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Why is the bailout so heavily biased to the wealthiest in the UK?

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I have already mentioned the work Ben Wray is doing as editor of the Source Direct email newsletter from the Commonweal thinktank in Scotland, which I think is outstanding. This morning's is a classic and I am going to share it in full to promote his work and encourage people to subscribe. It's worth it, even if you have no interest in the Scottish dimension:

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Let's develop a little scorecard on where we are with the economic measures in the UK and Scotland to cope with our new pandemic-world.

For corporations, we have 80 per cent of the wages they owe workers affected by Covid-19 covered by government. That's a significant drop in their costs, overnight. For banks, we have unlimited access to emergency liquidity, as well as £330 billion in state-guarantees for loans. Almost unlimited protection from losses for finance. For buy-to-let landlords and home-owners, mortgage payment holidays are available to apply for. That's not all that generous, since the interest still accumulates on those loans, but those bankers must be paid! Finally, landlords in Scotland have also been given extra back-up by the Scottish Government, who agreed with the Scottish Tories to introduce a special interest-free loan for them, so should they struggle to collect rent in coming months, they can access that fund.

Now let's look at the other side of the equation. If you are an employee affected by Coronavirus, you get 80 per cent of your wages covered by government, but that could mean a 20 per cent wage-cut, with many companies saying they will pay workers the payment protection scheme cash and no more. Also, there is no agreement to stop redundancies in return for the huge corporate bailout. Nearly one million people have applied for Universal Credit in two weeks, suggesting workers are being laid off at an alarming rate. UC is being topped up by an extra £1,040 per year for new applicants, but unemployment will remain a sharp financial fall for most. And if you are still on one of the legacy benefits - Jobseekers' Allowance, Income Support and Employment Support Allowance - shockingly the new UC top-up does not apply to you. The self-employed are getting a sizeable bailout, but not until June, and if you happen to be a gig economy contractor for the likes of Uber or Deliveroo and have just seen demand for your pay-per-drop/ride services drop like a stone in the lockdown, then you have to just suck it up.

For all workers, there is no obvious fall in household costs. The rent payments continue - there's no tenant bailout here. No one can be evicted for six months in Scotland, but they can be evicted at the end of the notice-to-quit period, meaning if they don't pay rent now they will have the threat of eviction hanging over them when the six months is up. Debt repayments continue as normal, as do taxes like the Council Tax, in which debts (which incur 10 per cent interest) were already at peak levels in Scotland before this crisis began. It is possible that you can get support for your electricity bills if you are self-isolating, but the government advice is vague: payments can be "reassessed, reduced or paused".

So let's tally it up: there's an employer bailout, but no employee job guarantee. Creditors get unlimited protection, but debtors keep paying. There's a landlord fund, but no tenant bailout or fund. That looks an awfully lot like a one-sided version of 'all in it together' to me. As Laurie Macfarlane explains in a superb piece on the economics of the government's response: "What is being presented as a bailout for working people is, in practice, a bailout for the wealthy".

He explains: "The income streams for the ownership class – rents, interest and corporate income – are protected. But crucially, because the discretionary spending of the rich has collapsed (they are no longer going to nice restaurants or spending money on holidays), they will now have much more money left over each month. So while the bank balances of working people will shrink over the coming months, the bank balances of the asset owning rich will increase dramatically."

This will not do. We do not enter our new pandemic age out of a vacuum. A study of wealth inequality in the two years prior to Covid-19 found that the wealth of the UK's richest 10 per cent had risen four times faster than the poorest 10 per cent in just those 24 months. The ONS study found the poorest 10 per cent had debts three times greater than their assets, while the richest 10 per cent had accrued wealth 35 times larger than their total debts. What group really needs a bailout now, and which doesn't? We're still waiting on that rare thing - the people's bailout.

Ben Wray, Source Direct

Writing off NHS debt of £13.4 billion is a charade. What is required instead is the renationalisation of the NHS: nothing less will do

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As the Guardian has noted this afternoon:

To help NHS trusts deliver what’s needed, Hancock has written off £13.4bn of historic NHS debt.

He said at this afternoon's press conference:

This landmark step will not only put the NHS in a stronger position to respond to the pandemic, but it will ensure our NHS has stronger foundations for the future too.

Let me put this in context.

First, the NHS had no debt at all. It was owed from NHS agencies, owned by the government to the government itself. That's not debt: that's just book-keeping.

Second, that book-keeping was created to, in particular, reinforce the internal market reforms created by Andrew Lansley in 2012, which were the undoubted intended precursor for NHS privatisation. That process was massively bureaucratic, and so costly. It diverted massive effort into corporate management, PR, and accounting when none of that was needed: no one needed to sell the NHS to anyone. But worse, it dismantled the National element of the NHS.

Third, that debt was designed to be penal: an NHS trust that ran a deficit was penalised by expecting it to recover that deficit the following year, and if it failed, then the penalties were compounded. As such many of the Trusts in the most vulnerable areas of the UK were heavily penalised by this process which resulted in significant increases in health inequality as a consequence.

Fourth, writing this debt off does not mean that these inequalities are now being addressed.

But most importantly, if the debt is written off because that provides the NHS with stronger foundations then the next logical step is to scrap the whole NHS internal market and as a result rebuild both the idea of a national service (and that does mean Wales, Scotland and Northern Ireland do, of course, keep their services) and the idea that care must be integrated, so that GPs, hospitals, ambulance services, mental health care trusts and others are no longer in competition with each other.

In other words, NHS debt write off is not enough now: the renationalisation of the NHS is what is required now. Nothing less will do.

Dogma is now a threat to our food supplies

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Ben Wray edits Source, which is the daily newsletter from the Commonweal think tank in Scotland. It does not matter, I suggest, whether you are much interested in Scottish affairs or not when considering subscribing to this free newsletter. I would suggest Ben’s commentary from a left of centre perspective makes it a daily worthwhile read for his comments alone. This is from today’s newsletter:

UK growers are utterly reliant on low-paid, seasonal foreign labour, mainly Eastern European, to pick the fruit and vegetables that is then delivered to market. Suddenly there is talk of special chartered flight for the fruit-pickers, the same low-cost immigrant labour that the right-wing press has derided for years. James Porter, a farmer in Angus, has told the BBC he needs to find hundreds of strawberry pickers within weeks or else his fruit will rot. He said normally 200 workers would travel from Eastern Europe, and it's interesting that he showers them with praise: his "top pickers" are "very skilful", productivity levels which will be next to impossible to find elsewhere. The National Farmers Union are appealing for students and the unemployed to head out to farms and pick, or else they "face ruin".

I am sure if a decent wage is paid for this skilled work then they will find the labour force. Food is just another case of our globalisation model not valuing its workers and not valuing resilience, and those chickens are now coming home to roost. Just one month ago today, a top advisor to the Treasury, Dr Tim Leunig, is reported to have said in high-level meetings that the UK's food sector was "not critically important", and agriculture and fisheries "certainly isn't". The UK could instead follow the Singapore model, of being "rich without having its own agriculture sector". Those comments - made in the context of post-Brexit trade deals - now look foolish to the point of madness. The world of pointing to a sector's share of national GDP to decipher how "important" it is must surely be over.

The dogmas of the neoliberal age are now extremely dangerous, to the point that Britain could quickly become a land of food waste and food shortages, all at the same time.

For those in Scotland I have just done a pre-record for John Beattie’s programme this evening

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The pre-record was ten minutes, which given how I feel was some effort.

The subject was whether or not we will have a crash.

My answer is predictable, I suspect, presuming the current state of government intervention.

And I ran through the solutions we need from the government if this is to be avoided. Readers here can guess what they might be.

I hope it gets out.

The John Beattie programme is on BBC Scotland.

Also available on BBC Sounds.

There are better forms of democracy for the UK

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I felt that this report from the Electoral Reform Society (I am a member), issued this morning, was worth sharing in full since many here seem interested in this issue:

A new report from the UK’s leading pro-democracy group lays bare the ‘crisis of legitimacy’ faced by parliament, following an election that saw voters marginalised on an extraordinary scale.

The Electoral Reform Society’s comprehensive analysis of December’s general election, titled Voters Left Voiceless, reveals (full figures/graphs by region and by party are in the report):

  • Nearly one in three voters (32%) ‘held their nose’ and opted for a so-called lesser evil in December’s election, according to previously unreleased YouGov polling for the ERS (regional figures and by party are available). Similar analysis for the ERS in 2017 suggested around 20% planned to vote tactically then [1].
  • Over two thirds  (71%) – or 22.6 million - votes were ignored – i.e. they weren’t decisive to the local result. This is up from the 68% of votes ignored in the 2017 election [2]. In seven constituencies, more than 90% of the votes were ignored (regional figures and by party are available). Of the 32 million votes cast, only 9.4 million votes (29% of the total) were ‘decisive’ in securing a candidate’s election. (Full tables at bottom of press release). And 35% of MPs were elected without a majority of support (229 out of 650).
  • Warped Westminster: This was a ‘grossly disproportionate’ election. Voters in Scotland and the South West of England were handed the most disproportionate results, closely followed by the South East. Around a third of seats in Scotland, the South West, the South East and East of England were ‘unearned’ in proportional terms. The scale of disproportionality was a DV score of 16, far higher  than the 2017 election score of 9 and the 5-8 score norm for elections with PR systems.
  • Disunited Kingdom: Westminster’s voting system is leading to ‘absurd’ inequalities in representation. For example, in Scotland a substantial Conservative vote share (25%) yielded just six seats (10%), while over 90% of Scottish Labour votes went unrepresented. And there are warning signs for Labour in Wales under First Past the Post (with a drop in seats higher than their vote fell by).
  • How it could have been: The ERS have modelled the results under different voting systems, including the Additional Member System (used for the Welsh Senedd and the Scottish Parliament) and the Single Transferable Vote (used for elections in the Republic of Ireland, Northern Ireland and Scottish locals), based on previously unreleased YouGov polling (see table in notes)

Dr Jess Garland, Director of Research and Policy at the Electoral Reform Society, said:

“It is no wonder trust in politics is at rock bottom – the vast majority of people’s votes are being systematically ignored by a voting system that is morally and politically bankrupt.

“Westminster cannot go on like this – all parties must get behind reform of this broken system at long last.

“It’s time Westminster caught up with the rest of the UK and ensured seats in parliament reflect how people actually want to vote. No more ‘holding your nose’ tactical votes, ignored votes and warped results. Voters are tired of feeling voiceless – and it doesn’t have to be this way.

“This research exposes the scale of disenfranchisement that is happening under one-party-takes-all voting. But we can build a fairer politics, where everyone is heard and your vote counts no matter where you are. It’s time for proportional representation and real democracy at Westminster.”

The ERS back the Single Transferable Vote [3], used for elections in Ireland and local councils in Scotland.

Unrepresented voters

Voters in Scotland and Northern Ireland fare particularly badly in terms of unrepresented voters, with the choices of 54 percent (Scotland) and 55 percent (NI) of voters going to non-elected candidates. That means that over half of voters there don’t have an MP they voted for, in contrast to proportional systems.

Overall, across the UK, over half (51%) of Labour voters saw their votes go unrepresented – i.e. to non-elected candidates – compared to just under a quarter (24%) of Conservative voters.

The Conservative Party was highly over-represented in the South East (88% of seats on 54% of the votes in this region), while Labour was over-represented in the North East (66% of the seats for 43% of the votes) – but both parties lost out in other regions, leading to a ‘warped political map’. For example, in the East of England, where Labour received just under 750,000 votes, 84 percent of their voters were unrepresented, while in London, over half (55%) of Conservative voters went unrepresented.

UK-wide, 92 percent of Liberal Democrat voters went unrepresented, 96 percent of 865,697 Green Party voters, and all of the Brexit Party’s 644,255 voters.

ERS analysis also reveals the startling difference in votes needed per party per seat:

  • SNP - 25,882
  • Conservatives - 38,264
  • Labour - 50,835
  • Lib Dem - 336,038
  • Green - 856,000

Shoe-in seats vs electoral deserts

BMG polling for the ERS revealed that those living in seats classed as marginal received far more election literature than those seats classed as safe for one party or another. Just one in four people (25%) in safe seats reported receiving four or more election leaflets or other pieces of communication through their door compared to almost half (46%) of those in potential swing seats. Nearly three times as many people in potential swing seats (14%) reported receiving 10 or more leaflets or other pieces of communication, compared to just five percent of those in safe seats.

Alternatives

Using exclusive (as yet unreleased) YouGov polling immediately after the election, the ERS have projected the results under different electoral systems – with all three systems more fairly reflecting how voters wanted to be represented.

My conclusion? There are better forms of democracy available to the UK. The trouble is, at least two parties do not seem to want them. 

England’s declining life expectancy is clear indication of a chronic political malaise

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As The Guardian has noted this morning:

Life expectancy has stalled for the first time in more than 100 years and even reversed for the most deprived women in society, according to a landmark review which shows the gap in health inequalities is yawning even wider than it did a decade ago, in large part due to the impact of cuts linked to the government’s austerity policies.

This is not the first time the link between austerity and life expectancy has been made, of course. Prof Danny Dorling’s work suggested that more than 100,000 deaths per annum might be linked to the impact of austerity in recent years. But as the Guardian also notes:

Sir Michael Marmot’s review, 10 years after he warned that growing inequalities in society would lead to worse health, reveals a shocking picture across England, which he says is no different to the rest of the UK and could have been prevented.

And it is not just deaths that matter:

The government has not taken the opportunity to improve people’s lives and life chances over the last 10 years, the report says. Real cuts to people’s incomes are damaging the nation’s health for the long term. Not only are lifespans stalling, but people are living for more years in poor health.

I think the following quotes from Sir Michael also worth noting:

“This damage to the nation’s health need not have happened. It is shocking.”

“The UK has been seen as a world leader in identifying and addressing health inequalities but something dramatic is happening. This report is concerned with England, but in Scotland, Wales and Northern Ireland the damage to health and wellbeing is similarly unprecedented.

“Austerity has taken a significant toll on equity and health, and it is likely to continue to do so. If you ask me if that is the reason for the worsening health picture, I’d say it is highly likely that is responsible for the life expectancy flat-lining, people’s health deteriorating and the widening of health inequalities.

“Poverty has a grip on our nation’s health – it limits the options families have available to live a healthy life. Government health policies that focus on individual behaviours are not effective. Something has gone badly wrong.”

I have blogged throughout the austerity years and made the NHS such an issue at one point that I think I was noted as the fourth most active social media campaigner against the 2012 NHS reforms that increased the impact of market forces upon it.

Those reforms have failed. A healthcare system that was intended to, and did, deliver worse health outcomes in a political environment of hostility towards large parts of the UK population is indicative of a chronic political malaise within government during this period.

Of course Brexit was the logical consequence.

And now populism builds on that to make people believe that their condition is the fault of ‘others’ - most especially in and from the EU when it is in fact entirely explained by Conservative economic policy of the last decade.

Labour, meanwhile, is fighting itself.

I hate to use the word revolution: it has connotations I do not like in terms of potential harms done. But we need nothing less now. The culture of obsequiousness to finance that has inculcated this country for four decades needs to be swept away. People are dying because of it. That has to end. We must have the public services we need. And we can afford them - because with the right policies there are the people to deliver them and no shortage of funds.

But is there, even now, the will?

Why is the UK still playing by EU procurement rules that no one else seems to think apply to them?

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For the second time in a few days I want to share an editorial by Bew Wray from Common A.M., which is published by Common Scot, which in turn is linked to Common Weal. As Ben says this morning:

The extent of how clueless Ministers are is frightening. In the House of Commons on Wednesday, Scottish Secretary Alister Jack was asked about the awarding of a major contract at the £2 billon Neart na Gaoithe Offshore Wind Farm off the coast of Fife to Indonesia, while the manufacturing workers at nearby BiFab missed out. The contract could have created a 1,000 jobs at the Fife yards, instead the manufacturing of the sleeves will travel across half the globe, generating significant carbon emissions from the shipping alone. Jack blithely responded that it is just "the market economy at work". That dogma doesn't stand up to an ounce of scrutiny. The Scottish Government licensed the offshore wind farm. The UK Government set the basis for renewables subsidies through Contracts for Difference. The EU restricted what subsidies are possible through public procurement and state aid rules. The company which won the contract, EDF Renewables, is owned by the French state. The Indonesian firm which won the sub-contract off EDF, Saipem, is owned by Italian conglomerate ENI, and benefits from operating in an 'enterprise zone' which offers special tax, regulation and infrastructure incentives, and with few workers rights. The state has had a role to play in shaping this 'market' every step of the way.

Trade unions are rightly angry about Jack's remark. The promised green jobs boom has not come because the sector is dominated by multinationals (some owned by other country's states) which know how to rig public procurement processes and state aid rules to maximise their profits. Meanwhile, the local supply chains we need for the zero-carbon transition are undermined, and the farce of offshoring contracts around the world to build a windfarm in Scotland in the middle of a Climate Emergency continues. There is a small window of opportunity to rewrite the rules on procurement and state aid as Britain exits the EU in such a way that it is fit for the zero-carbon transition, but with Minister's like Jack in charge talking nonsense about an imaginary free-market, there's little hope that anything other than corporate interest will win out.

What's really quite bizarre is that despite leaving the EU the UK is still determinedly playing by rules that no one else seems to think apply to them when it comes to procurement, and UKjopbs losses are happening as a result.

The big question is, why is that?

How Johnson’s bridge to Ireland would work – for the benefit of the City of London

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There is much discussion in the media on Johnson's proposed bridge to Ireland. The focus is on whether it's affordable. Or feasible. Or will achieve any economic objectives. And on how it might only unite two parts of the UK that are likely to leave it.

All of these issues are important. They need to be debated. But I suggest that this is not why Johnson is so keen on the bridge. Last year I published an extract from a report on the Finance Curse by John Christensen and Nick Shaxson. In it they had a chart showing how a Scottish police academy was funded. And what that showed was that this apparently local facility was, as a result of the funding arrangements, guaranteed to suck money out of the Scottish economy and towards the City of London and its tax haven branch offices. That is because of the ownership and financing structure, which looked like this:

Of course the bridge financing will be different.

But not that different.

And you can be sure that the City of London will have a bonanza at Scotland's expense.

Which is the best reason for not building this bridge.

Scotland’s progressives have to win or its curtains for the SNP – however unlikely that looks to be right now

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My friend Angus Brendan MacNeil, who is SNP MP for the Na h-Eileanan an Iar (the Western Isles) and chair of the House of Commons International Trade Committee, has had an article published by Politics Home that is going to open up debate in Scotland on the direction of independence campaigning. As Politics Home says of the piece :

In a direct challenge to the First Minister's authority, Angus MacNeil urged the Scottish Government to explore "all options" for securing independence, including holding a Catalonia-style wildcat poll on leaving the UK.

His dramatic intervention comes after Ms Sturgeon's latest request for the Scottish Parliament to have the legal power - known as a Section 30 order - to call a second ballot was rejected by Boris Johnson.

As they also note:

Speaking on Monday, the First Minister said she planned to continue pressing the case for "indyref2" with the Prime Minister, but said any route towards independence must be "legal and legitimate".

I am aware that Angus' view will not appeal to all in the SNP. Most especially it will not appeal to those around Nicola Sturgeon. Angus is breaking the almost unwritten rule of SNP politics of 'no dissent'. But there is dissent in the SNP now. And the dissent is over Sturgeon's view that the route to Scottish independence has to be along a path set by England.

I have already discussed the fact that this is not necessary.  Scotland can become independent, as a matter of fact, without English consent. International law says so. After all, if it did not almost no one would ever have achieved independence from English domination, from the USA onwards. In other words, Sturgeon is choosing a very narrow view of what legal means here. In effect she's defining it is as UK law when that is precisely what Scotland does not want to be bound by.

But there's another dimension to this as well. It's forgotten just how much Brexit changes this. I rather strongly suspect that Alex Salmond had no choice but go down the UK approved referendum route in 2014 precisely because the UK was then a member of the EU, and he knew that meant two things. The first was that the EU exists to support its existing members: all clubs do.  So they would not accept any Scottish departure from the UK without English / rUK consent. And so, secondly, they would not let Scotland back into the EU if they had left without that consent. So Salmond had to get a Westminster approved referendum.

But all that has changed. The UK is no longer in the EU. The EU is not worried about UK national unity anymore. It's simply not its issue. And some members are even quite seen to see it broken. In that case the EU will be more than happy to let Scotland back in now on the basis of international law, and that does not, as I have noted, require that the rest of the UK approve the departure. 

Put simply then, what constrained Salmond to require Westminster approval should no longer constrain Sturgeon. She is simply wrong to say it does. All that was is no more in this context: everything has changed. Except, it seems, Nicola Sturgeon's view on seeking to please London.

This does not mean Scotland should be reckless. Far from it. Robin MacAlpine has set out an excellent logic for going forward. But as Angus MacNeil has said:

If we discount doing nothing bar shouting how unfair it all is, all the options open have surely to be considered.

I sense a bumpy ride for Scottish independence for all sorts of reasons over coming months. But this divide is the biggest one of all. And the split seems to be between those very comfortable with governing from Holyrood, and wanting to stay in power there, and those who want to drive Scotland forward.

I suspect the progressives will win. The reason is easy to identify. All that splits the SNP from much of Labour is their promotion of independence. On policy, or at least rhetoric, they are remarkably alike. Labour has been wiped out in Scotland. The SNP has been ascendant. But the moment it forgets independence is its reason for being then it will go into decline. That is what those who are saying Sturgeon is failing them sense to be the case. And based on pure political analysis alone, it looks like they have to be right.

This one will run, and run.