Category Archives: Economy
CityAM, London’s most-read financial and business newspaper, reported (“Economists give Labour a boost by backing spending plans”) that Professor David G Blanchflower (below, right) headed the list of signatories to a letter (25 November 2019). It added under an illustration: “Jeremy Corbyn’s Labour party would markedly increase the size of the state to roughly German and French levels”
Summary of the economists’ letter which opened: “The UK economy needs reform”
For too long, it has prioritised:
- consumption over investment
- short-term financial returns over long-term innovation,
- rising asset values over rising wages,
- and deficit reduction over the quality of public services.
- ten years of near zero productivity growth,
- corporate investment has stagnated,
- average earnings are still lower than in 2008,
- a gulf has arisen between London and the South East and the rest of the country
- and public services are under intolerable strain – which the economic costs of a hard Brexit would only make worse.
We now moreover face the urgent imperative of acting on the climate and environmental crisis.
Such investment needs to be directed into the large-scale and rapid decarbonisation of energy, transport, housing, industry and farming; the support of innovation- and-export oriented businesses; and public services.
It is clear that this will require an active and green industrial strategy, aimed at improving productivity and spreading investment across the country. Experience elsewhere (not least in Germany) suggests a National Investment Bank would greatly help . . .
As the IMF has acknowledged, when interest payments are low and investment raises economic growth, public debt is sustainable. At the same time, we need a serious attempt to raise wages and productivity. A higher minimum wage can help do this, alongside tighter regulation of the worst practices in the gig economy. Bringing workers onto company boards and giving them a stake in their companies, as most European countries do in some form, will also help. The UK’s outlier rate of corporation tax can clearly be raised, not least for the highly profitable digital companies.
As economists, and people who work in various fields of economic policy, we have looked closely at the economic prospectuses of the political parties. It seems clear to us that the Labour Party has not only understood the deep problems we face, but has devised serious proposals for dealing with them. We believe it deserves to form the next government.
Will Corbyn/Labour’s industrial strategy guarantee fair production costs for perishable food – or rely on the global market?
“It is simply not right that any worker should have to sell their product for less than it costs them to produce them, and this is acutely felt by dairy farmers.”
Countryfile, reviewing Jeremy Corbyn’s “Rural Renewal” report, continued to quote: “A combination of a small number of very large milk processers operating as suppliers to retailers, supermarkets operating a ‘price war’ forcing down the cost of milk, and milk co-ops losing their power has resulted in thousands of dairy farmers finding it harder and harder to make ends meet, let alone make a profit.”
Corbyn said “we will work with all parties to ensure that customers are offered a price they can afford for their milk, but not at the expense of farmers whose very livelihoods depend on it. This will include investigating regulating supermarkets to prevent below cost selling.”
Factories don’t sell their products at a loss, but those producing perishable food are often required to do so. It’s so easy to put pressure on those producing perishable food: fresh milk, fruit and vegetables, who have to sell quickly – in effect holding them to ransom.
Seven years ago Telegraph View pointed out that some supermarkets pay less for milk than it costs to produce. Nothing has changed! Prices sometimes drop to the 1990s level but all other costs have risen steeply.
Confidence in successive governments continues to fall as the country has become increasingly dependent on imported food – which now even includes tomatoes from Morocco and eggs and poultry from Israeli settlements in the occupied Palestinian territories.
A Fairtrade Policy Director noted that ‘The unpleasant and aggressive tough love lobby’ which has cut social and healthcare, education and public transport doesn’t spare family farmers
Corbyn on a Cumbrian farm, pledging to do “everything necessary” to stop no-deal Brexit carnage for famrers
No thoughts of love – or natural justice – appeared in the Oxford Farming Conference address of Liz Truss, Secretary of State for Environment, Food and Rural Affairs, who blamed the ‘difficult world market’ for low milk prices and focussed on farming’s ‘huge export potential’, rejoicing that ‘we now grow chillies which we export to Pakistan and Mexico’.
Barbara Crowther (right), by far the best Fairtrade Foundation Director of Policy & Public Affairs (2009-2017), said “There is a very unpleasant and aggressive tough love lobby out there who simply do not understand the importance of locally sourced food and the underlying food security issues which are only going to get worse as the global population grows”. She asked “Could we make our Mark work on milk?”. This link to that (now unwelcome?) reference has been removed.
It’s a fair question and is something that has been looked at, and discussed many times – not least as part of a ‘Local and Fair’ conference a few years ago, bringing Fairtrade and Cumbrian farmers groups together to discuss the issues they hold in common, co-ordinated by Joe Human (see Barbara in video at that conference).
MP Anne McIntosh (below, who chaired the parliamentary Environment, Food and Rural Affairs (EFRA) Committee, for several years, urged the Government to intervene, after it was reported that 60 dairy farmers went out of business in one month alone. EFRA wanted the Groceries Code which covers suppliers to the big supermarkets and retailers, to be extended to include dairy farmers – but soon afterwards, the estimable Ms McIntosh was deselected. Now in the Lords she is campaigning for the farming interests threatened by Brexit
The Royal Association of British Dairy Farmers insists that all supermarkets could pay dairy farmers a price for milk that would meet the cost of production without increasing the price charged to the consumer: they would just need to accept a slightly lower profit on the milk they sell.
Placing the issue third after Angora goats and use of level crossings, the BBC, in a video link no longer working, gave priority to the destructive comments of the establishment economist, Sean Rickard.
Apparently unaware of economic interdependence – the knock-on effect to other industries and the rural economy – Sean Rickard tells farmers that if they can’t manage under these conditions, ‘they should give up making milk and live off the subsidy’.
In fact, as Clitheroe dairy farmer Kathleen Calvert often points out, the whole rural economy is affected as farmers lose income. Each working dairy farm returns a huge amount of money back into the wider economy, supporting many other regional businesses, and therefore helping to provide jobs for many. Each dairy farm that ceases to trade has a knock-on effect on the surrounding community and the economy, due to a loss of income to many other businesses. From press release, link no longer works. Instead see a briefer reference in Lancashire Life.
The key message “We are losing hold of a vital skills base at an alarming rate as dedicated dairy farming families are no longer financially able or prepared to work at a continual loss. We believe that many milk buyers gamble with the continuity and security of the UK milk supply by keeping much of the profit further up the market chain. Despite varying business structures and the importance of food production, most farm gate prices are now lower than production costs. This has a knock on effect on a wide range of other businesses and livelihoods of countless people involved, ultimately leading to pressure on incomes”.
Dairy farmers are compelled to pay a levy to DairyCo/AHDB, a body set up by government, which, consultant Ian Potter (above right) notes, has received – and spent – more than £1 million extra as a result of the increase in production. He asks: “But on what? Cynics say it spends the money on encouraging more production because that generates more levy money for it…and so on!” He continues: “In my opinion we now need a campaign to promote the buying of British dairy products using British milk . . . I have heard one Tesco farmer would prefer to give his levy to Tesco if he could to help it promote British milk. That makes sense to me if DairyCo won’t!”
Meanwhile food imports rise and government ministers advise hardworking farmers to place their ‘commodities’ on the global market so that unproductive internet bound speculators can ‘make a killing’ – nowadays more often crouched over their computer screens.
“Mr Corbyn comes to life on the stump”
Above: Corbyn in Trafford, May 2019
Mr Shrimsley estimates that a vote share above 30% may be enough to prevent a Tory majority adding that, given likely losses in Remain strongholds, Mr Johnson needs 40-50 gains.
Other points made include those summarised below.
Having alienated the Democratic Unionists, the Conservatives have no natural coalition partners and face the ‘potentially wrecking impact’ of Nigel Farage’s Brexit Party.
Several other parties might support Labour or at least tolerate an anti-Johnson administration. The early evidence is that Remainers may be reconciling themselves to voting Labour where necessary.
Labour has a coherent narrative. The last three years have been no advert for Tory efficiency and the last nine have not left most people feeling better off
It has a raft of policies with appeal to core groups. It has baubles for young and old, tenants and workers. It will not be outbid on public services.
Voters’ current experiences are of austerity and cuts. Labour can, for example, note that Mr Johnson’s promised 20,000 extra police will only restore numbers to their 2010 level.
Plans to nationalise water and rail companies will play well, as will promises to give workers more say and more pay.
Labour also has a radical agenda on the environment, perhaps the most salient issue for younger voters.
And the wild card? As Camilla Cavendish (former No10 adviser) points out: “Mr Corbyn comes to life on the stump; Mr Johnson doesn’t always seem to do his homework”
A provisional Labour election “grid” which was leaked to the Sunday Times is said to reveal that while Mr Johnson is framing this as “a Brexit election” Jeremy Corbyn will continue with two main themes.
Mr Corbyn will first focus on the National Health Service, described by the FT’s George Parker and Laura Hughes as “traditionally Labour’s strongest suit”.
He sees Brexit leading to a “toxic Trump trade deal”, opening up the health service to rapacious US corporations and will challenge PM Boris Johnson about the claims in a recent Channel 4 Dispatches programme, alleging that the Tory government was secretly discussing NHS drug pricing in the context of a possible post Brexit US trade deal.
The FT journalists say that the risk that voting might take place against the backdrop of one of the NHS’s periodic winter crises, “keeps Tory strategists awake at night”.
The second campaigning focus will be on evidence that post-Brexit workers’ rights and regulations will be changed for the worse
The BBC and Financial Times have seen a leaked internal government document marked “Official Sensitive”. This “Update to EPSG (Economic Partnership Steering Group) on level playing field negotiations” was drafted by DExEU, the government department for exiting the EU.
The document suggests that Mr Johnson – a persistent critic of what he sees as unnecessary regulation from Brussels – wants to diverge ‘significantly’ from the EU on regulation and workers’ rights after Brexit, despite a pledge to maintain a “level playing field”.
The FT reports that it was told by one senior adviser to Mr Johnson, “We’re not confident at all. Of course this is a gamble. But it’s the least worst option.” Mr Corbyn’s supporters expressed confidence in his campaigning ability, first shown in the 2017 election, when he captured 40% of the vote.
A surge in number of young people registering to vote has been reported as more than 300,000 applications were submitted in two days. There was a big spike on the day the election was announced.
- A third were from people under 25.
- Nearly two-thirds of applications were from people aged 34 and under
- and 4% came from those aged 65 and over.
Dr James Sloam is co-director of Centre for European Politics at Royal Holloway University, currently leading a project for the Greater London Assembly investigating the key policy issues for young people and questions of civic and political engagement and their relevance to the UN Sustainable Development Goals.
Dr Sloam argues that there has been a step-change in youth political participation, as young people have been attracted in large numbers to Jeremy Corbyn’s message. In the 2017 general election, turnout amongst 18-24 year olds rose from 43% in 2015 to 54% and polling data showed that most of them voted Labour.
BBC journalist Laura Lea points out that this is the generation that has borne the brunt of the financial crisis with uncertainty, unemployment and wage freezes being a staple of their adult life. Young people have experienced the tightest pay squeeze in the wake of the financial crisis – with real pay falling by 13%, according to the Resolution Foundation.
And – we add – they will have to face the increasing hazards of climate change.
Over the past few years we’ve seen a trend in which the Labour Party has become Greener and the Green Party has become “Leftier”. I fervently wish for further rapprochement.
While feeling despair at the head-in-sand attitudes and empty rhetoric in much of Westminster, Whitehall and the City – especially the City – I was enthralled by a presentation given in my constituency of Stroud last month by Alan Simpson, Jeremy Corbyn and John McDonnell’s advisor on climate change and sustainable economics. If anyone is unfamiliar with his policy ideas, I urge them to look him up and read these essays.
A future Labour government will do its utmost to adopt Simpson’s plans, which include:
- local renewal energy cooperatives,
- an agricultural policy reset to penalise high greenhouse gas emissions,
- a far more locally-based economy (community wealth building – thriving in many locations and now to be adopted in Stroud),
- a far more integrated, publicly-owned transport system…
- and of course real measures to curb tax “avoidance” by the heavyweight national and global corporations, and tackle our hideous income inequality.
- First and foremost though – greenhouse emissions must be HALVED every ten years.
We should all be taking notice of the wonderful Greta Thunberg’s message
Real change can’t come too soon, and the only way we’re ever going to see real change in the UK is to put a Labour/Green government? into power at the earliest possible opportunity.
I can’t see how diluting the non-Conservative vote at the next general election is going to achieve anything except more Tory-led acceleration to destruction.
I realise some will find their tribal loyalties tested – but the nightmare we’ve created transcends such petty concerns.
Media 104: The fight-back? Seriously flawed FT article on the next 30 years of fossil fuelled energy
The message from the article’s author, Nick Butler: “Loved or not, the energy companies will still be giving us products we need and they will thrive over the next three decades . . . Wind and solar power are of limited value in meeting industrial energy requirements”.
He stresses the continuing weighting of investment in favour of oil and gas against renewables and focuses on the latest long-term international outlook, which “paints a picture of the world to 2050, on the basis of current policy, reasonable expectations of economic and population growth across the world”.
Sounds good: but this report “comes from the US Energy Information Administration — an independent agency in September”. However, according to its hyperlink and Investopedia, the Energy Information Administration (EIA) is a government agency formed in 1977.
In addition to this incorrect information, the author attribution – ‘energy commentator for the FT and chair of The Policy Institute at King’s College London’ – fails to add his significant previous employment as Senior Policy Adviser in the Prime Ministers policy unit and BP’s Group Vice President for Strategy and Policy.
Not so: a scroll through the report saw no input from such companies and a word search of the report, using the names of three of the largest oil companies, found ‘no results’.
He concedes that the energy transition is indeed happening (see Bloomberg, above) but asserts that its impact is small and “on this analysis will largely remain focused on the generation of electricity”.
The report, Butler continues, gives a picture of two very different worlds.
“On the one hand, in the developed OECD countries energy demand in volume terms thanks to efficiency gains, minimal population growth and public policy — is static to falling and the supply is getting progressively cleaner. In the rapidly growing Asian economies, population increases and the desire to escape poverty are pushing up both demand and emissions shows an inherently unsustainable future. The trends it describes are a recipe for serious global warming and climate instability.”
As the website of UK Oil & Gas PLC (UKOG) reminds us, there is no alternative (TINA): oil is indispensable: it heats homes, provides fuel for water, air and road transport and is used in plastics, fertilisers, detergents, paints and medicines.
Is Butler unaware of research under way to redesign many of these products to eliminate oil use. The use of electric heating is growing and of electric road and waterway transport, mainly ferries? And though emissions will be reduced by increasing localisation of supplies, there will be some need for clean shipping; for nearly three years the first Chinese 2000-tonne electric cargo ship has been in business. Japan and Norway are also working in this sector, with Japan’s Komatsu Ltd developing its first electric-powered digger.
Many commentators see the need to phase out long-distance air travel, but there will always be the need for some air transport during emergencies and the BBC reports progress towards such a capability: July’s Paris Airshow saw the launch of the world’s first all-electric nine-passenger aircraft for which orders are now being placed
Years ago, Dave Lindorff wrote about ‘ecological cataclysm’: “it is useful to look at the hypocrisy of the energy companies when it comes to an even worse crisis threatening life itself on the planet – rapid climate change due to increasing carbon in the atmosphere”.
His advice is more reliable than Butler’s: Watch What Big Oil Does, Not What It Pays to Have Said.
An earlier post – the first in a series ‘The Corbyn Revolution: How Labour leader Jeremy Corbyn’s economic agenda would impact Britain’s economy’ – was a fairly dispassionate overview of the proposed policies ‘breathtaking in scope’, but the other titles in the series indicated that they would fall well below the standards of ‘fairness and impartiality’ which the FT’s new owners had undertaken to maintain.
The writer cravenly decided to avoid them, but Judith Martin (below, right) had more spirit and took the FT – ‘One of the business world’s most-respected platforms’ – to task for its article, UK’s Labour would seize £300bn of company shares.
Though the FT edited or removed many sentences and gave it an anodyne and misleading title: Rewarding your workers makes sound economic sense, we can now present the full text, sent by the writer.
“Raid”, “stealth tax”, “expropriation” – I don’t recall the FT using these inflammatory terms when discussing the John Lewis Partnership, which has always given annual bonuses to the staff instead of to shareholders.
Your front page headline “Labour would cost UK companies £300bn by shifting shares to staff” (2nd September 2019) is one of the most partisan I have ever seen in the FT, and more like something I would expect from the tabloid press that I don’t choose to buy.
Only later does it become clear that the suggestion is for a gradual transfer of a mere 10%. The fact that the top 20% of income earners received 6 times the disposable household income of the bottom 20% (according to the government’s own figures (Income inequality in the UK, House of Commons Library, May 2019)) doesn’t get a look-in.
Henry Ford understood that it made sound economic sense to pay workers enough to allow them to buy the company’s products. Impoverishing your workers – even if, like Deliveroo, Uber and the rest of the gig economy crew, you claim they’re not actually employees – is not good for society, as numerous FT articles have noted in recent years. Most of our current worker protection has come from the EU.
As for the rights of tenants, I am agnostic on whether or not they should be given the right to buy but they certainly need a fair rent structure and decent protection. Not long ago there were headlines saying that a new generation of middle-aged renters was likely to face extreme poverty in old age, with resulting stresses on the health service and elsewhere. Compare this country’s attitudes to housing and landlords with Germany, where Berlin has just acquired nearly 700 flats from a private landlord, with plans for more. In March this year the FT noted approvingly that the start-up culture in Berlin was thriving. A city that protects its residents frees up initiative.
Is this really a good time to put the boot in to any policy that might suggest that capitalism was capable of improvement? The FT has spent the last three years insisting that the EU gives a better deal than the economic isolation that faces the country in November.
When Jeremy Corbyn (left, FT) has finally been dragged into co-operation with other anti-brexiters, and Boris Johnson’s Conservative Party is looking increasingly unstable, is this really a good time to put the boot in to any policy that might suggest that capitalism was capable of improvement just because it comes from the Labour party? Do you really want more of Johnson and his stated approach of “fuck business?”
(Ed) Is Jim Pickard’s language in this article – seize, confiscate, state raid, expropriate – actually adding to Project Fear, which is becoming Project Cold Hard Reality according to the Scotsman – no doubt thinking of the number of jobs and assets moving to continental Europe?
In a letter today signed by over eighty economists, including Richard Wilkinson, Guy Standing, Prem Sikka, Kate Raworth, Richard Murphy, Steve Keen, Joseph Huber, John Christensen, Dani Rodrik, Thomas Piketty and lead signatory, David Blanchflower, the FT is charged with failing to appreciate the severity of the UK’s current economic condition. The indications include:
- the country’s ‘meagre recovery’ from the 2008 banking crisis, fuelled by rising household debt,
- stagnating earnings,
- a housing market crisis,
- the wealthiest disproportionately benefiting from growth since the 1980s and
- a failure to take adequate action to prevent climate and environmental breakdown and prepare for their effects.
They point out that all political parties in the UK are proposing increases in public spending to meet these challenges – and charge the FT with reproducing a number of misconceptions:
Labour’s proposals are affordable: the FT’s source, an Office for Budget Responsibility analysis, “ignored the impact of public spending on growth, and thus on tax receipts” – a critical relationship noted by senior IMF economists in their critique of austerity.
The economists pointed out that government can borrow at negative real interest rates to fund pressing infrastructure, education and environment projects, many of which offer returns well above zero, generating higher future tax receipts to spend on social and environmental needs such as those listed above. At present, they observe, taxation levels in the UK remain lower than in most well-provided European countries.
They corrected the implication that a mechanism such as an Inclusive Ownership Fund (p.42) would require companies to pay out cash out; companies would issue new shares to be placed in a mutual fund – just as shares are now issued for executive compensation.
After being reminded that in the 1940s and 1980s, major policy changes were made in response to a failed economic model – at first seen as overly radical but later accepted across the political spectrum – the FT editor might heed the advice of the critical reader whom he invited to write a letter:
“There needs to be a revolution in the FT — not the communist type of revolution, but a revolution that turns the mindset to see the world beyond a white middle-class neo-liberal tinted lens.”