Reasons for low productivity

Much is being written about the UK`s low levels of productivity, but totally unsurprisingly, few, if any, mention some rather crucial points. Lack of investment in new plant and machinery is identified as being hugely important, but is not the method of paying bosses and managers significant here? If CEOs can only be motivated by the prospect of their share options rising in value, their focus will inevitably be placed on the firm`s profits in the short-term. They will not be incentivised to invest funds in new machinery and technology, which would increase productivity at a stroke, when such spending will reduce the immediate profits of the business, and therefore, reduce the value of its shares. The business sector must surely realise this type of payment for company chiefs is holding back the country`s productivity, but is doing nothing to alleviate the problem. Any suggestion of government interference would, of course, be viewed by the likes of John Cridland of the CBI as "business-bashing".

      Even if there was a change of renumeration method, and investment increased, productivity is not just a question of having the most up-to-date machinery, as the efforts and abilities of the workers matter hugely. However, if the dubious point of lack of skills being a relevant factor is important, should the government be contemplating cuts to the education services of up to 10%? Furthermore, if motivating bosses can only be achieved by huge financial reward, the case for similar treatment for every worker is incontrovertible; shouldn`t workers not only be receiving decent pay, and thereby avoiding the necessity to rely on in-work benefits to survive, but actually be sharing in the profits their efforts bring to the firms? The news that "one in three workers worries about how to stretch their pay packet until the end of the month" is absolutely appalling, and an indictment of our society.

    The huge gaps in pay between bosses and workers is the real problem with Britain`s economy, and low productivity the result of the lack of foresight of our politicians and business leaders.

Letter to Independent on Mansion Tax

Donald Macintyre is right to criticise Labour for apparently dropping the "mansion tax" proposal, largely because the candidates for leadership tend to agree that it lost the support of the "aspirational" (Independent,27/05/15) If taxing owners of houses worth £2m and over symbolises "the politics of envy", as Burnham and the others suggest,  presumably they are also against raising the top rate of income tax to 50%, and a bonus tax on bankers? In fact, Labour is now, presumably, in opposition to all methods of wealth redistribution, something which is central to the creation of a more equal and fair society. Under Thatcher, the top rate of income tax was 60% between 1979 and 1988!   

      Do these candidates not want to improve the UK`s shameful 28th position out of 34 so-called developed nations in the equality league table? The fact is that the "mansion tax", itself an extension of the council tax, would have cost the owners of these homes, most of them in London, around £3-5,000 annually, an amount almost certainly exceeded by the increase every year in the house`s price. If these well-off people think that such a tax is unfair, and that money is better raised by "efficiency savings" in the public sector, they are never likely to vote Labour anyway!

    If  Labour is to recover from its devastating defeat, it has to develop transformational policies, which will undoubtedly cost billions. If there is no willingness to fund public services by taxing those most able to pay, not only will Labour`s ability to balance the books again be questioned, its raison d`etre will be too.

Labour manifesto too left wing? Nonsense.

The Blairite nonsense about the election result was being spouted literally before all the votes had been counted. The carefully rehearsed message, delivered with such barely disguised glee, repeated the rhetoric heard so often from Mandelson and the rest over the years. It was no surprise, therefore, when the Blairite candidates for leadership all too quickly offered their services, blaming the defeat on failing to attract the votes of the aspirational middle class, a lack of pro-business policy, and a Labour programme too far to the left. None of them appeared to realise how insulting this was, both to the electorate in general, all with  hopes and ambitions for the future, and to those who had voted for Ukip, and the more radical SNP, Plaid Cymru, and Green parties.  Insulting, but also, inaccurate! The fact is that the Blairite propaganda machine wants to demonise any leftward movement of the party, so, clearly, some analysis of the Labour proposals is required.

      For starters, nothing left-wing at all about the pledge to end the callous “bedroom tax”, just simply a humanitarian policy, which has the support of everyone with a hint of decency. Then there`s the raising of the minimum wage to £8 an hour by 2020; how can this be too left wing when wages are so low,  many workers cannot afford to live without in-work support from the taxpayer, to the tune of £11bn a year in  housing benefits, and when the current living wage is £7.85, and, in London, £9.15? Many would think £8 an hour a very moderate ambition, certainly not radical, especially as so many politicians have openly admitted they could not live on such meagre pay. With 44% adults not paying any income tax at all, because they earn so little, raising the minimum wage has to be considered sound economic policy.

     The same applies to zero-hours contracts, which enable companies` profits to rise, whilst the taxpayers subsidise the low-paid. Which is more alarming in the eyes of the average voter? Allowing those forced to work on zero-hours contracts full- time employment after three months, or threatening workers with “day-to-day hiring”, as the CBI chief, John Cridland, did when Miliband announced his plan?

    The idea that those earning houses worth £2m and over should pay the so-called “mansion tax” originated with the Lib Dems, so automatically ruling it out as “radical” or left-wing”. Tristram Hunt unbelievably said, in an interview with the Tory Times, that it reduced people`s aspirations! The sensible view is that it was merely an extension of the council tax, and the £3-5,000 most would have paid a year would have been offset by the rise in the value of the property, especially as most houses worth over £2m are in London and the south-east. It certainly did not prevent Labour doing rather well in the London area.

     Left wing policies in the Labour manifesto were far more noticeable by their absence. Where were the pledges to re-nationalise the railway and energy companies, ideas which, according to opinion polls, would have proved rather popular? Did Labour promise to keep hold of the 79% taxpayer-owned RBS and convert it into a People`s Bank, to rival those on the high street? No, of course not, just a bonus tax which bankers would, no doubt, have circumvented, with claims that their extra pay constituted annual “allowances”! Not even a promise to participate in the EU`s Financial Transaction Tax in January, 2016.

      With so many tenants having to pay up to 60% of their earnings to Rachman-like private landlords, was there a pledge to review exorbitant rents? No, merely a cap on future rent increases. Did the education policy plan to increase social mobility, or even to review Gove`s unnecessary assessment reforms?

     Presumaby, raising the top level of income tax to 50% for the very high earners was regarded as left-wing by Blairites, even though it was placed at that level by  Brown`s government, and under that Marxist, revolutionary, Margaret Thatcher, it was much higher: between 1979 and 1988 it stood at 60%!

      So, not left-wing at all, and certainly not really a factor in the election defeat. Many clearly voted for other parties because Labour`s manifesto included so many moderate ideas, rather than ones which would re-shape the country`s economy and transform our society. A stress on the fact that the coalition`s policies were, in actual fact, extremely right-wing, rather than Labour`s being too far to the left, might prove a more accurate evaluation by the leadership candidates; perhaps one of them will have the bottle to say so, but I`m not holding my breath.

Unpublished letter about Labour and Blair

Jonathan Freedland is right to warn Labour that it has to sort out its relationship with Blair, "once and for all", especially when he stresses the need for the "making of distinctions" (Labour has to get over its Tony Blair problem,23/05/15). It is essential to remind itself of the improvements made to our society during the Blair years, like the introduction of the minimum wage and the windfall tax, but the trouble is that what Seumas Milne calls the "Blairite agenda" is driving the party so far to the right as to make it indistinguishable from Toryism (This New Labour revival could end with a party split,21/05/15). The Blairites` simplistic analysis of the election defeat, with  the emphasis on the perceived failure to meet the demands of both the "middle class people with ambition" and of business, is leading them to the reinvention of a Labour party alien to the majority of its core supporters.

     The Iraq war was not the only disaster under Blair; pandering and cosying up to the City, and generally de-regulating, contributed hugely to the over-confidence of the banking and financial sectors, and the subsequent economic crash. The same over-confidence and arrogance of business are still in evidence, with banking scams, tax avoidance, failures to pay minimum, let alone living, wages, and obscene renumeration, often in excess of 150 times that of their average employee, for many bosses. Didn`t the CBI chief, John Cridland, warn against the ending of zero-hours contracts after three months, as Miliband proposed, because businesses would resort to "day to day hiring", 19th century style? (Give zero-hours workers regular contracts after 3 months-Miliband,01/04/15) Hasn`t HSBC just threatened to take its headquarters out of the UK because of proposed taxes and regulation?

     Miliband was right to "get over any Tony Blair problem" he may have had, and challenge the right of business to exploit workers and flaunt laws, even though he was described by the likes of Cridland as "business-bashing". Labour`s leadership candidates should be praising Miliband`s efforts, rather than trying to create a party which is "intensely relaxed" about inequality, and in cahoots with the City and big business.

 

"Politics of envy"

Andy Burnham, currently the "frontrunner according to the bookies" in the race for the leadership of the Labour party, made some very valid points regarding the party`s problems and future, but let himself down with comments on the "mansion tax" (Andy Burnham: My campaign is "heart of Labour". I was loyal to Blair, Brown and Miliband. I am not into factional politics,17/05/15). If taxing owners of houses worth £2m and over symbolises "the politics of envy", as he suggests, presumably he is also against raising the top rate of income tax to 50%, and a bonus tax on bankers? In fact, his comment indicates his opposition to all methods of wealth redistribution, something which is central to the creation of a more equal and fair society. Under Thatcher, the top rate of income tax was 60% between 1979 and 1988!  

      Does Burnham not want to improve the UK`s shameful 28th position out of 34 so-called developed nations in the equality league table? The fact is that the "mansion tax", itself an extension of the council tax, would have cost the owners of these homes, most of them in London, around £3-5,000 annually, an amount almost certainly exceeded by the increase every year in the house`s price. If these well-off people think that such a tax is unfair, and that money is better raised by "efficiency savings" in the public sector, they are never likely to vote Labour anyway!

    If  Labour is to recover from its devastating defeat, it has to develop transformational policies, which will undoubtedly cost billions. If there is no willingness to fund public services by taxing those most able to pay, not only will Labour`s ability to balance the books again be questioned, its raison d`etre will be too.

Hunt the Labour leader?

Whilst it is difficult to disagree with the main argument of your editorial about the Labour leadership, that "choosing the leader now is pretty daft", issue must be taken over your points about Tristram Hunt (The party has got its leadership election process back to front. Paging Alan Johnson, 21/05/15) Why hasn`t he had a "proper chance to develop his ideas"? How long does it take, or do you mean that candidates should adopt a pragmatic approach, and change their basic political principles to suit the occasion?

  Whether Hunt`s voice is one "worth hearing" is a moot point, too, as we have heard enough from him in his role a shadow education secretary to last a while. Didn`t he suggest that teachers take an oath, and that, because they are obviously not inspected enough by Ofsted, should apply to be re-licensed every few years? He showed his complete failure to understand how education works by advocating Performance Related Pay, and continues to insist how "character and resilience" are only achieved in the private sector. As soon as Miliband resigned he was writing in the Observer, attributing Labour`s defeat to the usual  causes, behind what Seumas Milne calls "a Blairite agenda"(This New Labour revival could end with a party split,21/05/15).The last things the Labour party needs right now are candidates who lack the bottle to accept the fact that many of Miliband`s more radical policies were popular with the general public!

Delusional Blairites and Kettle`s Tories

Seumas Milne`s evaluation cannot be faulted; the "delusional" Blairites blame Labour`s defeat on the abandonment of "aspiration and middle England", and its "spiteful" proposal to " tax the wealth creators" (The return of the Blairites is the last thing Labour needs,14/05/15). They clearly expect the party to believe that people on above average incomes, from around £30,000 to £60,000, could not bring themselves to vote Labour because, when their incomes miraculously treble, quadruple or more in the future, they would have to pay 5% extra tax on all the money earned over £150,000. Someone appears to be forgetting that the average income in the UK is £25,000 approximately, and that 44% of all adults do not earn sufficiently high wages to pay any income tax at all. 

     Perhaps small business owners, earning two, three or four times the average, did not think having to pay reduced business rates, as Miliband proposed, would benefit them sufficiently, or that Labour going after tax avoiding companies, which undercut smaller rivals` prices,and put many out of business, was sensible policy? There will always be those, of course, who feel having to pay an increased minimum wage is unfair, and that supplementing very low wages from the taxpayers is fine, but would such people vote anything other than Tory anyway? Only if the Labour party adopted such so-called "pro-business" policies like the Tories have done, as ignoring tax avoidance and cutting the staff meant to prevent it, ensuring firms paying less than the legal minimum get off with small fines, doing nothing to prevent the exploitation of tenants by Rachman-like private landlords, and awarding government contracts to firms best known for their inefficiency and dubious tax policies, rather than their competence and ethics, could it attract such votes away from the Tories.

 Labour did nor haemorrhage votes to Ukip, and the more radical SNP and Green parties, because its policies were too far to the left, and Labour clearly needs a leadership candidate with the bottle to say so.

Maybe I am one who fits Martin Kettle`s description, but is my view of the Tories really "naive"? (The Tories fooled us all. We must study how they did it,15/05/15) Tory voters may, indeed, see their party as "competent and reliable", but didn`t their incompetent economic policy of austerity not only delay any economic recovery by at least three years, but also fail to meet targets they set themselves on deficit reduction, whilst breaking electoral promises on VAT, and NHS topdown reorganisation? "Realistic" suggests knowing what is actually possible, but pledges to take government spending to levels last seen in the 1930s would entail returning, in effect, to a 19th century system of laissez-faire.

    "Prudent" would appear inaccurate, in view of the £375bn created by quantitative easing and given to the banks, whilst "generous" can only be viewed as precise when thinking of tax reductions for the very rich. "Tolerant" is certainly true when applied to tax avoidance and evasion, and "decent" is not the epithet that springs immediately to mind when thinking of the "bedroom tax" and welfare cuts for the most vulnerable. As for the Tories being "patriotic", many would consider this suitable but only as long as it applied to England rather than the UK.

     As Kettle says, none of these qualities are "objectionable"; the trouble is they do not accurately describe the Tory party. By all means ask "why the Tories succeeded", but answers might still go back to the opposition`s campaign.