The New Economics Foundation has a new report out this morning on the impact of the Covid crisis on income and wealth using modelling originally created by Howard Reed.
The report is well worth reading, I am borrowing the charts to emphasise the message. First, this is what justifies all I am doing on taxing wealth:
The chart is so clear as to who has benefited from this crisis that nothing much else needs to be said about the bias in policy that led to this outcome.
But, that does of course translate into regional disparities:
Is it really any surprise to anyone that the south, and London in particular, have done best?
That there were losers in society is unsurprising as well, and given that we have a Conservative government in power who those losers are is as predictable:
It is not just those without work, though. No Tory policy would be complete unless single parents were picked upon:
As far as I'm concerned, the relatively small rates of change for single pensioners seen in this example is a control to demonstrate that it is definitely single parenthood that has been used as the basis of discrimination.
We are so very, very far from levelling up when this Tory government has done its level best to make the UK a more unequal place.
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More unequal definitely but also, more hateful, with the hate steered cleverly towards each other in many cases.
Stunningly illustrative graphics, Richard, with only your very few words necessary to force home their significance, and the obvious conclusion, of course. Truly shocking!
But what should we expect? Anyone with any knowledge of the ideals and beliefs of Tories like Johnson and those he surrounds himself with (and perhaps all Tories), has known from the outset that the whole ‘leveling up’ agenda is simply a slogan at best, or in Johnson’s mouth a lie. There’s little or no substance, and what there is – or is claimed – is nothing more than what would have been delivered by a hundred other policies the Tories have taken a wreaking ball to over the past decade.
What’s for sure is that we’ll hit the run up to the next election with nothing substantive in the way of ‘leveling up’, which is going to make life pretty uncomfortable for all those ‘red wall’ Tory MPs, no doubt left to pin their survival on a pre-election tax cut(s) from Sunak, or whoever his successor is at No.11.
But back to the graphics. Some incredibly valuable material here for Labour. Sadly, something tells me little if any of it will be used, but as always I’ll try to remain hopeful.
I know Rachel Reeves get this stuff, in the sense it arrives in her inbox
She follows me on Twitter
I can live in hope
I think that this comment by Bill Mitchell:
“Until the British Labour Party breaks out of this mindset – that somehow they have to appease the business lobby, and, specifically, the financial gambling sector, they will come up with wrong-headed policies and risk electoral defeat.”
says a lot about current Labour thinking. it can be found at the end of this:
http://bilbo.economicoutlook.net/blog/?p=48743
Shocking. And yet very few people in England seem to care as we are throttled financially, the opportunity for many to get out of a rut – vanishing.
What I think would helpful, Richard, is a further explanation of precisely how the current method of QE directly finances wealth disparities. I do get it, but I would still struggle to explain it to a non-believer! It seems to me a pivotal issue and the sheer madness of it helps to sell the case politically for wealth taxes. As you know, Starmer and therefore the so called Opposition has FORMALLY ruled out wealth taxes, so there is much to do here.
I am working on this, quite oddly….
A significant amount of QE is replacing money that the banks have effectively created, then placed on a bonfire and burnt. It is not creating extra money, because the money it replaces is gone. QE becomes a problem when it is used as an excuse to divert Government-created money from useful purposes. Is it still true that banks and private debt create more Government-backed £s that the Government?
I am not sure that I entirely agree with your argument. The reality is that bank loans were repaid and new ones did not replace them and so money supply was required which is the reason why QE was required to maintain solvency. That is a little different from your argument.
In principle banks and private debt to create more money than the government
Richard, if you put your accountant’s hat on, the banks create Government-backed £s to make the loan and cancel them when the loan is repaid. But this means that the interest on the loan must come from Government-created £s and part of that interest is insurance against loans that fail. Some of that Government-created money from the failed loan may make its way into the economy indirectly, so that it will have achieved its purpose (via fast cars and fine dining?). But some £s are nowhere to be seen. I argue that they no longer exist.
BTW
(a) Great picture=1000 words article
(b) So, Professor Murphy, what mark would you give the student essay on MMT by Satyajit Das?
I think you are getting confused although I cannot really follow your logic – or your double entry
That article was a fail
Shock state…
The social care sector,especially the big companies know how to force down further already low
incomes. Social care sector is not capable of reform – certainly not in England. Maybe Scotland – though less likely with this SNP.
Privatisation of social care in England and Scotland began in the 1990s. The effects have been to degrade care quality and an unsustainable business model. One in five care homes in England provides care that is inadequate or needs to improve. Research has found that the highest profit care homes provide the least quality care.
Austerity policy sharply reduced the money going to English public authorities to fund care. Thus, austerity also reduced the block grant to Scotland. The result is that in the UK privately run care homes provide 84% of care. Local authorities use bulk purchasing power to drive down costs for care they purchase from a private company. Private payers subsidise the state. Some private care providers run at a loss or have negative net worth. 70% have high levels of debt.
Recruitment and retention of staff has long been a problem in the care sector of the UK. The greatest cost is staff. To reduce costs staff have been given more patients per person to care for. Conditions are reduced by restricting annual leave, removing sick pay, removing paid breaks and moving to unpaid, online training. Staff turnover (pre-pandemic) is 39.5%. In 2015, the Resolution Foundation said some care staff were paid in breach of statutory minimum wage conditions. They were unpaid for working time between domiciliary visits and for time being on call. The total lost in a year was £130 million and the average loss to the person was £815 per year.
Among the largest care companies £13.35 of every £100 of income goes to profit before tax, rent payments, directors’ pay, and debt interest. For the small to medium size care homes the figure is £7.07. Large amounts of rent are paid by big care providers to related companies that are offshore and pay no tax. Excessively high rents paid to related companies is a means of extracting profit.
Most of the debt owed by the five largest care providers is to related companies and is at a high rate of interest. Interest rates vary between 7% and 16%, much higher than if borrowing from banks. Debt repayment seems to be another way of extracting profit.
Some large care companies operate a sale and lease back arrangement. The care home is sold to a property company which rents it back to the operating company. The operating company then has limited or no resources to meet any liability claims arising from the quality of care provided.
Better care is provided in smaller homes,10 to 50 beds. Economy of scale favours big care homes. How will Scotland develop a social care plan? Can it be made free from the knock- on effects of UK policy in England?
“Social care sector is not capable of reform”
I am not sure that I agree with that although I get the point that any reform required would be radical
The story they tell is one of the economic impact of political choices made over the last forty years and accelerated since 2010.
Our Government and their allies in the media seem to suggest these outcomes are somehow the natural order of things and engender a feeling somewhere between helplessness and inevitability. The upshot, is that rich and poor, in accepting this state of affairs, either congratulate themselves for their wealth or blame themselves for their poverty.
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