britain was indirectly responsible for the suicide attacks at Kabul airport last week because it insisted that the Abbey gate entry point to the site be kept open to allow British nationals to enter the airport.
I’m reminded of the old adage of how, in war, “Victory has a thousand fathers but defeat is an orphan”
Peter Martin/Jeff,
Economic policy needs to be based on real world evidence and outcomes. The simplest and most effective way of doing that is to look at the different economic policies pursued around the world to assess how effective they are in achieving their objectives. The objective of economic policy is to improve the living standards of the population as a whole.
The best living standards in terms of quality of public services, income distribution and economic security are typically achieved under the Nordic model applied by the Scandinavian countries. A well structured social security system acts as a automatic stabiliser to smooth fluctuations in the business cycle as it does to an extent in the UK – less so in the USA.
Fiscal stimulus policies, as with monetary policy, do not address structural problems with economic competitiveness. That requires sustained strategic investment at both a public and private level in human and physical resources over decades with a strong focus on overseas trade. That investment has to be sustained by public service provision and infrastructure that is funded by commensurate levels of taxation as is seen in the Scandanavian countries and Northern Europe.
The UK is ranked in the top 20 counties in the world in terms of quality of life https://www.lonelyplanet.com/articles/denmark-country-best-quality-life-world but the Scandinavian countries consistently top these rankings and the reasosns can be found in their approach to economic policy, taxation and public service provision.
It is true that it’s too difficult to separate the Brexit and Covid effects at the moment. The economic impact of Brexit will play out slowly and be seen in a lower trend for long-term growth rather than any abrupt contraction as with Covid.
Peter Martin,
“…cutting public spending and raising VAT to 20% then they are squeezing the economy. It’s contractionary. Period.”
This is incorrect. Overall spending increased significantly during the coalition period primarily as a result of increased spending on health and pensions. Tax cuts in the form of much higher personal allowances and cuts in corporation tax offset VAT rises such that the tax yield was broadly neutral. As a consequence Fiscal policy was moderately expansionary.
A good argument can be made that it was not expansionary enough once inflation had been reigned in and interest rates were at the zero bound but that argument is based on the assumption that additional fiscal stimulus would generate higher economic growth than what was actually achieved. The UK had amongst the highest growing G7 economies from 2013 to 2016. That trend ended with the Brexit referendum (when the pound fell, inflation spiked and uncertainty stalled investment) since when the UK has become one of the slower growing economies https://fullfact.org/economy/uk-economic-growth-within-g7/
As the full facts article notes “The UK economy is almost constantly growing. The last time it actually got smaller over a year was in 2009—which was the time of the recession. The debate in more recent years has been about whether the UK is growing fast enough, and one measure for that is how it’s doing compared to similar advanced economies.”
If Japan’s experience with fiscal and monetary stimulus measures is anything to go by, once the UK economy has recovered from the Covid lockdown long-term growth trends will continue at a much lower rate than previously experienced unless structural reforms based on an long-term industrial strategy are undertaken.
See what I mean. Once Bourke and Martin get started, nobody else gets a look in. It’s high time you two chaps pooled your knowledge and sorted this country of ours out for us. 😀
@ Joe @ John Marriott
Joe does, for reasons best known to himself, push a line of right wing economic thinking that I’d never be able to go along with.
Joe is well to the right of even Sir Vince Cable who was also saying that Brexit was caused by economic austerity in 2018. So for once I’m more in line with the Lib Dem establishment than Joe.
https://news.sky.com/story/sir-vince-cable-admits-regret-coalition-austerity-policies-may-have-led-to-brexit-vote-11499891
@Joe@Peter
Perhaps it’s just me; but surely you chaps must have exhausted all the pro and con arguments regarding taxation, economics etc. by now. It’s pretty clear that neither of you is prepared to give an inch of ground, so, why do you both continue trying to score points off each other? Perhaps some LDV aficionados find your joists exciting, in which case it’s probably time that I minded my own business and let you continue to indulge yourselves.
PS….
Revisited the Royal Yacht Britannia this morning (I think I wrote earlier in this thread that I was checking out David Raw’s adopted country) and it made me wonder whether there was any British yard capable of building the replacement Boris keeps banging on about? Back home tomorrow with an abiding memory of face mask wearing people largely abiding by the rules, unlike south of the border where it’s more or less please yourself!
Joe,
You’re assuming that a contractionary fiscal policy has to mean that the economy as a whole will contract. You’re ignoring that the Coalition government, or rather the BoE on its behalf, was at the same time running an expansionary monetary policy. In other words because the govt was too tight fiscally the BoE tried, with some success, to compensate by being too loose monetarily. This is why we have ultra low interest rates.
The problem is this has created too much debt in the private sector. Whereas a looser fiscal policy will, and does, stimulate the economy by giving everyone more money to spend a looser monetary policy doesn’t. It just encourages everyone to save less and borrow more which doesn’t make anyone better off unless perhaps the borrowing enables us to avoid paying rent. We all know that borrowing money isn’t always a good idea. It gives us more to spend in the short term but we have less to spend in the longer term because we have to repay with interest. That’s when the debt deflation sets it to contract the economy again when we should be aiming for a steady and sustainable expansion.
When you come back over the Forth Bridge, John, cast your eyes to the right…… and you’ll see where all 70,000 plus tons of HMS Queen Elizabeth was assembled in the Firth of Forth at Rosyth Dockyard….. from nine blocks built in six UK shipyards: BAE Systems Surface Ships in Glasgow, Babcock at Appledore, Babcock at Rosyth, A&P Tyne in Hebburn, BAE at Portsmouth and Cammell Laird (flight decks) at Birkenhead.
Much bigger than any tiddly little pretentious Johnson folly we don’t really need.
@Joe@Peter
I endorse John Marriott’s posting of 31st Aug ’21 – 8:40pm and I don’t find your joists exciting. And they take up too much bandwidth.
If the 2 of you must continue arguing over economics with each other can’t you do it somewhere else? Please!
Nonconformist radical,
the issue of HGV drivers that you comment on above is not simply related to Brexit restrictions. As this Sky News report https://news.sky.com/story/hgv-crisis-unprecedented-demand-for-training-as-drivers-load-up-on-pay-rises-12396007 states “Figures from the Office for National Statistics show that 31,000 UK-based drivers have left the road since 2019, almost double the 14,000 European truckers who have departed”
The LibDem Treasury spokesperson, Christine Jardine, published an article in the Scotsman yesterday https://www.scotsman.com/news/opinion/columnists/universal-credit-cut-and-coming-economic-storm-may-blight-the-lives-of-a-generation-unless-we-act-swiftly-christine-jardine-mp-3362983 in which she writes “What we have lacked throughout this crisis is long-term planning and a clear vision of how we are going to repair and rebuild our ailing economy. We cannot delay that any longer.”
You ask above “Is there a reluctance among some British people to try some field of work other than that in which they already have some experience?”
With respect to the end of furlough and the Universal credit uplift , Christine Jardine writes “for many of them, people who were previously used to life in stable jobs in growing industries or had built successful businesses, the impact of this cut comes on top of seeing their economic security disappear overnight in 2020.”
This is the stuff of politics even if some (perhaps many) readers may not find it terribly exciting.
@Joe Bourke
“Christine Jardine writes “for many of them, people who were previously used to life in stable jobs in growing industries or had built successful businesses, the impact of this cut comes on top of seeing their economic security disappear overnight in 2020.”
This is the stuff of politics even if some (perhaps many) readers may not find it terribly exciting.”
I agree it’s the stuff of politics. But you are not helping the discussion here through indulging in lengthy arguments about macro-economics with Peter Martin. Cut it out please and get down to the basics of what we need to do to help people manage for themselves with less dependence on welfare – in times of crisis as well as at other times. And cut down the length of your posts – say what you want to say in plain English in far fewer words.
And I don’t believe we can begin to fix these problems without fixing our broken education systems (plural deliberate because of things being different in Scotland).
@ Nonconformistradical,
“Cut it out please and get down to the basics of what we need to do to help people manage for themselves with less dependence on welfare – in times of crisis as well as at other times”
Political parties have been coming out with the same old, same old, for as long as I can remember and we’ve not moved on. What would you suggest that hasn’t been tried before?
My suggestion for welfare reduction is a move towards a Job Guarantee. This is also part of a macroeconomic theory. So we could start by training up lorry drivers. Their guaranteed job would be to learn and pass their HGV licence after which they would be in a good position to find better paid work. Most Lib Dems would prefer more welfare like a UBI which doesn’t solve the problem of too few lorry drivers
I do my best to be concise, using my own words, and in plain English. I hope this comment isn’t too long winded for you!
@Peter Martin
“So we could start by training up lorry drivers. Their guaranteed job would be to learn and pass their HGV licence after which they would be in a good position to find better paid work.”
I agree in principle – but would you make this a ‘one time only’ support mechanism? i.e. when the lorry driver job goes are the ex-lorry drivers left to fend for themselves without proper support? Or are you talking about life-long education – and not only for work purposes?
“Most Lib Dems would prefer more welfare like a UBI which doesn’t solve the problem of too few lorry drivers”
This Lib Dem is not convinced about UBI – risk of enabling tory-supporting tabloid press to shout about scroungers and doesn’t help people to manage their lives for themselves.
@ Nonconformistradical,
The details of the JG would have to be discussed and agreed through the usual democratic processes. But we have to start somewhere and training for those required to fill job shortages such as we currently see in nursing, lorry driving, agriculture and horticulture, building construction etc would be as good a place as any.
A move back to Beveridge insurance principles would also be in order. I don’t think anyone wants to see someone close to retirement have to retrain as an apple picker for example. By that time they should have accumulated enough credits to be able to be more choosy in what they would like to do whenever their accumulated payments run out.
The problem is at the other end of the age scale and the priority should be to get young people trained and into jobs where there are currently shortages. The expectation should be that they will be required to work and be given a job if necessary and if they can’t find something suitable for themselves.
If the time ever comes when the robots can drive trucks, work on the farms etc, and we really do start to run out of useful things for people to do then we should respond by reducing working time for all rather than just a few losing their jobs completely and who are then told to go away and live off their UBI.
Nonconfomistradical,
it is up to individual contributors how they choose to respond to articles or comments on public forums. It is called Freedom of expression and a basic tenet of Liberalism.
Expats quotes H. L. Mencken above “For every complex problem there is an answer that is clear, simple, and wrong.”..
The Conservative approach to complex problems is ‘bread and circuses’ for what is admittedly a socially conservative rather than socially liberal majority of voters in in the UK. Labour frames every issue in terms of class struggle. The LibDem approach is based on analysis of evidence by working groups and policies that are debated at conference. This approach is developing a minimum guaranteed income to be debated at this month’s conference.
As Christine Jardine concludes in her Scotsman piece “I have written before about my belief that the time has come to rethink our welfare state for the 21st century. That if ever there was a demonstration of why we should investigate how to guarantee a minimum basic income for all, it has been the pandemic.
The Labour government in Wales is about to launch a trial, every other political party save the Conservatives is committed to the idea, and many of their own members are open to the argument.
But we are running out of time. If we do not act soon, it may be too late to save this generation.”
MMT doesn’t offer any new answers to resource constraints like labour supply problems or ongoing issues like the housing crisis . The big increases in house prices and associated mortgage borrowing occurred initially during the Labour years and were part of the reason for the financial crisis. The recent house price inflation and associated borrowing is occurring in the midst of a pandemic and unprecedented fiscal stimulus. Apprenticeships and work retraining schemes have been heavily pushed for over a decade with only minimal impacts.
Those who bear the brunt of economic disruptions are the most vulnerable in society. Hence the LibDem policy for a guaranteed minimum income.
@Joe Bourke
Re your posting at 1:55pm – how about stating what you are getting at in half the number of words you used please? Freedom of expression is fine but if you want people to pay attention to what you say then brevity and clarity would help.
“Those who bear the brunt of economic disruptions are the most vulnerable in society.”
I agree. But if there is work needing to be done by humans which isn’t being done because some who could do it and are available don’t come forward because they can just about manage on UBI how will you get that work done?
Nonconformistradical,
the Jardine article is an explanation of why we should investigate how to guarantee a minimum basic income for all. It is I think self-explanatory.
The Sky article linked above describes how shortages of HGV dirivers will ultimately be addressed by the firms that require them “the country’s largest driver training firm and finds strong demand among people to take advantage of surging salaries and bonuses from a career in the distribution business.”
The shortages of drivers are in the tens of thousands. Christine Jardine’s article identifies six million families that will be affected by the Universal credit reductions and writes “More than a million people still on furlough face an agonising wait to discover whether their employer will be among the one on five which the British Chambers of Commerce claims are considering redundancies when that date comes.”
What I want to know is how some LDV contributors seem immune to the dreaded ‘Flood Alert’ which tells me I’ve been making too many comments and need to wait “X hours” for permission to make more? Do people like Messrs Bourke and Martin have the Golden Ticket?
@ Joe
“MMT doesn’t offer any new answers to resource constraints like labour supply problems or ongoing issues like the housing crisis . ”
Actually it does.
MMT is for the Job Guarantee. So if we have a shortage of nurses, or doctors, or builders etc we offer young people a Job Guarantee. The Job, initially, is to learn as well as do. The jobs would be apprenticeships if you like. We pay young people to learn and if necessary taxes are raised (in neoliberal terms) to cover the cost or (in MMT terms) to counter the inflationary aspects of the spending. The current neoliberal policy is to burden young people with often unrepayable debts.
The housing crisis in the UK is largely self inflicted. There is enough housing throughout the UK if it used effectively. It has arisen because the housing stock is seen as collateral for the creation of an ever increasing volume of private debt in the economy which is a deliberate result of neoliberal economic policies from all main political parties. Politicians say they want affordable housing even though they know that the level of private debt is backed by current expensive prices. MMT flags up the dangers of too much private debt in the economy. Neoliberals are only concerned with public debt.
Peter Martin,
government job schemes have been used for decades to mitigate long-term youth unemployment. Since 2008 apprenticeship schemes have been subsidised and promoted by government with some effect but rather marginal in the big scheme of things. It does not address resource constraints. Nurses and Doctors are trained in University, builders on the job. Government Job guarantees are not needed for this kind of skilled work. There is no shortage of work for any qualified nurse or doctor or builder with relevant skills, or lack of training opportunities in these fields.Both the Construction and Engineering Industries have internal grant schemes for training of apprentices. The NHS and construction firms are all crying out for applicants.
Debt is indeed a problem in the housing sector. As I mentioned above the big run-up in house prices initially occurred under a labour government that was consistently running annual deficits commensurate with annual growth and with bank base rates at around 5%. Public deficits and higher interest rates made no difference to the scramble for property mortgages prior to the 2008 financial crisis. Nor did they prevent the financial meltdown which arose from a lack of prudential control and supervision over bank lending and funding sources.
The housing crisis stems exclusively from a restricted land supply. If public authorities are enabled to acquire land at pre-planning consent prices the issue of affordable housing for the average wage earner can be solved within a few short years.
@ Joe,
“Nurses and Doctors are trained in University, builders on the job.”
Nurses and doctors are also trained in teaching hospitals. This is why they are so named. Builders and other practical workers have to spend some time in the classroom too. There isn’t a clear dividing line between those who are mainly learning and those who are mainly working.
Society used to recognise this at one time and paid young people enough to live on rather than putting them into debt. However, in recent years it became cheaper to import skills from overseas rather than train up our own young people. This looks like it has come to an abrupt halt through a combination of Brexit and Covid.
And a good thing too. Though no doubt you’ll disagree.
“The housing crisis stems exclusively from a restricted land supply. If public authorities are enabled to acquire land at pre-planning consent prices the issue of affordable housing for the average wage earner can be solved within a few short years.”
I doubt Sarah Green would have even kept her deposit in Chesham and Amersham if she had campaigned on a platform of allowing builders to freely buy up agricultural land for housing development at agricultural prices. Sarah knows better than either of us just how to win elections with a Tory inclined electorate. It’s a non starter politically.
Even if somehow it were shown to be a popular policy, no Tory or LibDem Govt would ever willingly allow the price of housing to fall significantly the way it did in parts of America and threatened to do the same here for a time after the GFC. It would leave millions in negative equity with little hope of escape. It would create a domino wave of bad debts and failing loans. It would bring down the economy with it.
You’re dreaming.
On the “too many words” issue, I notice some very long URLs in some of the posts. That’s unnecessary. EG tinyurl.com/tcws2t83 does the same work as the very long scotsman link above. Tinyurl is free. There are other sites that do the same
@Peter Martin – “The problem is at the other end of the age scale and the priority should be to get young people trained and into jobs where there are currently shortages.”
Whilst we do need to get more young people into some jobs, we should not undervalue the 50~70 age group. Expecting people to work in the same profession for 50 years is probably not a good thing, however, creating a society where it is normal to effectively retire from one (high-pressure) career at circa 50~55 and retrain and take up a less stressful second career is probably a good thing.
Looking at things this way, it becomes obvious that some shortages can be addressed by retraining older people (in addition to young people) whereas others may favour one or other age groups. An example of a shortage not being widely discussed that requires young people to be trained, is the impending shortage of doctors, particularly GP’s. several decades back the UK enticed many Indian doctors to settle and practise in the UK – to address a shortage of doctors arising in part from a daft policy of only training sufficient numbers as there were vacancies in the NHS. From a pre-lock down exhibition in the Royal College of General Practitioners, it was clear the UK wasn’t training and retaining sufficient for there not to be a shortage of GP’s in the coming years as these Indian doctors retire.
Obviously, this approach doesn’t fit the usual soundbite sloganeering favoured by Westminster parties.
@Joe Bourke – “The housing crisis stems exclusively from a restricted land supply.”
Err no.
Whilst there has been a shortage of housing, prior to circa 1997 this was caused in the main by changing the size of households – specifically, there was a significant increase in single-person households. Post-1997, we’ve had to contend with the braindead policy of encouraging unsustainable levels of inward migration with no regard to what adding circa 500k people per annum to the UK residential population would require…
The current skill shortages we are seeing is a direct consequence of successive UK governments over many decades failing to address fundamentals, instead mistaking short-term fixes as being solutions. Brexit and the predicted economic downturn gives us an opportunity to address the fundamentals.
Roland,
the change in the composition of households increases the demand for housing just as it increases the demand for cars, furniture, white goods etc.
There has not been a shortage of cars, furniture and other household goods because supply increases to meet demand.
Land with planning consent is limited in supply and the grant of planning consent is under the control of local authorities. As soon as planning consent is granted the value of land escalates in some cases 100 fold.
This FT article gives a little more detail https://www.ft.com/content/c41ce8a8-9f04-11e8-85da-eeb7a9ce36e4 “What should not be in doubt is that supply limits are the single biggest problem with housing.”
The demand for housing hasn’t only been increased because occupancy levels have decreased. Singles and childless duals over the last 30 or 40 years have benefitted considerably by buying bigger houses than they need have. The bigger the house the more it has appreciated in value. This has meant that those who can most afford to buy a family house, and gain the most from an asset with a seemingly ever increasing value, are those without the expense of actually running a family and of needing a family house in the first place.
Even worse than single occupancy households are the zero occupancy households in many parts of London.
It’s enough to make anyone in London who is struggling for accommodation to want to join the SWP. But many might choose the other extreme of the BNP!
https://socialistworker.co.uk/art/51642/Protests+highlight+the+scandal+of+empty+housing
@Joe Bourke
The ‘housing crisis’ stems in my humble opinion from the following factors in no particular order of importance:
* The easing of credit restrictions during the ‘Barber Boom’ of the early 1970s, where, because of a lack of available houses, prices quadrupled in under four years.
* The unwillingness and inability of local authorities to build sufficient numbers of council houses after the immediate post war building programme.
* Lady Thatcher’s ‘Right to Buy’, where local authorities were forced to use receipts to pay off debt rather than build new properties.
* The acquisition by some of properties for investment purposes rather than just to put a roof over their heads. ‘Buy to let’ is a good example.
* Developers, once outline planning permission had been granted, sitting on parcels of land until the price was right.
* The assumption by governments, particularly Tory, that ‘home ownership’ was the only way to go. Not everyone wants or even has the means to handle a mortgage.
* Nimbyism.
@Joe Bourke – “Land with planning consent is limited in supply and the grant of planning consent is under the control of local authorities.”
And as has been debated many times over the past decade on LDV, this has had little impact on housing supply; even in those countries with massive amounts of land available for development.
But as I said fundamentally the current housing crisis is caused by daft government policy which wasn’t thought through. But then given Brexit etc. its does seem nothing has changed (in terms of government thinking through policy).
Roland,
the FT article linked above explains why Planning rules are driving the housing crisis, not just in the UK but in Urban centres around the world.
Car loans are much cheaper when interest rates are low but the cost of cars has not increased three or four fold over two decades. The reason is simple – supply can increase to meet demand. With housing the supply bottleneck is land with planning consent. Address that issue and local authorities can address the affordable housing issue just as was done in the Inter-war years and after WW2 until the Land Compensation Act 1961 was introduced https://fet.uwe.ac.uk/conweb/house_ages/council_housing/print.htm. Investors don’t buy cars for long term gains they buy houses because there is a restricted supply of development land https://england.shelter.org.uk/professional_resources/policy_and_research/policy_library/report_grounds_for_change
“Land is central to building homes. Whether we build social homes, market homes, flat-pack homes or traditional bricks and mortar we need to have the land to do it on. Yet, in the last 20 years the value of land has risen by 544%. And high land prices have very real consequences for people and communities.”
@ Joe,
“With housing the supply bottleneck is land with planning consent. Address that issue…….”
So what does “address that issue” mean? For many it would mean the abolition of the green belt. Is this what you are advocating for the Lib Dems? The same Lib Dem party which wants to do just the opposite and wins bye-elections by promising the electors it will campaign to strengthen green belt planning restrictions?
I’d probably have more chance, as a Lib Dem, to bring the party around to a eurosceptic viewpoint than you would with this.
There are other groups already advocating just this:
https://www.spiked-online.com/2017/02/10/the-green-belt-is-strangling-our-towns-and-cities/
The Shelter Link has a series of short essays showing how the issue can be addressed;
The first essay is focused on “Using land reform to save the countryside”
The last essay considers reform of the Land Compensation Act 1961:
“To move forward and improve our ability to capture rising land values for the benefit of communities, we must change the incentives in the land market. Reforming the Land Compensation Act 1961 to exclude consideration of theoretical planning permissions
The effects would be felt far beyond land purchased using CPO. Because land traders know that ‘hope value’ is protected in current legislation, they price it into their trades. In the same way, a reformed compensation code would remove the ‘hope value’ floor from the land market. Land trades would reflect the risk of CPO without ‘hope value’, allowing land values to fall from their current high.
As such, the world created by this reform would not be one in which communities relied on CPO to purchase land for good development. In countries with compensation codes more in line with this proposal, such as the Netherlands, CPOs are not particularly common. Both sellers and purchasers of land have strong incentives to avoid the adversarial process of CPO where possible. Yet without the high bar of ‘hope value’ in land compensation rules, landowners have far more incentive to compromise with communities who want to see their local areas developed with their interests at heart. This might mean selling land at values to enable good development. Alternatively, a landowner could retain ownership of their land, allowing it to be used for good development in exchange for a long-term profit through rental income, instead of the massive up-front windfall returns at the heart of the current housing crisis.”
@ Joe,
I’ll take that as a yes. Yes you do want to abolish the Green belt concept. Good luck with that in the party of Sarah Green,
I wouldn’t go that far but, yes, the issue needs to be “addressed”. Partly by Nationalising agricultural land which is intended to be converted into building land at its existing value plus an extra amount for fair compensation. This may work out to be something like double its actual value is paid out.
But mainly it is by using the macroeconomic power of Govt to make better use of the existing space we have. The cost of housing in the North East, for example, is lower but there are fewer well paid jobs. The cost of housing where there are better economic prospects is much higher. Only central govt has the economic clout to better equalise the economy and stop, or even reverse, the population drift to the SE of England.
That should go down better with Lib Dem voters of the SE than building all over the Surrey Hills.
Peter Martin,
the Shelter essay referred above explains how these issues are addressed:
“We only have to look to the Continent to see what is possible. In Demark, the new town of Ørestad was developed on the outskirts of Copenhagen through a partnership between national government and the city government of the capital. Built around a Metro line, it comprises a mixture of commercial space, private residential development and social housing, and around 70% of residents use public transport to get to work. Other examples of settlements funded by municipal authorities harnessing land value uplift can be found across Germany, France, the Netherlands and Scandinavia. There is no reason why we could not plan similarly ambitious projects in Britain.”
“Speculative development is ruining our countryside. Meanwhile, enough suitable brownfield sites exist for over a million new homes, but they are underutilised.
Land compensation reform could help give us higher quality developments on more sustainable sites. In the long run we would lose less countryside and enjoy better places. And, as communities start to get more of the things they want from new developments, it might even mean that we could look forward to a less fraught and oppositional planning process.”