TORIES EYE BENEFITS AND WAGES IN CORNWALL

The Conservatives are looking at plans to localise benefits: local councils would be given the power to set the benefit levels in their areas and the present uniform payments throughout Britain would be abandoned. The story is in today’s Observer, Tories plan to let benefit levels be set by local councils.

Many people in Cornwall gain from national standards in wages and benefits. The levels of wages for people in the public services here, like nurses and teachers, are set by national standards and comparisons not local ones. For example, Cornwall local wages are not used as comparators to decide what to pay a teacher here. Benefit levels are also set nationally and do not, with exceptions for rent for example, refer to local living costs. The Tory localising ideas would have a marked effect on the rates of benefits paid to people in Cornwall where average wages and the general cost of living are lower than in, for example, London and the south of England. Benefit levels in Cornwall would be stifled — fall or be frozen or increase at a lower rate than elsewhere, the last probably being the more likely — to align them with the different living costs here.

Would it just be benefits a Conservative government would localise? I pointed out in this post that the national minimum wage might be a target for Tory cuts: localisation would be a way for a Conservative government to stifle it, to freeze it or hold back its present progressive increases, in places like Cornwall. Once the localisation of benefits is established, the Tories might indeed come to see localism as a rational way of reducing costs and acknowledging varying local circumstances in other spheres, especially in public service pay: for example, localising nurses’ pay — in Cornwall lower levels than in London and the south of England because comparator pay and living costs are lower — is a way of tackling the costs of the NHS.

Local variations in benefits and public sector pay (and the minimum wage) might seem reasonable. After all, local living costs do vary and market pay varies. However, the Tory ideas appear not to be about topping up mandatory national payments in areas of high living costs. In practice councils of all parties would most likely seize the localising of payments as an opportunity to cut back costs and perhaps reduce or stabilise council tax. David Cameron has said a Conservative government would wish to give councils a general power of competence: it will thus be difficult to prevent the essentially arbitrary stifling of benefits or pay, a stifling with only a tenuous link to local living costs. We shall also have a contentious post code lottery, especially noticeable outside Cornwall in large urban areas where neighbours will have different levels of benefit payment and, although doing the same job, different pay. Indeed, we might have differences within Cornwall as local living costs, especially housing costs, vary within the county. I discussed these issues two years ago in this post.

Cornishing benefits, public sector pay, and the minimum wage carries large disadvantages for many people in Cornwall. There are questions to ask the Conservative parliamentary candidates and unitary councillors. Localisers in other parties have some difficult questions too.

MINIMUM WAGE AND KENNEDY

There’s an interesting letter in today’s Times from Shirley Williams about the minimum wage.

She explains the influence that the late Ted Kennedy had upon its establishment in Britain, especially in showing that in the USA the minimum wage had not adversely affected employment.

In 1994 Williams successfully pushed the minimum wage as party policy at the Liberal Democrat conference though, as she says in her letter, the “entire parliamentary party” of the Libdems opposed the policy. The next year Labour adopted it too.

Initially the Liberal Democrats supported a minimum wage with different regional rates; this would have given workers in Cornwall a lower minimum wage than in most of Britain. Labour brought in a national rate.

SHAMEFUL FAILURE

The Labour government has failed on child poverty. It will not meet its target of halving it by next year and the target to abolish it by 2020 will sink. The numbers of children in poverty actually went up in 2007/08, the last year for which figures are available.

Some good work has been done, especially before 2005, as Labour half-heartedly tackled the leftover misery of an uncivilised version of Toryism which doubled the number of children in poverty after 1979. Labour had to balance on one hand the need to encourage enterprise and justly enable the reward of achievement and on the other hand the need to redistribute wealth to help those with life’s short straw. That takes skill and resolve and the disagreeable truth is that the Labour government lacked them. It also lacked the courage to challenge the self-absorbed to see beyond themselves and see a society; and it did not understand, for all the chatter of a moral compass and religion, the difference between rewarding success and indulging greed.

It didn’t have to be like this. There has been enough money since 1997 to achieve the noble ambition. Yes, it might well be impossible to persuade most of the wealthy that the children of the poor deserve a break. It takes political and moral skill and determination to persuade middling workers, who are the vast majority and who often struggle themselves, that children in poverty should be a major priority, that there is a bill that must be paid. It takes courage to make them a priority. A supine Labour government wasn’t up to the task.

At the same time we learn that income inequality, different from but related to poverty, is at its highest since the 1960s; yes, higher than when the Thatcher Tory government deregulated and encouraged me-now greed and set Britain on the course to the present financial miasma. The Gini coefficient is at its highest since records began. Three terms of Labour are ending like this with only the minimum wage and perhaps Sure Start as lights in the dark, though the latest increase in the wage is derisory.

This government was supposed to be about the many not the few, about opening up the possibilities of life for everyone, about helping the vulnerable. However, overshadowing the good and hard work of the party and its councillors and candidates in Cornwall and locally elsewhere, Labour 1997-2009/10 will be remembered for timidity, failures, and a bathplug. I am vastly disappointed.

Note on the mandatory minimum wage

From October the mandatory national minimum wage will be £5.80 an hour for people aged twenty two and over, an increase of 7p an hour over the October 2008 rate. This is the smallest money increase since the wage began in 1999 and is a 1.2 percent increase. For people aged 18-22 it will be £4.83, an increase of 6p an hour, and for people aged 16-17 it will be £3.57, an increase of 4p an hour. The recommendation of the Low Pay Commission that people over twenty one (rather than twenty two) should be entitled to the full wage will be implemented from October 2010, after the next general election. See Hansard 12 May 2009 column 40WS.

Related post: Work for peanuts in Cornwall . The second reading of the Tory bill is due 12 June 2009.
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WORK FOR PEANUTS IN CORNWALL

A while ago I doubted the Tory Party conversion to social democracy.

Then there was a story in the Sunday Mirror last October claiming that “David Cameron would allow minimum wage to die out” (Sunday Mirror 5 October 2008).

Now the other day in the House of Commons a group of eleven Conservative MPs introduced a bill, which won’t get far, to make the mandatory national minimum wage voluntary: adult workers would be able to freely choose to work for less than its current £5.73 an hour (Hansard 10 February 2009 columns 1258-1260: the Employment Opportunities bill). The philosophy behind this was “freedom, flexibility, and opportunity” but I think in practice it will be about working for peanuts.

The argument seems to be that voluntarising the minimum wage would help struggling small firms by enabling them reduce their wage bill and thus keep jobs that otherwise might have to go or even create new jobs and thus help people presently out of work into work by letting them take jobs which firms could afford if they pay less than £5.73 an hour. It is a plausible argument but basically I think this is a reformulation of the original Tory argument that the minimum wage destroys jobs at the bottom and the way to save them is to pay poverty wages. I believe if working for less than the minimum wage is made permissible, it will encourage a rush to the bottom in pay and more and more workers will be asked to choose, a job on inadequate pay or no job? Working for less than the minimum wage will cease to be a voluntary choice for vast numbers in the low-paid jobs. Many wages in Cornwall would be among those reduced to peanuts.

This is not a pay cut in jobs with reasonable pay which I can see in present dire circumstances might be sensible in some firms; it is a pay cut at the very bottom.

Additionally, a cut in low wages will increase the call upon top-up tax credits thus shifting costs from employer to taxpayers generally – assuming the Tories would keep tax credits.

It is instructive to note the position here before the introduction of the minimum wage. Speaking in the House of Commons second reading debate in 1997 on the bill to introduce the minimum wage, Candy Atherton, then an MP for Cornwall, said that in Penryn, Cornwall jobcentre she had seen jobs advertised for care workers at £2.20 an hour; kitchen porters at £2 an hour; and a skilled car mechanic at £1.80 an hour to work “40 hours, weekends and nights” (Hansard 16 December 1997 columns 211-212). She explicitly challenged the idea that low pay brings jobs.

In fact very few jobs have been lost because of the minimum wage which is at a very modest level and is increased annually generally with judiciousness but over time above general price and pay increases. The national minimum wage has increased the real wages of the low paid without damaging employment. For both these points see this study, On the impact of the British national minimum wage on pay and employment, December 2006, by David Metcalf.

Britain’s minimum wage: what impact on pay and jobs is a summary.

The Conservatives voted against the minimum wage when it was introduced by the Labour government. The October story and the Tory sally on 10 February raise the serious question of whether a Conservative government would abolish the mandatory minimum wage or voluntarise it or let it wither and die. The Tory leadership should be open with us about this and the Tory parliamentary candidates in Cornwall should say out loud where they stand.

I think we should keep the mandatory minimum wage and keep on increasing it in normal economic circumstances. If we reach a point where jobs disappear in numbers, we should deal with that scenario then. In the meantime we should take the low paid out of tax. People on the minimum wage pay tax which effectively reduces the wage rate by around £1 an hour. I would like to see the low paid taken out of tax altogether and it is extremely disappointing that after twelve years of a Labour government, with many fat years and millions paid in bonuses to the well paid, working people start paying tax when they reach pay of £116 a week, with no ten percent rate now.

These are not normal economic circumstances. The recession and rising unemployment mean that whether the minimum wage should be frozen at its present level or raised is a difficult question – and wholly separate from the Tory bill. The Low Paid Commission will report in May and its arguments will be engaging.

Look for a moment at the measure of the downturn in Cornwall and the fast disappearance of jobs, the circumstances in which some Tories want to hobble the minimum wage. In January 2009 there were 8989 unemployed people in Cornwall – that is, people claiming job seeker allowance (JSA), the standard measure which probably underestimates unemployment (Table 16 at Claimant count by unitary and local authority). That is a very substantial rise over 2007/08 (see Table 12).

The JSA is not generous. A single person, over twenty five and with no dependent children, gets £60.50 a week on JSA. Rent and mortgage payments are additional but £60.50 is pitifully inadequate for a decent life.

All right, in normal circumstances most people are on JSA for only a few months until they find a job. But these are not normal economic circumstances, are they?

This is the pro-Cornish agenda, recognising the people of Cornwall and their needs. The minimum wage should remain mandatory and be increased if feasible in these circumstances; the Tories are wrong. Unemployment benefits should be increased now: the low level of the JSA which in boom circumstances might have been defended as a temporary payment and a spur to work, an argument I am unhappy with anyway, is not valid now. People will be unemployed for longer than in the recent past and debts and deprivation will pile up and their ownership of their houses is imperilled.

Meanwhile Cornish nationalism studies its navel.
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Notes

The national minimum wage began in 1999 at £3.60 an hour. About 1.2 million workers were covered by it. There are now about 2 million workers covered by it.

The TUC estimates that 1.5 million workers are currently paid below the minimum wage though not all these will be instances of noncompliance with the law.

The second reading of the minimum wage bill was on 16 December 1997, the third reading on 9 March 1998. Conservatives voted against the bill on both occasions.

The February 2009 JSA claimant figure for Cornwall is 10 220 (added 19 March 2009).

This post, Shameful failure, also discusses inter alia the minimum wage.

UPDATE
Chope’s Employment Opportunities bill was denied a second reading on 16 June 2009 (Hansard column 1106) and is down for second reading on 16 October 2009, along with a host of other bills. Early day motion (EDM) 1461 of 11 May 2009 opposed the bill.

PAY AND HOUSING IN CORNWALL

Original post 3 January 2009. Note on average pay in Cornwall added 30 April 2009.

The economic crisis hits many people in Cornwall (and elsewhere) hard. Look at just two aspects of life here. The mean average pay in Cornwall is about seventy five percent of the UK average according to the GMB trade union. ASHE data for 2008 suggests around eighty percent. County averages encompass a large range and also variations among different and smaller subareas but they can be useful and limited guides. House prices in Cornwall are high (with the same caveat about range and variations). Affordable housing thus matters to local people looking for a home.

Look a little more closely at housing and pay.

We need many more affordable houses to be built throughout Cornwall – to rent and to buy. The Labour government has failed appallingly over the last decade to push house building. It talked houses but little got built, affordable or open market. This isn’t likely to change now as finance and the economy seize up unless the government and local councils are pushed very hard. I fear the economic crisis is more likely to see the shortage of affordable housing in Cornwall continue.

In our low wage economy, Labour’s minimum wage has been a godsend to many in Cornwall. Now we are hearing arguments that the minimum wage should be frozen at the present rate during the economic crisis. Of course, the wage has to be affordable by employers, an unaffordable wage bill puts firms out of business or leads to firings, but I remember that the national minimum wage was brought in to a background of miswarnings about unaffordability and job losses, Tory opposition, and Liberal Democrat nonsense.

Happily, the local Liberal Democrats are now firm in their support for it. However, the Tories now seem to be ready to see the minimum wage end.

It is unacceptable that those at the bottom of life’s financial heap should suffer further and unnecessarily financially. Labour’s record on poverty is patchy with its disastrous abolition of the 10 pence tax rate and its inexplicable failure to take the poor out of income tax altogether, two kick-the-poor policies, on the negative side. There are welcome signals that the guilty government does not support a freeze on the national minimum wage.

The minimum wage is £5.73 an hour at present for those over twenty two; that is modest pay.

Here is how we give real recognition to the people of Cornwall in this economic crisis:

We should build many more affordable houses in Cornwall, social housing for rent and low-cost housing to buy, because many people here, who cannot buy on the open market, need them and building provides jobs and funnels money into the local economy. The minimum wage, a lifeline to many in Cornwall, should increase normally because industry and commerce can afford it, the wage funnels money into the economy, and the poor and low paid should never be held down but always helped up.

Note on average pay in Cornwall

I put below the median average pay taken from ASHE table 8.7a for 2008: it is the gross annual pay for fulltime workers based on residence by local authority area in Cornwall.

There are numerous figures for average pay: median average pay, mean average pay (higher than median because of some very large salaries), and median and mean figures based on workplace as well as on place of residence, fulltime or part time work, male or female workers, or all; and based on residence and workplace by local authority and by constituency; and of course pay that is not simply gross.

Average pay, eh?

Anyway, here are the ASHE figures for Cornwall for annual gross median average, residence-based by local authority, full time working, for 2008: £21 004. Divided by fifty two that’s about £404 a week.

As I’ve said at the beginning of this post and indeed often about statistics, the figures vary across Cornwall

Previous ASHE data is here.

ASHE: Annual survey of hours and earnings

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See here for an earlier post about the minimum wage in Cornwall

Additamentum:
See this Guardian article of 6 January 2009 about the low rate of construction.

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EQUO NE CREDITE

Has the Conservative party changed? No longer the nasty party but centrist and caring and kinder; for example, determined to tackle child poverty?

This matters for families in Cornwall: I have explored child and family poverty among some in parts of Cornwall several times on this mudhook website.

Begin by looking at the record. This is the party that sat back when last in government while the proportion of children in poverty doubled; that since has opposed Labour’s introduction of the minimum wage; that periodically fumes about lone mothers and tells us marriage (between one man and one woman) will save the planet. This is the party that cut the link between the state pension and pay rises, thereby costing pensioners dearly – something Labour is putting right and which will benefit thousands of people in Cornwall, as has the minimum wage.

The Conservatives are the party that gave us privatised expensive water and privatised expensive trains. This is the party whose government approach to welfare was to bayonet the wounded. Its record on poverty is appalling.

At present the Tories are weeping publicly for those losing out in the Labour government’s 10 pence tax folly or villainy. Last year when Frank Field moved an amendment in the Commons to assess the impact of the abolition of the 10 pence rate and to mitigate any adverse effects, the Tories abstained. No Tory tears then.

Now look at this, perhaps a glimpse of Tory future. The other day on the launch of a reactionary childcare report it both welcomed the report and promised the party would consider its ideas. At present £1.5 billion of help is targeted on low paid working mothers; the reactionary, regressive ideas that the Tories are considering are to give all mothers, working or stay-at-home, poor or comfortable, and, yes, including the very rich, a flat rate tax-free payment of about £55 a week. This would cost around £5.4 billion and be paid for in part by abolishing the £1.5 billion of the childcare part of the working tax credit and the one-off sure start maternity grant; that is, money which at present goes to the poorest working mothers, including those in Cornwall. I don’t know where the rest of the cost will come from, widows’ mites perhaps.

The idea, then, is to take from the working poor and give to the comfortable and well-off: and this is what the Tories promise they will consider. The very thing that they now denounce the 10 pence folly for. To me this looks like the same old Tories after all.

Equo ne credite.

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You can read more about these reactionary ideas at:

The cost of caring Guardian 22 April 2008

The Tories are eyeing up a plan to take money from the poor to give to the middle classes Times 23 April 2008

Policy Exchange parental care allowance

PS 28 April 2008:
And perhaps contrary to my views, here’s a joint initiative.

Equo ne credite, Teucri. Quidquid id est, timeo Danaos et dona ferentis (Do not trust the horse, Trojans. Whatever it is, I fear the Greeks even when they are bringing gifts). Laocoon warning the Trojans, in Vergil’s Aeneid 2.48-49.

THE SILENCE OF CORNISH NATIONALISM

Some of the lowest paid people in the UK are presently worse off because the Labour budget has abolished the ten pence income tax rate, though belatedly the government is perhaps putting this right. I explain here (Soaking the poor) why I think about 48 000 are affected in Cornwall.

I’ve looked at some publicly accessible Cornish nationalist websites. Not one of those websites I’ve looked at, as far as I can see, has discussed this pauperisation of the poor in Cornwall, let alone protested it.

An odd silence.

Of course, individual nationalists may be protesting to their MP or the chancellor.

SOAKING THE POOR

About 48 000 households in Cornwall worse off

Labour argued for and introduced a 10 pence income tax rate because, it said, it was fairer to the low paid and would make work pay and thus be an incentive to work for the poor. I think in fact that the best way to help the poor would be to raise the tax free threshold and to cut regressive indirect taxes such as VAT, but Labour chose another, less efficient way. Nevertheless Labour did act on tax and also created a minimum wage to help the low paid.

In his 2007 budget Gordon Brown announced the abolition of the 10 pence income tax rate. The change comes into effect tomorrow.

Belatedly some more Labour MPs have just realised that this abolition will leave about 5.3 million households worse off. These are largely the households without dependent children and who do not have tax credits and who have incomes of between about £5400 and £18 500 a year. Way back in October 2007 the government gave its estimate to Frank Field of how many would be worse off and even said 900 000 of those had incomes below £10 000 a year – actually the number refers to the household reference person (Hansard 18 October 2007 column 1266W).

Field was on to this unfairness at the time of the 2007 budget and tried to get an impact assessment of tax changes on different groups and transitional arrangements if necessary for those on the lowest pay: his clause was rejected by Labour MPs though a handful of six Labour MPs and most Libdems voted for it, along with a few others (Hansard 25 June 2007 column 108 onwards). Julia Goldsworthy and Matthew Taylor both voted for Field’s clause and Dan Rogerson was a teller for it.

I can estimate how many households in Cornwall are adversely affected by the abolition of the 10 pence rate by comparing the number of households in Cornwall with the number in the UK and those adversely affected in the UK. This arithmetic suggests that suggests about forty eight thousand households in Cornwall are worse off because of the abolition of the 10 pence rate. As the proportion of low income households in Cornwall is greater than in the UK generally, the number affected is probably greater too.

Labour has done much, though nothing like enough, to help the poor since 1997 while keeping the economy sound and the bulk of the electorate on side. It has wrought a sea change since the barbarian days of the Tory governments 1979-1997. Things are now beginning to fall apart. It is difficult to understand this 10 pence tax policy. Labour is making a lot of low paid people worse off and doing it on purpose. Is this what people voting Labour thought they were voting for? How does this square with the minimum wage? This policy of soaking the poor is pitiable and shameful. The government should put its mistake right and ensure the low paid are not worse off.

PS The Conservatives officially abstained in the 25 June 2007 vote.