Category Archives: Economy
Today, Times columnist Clare Foges, a former member of Boris Johnson’s mayoral team and then David Cameron’s speech writer, challenges the narrative that Brexit is down, in large part, to a high-handed and callous establishment’s neglect of the “left behind”, deploring the belief that:
”Those in poor northern constituencies and bleak coastal towns were left trailing in the gold-flecked dust thrown up by the golden chariots that bore the wealthy, the Londoners, the elite onwards — throwing back their heads to laugh heartily and pour some more Bolly down their gullets while failing to give a monkey’s about those in their wake”.
Truly, those in poor northern constituencies and bleak coastal towns were and are left trailing – but the elite do not spend time laughing at them – those people are neglected because they are simply of no interest.
She asserts that the deindustrialised towns have suffered because of globalisation or automation, not because those in government sat on their hands.
But the elite constructed, fostered and continue to be enriched by globalisation and automation – the system which impoverishes many is necessary to their lifestyle. Clare admits that “When you know that you are on the lower rungs of a socio-economic ladder that reaches, at its heights, into the realm of millionaires and sports cars and Maldivian holidays, you may well feel resentful. It must be profoundly demoralising to see swathes of your countrymen and women enjoying seemingly easy success while you struggle”.
She also concedes, “Of course there is serious poverty and inequality in our country, but over the past 20 years in particular governments have tried a thousand different policies to reduce them” but fails to mention the ways – under recent Conservative governments – in which people on low incomes and those in poor health have been harassed, ‘sanctioned’ and deprived of their due allowances, in order to make derisory savings. She adds:
“I don’t deny that the Brexit vote may have been driven in part by resentment. Yet here is the crucial point: just because people have felt cruelly neglected by the powers that be, it doesn’t mean that they actually were . . . Let us not mistake a failure to revive left-behind areas with wilful neglect. For the most part the much-traduced “establishment” has been well-meaning and hardworking in pursuit of a fairer country.”
Yes, wilful neglect does imply a degree of awareness – the correct term is indifference; ‘left-behind’ people are simply not on the radar of the affluent, preoccupied by “sports cars and Maldivian holidays”. She ends with more burlesque:
“With a more benign and interventionist establishment at the helm, the taxes of rich people could be spread thickly all over the country with no fear that wealth will flee; billions could be borrowed for major infrastructure projects with no damage to our economy; the streets of Grimsby and Oldham would be paved with gold. By giving this impression, we are inviting people to vote for Jeremy Corbyn and his fantasy economics”.
But would those in government circles – who benefit from corporate sinecures, stock exchange speculation and commodity trading – be willing to change the globalised system for one in which government invests in strengthening the economy through regional production and supply chains? Or will they oppose such changes with all their might, to maintain their current privileges?
Government has pledged that all UK coal-fired power generation must end by 2025 and it accounted for less than 7% of UK power generation last year. That helped to push down UK carbon emissions to levels last seen in 1890 and to cut greenhouse gases faster than most other developed economies.
It is startling – in view of the government’s pledge – to learn that coal is still being imported from Russia, Colombia and the United States. GEGB engineers in the 70s complained about the imports of inefficient ‘dirty’ coal from Eastern Europe whilst good quality British coal was being stockpiled.
Muir Dean – one of many open cast mines closed in 2016
It is even more startling to read that a local coal mining company, Banks Group, which mothballed its Rusha mine in Scotland early because it couldn’t get a good enough price, has applied to extract coal from land behind the sand dunes of Druridge Bay (below). The social, economic and environmental objections received were deemed ‘insignificant’ by Justice Ouseley in the High Court.
The planning application submitted by Banks Group was approved by Northumberland County Council in July 2016. In September the plans were put on hold subject to a government inquiry. In March 2018, the proposal was rejected by the Communities Secretary Sajid Javid, citing among other environmental reasons the “very considerable negative impact” the opencasting would have on greenhouse gas emissions and on climate change, as well as on landscape and heritage assets.
The high court over-ruled Sajid Javid’s decision in November and James Brokenshire, the minister for communities and local government, is to re-examine the application.
Gavin Styles, managing director of Banks, had described Mr Javid’s decision as perverse and political: “the government . . . has now demonstrated that it would prefer to source the coal that is essential for a variety of important industries across the UK from Russia or the US, rather than support substantial investment and job creation plans in our region.”
Anne Harris of Coal Action Network, which is fighting Banks’s plans across the north-east, said: “If James Brokenshire approves this scheme at Highthorn, he’s showing the government has no intention of meaningfully following through on the 2025 coal phase-out. It would mean the concerns and opposition of people in the area are being ignored for a coal company that’s trying to grab resources and run.”
All sides have submitted their case to Brokenshire, who will begin his deliberations on Friday.
A year ago, Colin Hines and Jonathon Porritt challenged the “permanent propping up of whole sectors of our economy as a direct result of our failure to train people properly here in the UK”.
They called for the training of enough IT experts, doctors, nurses and carers from our own population to “prevent the shameful theft of such vital staff from the poorer countries which originally paid for their education”.
Mass migration from developing countries deprives those places of the young, enterprising, dynamic citizens they desperately need at home
Dependence on the free movement of peoples as practised in the UK is the opposite of internationalism, since it implies that we will continue to employ workers from other countries in agriculture and service industries and steal doctors, nurses, IT experts etc from poorer countries, rather than train enough of our own.
Many individuals who migrate have experienced multiple stresses that can impact their mental well-being
Professor Dinesh Bhugrah is an authority on the stresses of migration. Years of research have revealed that the rates of mental illness are increased in some migrant groups. Stresses include the loss of the familiar, including language (especially colloquial and dialect), attitudes, values, loss of cultural norms, religious customs, social structures and support networks.
Porritt and Hines advocate – like former Chancellor Merkel – a redoubling of our commitments to improve people’s economic and social prospects in their own countries, tackling the root causes of why people feel they have no choice but to leave family, friends and communities in the first place.
They advocate the replacement of the so-called free market with an emphasis on rebuilding local economies . . . dramatically lessening the need for people to emigrate in the first case. Hines gives a route to localization in his classic: Localization: a global manifesto, pages 63-67.
The seven basic steps to be introduced, over a suitable transition period are:
- Reintroduction of protective safeguards for domestic economies (tariffs, quotas etc);
- a site-here-to-sell-here policy for manufacturing and services domestically or regionally;
- localising money so that the majority stays within its place of origin;
- enforcing a local competition policy to eliminate monopolies from the more protected economies;
- introduction of resource taxes to increase environmental improvements and help fund the transition to Protect the Local, Globally;
- increased democratic involvement both politically and economically to ensure the effectiveness and equity of the movement to more diverse local economies;
- reorientation of the end goals of aid and trade rules so that they contribute to the rebuilding of local economies and local control, particularly through the global transfer of relevant information and technology.
Since that book was written, a gifted group of people set out the Green New Deal which – though aimed initially at transforming the British economy – is valid for all countries and most urgently needed in the poorest countries from which people feel impelled to emigrate.
Funded by fairer taxes, savings, government expenditure and if necessary green quantitative easing, it addresses the need to develop ‘green energy’ and ‘energy-proofing’ buildings, creating new jobs, a reliable energy supply and slowing down the rate of climate change.
Senator Bernie Sanders and Alexandria Ocasio-Cortez, the youngest person ever to be elected in Congress, now advocate a Green New Deal in the US.
Professor John Roberts, in one of the newsletters posted on http://www.jrmundialist.org/ says: “Increasingly my thoughts return to the overwhelming need for all of us to think (and then act) as world citizens, conscious of a primary loyalty not to our local nationalism but to the human race (however confused and divided) as a whole”.
Jonathon Porritt quotes Alistair Sawday: “I remembered that the skills and the policies to reverse the damage are there; it is a matter of will – and of all of us waking up.
António Guterres, Secretary-General of the United Nations, which has developed urges all to work to “…Narrow the gaps. Bridge the divides. Rebuild trust by bringing people together around common goals. Unity is our path. Our future depends on it.” –
Jeremy Corbyn addressed the General Assembly at the United Nations Geneva headquarters last year. He concluded:
“The world’s economy can and must deliver for the common good and the majority of its people. . . But let us be clear: the long-term answer is genuine international cooperation based on human rights, which confronts the root causes of conflict, persecution and inequality . . . The world demands the UN Security Council responds, becomes more representative and plays the role it was set up to on peace and security. We can live in a more peaceful world. The desire to help create a better life for all burns within us. Governments, civil society, social movements and international organisations can all help realise that goal. We need to redouble our efforts to create a global rules based system that applies to all and works for the many, not the few.
“With solidarity, calm leadership and cooperation we can build a new social and economic system with human rights and justice at its core, deliver climate justice and a better way to live together on this planet, recognise the humanity of refugees and offer them a place of safety. Work for peace, security and understanding. The survival of our common humanity requires nothing less”.
Though Cammell Laird’s Birkenhead shipyard won two contracts this month, worth a total of £619 million, to provide spares, repairs and do maintenance work for the Royal Fleet Auxiliary over10 years, news of plans to axe about 40% of the workforce (290 jobs) by the end of March 2019, was given to union representatives and workers today (11th October).
The Unite union is demanding that Cammell Laird sets out the business case for cuts which will see the loss of vital skills and ‘backdoor casualisation’ of the workforce. It fears that the proposed job losses will undermine the shipyard’s ability to fulfil new contracts.
Unite’s assistant general secretary for shipbuilding, Steve Turner, said: “The loss of jobs at Cammell Laird would see skills gone for a generation and be a further blow to the UK’s shipbuilding industry . . . it is clear that the government must and can do more to support UK shipbuilding jobs. This must include the government stepping in and supporting the retention of skills and jobs while shipyards like Cammell Laird wait for new contracts to come on stream”.
Instead of ‘offshoring’, the government should be handing contracts to build the Royal Navy’s new fleet solid support vessels and a £1.25bn contract for Type 31e frigates (maritime security-focused platforms) to UK shipyards, using British made steel as part of an industrial strategy that supports jobs and communities across our four nations.
Yesterday it was reported that MPs had urged civil servants (defence officials) to pick a UK company for the £1billion contract for three Fleet Solid Support vessels for the Royal Fleet Auxiliary. Commons Defence Committee chairman and senior Tory MP Julian Lewis feared that foreign firms subsidised by their governments could undercut British rivals.
Penny-wise, pound foolish?
The MoD’s director general for finance told MPs the department’s biggest concern was “what will deliver the greatest value for money”- meaning the lowest bid – a narrow perspective. But as Labour MP John Spellar pointed out, the Treasury would benefit from tax revenue ploughed into public coffers if the work was carried out in the UK – “a significant return” – which would be multiplied by work given to British steel and component manufacturers.
Steve Turner said that a failure to have these ships made in Britain would be ‘a gross betrayal of UK ship workers and regional economies, putting at risk manufacturing skills vital to our country’.
UK aviation policy is primarily predicated on the requirements of airport operators, major airlines and the Treasury – the needs of passengers come last says Steve Beauchampé in The Birmingham Press.
The government’s long-awaited – and unsurprising – decision to proceed with construction of a third runway at London Heathrow is fundamentally flawed, supported with redundant arguments and highly questionable financial assessments. If the UK had a comprehensive and comprehensible national aviation strategy Heathrow would not be operating at anything like 95% of capacity.
That it does so is the result of a system that essentially forces millions of UK passengers per annum to travel long distances, often in arduous and stressful conditions, to use both Heathrow and London’s two other main airports (Gatwick and Stansted) at great cost both to themselves and the environment. rather than utilising their local airports, many of which are working to a fraction of their capability.
Birmingham International Airport handled 12.9m passengers in 2017 but could cope with around double that number. Meanwhile, Nottingham East Midlands welcomed a paltry 4.88m whilst major population centres such as in the North East, South West, South Wales and along the south coast are all but bereft of decent flight choices. This is not only down to the London-centric approach which blights so many activities in the UK, but the failure of successive governments to challenge and take on the vested interests of London airports and the major airlines.
Two key arguments put forward in favour of a third runway at Heathrow are particularly fallacious
The first is that Heathrow must continue developing as a ‘hub’ airport, competing for passengers not with Birmingham, Manchester or even Gatwick, Stansted and Luton, but with Amsterdam, Frankfurt and Dublin and increasingly Dubai!
So a third (and later probably fourth and fifth) runway at Heathrow is essentially required to allow the airport’s operator Heathrow Airport Holdings to attract passengers who will never leave the airport environs but whose visit is solely to transfer from one aeroplane to another, Great news for HAH, who enjoy increased landing fees as a result, and good news for the Treasury, who collect airport tax each time that a passenger takes a flight.
But it is hardly good news for UK travellers who are not being provided with flights from their local airports to the locations that they want and at a time when they want to fly. Indeed the hub strategy encourages those in the north of England, Northern Island and Scotland to take domestic flights to Heathrow and then transfer planes to reach their ultimate destination.
Yet hub airports may soon be an outdated concept, with technological improvements meaning that modern aeroplanes will be able to fly further (and faster) without the need to refuel (it’s already possible to fly non-stop from London to Sydney). Point-to-point flying seems more likely to be the way ahead.
The second argument in favour of Heathrow runway expansion is that many airlines do not want to fly out of the UK’s ‘regional’ airports (with the possible exception of Manchester, which handled 27.7m passengers in 2017) and would be unwilling to give up valuable landing slots at Heathrow.
But this argument is unacceptable. We would not tolerate train operators refusing to serve smaller stations nor bus companies running services only on main routes. To combat this attitude the number of slots available at Heathrow needs to be limited rather than endlessly expanded, whilst the national airport strategy that Conservative MP and anti-Heathrow Runway 3 campaigner Justine Greening called for earlier this week should focus on ways to create an environment which encourages airlines to relocate services outside of London and the South East.
This is particularly apposite given that both Birmingham and Manchester airports will be stops on the HS2 network by 2030. And whilst there is a real risk that limiting slots at Heathrow will result in some airlines pulling routes and services out of the UK altogether, the country is a large enough aviation market to offer sufficient paths to profit that most such withdrawals will likely be less than crucial and, in some cases, perhaps temporary.
In agreeing to support Heathrow’s third runway the government have committed to paying £2.6bn in compensation to those communities near to the airport that will be destroyed or significantly affected by the project. To which can be added an estimated £10bn in public funding for the new infrastructure and environmental measures required to support the expansion.
How much better to invest this money throughout the UK to create a national airport infrastructure to meet the needs of the travelling public, and one befitting the world’s fifth largest economy.
George Monbiot recently pointed out that the Commons report on the Carillion fiasco is one of the most damning assessments of corporate behaviour parliament has ever published. It trounces the company’s executives and board and laments the weakness of the regulators.
But, as Prem Sikka said in his April article, it scarcely touches the structural causes that make gluttony a perennial feature of corporate life.
Both agree that the problem begins with an issue the report does not once mention: the extreme nature of limited liability. Sikka points out that this system, under which executives are only financially accountable for the value of their investment, has also benefited frauds and led to the self-enrichment of executives at the expense of workers, consumers, creditors, pensioners and citizens.
Monbiot adds that the current model of limited liability allowed the directors and executives of Carillion to rack up a pension deficit of £2.6 billion, leaving the 27,000 members of its schemes to be rescued by the state fund (which is financed by a levy on your pension – if you have one). The owners of the company were permitted to walk away from the £2 billion owed to its suppliers and subcontractors. (Left: the former Carillion chief executive Keith Cochrane in Westminster after appearing before the Commons work and pensions select committee)
Monbiot continues: “There is no way that fossil fuel companies could pay for the climate breakdown they cause. There is no way that car companies could meet the health costs of air pollution. Their business models rely on dumping their costs on other people. Were they not protected by the extreme form of limited liability that prevails today, they would be obliged to switch to clean technologies”.
So what is to be done?
Prem Sikka (right) proposes that the bearers of unlimited risks and liabilities should be given rights to control the day-to-day governance and direction of companies.
He advocates including employees and citizen/consumers on company boards – because both ultimately have to bear the financial, health, social and psychological costs associated with environmental damage, pollution, poor products, industrial accidents, loss of jobs, pensions and savings. Through seats on company boards, they could secure a fairer distribution of income, challenge discrimination, curb asset-stripping and influence investment, training and innovation.
Across the 28 European Union countries (plus Norway), most have a statutory requirement for employee representation on company boards – unlike the UK, Belgium, Bulgaria, Cyprus, Estonia, Italy, Latvia, Malta and Romania.
George Monbiot proposes a radical reassessment of limited liability.
He points out that a recent paper by the US law professor Michael Simkovic proposes that companies should pay a fee for this indemnity, calibrated to the level of risk they impose on society. He adds, significantly, that as numerous leaks show, companies tend to be far more aware of the risks they inflict than either governments or the rest of society. Various estimates put the cost that businesses dump on society at somewhere between 4% and 20% of GDP
His own ‘tentative’ and ingenious proposal is that any manager earning more than a certain amount – say £200,000 – would have half their total remuneration placed in an escrow account, which is controlled not by the company but by an external agency. The deferred half of their income would not become payable until the agency judged that the company had met the targets it set on pension provision, workers’ pay, the treatment of suppliers and contractors and wider social and environmental performance. This judgement should draw on mandatory social and environmental reporting, assessed by independent auditors.
If they miss their targets, the executives would lose part or all of the deferred sum. In other words, they would pay for any disasters they impose on others. To ensure it isn’t captured by corporate interests, the agency would be funded by the income it confiscates.
Monbiot then says “I know that, at best, they address only part of the problem” and asks, “Are these the right solutions?
- support them,
- oppose them
- or suggest better ideas.
He ends: “Should corporations in their current form exist at all? Is capitalism compatible with life on earth?”
New Fleet Solid Support ships: cash-strapped MoD should look at the total cost-benefit of building in Britain
Jeremy Corbyn is in Glasgow today, where – reversing New Labour policy – he will call for Navy shipbuilding contracts to stay in the UK.
The contract could lead to over 6,500 jobs in the UK, 1,800 of those in shipyards: “Our proposal would both sustain existing shipbuilding and supply chain jobs and create new ones – right here in Scotland and also across the UK.”
The MOD, which is alleged to have ‘lost controls of costs’, hopes for a cheaper option. Its spokesman added: “We are launching a competition for three new Fleet Solid Support ships this year and strongly encourage British yards to take part”.
“Until the new Fleet Solid Support Ships (FSS) arrive, these hardy veterans must stagger on into the mid-2020s”
The three currently supporting ships supply ammunition, food and spares are “antiques built in the late 1970s and saw action in the Falklands War”. Corbyn warns:
“By refusing to help our industry thrive, the Conservatives are continuing their historic trend of hollowing out and closing down British industry. Over the course of the 1980s under the Tories, 75,000 jobs were lost in UK shipyards, leaving just 32,000 remaining.
“Our shipyards used to produce half of all new ships worldwide. Our current market share is now less than half a per cent. The Tories seem hell-bent on accelerating and deepening this industrial decline.”
SNP MSP for Glasgow Anniesland, Bill Kidd, is sceptical, saying: “Workers on the Clyde and people across Scotland haven’t forgotten Labour’s betrayal of the industry in 2014.
For many years international agencies have promoted a school of thought that says it is cheaper to import food than to grow it within the country, comments Devinder Sharma (below, right).
In December he told Rediff.com’s Syed Firdaus Ashraf:
“Rural Gujarat has voted against the influential ruling BJP. During the 2014 elections, Prime Minister Narendra D Modi had promised that if elected his government would give 50% profit over the cost of production as recommended by the (M S) Swaminathan committee and rural India voted conclusively for the BJP – but farmers are still waiting for the promise to be delivered”.
“The Reserve Bank of India’s governor used to say that the biggest reforms would be when farmers are moved out from the villages into the cities, because cities are need of cheaper labour. Cheaper labour is required for infrastructure, real estate and highways. In other words, agriculture is being sacrificed to keep economic reforms alive”.
Farmers need a fair price: cost of production plus
An article by Lancashire farmer, Kathleen Calvert, issued as a press release by local business, Dugdale Nutrition, stressed:
“Maintaining viable dairy farms not only protects livelihoods of farming families and others directly involved, it also makes a major contribution to local economies and the future of businesses, jobs, and families in the locality”.
Ruth and Richard Burrows, Devonshire farmers, assembled suppliers representing 3000 others whose livelihoods depend on them and other farmers. A photograph was published (right, faded newsprint, The web of rural ruin, Richard Price, Daily Mail, 23.9.99) with notes giving the names and roles of the people pictured. Mrs Burrows said: “They are living proof of the importance of the spending power of the farmer and how enormously important agriculture is in terms of the entire economic structure around here. The rural communities of Britain tick over on a system of mutual dependency of which the farm forms the hub. If it goes to the wall, dozens of ancillary trades in both town and countryside suffer”. Read more here.
Farmers organise politically in UK
As talks are under way at Stormont, William Taylor, speaks for Northern Ireland Farm Groups, which represents several food production sectors – now including the National Beef Association – and is concerned about the future of 25,000 SME family farmer businesses.
A bill, written by Daniel Greenberg, a barrister who specialises in legislation and is Editor of OUP’s Statute Law Review, is to be taken forward.
It proposes that farmgate prices in NI return to farmers a minimum of the cost of production, plus a margin inflation linked, that would give 20,000+ new jobs and prosperity across the province in towns, cities and countryside alike.
Their proposals have been well-received by several parties and unions, and Claire Sugden from Coleraine, Independent (the Justice Minister in the former assembly) told the farm groups that ‘she was of a mind to take legislation on farm gate prices forward’.
Legislation on farmgate prices for Northern Ireland according to the Gosling Report, would return 10-20,000 jobs+, save Stormont £280million+ in welfare costs and bring prosperity back to Northern Ireland.
In both countries, as Sharma comments, “What farmers need is income, a profit over the cost of production. To keep food inflation in control, successive government have denied farmers their rightful income”.