Wednesday, 28 May 2014

Why I wont be signing Labour's contract...

Labour recently released a contract of what they will do in power immediately once they are in power, words taken directly from their statement, and my responses:

  1. Freeze gas and electricity bills until 2017 and reform the energy market

    I do like the irony of the former Energy Secretary leading with this, as if his three years in the post weren't sufficient for reform... Obviously energy bills need to come down - or at least stop increasing so rapidly.  The irresponsibleness of this though is the prospect of frozen bills for 20 months will lead to companies increasing their price just before the next elections - meaning people are worse off to begin with,  In addition a freeze on bills could easily lead to a freeze in investment which is needed. 
  2. Get 200,000 homes built a year by 2020

    Unfortunately home building is a slow process so it will be 2016/17 before we're seeing the full impact of the coalition on the number of homes being built.  If Labour do get the figure up to 200,000 that is very admirable (although they set a target of 240,000 back in 2007 and didn't get close - I will blame the credit crunch for that one though).  Last year more homes were started (122,590) than in anyn year since 2007, so this is moving in the right direction.  There is still a long way to go - if Labour get in I hope they succeed with this.
  3. Stop families that rent being ripped off and help them plan for the future with new long term predictable tenancies

    I find this a little patronising but I can see the admirable aim.  I wonder if this is the correct way to go about it.  I do like the idea of letting fees being scrapped for tenants - although I'm sure then letting agents will want to cover this loss of income so will push the cost on to the lessor who'll want to recover this with higher rent.  This is probably preferable though than to have to pay out up front for fees.

    I am in favour of longer term contracts (as long as the tenant is free to request a shorter term) as long as any rent changes are clearly highlighted in the contract.  The problem with a longer term contract is that there would usually be steeper penalties for someone wishing to break the contract (particularly the tenant), this would also be a concern.

  4. Cut income tax for hardworking people through a lower 10p starting tax rate and introduce a 50p top rate of tax as we pay off the deficit in a fair way.

    First of NO! Just NO!  Labour please go back and read that sentence, correcting it for something that can actually be done.  A deficit is not the same as debt!!!  In this country we currently are running a deficit due to spending more than is being received in taxes, this in turn increases our total level of debt.  A deficit is not something that can be paid off - it can be reduced until we reach a surplus, but we wont have paid it back just because the books become balanced!  I don't think in my lifetime we'll see the debt reduced at all - yes I expect the odd year of a surplus, but it will be a drop in the ocean compared with the level of debt (currently nearly £1.375 TRILLION) which obviously we finance resulting in money being spent on interest payments rather than on other things like schools and healthcare... anyway back to the actual point...

    During this Parliament the Personal Allowance has already increased to £10,000, which has massively reduced the amount of tax paid by the low paid.  Introducing a 10p rate of tax is not as progressive as increasing the allowance before people pay any tax (even if both thresholds were adjusted so the same amount of tax was being paid by a person in the 20% tax band, this is because those who are only just into the tax paying threshold will be paying 10p rather than 0p).  I realise he's trying to differentiate from the coalition and the Liberal Democrat's fantastic work in this area but it doesn't make this policy good.  (I wrote more about the 10p tax rate here - I actually do like a 10p rate, but not at the expense of an increased PA)

    Regarding the 50p rate, I am in favour as long as it increases tax revenues (and isn't just a populist measure to be seen to be effectively punishing people for being rich).  Unfortunately the richest in our society are also the ones able to obtain the best financial advice which is probably why when the 50p rate was introduced late in the last Labour Government's tenure we saw income declared to the tax man fall among those who were now eligible for this tax.
  5. Ban Exploitative zero-hour contracts

    I am just against this on pure principle, again I find it patronising that Labour feel that zero-hour contracts don't work for anyone.  I'm sure there are many cases where they work for both the employee and the employer, Only 27% of those on a zero-hour contract state that they are dissatisfied with not having a minimum number of hours in their contracts.  Just because an employee is contracted doesn't always mean that the employee has to accept the work, with only 15% of employers saying that it is always mandatory, and 80% of employees saying that they aren't penalised for not working.  If Labour/Ed really feel strongly about these being exploitative then I personally would reform them in order to say that someone should only have to be available to work for the number of hours on their contract - which means for a zero hour contract there'd be no requirement from either the employer or the employee allowing flexibility on both parts.
  6. Make work pay by strengthening the Minimum Wage and providing tax breaks to firms that boost pay through the Living Wage

    The Lib Dem's current policy of linking the Minimum Wage to the personal allowance would help to strengthen it.  In order for the boosting pay to work the tax breaks would have to be sufficient enough that it is more beneficial for the business, which could be rather costly indeed.

  7. Back small businesses by cutting business rates and reforming the banks

    Business rates fine (assuming it's just for small businesses), I'd like to see them all revalued though since I believe it's still based on data from 1990 - i.e. 24 years ago!  Not sure what specific banking reform we are supposed to be expecting here - particularly vague promise.
  8. Help working parents with 25 hours of free childcare for three- and four- year olds

    Can't argue with this promise, the Liberal Democrats/Coalition have already made childcare effectively tax free as well as increasing the number of free hours for 3/4 year olds to 15 per week, but obviously more can be done, and should be done as it increases the participation of women in the workforce.
  9. Tackle the abuse of migrant labour to undercut wages by banning recruitment agencies that only hire foreign workers and pressing for stronger controls in Europe.

    I know there have been instances of jobs only advertised in Polish, but I haven't heard of many cases.  Without knowing how much of an issue this is (as it doesn't appear prevalent in my area) I can't really comment, but the fact it is in here just sounds like pandering to the UKIP crowd.  I worry that it's stirring up even more xenophobia.  
  10. Back the next generation with a job guarantee for the young unemployed and more apprenticeships.

    I don't think anyone can argue with the aim of getting more people into work, and I whole heartedly agree that apprenticeships are good - which is why I'm pleased that there were around 510,000 starters on apprenticeship courses in 2012/13 compared with just 279,000 in 2009/10.  I know from my personal experience that the government schemes are helping as my employer is looking to take on an apprentice starting in the 2014/15 academic year.

    The jobs guarantee however worries me.  It's all about how these jobs are guaranteed - i.e. what the jobs are and how the arose.  For instance, ensuring that someone who has been unemployed for 2 years can have 6 months stacking shelves in say Tesco, means that Tesco will need an incentive to take them on, replacing a job that would have already existed.  This means that a Labour government would therefore end up subsidising Tesco - providing them with cheaper employment rather than giving the job to someone else who's currently say short-term, meaning that these people will now be claiming benefits.  If on the other hand the jobs are created as public programmes then this might work - although would be costly. 

So there you have what Labour promise to do, my thoughts on each issue.  As much as I'd like to think otherwise I'm sure they'll win the next election - if they don't (considering the fall off in the left vote from the Lib Dems and the split in the right vote between Tories and UKIP) then Labour will have had a disastrous campaign.  

Overall it seems very populist with a lot of give-aways - I understand these are their tempters/hooks to try and reel in voters but I have to wonder how they can afford this whilst "paying off the deficit" as they put it since very few if any of these will increase revenue.

Lets see how they do with these in Government, assuming Ed doesn't mess it up. 

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