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Nicola Smith

Nicola Smith

I’m Head of the Economic and Social Affairs Department at the TUC. I also represent the TUC on the Social Security Advisory Committee. My posts may therefore range from the environment to the welfare state via macro-economic policy but will inevitably provide more detail in some areas than others. In my previous roles I specialised in labour market policy and coordinated the work of the Commission on Vulnerable Employment (CoVE). Before joining the TUC I worked in research and policy roles for Barnardo’s, the Children and Young People’s Unit at the old DfES and the Centre for Economic and Social Inclusion.

  • Labour market

    Budget 2012: No help for young unemployed people

    21st March 2012 — Filed under: Labour market

    Nicola Smith Nicola Smith

    Today’s Budget contained no help at all for young unemployed people. All we learnt was that:

    Government also recognises that the best route out of unemployment for some young people will be starting up in business, but that it can be difficult to obtain the skills and capital required. Building on the support already availible, including the New Enterprise Allowance, later this year the Government will pilot the best way to introduce a programme of enterprise loans to help young people set up and grow their own business.

    Great. A pilot scheme with an unspecified number of places (from which, read ‘it’s very small’) to enable young unemployed people to take on loans which, if their businesses fail, will leave them with additional debts to be repaid through their JSA. Meanwhile, more than one million young people continue to look for jobs, the total amount of support available via the Youth Contract remains 26 per cent less per year than was previously provided and companies get another £800 million off their tax bills.

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  • Economics

    Are the rich really paying five times more?

    21st March 2012 — Filed under: Economics

    Nicola Smith Nicola Smith

    The Chancellor claimed that today’s Budget shows that:

    we’ll be getting five times more money each and every year from the wealthiest in our society

    Is this true?

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  • Economics

    A tax cut for those paying the 40p rate: £42.20

    21st March 2012 — Filed under: Economics

    Nicola Smith Nicola Smith

    Interesting to note that while announcing his personal allowance tax cut the Chancellor failed to mention that ‘the basic rate limit will be reduced, from £34,370 to £32,245 in 2013-14, so most higher rate taxpayers will get one quarter of the benefit a typical basic rate taxpayer will receive’ (page 29). Firstly, this means that more people (reportedly 300,000) find themselves in the higher rate tax band, something the Chancellor was undertandably not keen to point out. And secondly it means the scale of the benefit from the increased personal allowance for those in the higher rate band is limited. Whether providing 3.7 million people with an extra £40 a year will make a huge difference to our economic prospects remains to be seen.

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  • Economics

    OBR’s assessment of Budget’s impact on household spending: nil

    21st March 2012 — Filed under: Economics

    Nicola Smith Nicola Smith

    Page 46 of the OBR’s economic and fiscal forecast sets out their view on what the Budget will achieve for our economy. On household spending its message is pretty clear – this isn’t a Budget that’s going to do much to boost consumption. While the OBR note ‘there are a number of measures that increase real household disposable income’ including raising the personal allowance, the tapering in the reduction of Child Benefit and the reduction in the annual rate of income tax, they note that ‘a number of other measures are likely to reduce real disposable income, including the changes to age related allowances and the widening of the VAT base’.

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  • Economics

    Are pensioners paying for corporation tax cuts?

    21st March 2012 — Filed under: Economics

    Nicola Smith Nicola Smith

    The Budget policy costing document reveals that the additional cut in corporation tax is set to cost us £880 million by 2015-16.  But at the same time, the rather opaque announcement that ‘age-related allowances’ for pensioners will be frozen and restricted to existing recipients from April 2013 will raise over £1 billion by the same date. Has the Chancellor really paid for tax cuts for big business (whose record surpluses are currently worth 50% of GDP) by making pensioners pay more tax?

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  • Economics

    How can the Budget help address our investment shortfall?

    18th March 2012 — Filed under: Economics

    Nicola Smith Nicola Smith

    As the TUC’s Budget Submission set out earlier this week, the UK economy is facing a huge investment shortfall. With (as our most recent Economic Report showed) Government growth forecasts dependent upon investment overtaking consumption as a proportion of GDP by 2016, and a 7.7 per cent annual rise in business investment needed over 2012 if we are even to achieve the lackluster 0.7 per cent annual growth currently forecast by the OBR, our future economic prospects are clearly dependent upon achieving an investment step change.

    How might this be achieved?

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  • Economics

    Why scrapping the 50p tax is wrong

    17th March 2012 — Filed under: Economics

    Nicola Smith Nicola Smith

    If newspaper reports are to be believed, the 50p tax rate is toast. Britain is apparently set to show she’s ‘open for business’ by endorsing the view that as the rich get even richer the rest of us benefit from the growth and investment that their spiraling incomes and additional effort bring.

    In contrast, the campaign in favour of retaining this tax rate rests on the belief that there is ample scope for the best off to make a greater contribution without their wealth creating activities being curtailed – and that a fairer and more progressive tax system would bring wider social and economic benefits.

    Not surprisingly, I’m in the latter camp. And while of course I recognise that the 50p rate is very far from the only move necessary to achieve a fairer system, and that it may not even be the most important of the many changes we need, the decision that is taken on its retention will provide a significant indication as to where the Government’s views on this important debate lie.

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  • Economics

    Is permanent austerity inevitable?

    14th March 2012 — Filed under: Economics

    Nicola Smith Nicola Smith

    Last night’s Newsnight started from the premise that demographic change will create an unquestionable black hole in our future public finances. But such a gloomy prognosis does not have to be inevitable. The OBR say themselves that such long-term forecasting is ‘highly uncertain’  – and the idea that at any point in our history anyone has been able to accurately predict how the next 30 years of economic development will progress is obviously wrong.

    But it is not just our ability to forecast that is in doubt, it is also the polictical assumptions that such forecasts are often framed by. It is as wrong to conclude that the public of the future will chose privatised health care over a collectively funded service that is free at the point of the delivery as it is to conclude that employment rates (and in particular the labour market participation of women), population growth and productivity will only change in relation to current trends and that income tax revenues will therefore inevitably fall.

    Attempting to cover the entirety of this debate was a bit of a stretch in a ten minute panel discussion at 10.30 in the evening, so I thought I’d try and set out something (slightly) more comprehensive here.

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  • Economics

    Surprise! The richest people in the UK would like to pay less tax

    1st March 2012 — Filed under: Economics

    Nicola Smith Nicola Smith

    There has been widespread coverage of high US earners who are campaigning to pay more tax.  But not so the UK. Our ‘Patriotic Millionaires‘ still appear to be in hiding, instead replaced by 557 ‘business men and women‘ who want their own personal income taxes to be lower. Their claims are fairly extreme. Andrew Denny of Fix-a-Form asks :

    Why are high earners treated like they have committed a crime and should be punished?

    And James Milne of Balmoral Group Holdings, asks:

    Sometimes I feel ‘why bother?

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  • Society & Welfare

    We need real action to tackle youth unemployment

    1st March 2012 — Filed under: Society & Welfare

    Nicola Smith Nicola Smith

    Today the TUC has published ‘Generation Lost‘ (written by Paul Bivand, of Inclusion), a new analysis of young people’s jobs prospects and the action that is needed to improve them, both now and in the future. The report makes worrying reading, highlighting that whatever you make of unpaid work experience there is currently no evidence that it works as a way to improve young people’s chances of moving into paid work, and that the limited nature of the Government’s Youth Contract means that (over the period of its operation) it will only be sufficient to provide support to one in ten young JSA claimants.

    But we are not only concerned with the immediate problems facing young people. Considering youth unemployment over recent decades, our analysis demonstrates both that there was a small rise in youth unemployment before the recession and that this increase was worse for young people who were not in education. And it is not just current policy interventions that the pamplet questions: for years politicians have focused their efforts solely upon the population of the claimant unemployed, but with one in five of all young people not in education or employment we believe that this group are arguably more vulnerable than those who are just in reciept of JSA, a concern that often fragmented policy solutions need to take account of. 

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