Universal child benefit?

The bathhouse has been a disticntly dry space for a while, which given the dramatic redrawing of the political landscape in our fair Isle is a sad thing. So in the spirit of revival – captured so precuriously by Ed Milliband – I thought it high time a post.

As usual I’m motivated by confusion. What to make of the end of universal child benifit. It seems ludicrous that people on £18,000 should subsidise those on £250,000 so are the Coalition’s plans well placed?

The general Lefty stance is no – uniting them with the Daily Mail and Telegraph. But unlike the Tory press the left defend the idea of universal welfare states because ‘services for the poor make poor services’. Which, as the US demonstrates, is palpably true. But child benifit is no service, it’s a bank transfer. So what to make of it? Also, Ed Milliband has been entirely silent so far, which is a tad worrying.


Some links

I know this is very lazy of me, but rather than anything clever I thought I’d just post a couple of links to interesting blogs of the last couple of days. The last 2 refer to Osborne’s announcement today that he’s going to axe the Future Jobs Fund and Child Trust Funds – a rather chilling prelude to what’s coming up.

1) Peter Kenway in the Guardian shows that contrary to the popular myth, work is not the route out of poverty

2) A couple of fairly harsh criticisms of the loss of the Future Jobs Fund – both make excellent points.

3) A similarly harsh criticism of the decision to axe child trust funds. Interestingly, all the Community Development workers I asked about this today said they didn’t really know much about it and weren’t that interested. I wonder if it’s a very sad case of an excellent idea that has ultimately failed because no-one promoted it enough. Kate Green used to be head of Child Poverty Action Group and is very well respected indeed.

Is VAT regressive?

The conventional wisdom is that VAT is regressive, because poorer people pay a higher percentage of their income in VAT. Save the Children say the poorest 10% of families spend 14% of their disposable income on VAT, versus 5% for the richest. This is important because a lot of people suspect George Osborne might announce a significant rise (from 17.5% to 20%) in VAT in his emergency budget in June, which would worsen inequality.

However I thought I’d read somewhere an argument claiming it wasn’t actually regressive, because many items (childrens clothes, food, etc) are excluded from VAT, and these are the things that people on lower incomes spend most of their money on.

This IFS paper (love the IFS) sorts it out. Apparently if you look at the percentage of income that goes out again on VAT, then it is regressive, just as Save the Children claim.

However, the IFS researcher argues that, in some ways, it makes more sense to look at percentage of expenditure rather than percentage of income. This is because borrowing and saving can allow a relatively stable consumption level despite fluctuations in income. A retired doctor eating through their savings is going to have a low income level but a high expenditure. So is a student spending their way through a student loan, hoping to earn it back later on, as is someone who is temporarily unemployed as they use their savings from a previous job. All of these might distort the picture, raising the amount of VAT paid by those with low incomes.

It turns that almost everyone pays about the same percentage of their expenditure in VAT. So, on this measure, it’s not regressive (not progressive either, mind).

In some ways this is quite convincing. If you assume that those with the lowest incomes who are actually poor (rather than sitting on big savings) have to spend all their money rather than saving it (there’s probably evidence one way or the other?), then removing the ones who have low incomes but are actually spending more does make sense.

The paper also identifies that 55% of consumer spending is on goods taxed at the full rate of VAT, which lends support to the argument that people on low incomes might be spending most of the money on goods that are not subject to VAT (or not at the full rate).

A big left-wing society?

Another week closer to the new government and I’m still bogged down trying to decipher our Big Society. It struck me that if an international development programme was all about ‘empowering communities on the ground to take charge of their own lives’ and ‘doing away with centralised donor conditions’ I would be cooing along happily.

It’s also worth noting, in a time where we’re routinely told radical progressive politics have no place here, the sentiments and language of Big Society is reminiscent of Hugo Chavez. You’re left to wonder what could have been if New Labour ever dared to tap into this.

In The Observer today, Cameron powerfully outlines the ideals of a bottom-up society.

So if parents want to set up a special school to fill the void in their locality, why should we not help them? If nurses believe they can deliver a better service, why should we not encourage them to form a co-operative and do it themselves? If a pioneering social enterprise can help people escape the spiral of drug addiction and crime, why should we not let them? If a private company can get people off benefits and into jobs, why should we not allow them?

Why indeed? Reading the (Orwell Prize shortlisted) blog of a guy who works in care for ‘bad teenagers’ emphasises the problems of over-centralised social care.

The criticism is not with the ideal but simply the fact that the Tories have committed so little funding for it. The Big Society bank will mop up dormant bank accounts, but is it really enough to unfurl a massive programme of social reform? The government is likely to spend £170bn on benefits alone this year, and we can see from this lovely picture how much is spent elsewhere.

Without the investment in things like Community Links I guess Big (Broken?) Society is just an excuse to cut the support government offers. So my questions to you all are, what do you make of the ideas? Could there be a left-wing version of the Big Society? What would it entail?

My first suggestion would be pushing co-operatives and co-operative-type legislation into the private sector, not just the public sector as Cameron suggests. What else?

Is Britain Broken?

Some eager bathhouse members managed a field trip to a Guardian debate last night that asked ‘Is Britain Broken?’ (The link has a podcast of the event, by the way) So in the spirit of things, it seemed only right to share some thoughts.

‘Broken Britain’ is such a pithy, general and meaningless slogan that any number of issues can collapse into it. The state of social housing, the expenses scandal, the deficit and divorce lawyers were just a few of the bugbears cited by the audience and as symptoms of a broken society.

Yet Will made a good point by wondering just how useful the term actually is. Does ‘Broken Britain’ cloud or clarify the issues in question?

For me, many of the social issues that matter are outcomes of an unequal society rather than anything else. But equality has different aspects to it. While plenty has been said about the spiralling income inequality, there has been nothing about the inequality of political power.

Asking a government to promote the interests of the majority is pointless when that majority has little power. It’s a chicken-egg conundrum. With the break-up of unions, political power over the economy has been lost, and with the collapse of party membership numbers, power over the party system has been lost.

Until we discover ways of giving the majority of people political and economic leverage, the left will struggle to find electoral success. The obvious question is how exactly do we do that?

Will suggests joining the New Labour party. But it has spent the last two decades ridding itself of a historic tie to equality. That said, what else can we do?

The myth of Tory investment

There’s a good comment piece in The Guardian about the legacy of Thatcherite/New Labour economic thinking that dominates today. Among other things, it says

Over the last 30 years the share of the nation’s wealth owned by the bottom half of the population has fallen from 8% to 5%.

In 1978 there were 7.1 million employed in manufacturing, by 2008 that had fallen to 3 million.

George Osborne, last week said his solution to the problems of the UK economy is to unleash “the forces of enterprise” in the economy – i.e remove the state and hope the private sector blossoms.

All of which is classic Tory/New Labour rhetoric, tied into guff about ‘personal responsibility’ and the inherent ‘efficiency of the private sector’. Thatcher closed down state enterprise because she felt state investment ‘crowded out’ private investment but research from CRESC in Manchester University, suggests this isn’t the case.

Since 1998 state and state-related industries make up more than half of the job creation nationally and in ex-industrialised areas (where Tory reforms were felt most) this figure is much higher. It sounds a casual observation but it’s completely fundamental to how we think about the UK political economy.

Poverty, inequality, and that..

You probably saw two interesting reports this week – the first was the British Social Attitudes survey which showed that although we’re getting socially more liberal (far more tolerant of homosexuality and cohabitation, particularly) we’re moving rightwards politically and economically. People are less in favour of redistribution, and most don’t believe a role of government is to create a more equal society.

Which is rather depressing in the week when Harriet Harman’s economic equality report shows that inequality is huge and growing.

What you might not have seen is that at Community Links we spent a week looking at how the media covers poverty and inequality. Some really interesting stuff – I’ve copied my summary below, with links to all the good posts.

And the two reports also reinforced in my mind the difference between equality as a tool for greater social good, and equality as a desirable end in itself. The Spirit Level shows that more equal societies perform better on a whole range of measures of health and social well-being. Lefties love it because it provides evidence to back up  what they’ve been saying for ages, that inequality is good.

However, perhaps we could use it more widely than that. I think if it gets hijacked and turned into evidence supporting an ideology, we might be stifling its potential. Because what it actually shows is that irrespective of your ideology or your ideal society, and irrespective of exactly who inhabits the top 10%, or which group of people are at the bottom, narrowing that gap will improve the UK’s performance in a range of areas that surely everyone can agree are good (we live longer, are happier, trust eachother more, are less likely to be obese, etc etc).

So perhaps someone needs to stop promoting income equality as a desirable end in itself and start promoting it as a tool for greater well-being. An instrumental argument for equality. The message should be clear – if you’re going to argue you have to argue with the evidence, not the ideology. At the moment I think too many people are mixing them up…

My summary post from Community Links blog.

It has been a fascinating week of discussion – we’ve had 20 authors grappling with the issue of how poverty is portrayed in the media, approaching it from very different angles. So what have we learnt?

The way the media portrays people on low incomes is neither positive nor reflective of the true situation. Those covered are often the tiny majority who are also criminal or antisocial – the ‘visible poor‘. Meanwhile poor people of the past are portrayed as nobly struggling, while those of the present are seen as feckless scroungers. And young people often get a particularly raw deal in the media.

There was less agreement on why this distortion occurs. Some focussed on the role of journalists, highlighting how little many journalists know about the lives of those they report on, and how they often don’t take the trouble to find out. Others blamed it not on the journalists themselves but the media as a whole, where a desire to shock and sensationalise can override all other considerations.

On the other hand, perhaps charities have to shoulder some of the blame for being overly hostile towards those journalists who are genuinely interested. And politicians and their language have a powerful influence, both in promoting negative stereotypes, and reacting to them. Indeed, it could be argued that government have thwarted their own ambitions for tackling poverty by turning the public against poor people.

So finally, what do we do about it? There’s perhaps a role for better understanding between journalists and charities, ensuring they work together rather than against each other. Perhaps ignoring the mainstream media and producing your own content or starting conversations in communities is the way forward. And JRF’s excellent guide to reporting poverty is being taken into journalism schools and promoted to students, hopefully influencing the next generation of reporters.

However, I can’t help feeling there is more we could do. Is there room to seriously engage with politicians on this issue, pointing out that stigmatising poor people is a direct barrier to tackling poverty? Are there ways we could engage the media better with people on low incomes? An idea that hasn’t been mentioned this week, but that I’ve heard before, is of a citizens’ panel that holds to account media outlets offering negative portrayals.

This discussion certainly isn’t over, and perhaps over the next few weeks we can keep it going, on this blog or elsewhere. In the meantime we can challenge negative portrayals wherever we see them and perhaps come up with some more concrete proposals for harnessing the power of the media to better represent and promote the interests of people on low incomes.