Alice Hood

At midnight tonight the troubled East Coast Mainline will be taken back into public hands under a new, publicly owned company, after National Express failed to meet the terms of its £1.4 billion franchise agreement.

The Government says the line will be managed by the new East Coast body for the next two years, but unions are calling for the prestigious route to be kept in public hands and run on a not-for-profit basis. We’re in good company: this summer the Transport Select Committee argued that an East Coast line kept under public ownership would be an ideal way to measure up the franchise system, acting as a comparator to the lines run by private operators.

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• Close fiscal deficit with Chaps tax
  Adam has a post up at Comment Is Free: “A small levy on the large transactions that pass through the bank-to-bank payment system would be prudent and just”
• Contra Cameron on Society
  Hopi Sen adds to the Cameron speech debate
• Cameron fails poverty fact-check
  Next Left reports on David Cameron’s recent speech
• Cautious good cheer
  Stephanie Flanders: “When Mervyn King does cautious optimism, you can keep the emphasis on cautious.”
• A feminine economy?
  Stumbling and Mumbling: “Our economy is becoming increasingly feminized. That’s one message of today’s labour market figures.”

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Adam Lent

I had this post on Comment is Free yesterday:

Now is not the time to close the UK’s fiscal deficit. The kind of cuts urged by the small-state right wing run the risk of making the recession deeper and longer.

But while deficit doves can agree cuts today would be premature and that economic growth can make the biggest contribution, there is much less agreement about what further measures are required to reduce the deficit in the medium to long term.

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Stewart Lansley

Rising personal debt, global imbalances, excessive bank leveraging and reckless financial risk-taking all played a key part in the current economic meltdown. But there is another factor that has been largely ignored – the role of wages which I explore in the first Touchstone Extra - Unfair to Middling:  How Middle Income Britain’s Shrinking Wages Fuelled the Crash and Threaten Recovery, which is published today.

In the 25 years from 1945, the share of the nation’s output going to wages held steady at close to 60% before rising to nearly 65% in 1975. Since that high point, the wage share has been in inexorable decline. Today it stands at a mere 53%. An even steeper fall has occurred in the United States, while continental Europe has experienced a shallower fall.

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Today we launch a new Touchstone initiative – the first Touchstone Extra.

These will be new downloadable papers available as pdfs. Unlike the Touchstone pamphlets we will not be producing hard copies, but it will provide enough space – ie more than a blog-post – to present original research, develop an argument and provide the background reasoning.

We are very pleased that the first Touchstone Extra is by Stewart Lansley, the author of the Touchstone pamphlets on the super-rich and middle-income Britain. In Unfair to Middling:  How Middle Income Britain’s Shrinking Wages Fuelled the Crash and Threaten Recovery Stewart continues his analysis of the position of middle earners. He charts the decline in the share of the economy going to wages – particularly for middle and low earners – and argues that the wages squeeze helped cause the financial crisis by both increasing demand for credit among those trying to keep up and freeing excess profits to be used for speculation by the finance sector.

We will also publish a Touchstone post by Stewart on the pamphlet.

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• David Cameron, social policy butterfly
  Polly Toynbee guts David Cameron’s ‘Big Society’ Hugo Young Lecture speech in a post on Comment is free
• Unkind cuts
  UNISON’s Heather Wakefield has a post on Public Finance’s blog on the trend to spending cuts in Councils’ services. Nottinghamshire has seen cuts of “£10.5m from services to the elderly and disabled, including an end to the Dial-A-Ride service, closure of four day centres, increased charges for day centres, transport, and meals-on-wheels and the sale of 13 residential care homes. Meanwhile, employees face pay cuts ranging from £2000 – £8000 a year, a three-day reduction in annual leave and lower essential car user allowances. And if losing your job isn’t bad enough for the 500 to be ‘let go’, the redundancy agreement is to be cut by a third.“
• The Current Crisis and the Culpability of Macroeconomic Theory
  Paul Ormerod demolishes the macro-economic consensus that allowed the crash to happen: “Modern macroeconomics, with its basis in rational agents and rational expectations (RARE), bears a heavy burden of responsibility for the financial crisis. The discipline provided the intellectual underpinning for a world in which situations involving risk led to it being systematically underestimated, and in which situations of genuine certainty were not recognized for what they were. It surely now is time to scrap once and for all this RARE view of the world. Central banks should ditch their DSGE models. Funding agencies should no longer support RARE proposals. The scientific evidence provided by the ‘experiment’ of the financial crisis should enable us to draw these conclusions.“
• Tax Payers Alliance condemn firefighters for saving trapped duck
  Prime “You couldn’t make it up!” stuff from Liberal Conspiracy

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Richard Exell

David Cameron’s Hugo Young Lecture is the closest any Conservative has come to explaining how they expect reactionary methods to achieve progressive ends. He fails, but the speech should not be written off and it shows that he has – at least rhetorically – broken with the Conservatives of the 1980s and 90s, who didn’t give two hoots about inequality.

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Philip Flaxton

The recession could lead to a travel revolution, as organisations and staff look to cut costs during the current economic turmoil.

I’m making this prediction during Commute Smart Week, which is run by my organisation Work Wise UK. Now in its fourth year, the week  highlights a number of ways of avoiding the misery of traveling to and from work in the dark, and the depression and despondency that many experience as a result, by working and commuting ‘smarter’.

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Sophia Parker

Once again, today’s ONS figures show us that the once-predicted ‘white collar’ recession has not materialised. Instead it is the UK’s 7.2 million low-paid, low-skilled workers at the sharp end of a flexible and global service economy who are being hit hardest.

Today the Resolution Foundation publishes its report exploring the impact of the recession on low earners – the ‘squeezed middle’ with below median incomes who remain broadly independent of state support. Our analysis shows that if low earners do lose their jobs, they will find it harder to re-enter the labour market due to their low level skills. Whereas nearly nine out of ten managers and senior officials find work again within 26 weeks, only three-quarters of people in elementary occupations move off the claimant count. Those who do hold on to their jobs are finding the recession is limiting their already slim chances of accessing training, with evidence that employers are cutting back on training budgets during the downturn.

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Nicola Smith

Today’s unemployment figures provide welcome signs that sharp rises in unemployment levels may be behind us. But there are mixed messages – young people and those at risk of long-term unemployment are feeling the effects of the downturn much more than other groups.

Unemployment increased 30,000 on the quarter, to 2,461,000 for the July-September period. However, short-term unemployment of under six months fell 99,000, while unemployment of over 6 and up to 12 months increased by 57,000 and unemployment of over 12 months increased 71,000. 618,000 workers have now been unemployed for over 12 months – 25.1% of all unemployed people. These data suggest that while flows of new workers into unemployment are slowing, those who have already spent significant amounts of time out of the labour market are facing real risks of long-term worklessness.

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