ToUChstone blog: A public policy blog from the TUC

Owen Tudor

The European Parliament voted today – by a thumping 487 to 152 – for a Europe-wide Financial Transactions Tax (FTT) to be implemented by 2014, as part of a wider growth strategy. They couldn’t have sent a clearer message to the EU leaders who are meeting this evening in Brussels to discuss the Eurozone crisis, growth and possible solutions like an FTT. The Robin Hood Tax (as the FTT is called in some EU countries like Britain) has been placed on the EU Summit agenda by the new French President Francois Hollande. Having raised it this weekend at the G8 summit in the USA, Hollande has made it clear he is at least as committed as his predecessor, and it is a proposal backed by four of the five biggest economies in the EU – Germany, Italy and Spain as well as France. 

David Cameron is a lone voice among the big five in opposing the tax. He told Hollande in Washington that an FTT would do nothing to stimulate growth which is staggering for a Prime Minister who has presided over the VAT increase , the pasty tax, the caravan tax… Apparently taxes on ordinary people are fine, but taxes on Cameron’s friends and funders in the City of London are unacceptable!

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Tim Page

On Monday, Pat McFadden, MP for Wolverhampton South East, former Minister at the Department for Business and one-time member of Tony Blair’s Policy Unit, published a paper entitled ‘Making things: a reassessment of British manufacturing’. This is the first chance I’ve had to blog about it. It contains a lot of evidence from Pat’s own constituency, which was formerly a part of the UK’s manufacturing heartland. And, in the main, I think it is a a good report.

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Philippa Newis

Over the last two years, austerity has tightened its grip on the welfare system. Levels of child benefit have been frozen, support for help with childcare costs has been reduced and the health in pregnancy grant has been scrapped, to name but a few.

From this week, single parents will yet again feel the pinch. Single parents whose youngest child is five are no longer entitled to receive income support (IS). Instead, they will need to claim jobseeker’s allowance (JSA) or another benefit. This is one of the first provisions of the Welfare Reform Act 2012 to come into force. It is the latest in a steady stream of welfare-to-work initiatives targeted at single parents over the last 14 years.

Single parents on JSA will get the same amount of money as they did on IS but will have to show that they are actively looking for work in order to receive their fortnightly payment. But is it as simple as ‘off to work we go’?

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Duncan Weldon

I’m still working my way through the IMF’s thoughts on the UK economy. But so far I’m inclined to agree with Larry Elliot’s take at the Guardian:

The IMF says plan B should involve the Bank of England cutting interest rates from their already record-low level of 0.5% and chucking some more newly minted money at the economy through the process known as quantitative easing. Only if that fails to do the trick does the Fund think the chancellor should resort to fiscal policy – decisions affecting tax and spending – to boost demand. As far as the Fund is concerned, deliberately increasing borrowing in an attempt to stimulate demand is plan C not plan B.

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Philip Pearson

Alongside the Energy Bill, a TUC Briefing, published today, argues that the government should set out a plan for energy jobs, skills and growth. At least £110bn of clean energy investment is required by 2020, and further £16bn a year through to 2030. Despite rising concerns over energy bills, we are facing a new “dash for gas” stranding the UK with high CO2 emissions into the 2030s. The Energy Bill must therefore enforce carbon capture & storage (CCS) investment on coal and gas power stations from the outset. The Bill should engage industry with a new CCS Feed in Tariff for major industrial sites. New measures to incentivise energy efficiency could save UK businesses £23 billion annually.

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Duncan Weldon

Today’s inflation figures brought another welcome fall in the pace of price increases. But as earnings growth continues to slow, lower inflation is not feeding through into rising real wages.

As previously noted, the TUC has started tracking the different rates of inflation faced by the poorest 10% of households and the richest 10%. (The post linked to explains the methodology).

As can be seen in the chart below, the poorest 10% have faced higher inflation than the richest since August 2011. This is because they spend a greater proportion of their income on essentials such as food and utility bills, items where prices have been rising faster.

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Judy McKnight

Judy McKnight, former General Secretary of NAPO and Chair of the TUC Women’s Committee, is now a TUC nominee on the European Union’s Economic and Social Committee (EESC). In that capacity, she took part in the 2012 annual meeting of the European Economic Area (EEA) Consultative Committee, held in Iceland earlier this month. The Committee brings together representatives from civil society in both the EU and the EEA countries – Iceland, Norway and Liechtenstein. Here’s a summary of her speech.

There is a striking difference between the Nordic countries and the rest of Europe, including the UK, in terms of economic inequality and social justice, and interestingly, levels of growth. Nordic countries not only top OECD indices on economic inequality and social justice but are also recovering from the economic crisis quicker than those countries such as the UK. Since the mid 1970s we have had a greater increase in income inequality among working age people than any other wealthy country, we trail the Nordic countries on social justice and, having adopted austerity measures, are not finding a quick path to growth. And all these issues are connected.

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Owen Tudor

The G8 summit in Camp David is over, and the statement agreed on the global economy is one of the most two-faced compromises imaginable. Yet again, world leaders have shown a colossal inability to lead, facing both ways rather than take the decisions necessary to tackle the continuing economic crisis. Just as EU leaders have kicked the can of the Eurozone debt crisis down the road time and time again, refusing to choose between two unpalatable directions, the leaders of the G8 nations have done exactly the same, backing both growth and austerity, despite the fact that all of them know they are incompatible. It’s a shabby compromise between those (Obama and Hollande) who favour growth, and those like Cameron and Merkel who favour austerity. And it will continue like this until electorates force their leaders to do what’s needed.

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Owen Tudor

Foreign Secretary William Hague spoke to the CBI on Thursday, and he devoted most of his speech to what the FCO, under his leadership, was doing for British business. He also spent some time justifying the current Government’s austerity policies. As he was playing so plainly to his audience, he did not repeat last week’s gaffe of telling businesses to stop complaining and work harder. But he did say something about human rights:

“Support for human rights is in our core national interest and deep in our DNA as a nation. But our ability to promote freedom and democracy is strengthened by a strong economy and a global role. Foreign policy is not something that exists in a vacuum. … It is not the plaything or pastime of Ministers, to be channelled into utopian schemes to remake the world.”

That was it. No mention of the Ruggie Principles, no mention of ethical sourcing, no mention of corporate social responsibility, compliance with the OECD guidelines on multinational enterprises, ILO core conventions on workers’ rights… It’s just business, as a mafia boss would say about butchering his brother.

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Owen Tudor

Employment Ministers from around the G20 have been meeting in Guadalajara, Mexico’s second city, for two days to thrash out a report on the continuing global jobs crisis for the G20 leaders summit in Los Cabos next month. In particular, they’re discussing the findings of an inter-governmental Youth Employment Task Force set up by the French G20 Presidency last year.

Unions met with the Ministers and with employers for a tripartite social dialogue on the first morning, and I represented the TUC. Other trade unionists were there from Mexico of course, as well as fourteen other G20 nations, from South Africa to China, Saudi Arabia to Indonesia. We stressed the need for action as well as fine words, on job creation, tackling the youth jobs crisis and on green growth.

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