Author Archives: burdzeyeview

Labour avoids damaging headlines by hurting the hardest hit

Clearly, the Scottish Labour MPs who trailed the Tories into the lobby to vote for the welfare cap in the House of Commons yesterday didn’t hear the Mental Welfare Commission’s condemnation of the new benefits system, far less take time to read its investigation report.  Following the suicide of a woman who failed her work capability assessment – not a scrounger in the parlance but a woman who had worked most of her adult life until becoming ill with significant mental health issues in her fifties – the Commission examined her particular case in the wider context of the welfare reform progamme, surveying psychiatrists to gauge the impact of these assessments on a wider cohort of individuals with mental health issues.

Its investigation found that “the decision [relating to the woman's benefits] was made on the basis of an assessment that contained insufficient information about her mental health” and that more generally, “the work capability assessment needs to be more sensitive to mental health issues“. Effectively, how she was treated and communicated with, contributed to her taking her own life.

We can expect more tragic stories like this, following the application of a welfare cap as part of the UK budget – or Charter for Budget Responsibility as it is properly called.  This puts a ceiling on overall expenditure on benefits.  It excludes state pensions, council tax benefit (now devolved) and job seekers’ allowance but includes all the benefits paid to people due to disability or ill-health such as disability living allowance, carers’ allowance and incapacity benefits. It will also affect families with children as it includes child benefit and pensioners will not escape its potential impact either, for it includes winter fuel payments and attendance allowance.  It is not just aimed at those out of work but will cap the amount of benefits paid to those in work as well, especially those with children, encompassing tax credits and also housing benefit (which is relied on by many in work-related poverty to meet housing costs).

The details clearly do not appear to have bothered most of Scotland’s MPs.  Only the SNP’s five and two hardy Labour souls with a conscience – Katy Clark and Michael Connarty - voted against it. Apparently, this is because Labour had to avoid the “political bear trap” set for it by the Tories. Presumably this means that had it abstained or voted against, the Conservatives aided and abetted by the right wing press would have attacked Labour for being soft on benefit scroungers.

Some left-leaning lobby journalists – yes, that’s you Kevin Schofield and Torcuil Crichton – tried to conflate this cap on overall welfare spending with the cap on individual household benefits. All the better to try and embarrass the Nats you see, thanks to a line in an interview by the First Minister which suggested there might be a place for limiting the amount of  benefits any one household could claim. Apparently, this made the SNP hypocrites and this was the real story from yesterday for some Laboury types.

Which just goes to show how far some will travel in their efforts to protect the Labour party. For having voted for it yesterday, presumably this means Labour will continue to apply the cap, if it wins the 2015 General Election.  And while a cap might be superficially popular because no one understands it – because no one beyond the policy wonks has tried to understand and explain it – that won’t last once it starts to bite.

In practical terms, if expenditure on welfare looks set to breach the cap, cuts must be made to prevent that happening. The biggest area of expenditure is on tax credits – the money the government pays to help people work, either through childcare tax credits or because their wages are at such low levels, the state has to augment their income to make work pay. The second biggest is on housing benefit – and we are already seeing the damage being done by the dread bedroom tax. Labour if voted in in 2015 proposes to ditch the spare room subsidy but hasn’t quite got round to telling us what it might do instead, which is now a rather urgent issue, having supported this ceiling.

Next up is the bill for supporting disabled people – many of whom rely on DLA (as it was) to provide care and travel support to enable them to work incidentally – and that too will need to be kept under control. Expect more humiliating work capacity assessments then and potentially, more destitute disabled people.  And more suicides.

This political gimmick has the potential to hurt hundreds of thousands of people across these islands, because little attention has been paid to current demographic trends. First, we are experiencing a baby boom – more people having babies means more statutory maternity pay and child benefit being paid and more demand for child and childcare tax credits.  Which should be a good thing but according to the Tories, Lib Dems and now Labour, now isn’t.

Second, we may be in economic recovery but the data also shows that many are having to work part-time and that wages have been largely frozen, thus meaning potentially more qualifying for working tax credits. Third, we are also an ageing population:  more of us survive well into old age for longer, meaning more will have to be spent on things like winter fuel payments and attendance allowance.

Finally, as this excellent analysis points out, in times of economic instability, forecasting the amount a government needs to spend on welfare and benefits is difficult. Plucking figures out of the air for now will only work if the rest of the economic forecasts are accurate – and we know how good the Tory-Lib Dem government has been at this.

Still, I’m sure this is exactly the kind of homework all those Labour MPs did before they responded to the crack of the party whip. Now all we need is a plan from the Eds not just to avoid adverse headlines but also which will prevent ordinary people – hard working families!  squeezed middle! those hardest hit by the cost of living crisis! – bearing the brunt of unfair and unjustified cuts to their benefits and household incomes.

And just in case they haven’t quite got round to that yet, here’s one Scotland prepared earlier:  independence.

Powers for a purpose but whose and what?

Scottish Labour declared the focus and approach for its Devolution Commission to be about “Powers for a Purpose”.  But whose and what purpose?

Much has already been written about the timidity of the proposed extension of powers – not least by Labour commentators – with the findings failing even to live up to the dizzy heights of expectation created by the interim report. There are inherent contradictions too, in terms of what will be devolved and what will be left behind. For me, one of the most glaring is on the devolution of attendance allowance but not the non-contributory elements of employment and support allowance. Apparently, there “is an overriding argument for reserving” this it is an “explicitly redistributive” benefit.  Set aside that support for disabled people and those with long-term health conditions was never designed to be redistributive, the Executive Summary declines to say what that over-riding argument is. I’m sure if I wade through the full report I’ll find it, but I’m struggling to think of a coherent one.

The Executive Summary states, in recommending devolution of attendance allowance, a “connection between attendance allowance and health and social care policies”.  Thus, devolving this benefit would give the Scottish Parliament the means, or at least some of them, to meet the ever-rising costs of free personal care for older people by top-slicing the pot or, if it chooses still to give over the whole amount to pensioners, to means test its application so that only those with limited means to pay local health and social care charges benefit the most or, simply to allow it to continue as a universal benefit, to be recouped by local authorities through home care charges and the like. Yet, the non-contributory element of employment and support allowance, which is largely payable to disabled people and those with long-term health conditions of working age, would provide funds to be more creative about how to meet their care costs too. Or even allow Scottish Labour to extend free personal care to younger age groups.  On a policy level, devolving one and reserving the other makes little sense.  Not for a coherent policy purpose then.

The proposals fail a more fundamental constitutional test: they do not meet the expectations of the Scottish people. It’s not quite “devonano” or my favourite, “devoheehaw” but it is “devolimited”. And if the intention, even on an unwritten or subconscious level, was to provide an offer which stops the inching in the polls of Scots towards a yes vote in September, it’s hard to see that it will be enough.  Because Scots want more: all the public opinion surveys which have asked this, show so.

Scottish Labour could and no doubt, will argue that saying they want full control over welfare and benefits in Scotland is sweeping and without proper consideration of the complexities of decoupling things like child benefit, winter fuel payment and carers’ allowance. Voters’ eyes will glaze over as the party explains just how so – well at least I hope it does in the 300 page tome. But that is missing the point. The Scottish electorate, for a number of years now, has set the bar on its aspirations for further devolution and Scottish Labour has failed the test.

Just as it has on electability. The Scottish electorate has fallen out of love with the party it has voted faithfully for, for decades and in some communities, generations. On a purely political level, there is much to like for those well to the left on the political spectrum, myself included. It’s well past time that the better off were required to pay their fair share. Higher earners should pay more tax; the few on stratospheric salaries and income in Scotland should pay more still. The limited recommendation to upgrade property taxation to make it fairer suggests the creation of new property bands for the council tax, presumably at the top end. [Which is so unambitious that it was proposed by Jack McConnell in the 2007 election]

There are many Labour voters who like the idea of soaking the rich. And if the intention of the proposals is to shepherd back into the fold, Labour heartlands, then they will probably achieve that. But the SNP winning constituencies like Anniesland, Clydebank, Airdrie and Coatbridge in 2011 was always an aberration. Recent by-election results in Dunfermline and Cowdenbeath suggest that these lost sheep will probably return of their own accord.

But regaining heartlands is not enough to win a Scottish election for Labour. It must find the way to appeal to those voters in those constituencies who will be nearly a decade apart from the party in voting terms. Breaking the habit the first time is one thing, reinforcing the break a second time means forming a new voting habit on the third occasion becomes much more likely. And there is little to prevent that happening with these proposals.

It does not matter that most of the voters and constituencies Scottish Labour needs to target have barely a handful of big hooses and high heid yins. It’s the aspiration that counts. And there are many who having bought their council house and seen their weans off to university and into good jobs, fancy cars and hooses with an en suite in nice communities are by definition, families who through striving and application believe in the ability to better themselves. Ignoring the detail that they are unlikely to earn the levels at which it all kicks in, they will see Labour’s tax proposals as punishment for daring to get on.

This matters because Scotland’s middle class is burgeoning. Still. It has paid little in the way of the price of austerity, as has been the case elsewhere in the UK. The no compulsory redundancy policy for the public sector has helped, as has the raft of universal policies – the something for nothing accusation applies just as much to those who could pay as those who can’t.

Appealing to aspirational Scots to win elections is something the SNP grasped two Scottish elections ago. By this report, it seems Scottish Labour still hasn’t got the hang of it. Building an electoral manifesto around proposals which hike up income and council tax for the better off won’t change their electoral fortunes much. It’s almost as if Labour never wants to be elected again.

At least in Scotland. Because the timidity of the power transfer and the focus of the tax proposals point to only one real purpose. Winning the UK election in 2015.  The whole premise smells of a compromise being brokered which buys off grumbling MPs, limits the ambitions of those more in thrall to devolution and crucially, provides the basis of UK Labour’s platform for 2015.  The UK party wouldn’t want recommendations coming from Scotland which undermine their bid for power at Westminster nor create the opportunity for awkward questions to be asked if divergence on key policy streams like tax, welfare and immigration could be discerned. The Powers for a Purpose boil down to being what the party at UK level was prepared to thole and willing to deliver if in government after 2015.

These powers are not for Scotland’s benefit, but Labour’s. They are not powers for a purpose, except that the purpose is power for itself. And in this, Labour’s proposals for more devolution will fail to stem the flow, towards a yes vote in September and towards its core vote becoming SNP voters, not just for the odd election but for keeps. Because they’re no daft and they know when they’re being sold a pup.

 

Time to talk tax

It is remarkable that tax hasn’t featured more in the referendum debate.

Last week saw its first real incursion into the headlines, initially through the First Minister’s response to a question at his New Statesman speech and then by Johann Lamont asking about it at First Minister’s Questions.

But it was hardly a full exploration of all the tax issues, focusing as it did on whether or not the top tax rate in independent Scotland would be raised to 50p.

The First Minister advised that he has no wish to set independent Scotland at a tax disadvantage to the rest of the UK. Less reported was his reference to the White Paper commitment to not make any tax changes immediately after independence. The reason for this is that tax is a policy issue upon which parties should set out their plans in election manifestoes. Which is as it should be.

UK Labour has already pledged to reinstate the top tax rate, so Scottish Labour saw an apparent opening and seized it. Conveniently forgetting in the process that its conversion to taxing rich people more has been more of an oppositionalist exercise than one it practised while in government. Yes, it did raise the rate but only at the fag end of thirteen years in power. It was in force for precisely 36 days before they lost the 2010 UK election.

And while this was clearly comfortable territory for Lamont, her inability to switch from the script of calling out the SNP as Tartan Tories was telling. The fact that the First Minister joined her in condemning the Tory-Lib Dem cut and aligned himself with comments made by Ed Balls on its inappropriateness in the current climate rather diluted her point.

But we are dancing on a pinhead here. Only a relatively small number of people, particularly in Scotland, pay the higher rate of tax. Surely of much wider concern and interest to most voters is what will happen to the tax they all pay.

Given its all-pervasive influence on our lives and how the types and levels of tax permeate nearly everything we do, it is curious that so little attention has been paid to this vital issue in the debate to date.

Perhaps that’s because the proposals in Scotland’s Future are plausible, workable and sensible. And even likely to encourage more to vote yes.

Labour is wont to seize upon the commitment to lower corporation tax as proof of the SNP being a neo-liberal, big business loving entity which wants to reinforce unfairness in the tax system. That lazy analysis ignores all that is said on pages 117 to 123 of the White Paper.

The section on tax makes plain a commitment to provide independent Scotland with a more efficient tax system predicated on key principles of simplicity, neutrality, stability and flexibility.

These point to a quite different future on tax. One which sweeps away the complexities and inefficiencies that successive UK Governments have enabled through decades and indeed, centuries of layering and applying without removing and reforming.

Even with Gordon Brown’s attempts to simplify income tax when he was Chancellor, legislation on UK tax runs to over 10,000 pages with over 1,000 exemptions. These, in particular, allow for tax avoidance and a whole industry employed in finding them and maximising them for a select few rich enough to employ their services.

So which would have the bigger impact on our country’s collective tax take and the perception of paying dues – removing myriad opportunities to avoid tax or paying slightly more on declared and visible income?

As Alex Massie kindly pointed out to me on twitter, both Alex Salmond and John Swinney have made speeches and given interviews in which they emphasise the no tax rises in independent Scotland position. But that safety first approach is only part of the story. The White Paper makes clear that in the longer term, independent Scotland will do different on tax than the UK: independence provides the opportunity to “design a Scottish tax system based on specific Scottish circumstances and preferences”.

That’s the bit of the narrative Scottish Labour chooses to ignore, the bit that Better Together would rather Scottish voters didn’t know and the bit that the Scottish and indeed, UK media, both left and right leaning, keeps hidden from view.

And that’s because many in Scotland, including undecided voters, are appalled that the gap between haves and have-nots continues to grow. Indeed, austerity has shifted a considerable number of haves into having far less, making them acutely aware of the inherent inconsistencies and unfairnesses in our tax system and elsewhere in our economy. The failure of any UK party to offer anything which punishes the financial institutions for the mess we are in nor attempts to reign in the worst behaviour of buccaneers adds grist to their mill.

If they knew of the existence of a fairer future on tax with independence, it might encourage more to move to yes. It’s exactly the kind of issue the Scottish Government and Yes Scotland should be encouraging all their grassroots supporters to be having conversations with their friends, family and neighbours about.

Follow

Get every new post delivered to your Inbox.

Join 5,961 other followers

%d bloggers like this: