City of London, the last rotten borough in England

From Tribune, news of a half-hearted attack on the City’s anti-democratic institutions by the Labour party:

LABOUR will this week challenge what it sees as the secrecy and unaccountability of the City of London’s government, as it seeks to become the first political party to be represented there in its 900-year history.

A slate of candidates is being put up for the elections to the Corporation of London’s common council, its main decision-making body.

Local Labour activists accuse the councillors – who are often business people non-resident in the Square Mile – of being part of an elite serving the interests of bankers.

Peter Kenyon, secretary of the 52-strong City of London Labour Party, said: “They were certainly very active in lobbying for the regulatory framework that proved to be fundamentally flawed and has plunged us into recession. The leaders of the City are looked to by our political masters as being sources of expertise.

“It’s very important for us to wake up and open the eyes of the electorate as to the extent of the influence of people they are electing.”

The current Lord Mayor of London, Ian Luder, is a partner in accountancy firm Grant Thornton, while Stuart Fraser, the corporation’s chair of policy and a common councilman, is a senior stockbroker. Both sit on Chancellor Alistair Darling’s financial services global competitiveness group.

Labour’s manifesto, launched last week by minister for London Tony McNulty, calls for all City employees to be paid the London living wage of £7.45 an hour.

It also promises to “speak out against special treatment and tax breaks for get-rich City financiers”, adding: “Too many common councillors neither live nor work in the City and are selected for their social connections”.

However, the balance of power on the council is unlikely to shift as Labour is only putting forward seven candidates for election to the 100-strong body.

Among them is Mark McDonald, a barrister of the Middle Temple who unsuccessfully ran to be Labour Party treasurer last year. No councilman currently declares themselves to be a member of a political party in the register of interests.

Mr Kenyon added: “We are not seeking to take over common council, but we are seeking to introduce a level of openness and transparency, which has previously been denied.

“We’re not seeking to overturn the role of people who had senior positions [in financial services]. It’s not to say that those skills are not relevant. But equally other sorts of skills are needed.”

The Corporation of London is the last authority in Britain whose members are elected partly by a business franchise. As well as about 8,000 resident voters, nearly 24,000 votes are distributed among businesses based in the City, with the voting share proportional to the number of staff each firm employs. (Emphasis added)

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Bosses call for minimum wage freeze!

Times are hard. But should the minimum wage rise?

No! Say employers. Their stooge Tim Worstall, who is probably paid significantly more than the minimum wage, agrees:

It really shouldn’t come as a surprise that if you raise the price of something then people will buy less of it – and this applies to labour just as much as anything else.

Which is an argument against having a minimum wage (or the much more effective living wage). And of course, Tim is completely against the minimum wage – though, I wonder, if he found himself in a low-paid job, would he remain a devout free marketeer?

Since the terrible things forecast by Worstall’s ilk did not happen upon the implementation of the minimum wage, should we listen now?

Think of this: if we are, as consumers, cutting our spending because of soaring utility bills, etc. won’t we cut our spending even further if our wages are frozen? If so, this will exacerbate the slump in consumer spending which will lead to greater job losses in the retail and service sectors.

The question of profits is one which Worstall doesn’t adequately engage. If we think low wages are immoral, he says, we should reach into our pockets. The only problem is that morality doesn’t come into it, which Worstall should know…

I am interested in the idea of a citizens’ income, which would make life much easier for the low paid, and towards that end – the living wage campaign. These things don’t come about because workers and consumers vote with their wallets, though.

What collective mechanisms exist to raise low wages? Erm, that’d be the minimum wage. And trade unionism – currently hampered by legal restrictions.

Mind you, I’m not sure employers would accept a frozen minimum wage in exchange for the restoration of workers’ rights…

hat tip: John’s Labour blog

Is there an underclass of welfare dependents?

One question that always surfaces in my mind when the words “welfare reform” are used: “Where are all the jobs going to come from?”

Presumably, there will be new jobs created in the private companies which will be allowed to run services currently provided by Job Centre staff. Which might allow some sacked Job Centre workers to effectively get their job back – on lower pay.

But where are all these jobs going to come from – the ones that the sick and long-term unemployed are to be trained for?

Is the government planning some kind of new green deal which will create millions of jobs in manufacturing and agriculture? I doubt it, they can barely even get the banks to lend money to small businesses, never mind fund an expansion of the economy…

Which leads me to believe that the “real deal” with these welfare reforms is to redirect the beneficiaries of the welfare state from workers, pensioners, the sick and the unemployed, to big businesses.

Benefit claimants – and indeed, all of us – should recieve a basic Citizens’ Income in place of other welfare payments.

We should not demonise the unemployed, but the capitalist system which is throwing people onto the dole and out of their homes.

No doubt New Labour’s plans will be passed into law – a backbench rebellion meaning it will go through with Tory support. Given that the labour movement has united against these reactionary proposals, there should be deep questioning of why trade union money is still funding New Labour. If the labour movement wants to see Tory policies implemented, why not fund the Tory party?

Read this article, dispelling myths about the “something for nothing” culture, from Socialist Worker:

Labour’s nasty attacks on benefit claimants
by Siân Ruddick

Labour and Tory politicians have been falling over each other to prove that they are the toughest on those who claim welfare benefits.

Work and pensions secretary James Purnell was to unveil a raft of draconian new plans in the Welfare Reform White Paper on Wednesday – details of which were flagged up in last week’s Queen’s Speech.

From lone parents to people suffering from long term illness, the government proposes to cut access to financial support and use increasingly punitive measures to force people into work.

New legislation will include a harsh sanctions regime for those claiming Jobseekers’ Allowance (JSA) payments.

This will include cash penalties for those who miss appointments or fail to adhere to “contracts” detailing training and other steps to prepare for work.

Harder

The new raft of “welfare reforms” follow recent similar attacks on incapacity benefit claimants that were also designed to make benefits harder to claim and to push more people into work.

Purnell has said that lone parents with children as young as one may be forced to look for work or training and report to a job centre every fortnight.

Quite apart from the attacks on parents’ choices and quality of life, the government doesn’t offer free nursery places until the age of three – so most lone parents would be forced to find costly private childcare just to be able to look for work.

And it’s not just parents who will be on the receiving end. The majority of disabled people would be required to actively seek or prepare for work before receiving benefits.

In a nasty attack that panders to the worst elements of the tabloid press, the government says it will roll out lie detector tests at job centres across Britain.

This will feed the myth that people claiming benefits are intrinsically untrustworthy or dishonest.

Some 25 councils already use such tests in relation to assessing housing benefit claims.

The continuing demonisation of people on benefits has become a hallmark of New Labour policy. Headed up by Purnell, “welfare reform” has become a stick to beat and frighten people with.

Both Labour and Tories say they want to stop a “something for nothing” culture of welfare dependency.

Disposable

But life on state benefits is far from a holiday. On average, over 25 year olds get about £60 per week. This is not disposable income – it is supposed to cover all utility and food bills, as well as money for clothing and household goods.

The government is demanding that people should try harder to get a job.

But with unemployment rising, people with years of experience in skilled jobs are joining the dole queues. In most job centres decent long- term jobs are hard to come by.

The government’s plans will be delivered by expanding the role of private companies contracts.

It is likely to award contracts on the basis of meeting targets for getting people off benefits – increasing the pressure on “advisers” from private firms to push people into work or training, even where it is unsuitable.

Benefits are a vital part of the welfare state. We should defend the idea of a collective responsibility for ensuring people’s welfare.

At a time of economic crisis these arguments can become sharper. We must resist the scapegoating of those in receipt of benefits.

Is there an underclass of welfare dependents?
The conviction of Karen Matthews for kidnapping her daughter, Shannon, has led politicians and the media to denounce the supposed “underclass” of benefit claimants that exists in Britain.

According to the Sunday Times, the case has demonstrated “the perverse consequences of the welfare system”.

Predictably, the Sun went further: “Vile Karen Matthews is a product of the sink-estate underclass of chaotic families that loaf away their days on easy welfare benefits.”

These assertions have helped to fuel a picture of council estates filled with work-shy layabouts who refuse to “integrate” into respectable society.

In reality there is no such thing as an “underclass”. The idea that there are whole streets and communities in Britain where no one works is a myth.

Even on Karen Matthews’s street in Dewsbury – now held up as the classic sink estate – the Guardian found this week that almost every household had someone in work.

Areas where poverty is common do of course exist, but repeated studies have shown that poverty is a threat across the working class.

Many of those in poverty are families surviving on minimum wage or low paid jobs with little to show for it at the end of the month.

A 2002 report called Poverty and the Welfare State: Dispelling the Myths, by social policy expert Paul Spicker, attacked the notion of an underclass and took Labour to task for its attacks on “welfare dependency”.

The report found that although certain groups – such as young people, those out of work, or pensioners – are the most likely to be poor, no group “is immune to poverty”.

Throughout the 1990s some 60 percent of the population spent at least one year in the bottom 30 percent of income distribution.

Spicker concluded, “Poverty is not the moral, cultural or social problem of a permanently excluded underclass, but an economic risk that affects everyone.”

So for those truly concerned about the sort of society children are growing up in, the urgent question should be how to address the scandal of poverty.

The concept of some sort of “underclass” conjures Victorian-era notions of the “undeserving poor”.

These ideas inform much of New Labour’s “reforms” including its approach to welfare, crime and education.

The Tories refuse to be outdone by New Labour and have proposed that benefit claimants should have to disclose their family history.

Those whose parents and immediate family have been on benefits “long term” will be scrutinised, including their child’s performance in school.

The demonisation of those who receive benefits does nothing to address the real problem of poverty.

Is progressive taxation is back on the agenda?

The Compass group has welcomed the Pre-Budget Report with as much optimism as the Chancellor’s asessment of the depth of the recession:

Neal Lawson chair of Compass said: “Today’s Pre-Budget Report marks a move away from the Neo-Liberal/free market economic consensus pursued by both Labour and Conservative governments of the past 30 years – but this should not just be a blip before normal service, in the shape of speculative consumer capitalism, is resumed – the government needs to make this a turning point that leads to the moral transformation of our society”.

Jon Cruddas MP said: “This is exactly the kind of measure that we’ve been advocating for a while now and it’s good news for people like my constituents in Dagenham. This should be the first stage in re-balancing the tax system so it’s fairer for middle and low income earners, as well as kick-starting the economy in the short term. When the new US administration takes office then we have the chance to move in to another phase – an international crackdown on corporate tax evasion. Meanwhile, Cameron is now retreating from New Conservatism into orthodox Thatcherite economics and we have to expose that.”

Gavin Hayes General Secretary of Compass said: “A financial crisis that was in part caused by the excesses and risky behaviour of those at the top should not be allowed to unnecessarily hurt the rest of us, so today’s announcement on reducing VAT, whilst at the same time announcing plans to increase the tax burden on the super-rich should both be welcomed, it is absolutely right for government to limit the impact of the recession by using pragmatic and sensible measures such as these.”

As Richard Murphy points out, cutting VAT by such a small amount isn’t likely to impact upon retail prices for consumers:

On an item costing £4.99 the VAT saving will be under 11p. Can you see anyone shifting that price to £4.89?

On £500 (VAT inclusive price) the saving is £10.60. That’s neither here or there: if you are going to spend £500 then £10.60 or so will not change the decision. Other influences are much stronger.

So at low price points this is a boost for the retailer who will take much of the gain. I really do not expect them to pass this on. At high price points I doubt the impact.

Either way the saving goes to marginal jobs in the UK, and Woolworths won’t be saved by this, whilst cheap imports are the only likely sector to see a boost. The business to business sector will see none at all: VAT does not impact them.

But it’s more than that: this might fuel deflation, which we can ill afford. So it’s a mistake.

VAT is regressive, but not as badly as some taxes (e.g. council tax) so the poorest who need help will not benefit most.

John McDonnell MP, chair of the Left Economics Advisory Panel said of the tax changes:

“The introduction of a higher rate of tax for high earners is long overdue but the Government’s proposals are hardly a revolution, and delaying them until after the next election is pointless. The higher rate should be the start of creating a fair tax reform agenda, redistributing wealth from the super rich in order to take the low paid out of taxation altogether.

“The Government should also move immediately to tackle the large scale tax avoidance by the corporate sector, introducing legislation to outlaw tax havens, mirroring the Obama bill in Congress. The public revulsion over City bonuses and bank executive salaries has opened the way for radical tax reform. Government must seize the moment.”

The Public and Commercial Services Union warns of the impact of so-called “efficiency savings” and points out that billions of pounds in taxes go uncollected:

Commenting, Mark Serwotka, PCS general secretary, said: “Further efficiency savings of £5 billion should not be a prelude to yet more job cuts, office closures and privatisation.

“Key public services, such as justice, welfare and tax are already struggling to cope against a backdrop of massive job cuts and office closures.

“Whilst the promise of additional funds for jobcentres is welcome, the government needs to reverse its job cuts programme across civil and public services to safeguard their delivery.

“Whilst the promise of additional funds for jobcentres is welcome, the government needs to reverse its job cuts programme across civil and public services to safeguard their delivery.

“For example the government should be looking at tackling the £21.5 billion worth of uncollected tax and £25 billion lost through tax evasion, by putting more resources into HMRC to claw back the billions in lost revenue, which could be ploughed into public services and stimulate the economy.”

The Morning Star‘s editorial is critical of the direction of travel signalled by the Pre-Budget Report, not so much a return to Real Labour but a continuation of Blue Labour:

Out of his own mouth
(Monday 24 November 2008)

CHANCELLOR Alistair Darling condemned himself out of his own mouth when he said that the central objective of his unambitious pre-budget report was to support firms and businesses going through difficult times.

That is why he opted for a cut of two-and-a-half percentage points on VAT, which will be absorbed into business income rather than find its way into lower prices.

Working people, especially those wondering how long they will be in a job, are unlikely to run out on a spending spree on the basis of a VAT cut.

And, if Mr Darling really wished to spark economic activity, he should have helped those on the lowest incomes whose extra cash would certainly have increased demand.

Those robbed when Gordon Brown abolished the 10 per cent tax rate should be compensated by being lifted out of income tax liability entirely.

State pensioners, whose living standards have been eroded every year since the Tories abolished the link with wages, those working for a totally inadequate minimum wage and others forced to exist on the jobseeker’s allowance pittance should receive a boost in their income.

It is pathetic that the Chancellor should be posing the possibility of no more than a 5 per cent increase to 45 per cent for tax on annual incomes over £150,000 and then only on condition that Labour wins the next general election.

This proposal will not bring any additional income to the Treasury in the life of this government. It’s not even of sufficient scale to encourage the electorate to vote Labour in the hope that it will switch the burden of taxation from working people to the rich.

Government failure to tackle the spiriting away of potential tax revenues of at least £25 billion a year through overseas tax avoidance centres, mainly in British crown territories, emphasises once more its priorities.

The bulk of taxation should fall on the shoulders of those able to pay rather than those too poor to afford avoidance schemes.

And the government should also lift the cap on National Insurance contributions, which is a hidden tax benefit for the better-paid, and introduce a wealth tax.

But the government must not restrict itself simply to measures calculated to increase demand.

It has a responsibility to intervene actively in the economy, especially since the banks have been quick to accept cheaper Bank of England lending and government investment but have not passed benefits on to small businesses seeking to weather the recession.

The government must put substance behind its much-vaunted commitments to environmental issues and to higher employment levels.

Financing at least 100,000 new council homes a year and a nationwide programme of renovating and insulating existing local authority properties could begin to tackle the housing crisis, improve energy efficiency and cut fuel bills.

Similarly, a crash programme of expanding the railways would not only improve the transportation network but increase demand for steel, concrete etc, safeguarding jobs in these industries as well as construction.

Unless the government adopts an economic programme with social justice at its heart, its cosmetic measures will simply prop up big business and ensure that costs of the recession will be paid for by workers.

Balls to a living wage, says Labour

Ed Balls talking balls:

THE CHILDREN’S Secretary, Ed Balls, last week attacked the concept of a London living wage, which is currently set at £7.45 an hour as the recommended minimum wage needed for survival in the capital.
The idea was introduced by former London Mayor Ken Livingstone in recognition that living costs in the capital – especially housing – are significantly higher than in most other places and that the minimum wage level, which at £5.73 is too low anyway, is totally inadequate in London.
Livingstone’s successor Boris Johnson has also declared his support for the London living wage and has promised it will be paid to all staff employed by the Greater London Authority and Transport for London. It has already led to the promise of a big pay rise for thousands of cleaners on the London underground from next year.

artificial

Now Ed Balls is claiming that it would be “artificial, inflationary” and not “necessary or appropriate”.

“An artificial ‘living wage for London’ could distort labour markets and prove poor value for money. Moreover, in seeking to reflect perceptions of the cost of living, this proposal could also raise inflation expectations at a time when increased vigilance is needed on inflationary risks. We do not believe it is necessary or appropriate.”
Ball’s stance has attracted criticism from poverty charities, businesses and unions representing low-paid workers for the government’s stance on the London living wage.
Mark Donne, the director of the Fair Pay Network said: “It is extremely disappointing, particularly from a children’s minister, yet perhaps not entirely surprising that such senior government figures have taken this view on the living wage. “The London living wage is extremely popular with the London electorate and cities such as Oxford, Norwich and Leeds are keen to follow suit.
“In both the moral and business cases, the national minimum wage, and indeed the living wage where implemented have lifted low paid people from poverty and bolstered local economies.”
The network represents charities ranging from Oxfam to the Child Poverty Action Group and the TUC.
Guy Stallard, the director of facilities for the management accountants KPMG, a company that employs more than 123,000 people, said: “We have found that paying the living wage is a smart business move as increasing wages has reduced staff turnover and absenteeism, whilst productivity and professionalism has subsequently increased.”
Dave Prentis, the general secretary of Unison, which represents 1.3million workers in public services, said: “A shocking 40 per cent of London’s children live in poverty, which means that millions of families in the city are struggling to make ends meet. The London living wage is a real opportunity to help these families cope with the high cost of living in the capital – and Ed Balls is only going to make their situation worse with his attack on decent pay.”

obscene

A spokesperson for Boris Johnson said: “If the government is serious about tackling the capital’s obscene levels of poverty and deprivation, then it would join me in urging all London employers to accept the London living wage as the basic pay rate.

“London is one of the most expensive cities in the world to live and work and it is not only morally right to pay the living wage but also makes good business sense, contributing to better recruitment and retention of staff, higher productivity and a more loyal workforce with high morale.”

It would appear that the Greens are redder than Labour when it comes to the living wage:

Green Councillor Jenny Jones has successfully passed a motion to make Southwark Council a Living Wage employer, at a full Council meeting on Wednesday 5th of November

The motion commits the Council to paying all staff, including sub-contracted staff, the London Living Wage and to use local strategic partnerships and other private sector engagements to promote the living wage more widely. Proposed by Green Councillor and London Assembly Member, Jenny Jones, the motion passed with support from Labour, despite hostility from Lib Dem Councillors.
Southwark is only the second Borough to adopt official policy backing a Living Wage, with Lewisham being the other where there are 6 Green Party Councillors.

The Living Wage is the real minimum rate of pay that enables a worker to provide a decent standard of living for themselves and their family. In London, the Living Wage currently stands at £7.45 per hour. The background to this figure can be found in the document, A Fairer London: The Living Wage in London (GLA 2008). Many service sector workers – including cleaners, security guards and catering staff – experience low pay and difficult, sometimes exploitative working conditions. It is estimated that in London alone 400,000 people fall into this working poverty trap.

Jenny Jones stated, “The Green Party has supported the London Living Wage from the outset and will continue to fight for all organisations to ensure that their staff are not receiving poverty pay.”

Support the striking Tube cleaners!

From The News Line:

700 TUBE CLEANERS TAKE STRIKE ACTION
SOME 700 London Underground cleaners scheduled to strike for a living wage and basic working conditions from 6pm today have received a welcome boost from London MPs supporting their campaign.

An early-day motion, tabled by John McDonnell and already signed by eight others, calls on the employers to negotiate a just settlement, condemns intimidation of union members and urges the Mayor of London to ensure that the London living wage, currently £7.20 per hour, is paid to all Tube cleaners.

After voting to strike by a landslide 125-one margin, RMT cleaners working for ISS, ITS, ICS and GBM will not book on for shifts that commence during the 24 hours between 18:50 tonight and 18:49 tomorrow night, Friday June 27.

A second, 48-hour, strike is also scheduled for all shifts commencing between 18:50 on Tuesday July 1 and 18:49 on Thursday July 3.

The cleaners’ demands also include 28 days’ holiday, sick pay, decent pensions and travel facilities, and an end to the barbaric practice of ‘third-party sackings’ in which cleaners can be dismissed, with no disciplinary hearing or right of appeal, at the behest of parties other than the employer – a device used to get rid of union activists.

RMT general secretary Bob Crow said yesterday: ‘The cleaning company bosses are making huge sums at the expense of our members and it is time they were paid a living wage and given the decent basic working conditions that they should be able to take for granted.

‘The 99%-plus vote for action should tell these employers everything they need to know, and they should now get around the table with us to thrash out an honourable settlement.’

Separately, the RMT accused Stagecoach of putting its profits ahead of service and safety.

RMT said: ‘As the rail, bus and tram giant posted a leap in profits to £59.1 million, a 7.6% return, it is also aiming to slash ticket office opening times and up to 140 jobs on South West Trains.’

General secretary Crow said this ‘undermines service and safety for staff and passengers alike and it is unacceptable.’

The RMT launched a Safer Journeys campaign at its conference in Nottingham yesterday to get staff back on stations.

The RMT pointed out that just 10% of the £300 million profits made by the big six rail companies would fund the return of 1,000 staff to stations around Britain’s railways.

It said that the cost-cutting removal of staff from railway stations by profit-hungry privateers is undermining safety for passengers and rail workers and must be reversed.

Living wage for London mayor?

A challenge to Red Ken and Green Sian, I suppose. Can’t see Boris Johnson taking her up on this…

In the light of the revelations over Ministers expense claims, Lindsey German, the Left List Mayoral candidate has today pledged to only take an average London wage as Mayor of London and to publish and account for any expenses.

She is issuing a challenge to the other candidates to do the same: “Its time for Ken, Boris, Sian and Brian to put their money where their mouth is.” Stated Lindsey today “A mayor who is paid hundreds of thousands of pounds is not in touch with the reality of living in London. If they really want to make London a better place for working people then they should join me in this pledge.”

“Just look at the MP’s – it is absolutely no surprise that politicians are so out of touch with the reality of every day life for normal people. They are immune to the great hikes in fuel bills, grocery costs and even telephone bills. For most people it’s a real struggle to keep up with these expenses, but the politicians are oblivious to this.”

“What do these people get a wage for? It seems their expenses cover everything they need, and then they get a huge salary on top!” said Lindsey German on learning about the expenses of the political elite in Westminster.

Lindsey concluded: “It is shocking that we have to pay £5,000 to keep Gordon Brown’s home clean. Is he allergic to vacuum cleaners?”