Queues

During this seemingly endless period of mourning for the Queen I have several times found myself, on automatic pilot, switching on the tv and going to BBC Breakfast, hoping to catch up on the news headlines over breakfast, only to discover that, to all intents and purposes, there is no longer any news. Instead, there is the sight of the hapless Charlie Stayt, once upon a time a decent journalist, embarassedly plucking people out of a queue of mourners to ask them why they have been shuffling along for twelve hours or so in order to view the coffin of the deceased, before shoving them back, lest they lose their place.

Queues have become the news.

I once attended a conference on ‘the customer experience’, one of those events organised by someone from an Ivy League US business school, with the idea of promoting the kind of catch-phrase that might make a best-seller on the business shelves of airport bookshops.

One of the case studies that was presented was from Disneyland and it concerned ‘queue management’. The presenter explained how carefully and deliberately these are planned. The ‘snake’ model is supposed to foster friendly chatting, as people pass and repass the same limited group of fellow queuers. But they are positioned so that there is always a tantalising vista of the final destination (eg the magic castle) in view, even when queueing for an intermediate attraction. This is the visual motivator for the whole experience – the ultimate focus, without which they might give up. Anything that might remind the punters of the money they have spent to get there (eg the car park) is kept hidden from view. For the same reason they are not charged individually for different rides. A reminder of the cost is seen as breaking the spell. The illusion that they are privileged to be in a separate, fantasy world must be sustained at all costs. Apparently visitors are so easily coralled by these strategies that they don’t even bother to lock the doors to the forbidden ‘staff-only’ areas of the theme parks.

It is clear that the queue performs several functions. The social contact among the queuers instils herd mentality and hence compliant behaviour. To start complaining runs the risk of becoming the unpopular one, who lets the side down and breaks the solidarity that has been built up. The very fact of queuing also reinforces the scarcity value of the thing queued for, which becomes all the more desirable because of the effort that has to go into acquiring it. In the case of commercial attractions, of course, this greatly increases profitability. The longer the customer spends waiting in line, the less time there is available for actually experiencing the attractions themselves, meaning that fewer have to be provided. There is a direct tradeoff between the amount of idle time these customers pay for out of their own pockets and the amount that has to be paid to employees out of the profits.

There is also the question of what the economists call opportunity costs. What productive uses might people be otherwise making of this time if they were not queueing? Here, in the present context, it is difficult not to make a connection between the current blanket coverage of this public mourning and the activities that have been halted because of it – both the news that is not happening and the news that is happening but is not being reported to the British public, which are closely interlinked.

Just before the Queen’s death was announced, it should be recalled, there was unprecedented public outcry over the energy crisis and the way in which the outgoing Johnson government had failed to address this. Indeed the news of her sudden indisposition interrupted the very parliamentary debate in which the incoming prime minister, Liz Truss was about to present her solution to this (the details of which have still not been subjected to proper public scrutiny, despite being already in the process of implementation). We were also in the midst of a wave of strikes the like of which had not been seen since the 1970s, strikes which, moreover, had strong support from the general public. Attitudes were changing on other things too. An opinion poll by Survation in August showed strong public approval of national ownership of utilities and transport (with 69% wanting renationalisation of water, 68% of mail, 67% of rail, 66% of energy and 65% of buses). Inflation was higher, and the value of the pound lower, than either had been for thirty years. In short, an unprecedented wave of public anger and militancy seemed to have been unleashed and a crisis seemed imminent, with the potential for shaking the foundations of the British establishment.

It is tempting to read the current situation as one that reveals a polarisation in the British public between loyal, tradition-respecting and law-abiding Royalists, on the one hand, and apple-cart-upsetting republicans on the other. While the first group grieves and queues, the second sits on its hands, waiting impatiently for a chance to get back to the picket lines or (even better from the point of view of the establishment) loses momentum and slips back into apathy or despair.

In my view, this is mistaken, though of course there are probably kernels of truth in it. On the whole, it seems to me, the mourning for the Queen can in many ways be seen as coming from the same impulse as the resurgence of militancy – a mourning for the history with which her 70-year reign was so closely associated. Nostalgia for the 1950s is not only nostalgia for the tight-lipped hierarchies of the period when posh women wore gloves and hats to open fetes and present prizes. It is also nostalgia for the early years of the post-war welfare state: the free milk and orange juice for children, the new housing estates with proper bathrooms, the school nurses who provided vaccinations and checked for headlice, the ‘dole’ if you were unemployed, the expanding telephone network.

The welfare state, paternalistic in its bureaucratic forms, was very difficult to detach from the monarchy, even in its terminology. The mail service, was the ‘Royal Mail’. Even the tax service, which in the 1950s was more redistributive from the rich to the poor than at any time before or since, then called the Inland Revenue, is now ‘Her Majesty’s Revenue and Customs Service’ (having been merged in 2005 with Her Majesty’s Customs and Excise). If, thanks to your state pension, you reached the age of 100 you got a telegram (now replaced by a card) from the Queen. The royal insignia was as much part of the landscape as the red telephone box, the milk float, the London taxi and the double-decker bus.

Whatever certainty and continuity people derived from living in the United Kingdom (interesting that it was never renamed a Queendom, though that is probably how many experienced it) came from some sense of being able to rely on institutions that were to varying degrees attached to the monarchy. As these institutions have crumbled in the forty years that neoliberalism has held sway, the pain of their loss has also been connected with it at some level, perhaps not even conscious, at least until the death of the monarch. It is my guess that a lot of the people in those queues would like to see renationalisation.

The institutions of the welfare state are also, of course, closely associated with queuing, both positively and negatively. We might think of those post-war ration queues, associated with ideas of fairness. Waiting your turn was considered virtuous; queue-jumping greedy and unpatriotic. Much of the public dislike of Thatcherism was rooted in a sense that, in her insistence that ‘there is no such thing as society’, she was encouraging precisely such queue-jumping behaviour, for example by encouraging people who could afford it to ‘go private’ for their medical treatment or their children’s education. There was outrage when it was reported in the 1980s that bus queues need no longer be respected – let the ablest person leap on first. Yet queuing was also presented negatively – associated with scarcity in communist countries, and (in the famous ‘Labour isn’t Working’ election poster) with unemployment. When there are scarce resources to be distributed fairly, it is difficult to think of better way to do it.

There are alternative ways to organise it, however. To me, with my particular injuries, that physical shuffling along is the most punishing form of movement there is. The reason I have to use the wheelchair assistance service at airports is because I cannot manage those lines to get through security, although I sometimes feel a bit of a fraud doing so because I am quite capable of a short burst of perambulation between seats. Happy to wait as long as it takes if there is some possibility of resting the legs, my favourite system is the one where you are issued with a numbered ticket on arrival and there is a row of chairs to sit on until your number is called.

But I digress. The current focus on queueing is also a reminder that’ the word ‘queue’ (apart from being an anagram of ‘queen’ if you turn one of the ‘u’s upside down to make an ‘n’) originates from the word for ‘tail’. We are indeed living through a time of endings – which is also of course a time of beginnings. And of great uncertainty. Most concretely, here in Britain, this is the beginning of a new monarchy and a new premiership, both of which feel foisted upon us without consultation or consent.

More broadly, there seem to be other beginning-endings. Just as the opening of the late Queen’s reign seemed to more or less coincide with that of the Welfare State, might its ending coincide with the terminal death of the institutions of that Welfare State? Just as its opening more or less coincided with the break-up of the British Empire and the cobbling together of the Commonwealth as a makeshift transition into a new global capitalist order, might its ending also coincide with the UK’s decline into a lesser power – one secondary state among many? Or might we even be on the brink of a break-up of that very ‘united’ ‘kingdom’?

Having witnessed the drowning of social democratic Keynesian national economies in a swelling tide of neoliberal globalisation over the last forty years, and having seen the necessity of state intervention to counteract the pandemic and the impact of climate change, could we be at a turning point where nation states are making a resurgent comeback? Or are we, instead, entering a new and even more destructive phase of global capitalism, with neoliberalism reinventing itself and authoritarian regimes on the rampage?

And what about those values of fairness, and duty and decency and industriousness that are now so strongly projected onto the departed Queen and also provide the underpinnings of our social order? My hunch is that they can be recreated through collective organisation but, like any other democratic achievement, their development might require quite a bit of slow, patient footwork. But, unlike a queue, along a route planned from below.

Jenni Murray, the BBC and the Welfare State

If ever there was an event that justified the use of the cliché ‘the end of an era’ it was Jenni Murray’s departure last week from hosting Woman’s Hour on BBC Radio 4. With the possible exception of The Archers, this is perhaps the last remaining programme that still enacts the BBC’s symbolic relationship with an abstraction of British society as a unified, entity that can be spoken to as a single audience by a singular voice.

In writing my recent book Reinventing the Welfare State, I did a lot of thinking about how the welfare state was formed in the mid-20th century, and the assumptions that underpinned its creation. The post-war world, it was presumed, was one where either you had a job, and were ‘employed’ or did not and were ‘unemployed’ or, more rarely, ‘self-employed’. Employment was full-time and permanent. Employees were assumed to be men, or unmarried women. On marriage women were supposed to leave the workforce to bring up their children at home, supported by the male wage. The benefit system provided universally for the whole population, in the form of free health services, child benefits and old-age pensions. A contributory national insurance scheme took care of workers in the case of misfortune like becoming ill or disabled, or losing their job.

This imagined world was faithfully reflected in the BBC’s radio programming which assumed that people were doing more or less the same thing at the same time, right across the nation. In the mornings (1946-1967) housewives did their dusting and hoovering while listening to each other’s music requests (always presented by a man) on Housewives’ Choice.

On their lunchbreaks, the skilled men and less-skilled unmarried women of the working class listened to Workers Playtime (1941-1964), broadcast from factory canteens around the country. Then at 1.45 (1950-1982) the housewives sat down with their toddlers to Listen with Mother. With any luck, by two o clock they had got them to sleep in time for Woman’s Hour (1946-now) which, perhaps more than any other programme, has surfed the waves of change that have rocked the last three quarters of a century.

The story of the last seven decades has been that of the slow disintegration of these unities – a tale with a double aspect. The first aspect involved a bringing to visibility of the ways in which this unified image never quite fitted the script, in a narrative that pointed to the realities of life for immigrants, single parents, travellers, homosexuals, the mentally ill and others whose lives did not conform to these norms. The second involved challenging the rigidity of the very template itself, by people whose lives fitted into it, but who experienced it as a straitjacket. Over the course of these decades there have been shifts of emphasis among those people who agitated for change, in particular a shift from looking for collective solutions, affecting large social categories en masse, to more individualised ones.

Murray’s 33-year term as the voice of Woman’s Hour spanned the most recent stage in this process. What began in the 1960s and 1970s, in a series of demands and actions by the women’s liberation movement, rooted in an insistence that the category ‘woman’ encompassed far more than just ‘housewives’, had, by the 1980s, diversified into a range of different campaigns and positions as feminists found themselves entering diverse positions in the professions and in the labour market, and women who were not feminists stepped through the doors that they had helped open. When Murray took the chair, there was hardly a topic on which a ‘woman’s angle’ could not be identified, and it is greatly to her credit that she interviewed an extraordinary range of women in different positions (including myself, on a few occasions), while continuing to address ‘core’ feminist issues seriously. By the time she left, a third of a century later, the very category ‘woman’ had itself been problematised, opening up existential questions for the future.

Over the years the BBC has come under attack in many of the same ways as the welfare state. Presented by neoliberals as an expensive, inefficient colossus, draining money from the state and impeding the free play of markets, it has been subjected by successive Tory governments to cuts, outsourcing and accusations of political bias. As I write, its future is very much in doubt. But as a broadcasting network among many it has greater ability to adapt, and more independence, than other state-funded institutions. The diversity of its audiences can be addressed by multifying the channels of communication, although this may come at the price of confirming minority voices as marginal, and conceding more ground to the power of global markets.

But pity the poor old welfare state. Like a ramshackle building subjected to cut-price extension, renovation and demolition of its various parts by a succession of cash-strapped owners, it now bears little resemblance to its founders’ bold visions of universality, but its scope for adaptation is minimal. That imagined post-war scene of the worker in the factory, the housewife in the kitchen and the sick and unemployed living in their council houses on the ‘dole’ seems quaint and fantastical. And, in volatile 21st century labour markets where growing numbers of people do not know from one week, day, hour or even minute to the next when the next ‘task’ might ping into possibility on their mobile phone, being readily classifiable into the status ’employed’, ‘self-employed’ or ‘unemployed’ is beyond the creaking capacity of the outsourced bureaucracy that adminsters the benefit system to determine with any approximation of fairness.

As I have written elsewhere, the combination of the tax-credit system on the one hand, with it subsidies to low-paying employers, and the benefits system, on the other hand, with its penal sanctions regime, in a deadly pincer movement, traps the poor into accepting precarious and dangerous work quite as effectively as the Poor Laws that preceded World War II and the workhouses that they replaced in 1930. No further tinkering with the current obsolete mechanisms will remedy this. What is needed is a complete reboot.

To find out more, you can order my book Reinventing the Welfare State  by clicking on the link.

If you enter the coupon code ‘HUWS30’ at the checkout you will get a 30% discount. The discount applies to both the paperback and the ebook editions.

A manifesto for hope

People have been saying to me that it’s all very well to lament the disenchantment of many of the traditional working class with neoliberal globalisation but what’s the alternative? What sorts of demands would give them enough hope to vote for anything positive?

Yesterday morning I started to make a list of things I would put into a manifesto for hope. I imagined then that it might be possible for the Labour Party to seize the moment, demand a quick general election and put some such manifesto to the public, with support for at least some of its ingredients from the Greens, the SNP and Plaid Cymru. Then I had to catch a train to Brussels and it got put on hold. In the meanwhile, the neoliberals in the Labour Party – who still seem to hold on to some deluded dream that there is space in the political spectrum for a ‘third way’ provided its proponents dress in smart suits and don’t upset the City of London – launched the latest stage of their vindictive and self-destructive attack on Corbyn. So this now looks even more like a pipe dream. But I am going to share it with you anyway: not as a blueprint, of course, but as a way of floating some ideas that others might share of a political approach that might obtain broad support and relaunch the UK (or some of its component parts) as a new kind of welfare state. Ideas to which others can add.

It is only a start, not very well worked out and not necessarily even in a very logical order, but, for what it’s worth, here it is, including some suggestions for how these things could be paid for.

The demands

• Proportional representation – to give everyone a sense that their voice is heard (including UKIP supporters!) and ensure that the neoliberal wing of the Labour Party can never again keep moving to the right unchecked in the belief that dissenting voices to their left have nowhere else to go.
• A raised minimum wage, including explicit formulae for converting piece-rates into hourly rates – not just to avoid organised workers being undercut by those more desperate in the labour market, but also to reduce reliance on tax credits and avoid situations where the taxpayer is subsidising employers who pay below-subsistence wages.
• Introduce a universal basic income. This report has shown that it would be affordable within current government budgetary limitations. I would personally prefer a more generous version, in which all age groups get the same level. However it would have to be linked to the raised minimum wage just mentioned to avoid the problem of subsidising employers.
• Major investment in housing, including self-build schemes, with the involvement of local communities in helping to decide where, how, and for whom this housing should be supplied.
• More spending on schools, with a special focus on building new nursery and primary schools wherever they are needed. And curriculum reform to  reduce testing and return to more child-centred forms of education.
• Abolish student fees. Graduates who get good jobs as a result of their studies can pay the public back in the form of income tax. Investigate the feasibility of requiring students to put in some ‘national service’ helping on community projects as a further way of thanking the public for investing in their further education. (Students won’t need grants because they will get a universal basic income).
• More spending on the NHS and an integration of health and social services, including hospice services. This should also include investment in training of nurses and care workers, upgrading the latter and returning them to public employment. The proportion of GDP spent on health and social services should be increased in line with international good practice.
• Investment in renewable energy.
• Investment in creative industries.
• Grants to local authorities, NGOs and worker co-operatives to set up local online employment platforms providing local services to local communities in ways that ensure that workers have decent working conditions and revenues remain in the local economy.

How can these things be paid for

• Welfare reform will result in substantial savings on contracts to companies currently paid to police benefit claimants.
• Increases in minimum wages and job creation will result in higher revenues from income tax.
• Increase corporation tax for larger companies and crack down on corporate tax evasion.
• Collaborate with other governments internationally to close down tax havens.
• Carbon taxes.
• Tax on empty properties and land hoarding.

 

 

The hardest nettle to grasp

It is still early in the morning as I write this and some people will not have heard the news yet, while others who have been up all night still haven’t even had breakfast, but already the finger-pointing has started.

And there are, of course, many easy culprits to blame for the devastating outcome of yesterday’s referendum vote on Britain’s EU membership.

Most obviously there is David Cameron. A taxi driver of Pakistani origin I spoke to yesterday (who insisted – perhaps like many others –  on seeing the referendum as a choice between Cameron and Boris Johnson) kept repeating, ‘Why? Why did he have to do this? There was no need. Politicians are always breaking manifesto promises’. And it is a common view that this most shallow man was prepared to risk Britain’s future simply as a lazy way of dealing with the Tory Party’s right wing to bring about some semblance of unity and marginalise UKIP in the run-up to the last general election (which, it is widely thought, he wasn’t even expecting the Tories to win). It is also widely believed that Boris Johnson was playing an even more cynical game: wanting Cameron’s job as Tory leader and gambling that the majority of Tories would vote to leave the EU (leaving him as the most popular potential successor) but that Britain would be held back from the brink by Labour, Lib-Dem, Green, SNP and Plaid Cymru voters. This would leave him as Conservative leader without any real challenge to the technocratic neoliberal global regime with which he still identifies.

Alternatively we can blame the populist right, whipping up xenophobic hatred (in alliance with the toxic popular press) to take advantage of the gullibility and disillusion of the working class victims of neoliberal globalisation to redirect their anger at refugees and immigrants.

Or – and this is a heavy weight for its recipients to bear – we can blame the Blairite centre left for identifying its interests with that same technocratic neoliberal globalisation project, contributing directly to that disillusion and anger and leaving traditional Labour supporters with nowhere else to go, with compromises that continued under Miliband’s leadership (Remember those ‘controls on immigration’ mugs produced as part of Labour’s campaign in the last general election – a campaign that also failed to challenge austerity?).

This anger undoubtedly led to the huge wave of support for Corbyn in last year’s Labour leadership campaign. But his leadership is not immune from blame either, albeit from several different contradictory directions. I woke this morning to the sound of Kate Hoey on Radio 4 blaming him for not taking the lead in a Labour Brexit campaign. Others think he did not campaign strongly enough for staying in the EU.

It seems to me that, whoever is blamed, the predicament that we are now in results from a fundamental contradiction in the nature of capitalism that social democratic parties and the trade unions have shied away from addressing directly over many decades,  whose full horrors are only emerging now,  in what might be regarded as the full maturity of globalisation.

This contradiction relates to what Marxists call the ‘reserve army of labour’ and how it is deployed under capitalism. I will be brief now (breakfast calls) but in essence the problem is this: the only way that workers can exert any control over their circumstances against a capitalist employer determined to extract as much profit as possible from their labour is to organise: to protect their safety; to be able to say ‘enough is enough’; to earn enough to survive. And the only way this organisation can lead to results is by ensuring some solidarity: if everybody agrees not to work more than a certain number of hours, or not to accept wages below a certain level, then the employer can be obliged to abide by these terms. From such beginnings trade unions grew. For employers, the easiest strategy to circumvent these requirements – especially important during periods when their profits are squeezed – is to bring in different workers who will accept poorer conditions and lower wages.

When Marx and Engels were writing, these workers were, by and large, drawn from an indigenous pool of unemployed people desperate for any means of earning a livelihood – the ‘reserve army’. Historically this reserve army has always extended beyond national borders. The canals and railways that provided the infrastructure for the expansion of British capitalism were largely built by Irish navvies; the South Wales steel industry in the 19th century drew in workers from as far afield as Spain, and of course the British Empire was built on slave and plantation and ‘coolie’ labour across the world. The reserve army also extended into the household, drawing in the labour of women and children, paid below the level of an adult male, so that the entire family had to work to survive.

The logic of the way this reserve army is deployed pits worker against worker. It is objectively in the interests of organised groups of workers to keep out any outsiders who will work for less, or, if they are admitted, to ensure that they are only admitted on terms that do not allow them to undercut the existing workforce. And this same logic, of course, disadvantages those whose starting position is as outsiders, whether because of gender, ethnicity or some other factor.

Nevertheless, in historical periods when the nation state was dominant, and most capitalists nationally based, it was possible for socialists to overcome this contradiction. The means for doing so was to go beyond making demands for particular groups of workers, represented by particular trade unions, to making general demands for the working class as a whole. In the 20th century this took the form of developing national welfare states: creating universal health and education services and social protection systems that would mean that the unemployed were never so destitute and desperate that they would take any work that was going, to the detriment of organised labour.

In our current era of neoliberal globalisation it is this pattern that has unravelled. Since the end of the cold war, employers have been able to access a reserve army that extends across the world, an army that can be accessed in multiple ways. They can do it by exporting the jobs to parts of the world with cheap labour, or by bringing in the cheap labour to the sites where the jobs have been traditionally carried out. The losers from this process are the native working class.

And this referendum vote can be seen as the revolt of these losers. The tragedy is that although they know what they are against they do not seem to have any clear vision of what alternative they want or how it will be achieved. The danger is that someone will reinvent National Socialism as a ‘solution’.

To categorise them as racist is to miss the point. But solutions can, nevertheless, not be found until racism has been tackled.

This is the painful nettle that Labour has to grasp. Urgently!

The income tax taboo

This is the fifth in a series of posts on what sort of welfare state we might want. The first can be found here, the second here, the third here  and the fourth here.

There seems to be an unshakeable conviction shared by all the major political parties that the surest way to lose an election is to suggest in your manifesto that you might want to raise income taxes. Perhaps they are right. Perhaps most British people really believe that paying more income tax is the worst thing that could happen to them financially. But if they do believe this, we should ask why they do so, because it flies in the face of just about all the evidence.

The belief seems to be rooted in the idea that there is some terrible unfairness in taking a slice from the incomes of hardworking individuals and spending it on general social goods and services. But this kind of logic is rarely applied to other taxes.

Take, for example, Value Added Tax (VAT). This was introduced into the UK in 1973, as a condition of joining the European Common Market. What it replaced was purchase tax, which was levied on selected goods, at the point of production, from companies, although of course the costs were passed on to consumers. With a few exemptions, VAT is applied to all sales and purchases of goods along the value chain, with companies able to claim back the VAT they have spent on purchases and set this amount against what they have charged to customers. The tax is therefore funneled inexorably towards the final consumer, who, needless to say, cannot set anything against it and must pay the full whack.

As the excellent work of Richard Murphy has shown, unlike income tax, VAT is strongly regressive. In 2010, before the VAT rate went up from 17.5% to 20%,  he compared direct taxes (income tax) with indirect ones (VAT) and concluded that:

Direct taxes then rise steadily as a proportion of income as incomes rise and both VAT and all indirect taxes combined do the exact opposite, falling as a proportion of income as income rises. So marked is the trend that the overall progressive effect of income tax is not enough to counter the fact that the poorest households suffer such a high rate of overall indirect tax that they end up with the highest average tax rates in the economy as a whole. The message from this data is unambiguous: the poorest 20% of households in the UK have both the highest overall tax burden of any quintile and the highest VAT burden. That VAT burden at 12.1% of their income is more than double that paid by the top quintile, where the VAT burden is 5.9% of income. (Taken from Is VAT Regressive and if so why does the IFS deny it?, Tax Research UK, July 12, 2010)

Five years later, with VAT at 20%, this inequality between the poorest fifth of the population and the richest fifth has undoubtedly worsened. Yet we find very little in the public discourse decrying this unfairness. It is overwhelmingly the redistribution of income tax that is denounced, implicitly or explicitly, generally in the form of a rhetorical question on the lines of ‘Why should the hardworking taxpayer subsidise ____ ?’. There are many ways the blank can be filled in: single parents, students, child benefit, winter fuel allowance, bus passes, cosmetic surgery on the NHS, education for prisoners … you name it. But I cannot recall ever hearing a sentence starting ‘Why should the consumer subsidise ____ ?’.

Such discourse both obfuscates and distorts reality. Let us take the example of benefits paid to parents of young children. The rhetoric implies that having children is a selfish pleasure that should only be indulged in by those who can afford it, and that those who are usually described as having ‘chosen to remain childless’ are unfairly penalised if a portion of their taxes is diverted in the direction of feckless parents. This ignores the larger reality that what parents are actually doing is bringing up (with very little support from the state) the next generation of workers (and taxpayers) whose labour will support them in their old age. Parents are thus providing what should be regarded as a public service in which it makes pragmatic instrumental sense for everyone to invest.

In other cases, the taboo against defending the principle of income tax extends even to cases where it is manifestly the best and fairest solution to the problem it is purported to create. Student loans provide a clear example of this. They were introduced to replace student grants using the argument that it was unfair for the hardworking taxpayer to subsidise the higher education of people who were eventually going to end up earning more money because of their higher qualifications. Let us leave aside the fact that this is not necessarily the case. The value of an undergraduate degree on the labour market has in fact deteriorated in proportion to the extent to which university attendance has spread across the population (increasing from 3.4% in 1950, 8.4% in 1970, 19.3% in 1990 to 33% in 2000*) and many graduates end up doing low-paid menial jobs, often with little relation to their qualifications. More importantly, for the purposes of this argument, the loan system manifestly does not work on its own terms. It was announced in November 2014 that three quarters of students won’t be able to pay off their debt (see this report in the Independent). To those who can’t pay must be added those who won’t. Loan repayments can, for instance, be avoided by the simple expedient of moving abroad. Students (and their parents) are in effect being asked to pay in advance for something that might or might not happen (in the process enriching the financial services industry). The logic that those who earn more should pay more has been stood on its head.

If the ‘problem’ is that graduates end up earning more than other workers, then the solution to that problem seems glaringly obvious. If and when they start doing so, let them pay it back in the form of income tax. Such a solution (tried and tested as it was in most developed countries in the latter part of the 20th century and still working in some) is undoubtedly simpler to run and more efficient in achieving the stated objectives of the policy that gave us those disastrous loans. It also has another benefit in that it recognises that the value of a university education does not only lie in the financial rewards it leads to. As I already discussed in this blog here, producing a well-educated population has general social benefits that accrue to everyone – not just those who receive that education –  in the form of art, culture, charitable work, the quality of public debate and political life, imaginative and better-informed parenting and what is currently known as ‘social innovation’.

As with child benefits and student grants, so it is with many other forms of social redistribution. Not only do they provide efficient solutions to managing economic and social reproduction, they also enrich the commons and provide the foundations of a civilised culture. So let’s grasp the nettle and start promoting income tax as a good thing.

to be continued

*figures taken from here

Don’t attack the baby boomers

This is the fourth in a series of posts on what sort of welfare state we might want. The first can be found here, the second here and the third here.

When I wrote about tax credits a couple of weeks ago I was too lazy to search out the latest figures on the breakdown of welfare spending and used some older figures I dug out in 2012. A few days later I discovered that the Daily Mirror had done the job for me here.

It compares the spending on the top seven categories of welfare spending of which the five largest categories are:

• £22.9 billion on Housing Benefit;
• £25 billion on Working Age Tax Credits;
• £80.5 billion on State Pensions;
• £13.3 billion on Disability Living Allowance; and
• £9.3 billion on Employment Support Allowance (ESA).

The news story to which this information is attached concerns the government’s plans to cut back the level of ESA (formerly Incapacity Benefit) paid to disabled people from £101.15 a week to £75.40 a week, just above the level of the Job Seeker’s Allowance (JSA) paid to the unemployed. (It should be noted in passing that the total amount of JSA paid out is too low for it even to feature in this breakdown.)

The main message of the article is that it is disgraceful to pick on disabled people this way. Despite the fact that the Mirror is traditionally a paper that supports Labour, however, it does not conclude from this that cuts should not be made. No, the burden of the article is that the savings should be taken not from disabled people but from pensioners. To quote:

‘Cutting Employment Support Allowance would save the government £2.4bn but at the cost of some of the UK’s most vulnerable people. But it leaves the biggest items on the welfare bill untouched. That’s pensions.’

Leaving aside the fact that many disabled people are pensioners, and vice versa, what is most striking to me about this conclusion is that the author makes absolutely no mention of  the second-largest component of welfare spending: Working Age Tax Credits. Nor is it ever suggested that it might be possible to raid this pot rather than the pensions one.

At the risk of repeating what I have written earlier, I feel it is necessary to reiterate that there is a fundamental difference between benefits like ESA and pensions, which accrue to individuals, and tax credits, the benefits of which accrue, not to workers but to cheapskate employers who pay wages that are too low to survive on.

The Mirror appears here to have internalised, completely and unquestioningly, the neo-liberal logic that plays one section of the population off against another whilst leaving unexamined the ways that this is in the interests of companies.

The elderly form a large and growing portion of the UK population. According to official UK statistics (OPCS estimates) in mid-2013 there were 14.7 million people aged 60 and over and 11 million aged 65 and over (out of a total population of 64 million) and there are now more pensioners than there are children under 16. It is predicted that the proportion of people over 60 will rise from the present 23% of the population to nearly 29% in 2034 and 31% in 2058.

Small wonder, then, that the pension bill is a prime target for those wishing to cut public expenditure. And right now the ground seems to be being prepared – with a vengeance – for future cuts. Several inter-related themes are recurrent in the popular discourse but they add up to a general message that the current generation of people retiring from the workplace are in some way privileged, and that these privileges are gained at the expense of other groups in the population: the disabled (as evidenced in this Mirror article) or, evenly more commonly, the young, including their own children.

One common theme is that the baby boomers’ pensions are being paid by those ‘hard working taxpayers’ who feature so prominently in the rhetoric of the Labour Party as well as government propagandists. Actually this misrepresents the reality to quite a considerable extent. During the 1950s, 1960s and 1970s, when most of the current crop of pensioners entered the labour market, the UK pensions system was still as it had been established under the 1946 National Insurance Act: National Insurance contributions were paid by those in work, and their employers, into a common pot from which unemployment benefit, sickness benefit, retirement benefit (pensions) and other benefits were paid. Pension coverage was not universal (married women and some self-employed workers were excluded from it) but the principle was that everyone contributed to a system from which everyone then benefited. The baby boomer generation thus spent the first two, three or even four decades of their working lives contributing to the basic state pensions of the older generation that preceded them. Some were, of course, also enrolled in employer-provided pension schemes which provided additional income in retirement, but by no means all (in the case of women working part-time and people working for small companies, only a very small proportion). Over the ensuing decades a series of changes placed pension schemes more and more into the hands of private providers and shifted the logic from one whereby people currently working paid for the pensions of their elders who were concurrently drawing pensions to one where people working paid for their own pensions in the future, a principle whose most recent formulation was in the Pensions Act of 2008 with its ‘defined contribution’ principle that says whatever the ‘jobholder’ puts in, he or she should then take out. This is quite contrary to the principle ‘to each according to  need, from each according to ability’ that underpins most socialists’ idea of what a welfare state should be about. It also strays away from the idea that contributions into a common scheme should be obligatory, a principle which even Winston Churchill recognised as necessary (in relation to unemployment insurance) because if it were not compulsory for everyone to pay into the system then only the bad risks would take out such insurance, leading to the failure of the whole scheme.

The baby boomers have, in other words, being paying into the system throughout their working lives, both in the form of National Insurance Contributions and in the form of Income Tax, though it is only in the latter part of their working lives (and in the case of many women and self-employed people, hardly at all) that many have been paying into their own private pension pots. Contrast this with the companies who benefit from the tax credits (which the Mirror thinks should not be touched) many of which are registered in tax havens and pay little into the public purse.

A second common theme is that the baby boomer generation have benefited disproportionately from the rise in house prices and are occupying high value properties that would otherwise be available for young people to live in. They are often portrayed as selfish squatters.

Again, let us leave aside the rather obvious point that in many cases young people, in the form of their own children and grandchildren, are already living with them in these properties, albeit perhaps sometimes with all parties wishing that they had a bit more privacy and control of their living space. There are some other myths here that need debunking. A few facts about the history of housing in the UK* may help here. During the 20th century, owner occupation grew from 10% of homes to 68%, with most of that increase taking place in the last four decades of the century (it actually fell between 1938 and 1951). A high proportion of the rented accommodation (a majority from the 1970s onward) was in housing owned by local authorities or (from the 1980s) housing associations. In the 21st century some of these trends have reversed a little, with a resurgence in the role of private landlords, so that by the 2011 census the breakdown was: 7.2 million homes owned outright, 7.8 million owned with a mortgage, 4.2 million privately rented and 4.1 million socially rented (of which 2.2. million were from local authorities and 1.9 million from other social landlords). Nearly 70% of homes, therefore, require the payment of either rent or mortgage to secure ongoing occupation. If the residents cannot pay these, they will be booted out.

The majority of the baby boomer generation were brought up in rented accommodation and started their working lives paying rent.  Some, but not all, switched to paying mortgages when they could afford to do so (often driven as much by fear that rents were becoming unaffordable as by the desire for the proverbial ‘home of one’s own’). Those who chose to acquire mortgages had to sacrifice a considerable chunk of their incomes to pay them off. (Let us not forget that for every pound of the purchase price of the property you pay off with your mortgage you pay at least as much again to the bank, building society or mortgage company that lent you the money to buy it with). Except in a minority of cases where properties were inherited, the properties these baby boomers now own were thus anything but a windfall (except to the moneylenders). Like their pensions, they were paid for from the wages of a working lifetime.

It is certainly true that many of these properties, including the former public housing that tenants were encouraged to buy from the 1980s onward, have increased enormously in value. But let us look at what, precisely, was going on when the Thatcher government decided to sell off the cream of Britain’s public housing stock. First of all, let us remember that most this housing had already been amortised. In other words, the initial cost of  building it had already been recovered. If the logic of the spirit in which welfare states were ostensibly set up had been followed, the rents of these publicly-owned homes should have been very low. If there was no need to make a profit from them, all that the local authorities who owned them should have needed by way of income was enough money to cover the costs of maintenance and repairs, and a contribution towards the cost of building additional new housing. So when these homes were sold off to their tenants, they were in effect being asked to buy something that was already publicly owned and paid for. And since they had to get a mortgage in order to do so, half of what they paid was in effect a gift (in the form of interest payments) to the financial services industries which were such strong supporters of the Thatcher Government, as well as beneficiaries from its policies.

But, I hear you think, the people who bought these properties nevertheless benefited hugely from doing so, didn’t they? Well, perhaps some did. But it is interesting how many people who were not former tenants did so even more. A surprisingly high proportion of former council flats have ended up in the ownership of private ‘buy to let’ landlords, including a number of Tory MPs (most notoriously Richard Benyon who purportedly collects £625,000 per year in tenants’ housing benefits). But even when, after years of paying off their mortgages, people have managed to remain in possession of these, or other properties, do they really get to leave them to their children as those enticing promises led them to believe? The answer is only yes if they are fortunate enough to die suddenly. Because of the pernicious distinction that has been drawn in the neo-liberal welfare state between ‘treatment’ (which, although increasingly narrowly defined, is still provided free by the National Health Service) and ‘care’ (which most emphatically is not), the chances are very high that the house will have to be sold off, either before or after death, to pay for the rocketing charges for social care (provided by private companies which, by a further irony, are very likely to be employing workers on such low wages that they require tax credits to survive and which may, or may not, be paying corporation tax).

So much for the baby boomers who scrimped and saved to pay mortgages. What of those who remained in their social housing and paid rent instead? Well they are already being  punished – by the ‘bedroom tax’. If they have any spare space whatsoever apart from their bedroom (whether used to house medical equipment, a study or any other purpose) then they have to pay an unaffordable extra sum of rent for it. So, although they may have faithfully paid rent for many years and put money and effort into maintaining and caring for the property, they are no more secure in their housing than anyone else.

Once again, what is happening is that different sections of the population are played off against each other, while corporate interests are rendered invisible.

to be continued

* Taken from here and here and here.

So what’s wrong with tax credits?

I have written about tax credits on this blog before, here and here, and regular readers must thing I’m obsessed with the issue. But, following  yesterday’s post, I  think it is important to spell things out more clearly. One reason for doing so is that there really seems to be a lot of misunderstanding about the issue, in many different political quarters and countries.

A couple of weeks ago I was at a conference in Brussels on the theme of ‘Building a Gender Just Society’ and there was a very impressive presentation by Marcella Corsi (professor of economics at the Sapienza University of Rome) about how to reduce gender gaps in the EU. I agreed with just about everything she said except one: there, included (admittedly rather tentatively) in the ingredients of the ‘Pink New Deal’ she was proposing, was the idea of tax credits as a solution to the poverty and precariousness experienced by so many women. It seems that tax credits are often raised as an option in debates on the feminist left in Italian politics. And this, I suspect, is not very different from the kinds of debates that took place in the UK prior to the 1997 general election after which tax credits became such a strong feature of New Labour’s policies. (though I must confess I took no part in these debates).

Why am I so convinced that this view is mistaken? Tax credits, on the face of it, do seem to solve a lot of  problems: they lift (some) people out of extreme poverty; they remove some of the ‘traps’ that previously made it difficult for people to move off benefits and into work without being financially worse off; they can be claimed by people without a previous record of paying contributions into the national insurance system. What’s not to like? Well, in my opinion, plenty. Tax credits are a crucial component of the architecture of the new neoliberal employment regimes, which, under a benign guise, are actually dismantling the welfare entitlements that earlier generations fought for in the 20th Century. There is NOTHING that they provide that couldn’t be provided better, and as or more cheaply, by other means, as I hope to show.

But before listing what is so invidious about them I should probably first explain what they are and how they fit into the tax system as a whole. Incomes have been taxed in Great Britain since 1798 when they were introduced by William Pitt to pay for the Napoleonic Wars. Right from the beginning, taxes were graduated, starting at 2 old pence in the pound (there were 240 pence to the pound so this was less than 1%) on incomes over £60 (the equivalent of about £5,500 in today’s money) and increasing up to a maximum of 2 shillings in the pound (there were 20 shillings to the pound so this equalled 10%). Those earning less than £60 a year paid no income tax. Although eroded in several respects, the principle is still the same. In 2015, the ‘personal tax allowance’ (the amount of earnings on which you pay no tax at all) will be £10,000. On earnings up to £31,865 the tax rate is 20%, rising to 40% on incomes between £31,866 and £150,000 with a maximum of 45% for people earning above that level. Tax credits (which the UK government describes as  ‘benefits’) are currently in the process of being transformed into ‘universal credit’ but, since this has not yet been fully rolled out I will describe the situation in 2014, with two main types of credit in operation. One of these is for people with children, payable to households earning less than £16,000 a year (if they have one child) or £32,200 (if they have two or more children). The other is for childless single people earning less than £13,000 a year or childless couples with a joint income of less than £18,000. What these credits effectively do, after various means tests have been applied and bureaucratic procedures followed, is top the income up: the state adds to it, rather than subtracting from it as it does when it takes income tax.

So what is so invidious about this?

• People who are claiming tax benefit are working people on very, very low earnings, in very, very badly-paid work.
• They have lost the right to refuse low-paid work because the conditions of obtaining unemployment benefit (‘job-seekers allowance’) have been made so penal that they are ‘sanctioned’ if they refuse to take whatever job they are thrust into.
• When they work for wages that are below subsistence level and claim a tax allowance, it is the employer who benefits.
• Tax credits are therefore a way to subsidise employers who pay below-subsistence wages.
• The direct link between hours worked, pay and survival is broken: if workers get a pay increase, the amount of the increase is simply knocked off the credit.
• So there is no incentive to join a union and campaign for better pay. Why pay union dues, that a low-paid worker can ill afford, for no financial benefit?
• Again, it is employers who benefit and workers who suffer.
• The level of tax credits is set by the government. It is a political decision that workers have no say over and can be reduced at a stroke.
• Reducing wage levels in this way would be much harder. Minimum wages are embedded in contracts of employment and collective agreements and can’t just be unilaterally taken away.
• Tax credits are seen by the government as a ‘benefit’ and therefore make up a high proportion of what is regarded as the ‘unacceptably high’ benefits bill.
• The category ‘benefits claimants’ is elided with the category ‘unemployed people’ or ‘scroungers’.
• The last time I looked at the figures (2012) benefits to the unemployed actually accounted for only 4% of welfare spending, while tax credits, paid to working people, accounted for 27%. Since then, the disparity has increased still further.
• Raising the minimum wage would therefore, at a stroke, reduce the benefits bill.
• Nevertheless, the demonisation of the unemployed as undeserving scroungers continues unabated.
• In the mass media this can be seen every day in TV programmes like Saints and Scroungers, Benefits Britain, Benefits Street,  Nick and Margaret: We all Pay your Benefits and Tricks of the Dole Cheats.
• It can also be seen in government advertisements encouraging people to call anonymously to report neighbours they suspect of being benefits cheats (despite the fact that, to quote the BBC, ‘only about 1% of all benefits are fraudulently claimed. Indeed more money is lost through administrative error than benefit fraud’).
• This false dichotomy between ‘hard-working tax-payers’ and ‘claimants’ doesn’t just drive wedges into communities, it also legitimises further demonisation and further welfare cuts in a continuing downward spiral.
• Again, it is employers who benefit and workers who suffer.
• An extra ingredient in this toxic stew is the role of tax credits in migration.
• Although they are actually quite hard to claim, requiring a lot of paperwork that most migrants don’t have, the fact that migrants are in principle entitled to claim tax credits not only perpetuates a myth that Britain is unusually generous to its migrant workforce but also allows anti-immigrant right-wing parties to whip up resentment which is then used to legitimate even more benefit cuts.
• Again, it is employers who benefit and workers who suffer.

I could go on. I would like to emphasise here that all these arguments against tax credits do NOT mean that I am against the idea that the state should provide a guaranteed minimum income for all. Quite the contrary. But that will be the subject of the next post in this series of blogs.

to be continued

A workhouse without walls

Another winter is upon us, with a bitter wind blasting the doorways which provide the only beds for increasing numbers of Londoners. The side entrance to the Rio Cinema, opposite my house, previously only used as as urinal, now has a regular occupant, as has just about every doorway in this stretch of Kingsland High Street. Yesterday morning, getting off a bus near Liverpool Street Station, my eye was drawn by a festive bunch of balloons outside a door bearing the inscription ‘Dirty Martini: spirited sophistication”.

‘The office party season’s started’, was my first thought. Then I realised there was someone asleep there, huddled up against the cold, with a stream of early morning commuters stepping past. There is a peculiar angry stamp that people who work in the City adopt. Probably something to do with the uncomfortable shoes they feel they have to wear for work. The women, especially, in their hard high heels, hammer their way along the pavement as though they have a personal grudge against every slab. It sounds as if a stonemason’s at work. You’d have to be utterly exhausted to sleep right through it.

 

The sun was rising red in the east and the wind was howling round the nearby skyscrapers – the Heron Tower, the Gherkin and other newcomers whose names I don’t know.  It’s a threatening environment in which to try to find shelter, with a reminder around every corner of wealth and privilege and how tightly it is guarded. The newer of these gleaming glass towers are designed with zero emissions in mind, meaning that there are not even hot air vents to allow a little warmth to reach the destitutes on the streets.

The growing numbers of rough sleepers on the streets are only one of many indications that Britain is increasingly taking on the character of a vast workhouse, but, unlike its 19th century precedecessors, one in which there is not even a roof to keep out the weather. You cannot turn on the radio,  glance at a newspaper or log on to social media without being inundated with evidence: the exponential growth in numbers of people using foodbanks; the ‘sanctioning’ (arbitrary withdrawal of benefits) of claimants for such trivial offences as arriving a few minutes late for an appointment at a Job Centre; people being declared ‘fit for work’ when they are on their deathbeds; a cancer patient in Scotland told to give up his therapy if he wanted to retain his benefits; kids forced into unpaid ‘work placements’. I will not bore you with references. A cursory google will throw up enough horror stories to place you in that almost catatonic state, beyond shock, that so many of us now seem to inhabit.

Suffice it to say, the welfare state that my generation grew up taking for granted (far from perfect as we knew it to be) has morphed into a regime that has anything but welfare as its prime objective (unless we are talking here about the welfare of the occupants of the boardrooms of those gleaming glass towers in the City). Increasingly run under incompetently drafted service contracts (whose main feature is a requirement to meet targets) by multinational corporations with a firm eye on the bottom line, the main effect of this regime is to harrass and humiliate the most vulnerable people in society and transform them into a forced reserve army of labour, with no sense of entitlement, coerced to work below the cost of subsistence.

It is kept in place partly by a series of unexamined shibboleths perpetuated in a variety of ways – by the mass media, by the main political parties and by others – that are increasing taken for granted by the general public. These include the beliefs that:

• The British welfare state is too generous. This is why so many immigrants are attracted here.
• The welfare bill is too high. The only way the economy can claw its way out of recession and into growth is by more cuts to services and benefits
• There are still too many benefit scroungers. They are stealing from hard-working people and need to be flushed out and punished.
• The tax credit is a progressive innovation.
• The Baby Boomer generation are an unaffordable burden on the young.They should be made to give up some of their privileges.
• Raising the minimum wage would place an intolerable burden on small businesses and make life impossible for the entrepreneurs who create jobs.
• Increasing income tax punishes hard-working people.
• Increasing corporation tax drives out investment and destroys jobs.
• The private sector can deliver services more efficiently than the state.
• There is no alternative to continuing austerity.

I believe all these statements to be dangerous myths and I hope to demonstrate why in a series of blog posts of which this is the first.

My reason for doing so is to contribute to a debate which I think is opening up quite broadly, though not in a very joined-up way, about what sort of welfare state is desirable or achievable in these times. What alternative is there to the workhouse without walls?

It is often thought, on the left, that demands for new welfare models are necessarily ‘transitional’ (in Trotsky’s sense): demands that cannot be met without a revolutionary change to the whole system. It may well be that this is the case for some of the options I hope to be discussing. But I would like to emphasise now that this is not necessarily the case for all of them because many of the features of the current system are actually dysfunctional for capitalism itself. This can be illustrated by just a few examples.

Here’s one: in the hypercasualised labour markets of zero-hours contracts and crowdsourcing where people are employed for a few hours, or even minutes, at a time, a welfare model that assumes that someone is either ‘in employment’ or ‘unemployed’ simply does not fit the reality. A more flexible benefit system would actually make it easier for employers to tap into these forms of labour.

And here’s another: employers are finding it so difficult to recruit workers with children because of the lack of unaffordable childcare facilities that the Confederation of British Industry is now campaigning for an expansion of free childcare (see   http://www.channel4.com/news/free-childcare-workers-business-britain)

Capitalism has historically benefitted from the strong welfare states to be found in the Nordic countries and from the British NHS. It is much easier for companies to locate somewhere where they know the workforce is educated and has its health taken care of by the state than to have to negotiate expensive company health insurance schemes (as many large companies had to do in the United States in the latter part of the 20th Century).

Too much poverty leads to a drop in consumer demand which is bad for business (just look at how the big supermarket chains are suffering right now) and too much destitution will, sooner or later, lead to breakdowns in public health and public order.

It would be nice to think that this question – What sort of welfare state do we want?  – will be on the agenda for public debate in the lead-up to the next General Election. I’m not holding my breath.

But watch this space.