Tax Credit

Interesting discussion on Newsnight about proposals to cut Working Families Tax Credit.

Interesting how Tories like Boris are using the (on the face of it) solid argument that it simply subsidises employers. I kind of see that argument but worry that all that would happen is more people would work less rather than working more because work won't pay enough. We'd end up with the same benefits bill but just paid to non-working people rather than working. This was the very reason Labour brought it in in the first place.

Of course this would be politically preferable to tackling pensioners' protection.

The cleanest answer would surely be to raise the Minimum Wage to a real liveable level. Again, ironically, there are signs that some Tories are beginning to come to this view as well. The risk is that some jobs would be lost. The next logical step then would be to give everyone a job and end the dole (like in socialist states like the Soviet Union).

Whatever the rights or wrongs of tax credits, fundamentally they are talking about another reduction in income for those who are among the poorest in society. Note that these aren't even the (practically non-existent) 'skivers' who the Tories like to bash so much - these are the 'strivers' they praise. £1400 per year out of the pockets of low-income families sounds fair, eh? Working tax credits subsidise low wages and there is no doubt that on the one hand, they make some jobs viable but then, on the other hand, they are a subsidy to big business who are able to pay less than they need to to some workers. Who thinks a reduction in tax credits will lead businesses to raise wages? Not this one. As usual, the right-wing ideologues think that reducing the income of poor families will "increase incentives to work", blithely ignoring the fact that real wages still haven't risen above pre-recession levels and extra work just isn't available or possible for many of those who will be hit.

An alternative would be to raise the minimum wage so that low-income workers get more in their pockets from the companies who employ them. Now, this will certainly lead to the loss of some jobs but then the balancing act is working out if the increase in the money in pockets of those still in employment will be of greater benefit to the economy than the loss of those jobs. A very difficult balance to strike, I expect, which is why nobody has managed to get it right.

However, instead of this, we will see the Tories quacking on about how companies should be paying the living wage which is all well and good, but history shows that most businesses aren't willing to pay this amount and which is barely sufficient in some areas of the country.

Interestingly enough, there is something called efficiency wage theory which posits that, for a number of reasons, employers get more from their workers when they pay them more generously. There is some evidence that this is the case. In the US, for example, Walmart raised wages for their workers in April and reports are that they have already begun to see the benefits:

http://thinkprogress.org/economy/2015/06/09/3667927/walmart-turnover/

Whether or not UK businesses (Asda, for example who are owned by Walmart) will begin to pay the living wage is a different matter. None of the big four supermarkets currently pay the living wage and they employ 900,000 between them. When their workers lose some tax credits, will they step up to fill the gap? Let's just say I don't have any confidence that they will.

http://metro.co.uk/2015/04/13/.....-1bn-a-year-5148380/

If you're a low-income worker and you voted for the Tories, well, let's just say Christmas is coming early this year and don't forget that you voted for it.

At the other end of the scale, I see that Osborne is set to sell off the rest of RBS at a loss of around £12 billion for the amount invested back when it was bailed out. You'll see figures of £7 billion losses quoted in the press, but this figure deducts £5 billion of fees paid to the government (for services received!) by the bank in recent years. Every other bank had to pay these fees as well so I'm not quite sure why this amount should be deducted from the loss which will be made on the sale of the shares? Why, it's almost as if they are trying to massage the figures to make them look better!

Now, Osborne's argument is that the sale now will provide the best likely return for the taxpayer as advice from the Rothschild investment bank indicates that they think the share valuation is unlikely to increase back to pre-crisis levels. However, as it stands, each increase in 50p per share would recoup £4.5 billion for the taxpayer so let's hope they are correct and it is valued accurately at present:

http://www.theguardian.com/bus.....-at-least-50p-longer

Obviously, this government has a great record at selling off public assets at a fair price. Remember the Royal Mail, sold off when it was highly-profitable and providing a great return to the government? Shares are a mere 56% higher 18 months later so clearly they weren't undervalued. Where's that eye-rolling smiley when you need it. Ah, here it is.

Now, who could have benefited from this massive undervaluation of one of our assets? Sure, quite a lot of comfortably-off individuals bought shares and will have made money from it (most of them probably voted Tory in thanks), but much of it was sold off to institutional investors. Here's an example of one of them:

http://politicalscrapbook.net/2014/04/osborne-best-mans-hedge-fund-made-36m-profit-on-royal-mail/

Oh, speaking of the Royal Mail, I see that we're selling off half of our remaining stake as well:

http://www.telegraph.co.uk/fin.....-Mail-overnight.html

Of course, this is going straight to institutional investors. No way for you or I to buy them from the government if we wanted to. What's the betting these shares will be sold off at a generous discount on the market rate as well?

Also, let's not forget that before the Royal Mail sell-off, the government took over the RM's pension liabilities! Privatising the assets, nationalising the debts as usual.

Let's keep an eye on the RBS shares over the next year or two to see whether they have been undervalued or not. Unless Osborne succeeds in crashing the economy (as seems to be his plan), I suspect they have been undervalued.

Typical Tory government. Putting the boot into the poorest in society whilst transferring even more wealth to the richest.

intercourse me Maringer, they used to call me cynical!

Love your critique btw, especially "Xmas coming early..." but you only got one tick for all that. Shows what an apathetic, apolitical bunch folk have become. Who'll win X Factor next year?

It does me good to vent my spleen a bit from time to time. The nonsensical shite this government is continuing to come up with beggars belief and it makes me angry to see Osborne spouting economically illiterate shite and continuing his ideologically-based plan to destroy everything achieved after the Second World War.

Still, at least his rich mates will be even richer.  

Quoted from jock dock tower

intercourse me Maringer, they used to call me cynical!

Love your critique btw, especially "Xmas coming early..." but you only got one tick for all that. Shows what an apathetic, apolitical bunch folk have become. Who'll win X Factor next year?

Impossible to say till the auditions.

Quoted from jock dock tower

intercourse me Maringer, they used to call me cynical!

Love your critique btw, especially "Xmas coming early..." but you only got one tick for all that. Shows what an apathetic, apolitical bunch folk have become. Who'll win X Factor next year?

One guaranteed winner, year after year, is Simon Cowell

Btw, the one tick was mine but pleased to see someone else appreciates Maringer's continued efforts to give us some balance

How utterly boring, 4 out of 5 posters more or less on the same page and the 5th didn't say owt on the subject. Where are all the Tories when you want a good argument?  

£1400 a year is a huge amount out of most people's pockets. Especially net. Not heard much from any of the Labour leadership candidates make much noise about it - but then maybe that's media (lack of) reporting.

Not much noise about the RBS and Royal Mail scandals either. If Gideon wanted to reduce the National Debt a good place to start would be to hold on to the shares a bit longer or at least slowly release them on to the market. intercourse Rothschilds! I bet they've got a stake in it like the banks who "advised" on the RM sale did.

I reckon there is something in that efficiency wage theory. The more you're paid the more you value it so the more you'll do. Plus there's the simple "they've been good to me so....". My employer demands a lot from me and I'm happy to do it, if they didn't pay me so well I may not be so compliant or I'd be down the road. Another example is that a lot of service companies in London now prefer to have full-time workers than part-time, even if it costs them relatively more per hour (higher ENI contributions and slightly hire pay rate) because the job then means more to the worker and will be more reliable.

Quoted from KingstonMariner

How utterly boring, 4 out of 5 posters more or less on the same page and the 5th didn't say owt on the subject. Where are all the Tories when you want a good argument?  

£1400 a year is a huge amount out of most people's pockets. Especially net. Not heard much from any of the Labour leadership candidates make much noise about it - but then maybe that's media (lack of) reporting.

Not much noise about the RBS and Royal Mail scandals either. If Gideon wanted to reduce the National Debt a good place to start would be to hold on to the shares a bit longer or at least slowly release them on to the market. intercourse Rothschilds! I bet they've got a stake in it like the banks who "advised" on the RM sale did.

I reckon there is something in that efficiency wage theory. The more you're paid the more you value it so the more you'll do. Plus there's the simple "they've been good to me so....". My employer demands a lot from me and I'm happy to do it, if they didn't pay me so well I may not be so compliant or I'd be down the road. Another example is that a lot of service companies in London now prefer to have full-time workers than part-time, even if it costs them relatively more per hour (higher ENI contributions and slightly hire pay rate) because the job then means more to the worker and will be more reliable.

If the "5th comment" mention was for my last post, I'd agree that it didn't add to the debate

I think that's merely because I'm just really disillusioned and disheartened from the Tory victory last month to have too much to say without depressing me further

To think that they are in power with a mere 24% of the electorate having voted for them actually makes me wonder about our so-called democracy...it's such a sad sad situation we find ourselves in

As to what goes on with family tax credits...I had enough of them with my last involvement a few years back, being made to pay back a substantial sum because they had messed up somewhere along the line with their awards isn't much fun. Not getting them in the first place if you're struggling financially is probably harder but who in government cares about individual domestic budgets?

No matter what we think or what we want for the country, the next five years whether it's to do with the public purse being tightened, educational "reform", healthcare choices etc., all I can see is that it's more or less going to be a stitch up by Cameron and Osborne with the general public just having to take the nasty medicine they'll be dishing out

Of the candidates that Labour have to offer as opposition, I suppose Andy Burnham would be my choice but is he a big enough hitter to threaten the malaise of the English electorate who for reasons beyond my comprehension, chose last month to give the Tories their chance to push on with their socially divisive agenda

The only consolation I can think of is that Cameron won't serve a third term...unless of course he goes back on his word should they succeed in the polls again in 2020

Ah! Make that 5 out of 5 posters.  There must be some Tories out there!

Quoted from KingstonMariner

Ah! Make that 5 out of 5 posters.  There must be some Tories out there!

There is one I know of but I don't think  Getyourfactsright   posts on here any longer...  

On this theme though I've just seen something very apt indeed


Two Tories talking at the bar in a country club

One says... I'm a Country Member

The other one says...Yes I remember!