Budget 2017: Social Care Forgotten

“Over a million of our elderly aren’t receiving the care they need and over £6 billion will have been cut from social care budgets by next March. I hope the honourable member begins to understand what it’s like to wait for social care stuck in a hospital bed, or for other people having to give up their work to care for them.”

Intemperate words from Jeremy Corbyn yesterday, bellowing across the dispatch box, in response to a budget that has been greeted with widespread disappointment and which made no mention of social care, despite the continuing crises in the system.

Days before the budget, 90 MPs, over a third of whom are Conservatives, wrote to the Prime Minister demanding cross-party action on social care, telling the PM that “the need for action is greater than ever.” Perhaps the plea did not find its way next door to number 11.

Repeated failures

None of the government’s half-hearted attempts to close the care-funding gap have been successful.

Early this year the Financial Standards Authority criticised the Better Care Fund in the harshest possible terms, saying that it had “failed to meet any of its objectives.” The Local Government Association recently said that the Fund “has lost credibility and is no longer fit for purpose.”

The Social Care Precept enabled local authorities to choose to raise council tax to help fund social care. It has been widely adopted by desperate councils. But because the precept depends on council tax, and therein property values, many decried it as benefiting poorer areas least, ironically those areas where local authority funded care is most necessary.

The chancellor would likely point to the £2 billion ring-fenced for social care in this year’s Spring Budget, to be spent over the next three years, some of which has already been allocated to councils. This, coupled with the Precept has seen social care funding rise by 3% this year, an increase of £556 million, the first year on year increase since 2009/10.

However, as funding is increasing so is demand, and the latter is still outstripping the former. By 2019-20, The King’s Fund estimates that social care will still face a funding gap of £2.5bn, despite these measures to increase funding. With a current average of 5,000 new requests for care every day in England, this is as daunting as it is understandable.

Councils on the brink

Separate research by the Local Government Association predicts that caring for the elderly, other vulnerable adults and children, will consume almost 60p out of every £1 of council tax by 2020, a 41p increase since 2010/11.

The LGA is sounding the alarm that the costs of social care are taking more and more money away from day-to-day services, such as repairing potholes, keeping streetlights on, parks clean and so on. Councils could be forced to ration essential services if the care-funding gap persists.

The way councils raise money is also undergoing a radical change. The largest source of central government funding; the Revenue Support Grant is being phased out. In return, councils will retain more of the money raised through business rates, from 50% in 2015 to a targeted 100% by 2020.

However, the changes to business rate retention were not included in the Queen’s speech, nor cited in the budget statement this week, leaving councils uncertain about how concrete this measure is and how they will be funding services in years to come.

Bigger thinking

Addressing the immediate crises in social care will require additional funding. However, the long-term solution for elderly social care provision in the UK requires deeper thinking. The endless, circular arguments about social care funding are reminiscent of many debates in our country when it comes to social services, where any form of insurance scheme is anathema.

One of the fundamental goods of the NHS is the ability to receive all manner of treatment without any form of point of use payment, this is a social service provided by general taxation, akin to policing, firefighting and national defence.

We could choose to fund social care through central taxation, as we do with the NHS. But can we honestly say with confidence that this would ensure sustainability and drive up outcomes long term? When answering this we should pay attention to the current crises faced by the NHS itself.

When it comes to social care, other options should at least be open to consideration. Our society and ways of life have changed. We all know that we are living longer and unlike in bygone eras, it is rare for elderly relatives to live with their sons and daughters. Because of these deep societal changes and others, we need to think rationally about the best way to fund social care, not with the sole aim of cutting costs, but to improve services, make the system sustainable and a guarantor of dignity and wellbeing in later life.

Another option to fund care services in the future is to move towards an insurance-based model. Take the example of the ultra-liberal, egalitarian Netherlands, where insurance schemes for social care, run by not for profit agencies, are compulsory. However, even systems like those in the Netherlands, which combine compulsory insurance and central taxation, are encountering their own funding shortfalls.

That familiar green glimmer on the horizon

Poor economic performance and the fact that care funding has already been increased – however lacklustre that increase has been – may have led the chancellor to believe he could ignore social care, as so many chancellors and minsters have in the past.

Phillip Hammond’s attitude may have been buoyed by the announcement that the long awaited green paper on care and support for older people will be published by summer 2018. Indeed the timing of the announcement, two days before the budget, was probably a pre-emptive defensive manoeuvre. For some time now, the green paper has been the go-to get out of jail free card for any minister or prime minister facing a grilling on social care.

Hope then, springs eternal. Truly effective policies are what everyone desires from the green paper. Accomplishing the shared goal of improved care, which is sustainable and affordable, will require data driven decisions, original approaches and perhaps just as important; political will and personal courage.

Here’s why rent controls will only aggravate the UK’s housing crisis

In his 2016 Labour Party Conference speech, Jeremy Corbyn claimed to have a great plan to ensure that “every British family” would have the “basic human right” to a decent home. His great plan? The same plan that has failed over and over again to provide homes for the most needy, from New York to Francisco to Stockholm: rent controls.

We are in a housing crisis with record numbers living with their parents and Britons paying the highest rents in Europe. Unless there is some drastic increase in the housing supply, young people are going to find it more and more difficult to find rental properties at all. And the best way to prevent the much–needed growth of the housing supply? Rent controls. Ironically, the very same measures that so many young people rave about will be the measures that later come back to bite them. To ensure the housing market supplies enough homes for future generations, it must be allowed to work properly – and that means freedom not control.

In a well–functioning market, supply will, eventually, match demand. At any given price, sellers will supply a certain amount of whatever product they offer to the market. The higher the price, the more they will be prepared to offer. A relatively high price is an indicator that demand outstrips supply and it encourages sellers to push more of their product onto the market. In the rental market, a high price encourages landlords to invest in building more homes.

Conversely, when prices are low, they don’t bother. The cost of opening up new rooms and homes to renters can be very high and, when the return is pittance, there can be little incentive to do so. Normally this is fine – the price is low because there’s no demand and so building extra homes would be a pointless exercise. However, when prices are held low despite booming demand, disaster strikes; there are lots of people wanting homes and an insufficient number being rented out. That’s the ugly inevitability of Corbyn’s great plan.

As with most government policies, with rent controls there are winners and losers. Whilst the losers here overwhelmingly dwarf the winners, it is worth looking at who the winners are to assess whether rent controls actually work to help the poor at all. The evidence would suggest not. When rent prices are held artificially low, current renters have little incentive to move out. These people are getting a good deal and they know it. With huge waiting lists for rent–controlled accommodation, moving out would mean moving into a less attractive area with grossly inflated prices. And why would anyone do that? These winners – often with higher incomes than those living in non–rent–controlled properties – stay in their homes for far longer than they otherwise would. New entrants to the property market don’t stand a chance.

A good demonstration of the colossal number of losers that rent restraints can produce is Stockholm. The Stockholm system is similar to that proposed by Corbyn, characterised by very slow rental rises and massive failures. There is a huge shortage of rental properties available making it nearly impossible to get a direct contract; with a queue 500 000 people long it can take well over twenty years to get to the top of the pile. Without connections or a willingness to enter the black market which inevitably formed as a result of the restraints, poor would–be–renters are stuck. Even the “winners” are losers; the lack of new housing means that they suffer a Stockholm syndrome–esque predicament, attached to houses they would rather leave due to a lack of alternatives rather than out of any real desire to stay.

Stockholm’s tragedy could become London’s. Sadiq Khan’s calls for rent controls to be introduced in the capital are just another in a long stream of proposals intended to help the poor but actually likely to have quite the opposite effect. Rent controls tend to work a treat for relatively wealthy long–term tenants who pay small sums for homes others would be prepared to pay much more for. However, for every household that benefits from the bargain, there are many more that get left behind. Young people wanting to live near where they grew up face a terrible choice between living in their parents’ back bedroom (and quite possibly never finding a place of their own) and having an unwanted property to themselves, one many miles away from their preferred location, outside of rent controls and so with rent far greater than that which they can truly afford.

Rent controls do not protect the poor; they punish them for not getting their hands on rent–controlled property first. There is an abundance of evidence showing that rent controls are an ineffective tool to help the poor, with economists from across the political spectrum practically unanimous in saying that rent controls reduce both the quantity and quality of available housing. Rents are high because there aren’t enough rental properties available – to bring them down we must allow prices to indicate this shortage. This means freeing the market rather than trying to control it. Rent controls nearly destroyed Britain’s private rental sector before; let’s not let them come back to finish the job.

The Price of Brexit: The Martyrdom of Business?

With Brexit now only a matter of months away, and nothing agreed, either with the EU or within the British cabinet, the martyrdom of our business to the cause of an ideologically driven Brexit appears as real a possibility as ever. It seems that there are some in Government, and millions across the country hell-bent on Brexit at any cost; a cost which I fear they can neither fathom nor understand. Recent studies which showed most Brexit voters would rather a hard-border in Ireland than remaining in the customs union are the epitome of the Brexit farce, and the inability of so many to realise the effects of such actions. They would have us create the biggest security hole anywhere in the world at a time when international terrorism is highly dangerous: and if ever radicals in Ireland needed fuel for action then this would be it…

But as the title suggests, the sinking of our economy seems to be the last concern to most in Government, with no positive noises and even less progressive action. Lets just take a second to review what business has been saying in the past week.

Jaguar Land Rover, which employs near 40’000 people in the UK as of yesterday questions the logic of a hard Brexit, calculating that it would lose in the region of £1.2bn per year to trade tariffs; the inevitable result of a destructive Brexit. The company even questioned whether remaining in the UK would be profitable should this eventuality occur? Similarly, Airbus which employs around 11’000 people in the UK has raised concerns about Brexit and the risk it may be forced to withdraw funding should a poor or no deal be the result of thus far fruitless negotiations. In this instance however, Jeremy Hunt, who clearly knows a lot about running a large organisation, which must be why the NHS is doing so well at the moment (in his mind at least, if not to the rest of the population), declared Airbus’s concerns “completely inappropriate”… as if he expects everyone to just say nothing and wait for the end. Funny really, it was okay for businesses who backed Brexit to speak, and its okay for those still brave or stupid enough to invest in Britain to do likewise, but anyone who fears the real and present dangers of this calamity must be silent: how’s that for democracy?!

And lets not forget the comments recently from the Society of Motor Manufacturers and Traders (SMMT). They have warned that the current Brexit process is “death by a thousand cuts” for an industry which relies on frictionless trade. Recent figures show that investment from companies represented within the SMMT has been halved from the first half of 2017.

The director of the CBI summed up the current situation best, when she said “facts ignored today mean jobs lost tomorrow”. Worryingly, we live in a world where facts are just what politicians say they are, when the people chose to believe them. No longer are experts, business and those with years of experience listened to, but cast off as “traitors” to the cause. What we need, as Stephen Martin argued, is “less antagonism and more pragmatism”: we should be so lucky. As long as it suits individuals like Boris to sabotage the governments position on Brexit, we will continue down the slippery slope to disaster.

For me, much of the government’s position can be summed up in one short phrase: “F*** business” in the words of our eloquent Boris… which is ironically what he and the government will end up doing if they don’t get their act together pretty damn quick! The complacency is galling, as is the complete disregard ministers seem to have for the thousands of workers and their families whose futures are threatened by their ideological squabbles.

So many in this country are so eager to sacrifice their children’s futures, the economy and business to the blood stained alter of Moloch. It genuinely terrifies me. But then, every country ends up with the government it deserves, and I truly believe that we have just that, populated by pompous self-opinionated toffs who think they know more about business that business.

Britain Getting Back on Track? It’s the Economy, Stupid.

Ah yes, it’s the economy stupid.

While I am not a massive fan of the former US President – Bill Clinton – it’s for a good reason. His ‘three strikes’ policy and his sordid relationship with Monica Lewinsky did little to endear him to me. But there are lessons we can salvage from his two terms.

To his credit, he was right about one thing when he grasped at the national mood around the economy.

This was highlighted in the campaign when he effectively took down Bush (’41) on how he himself was not affected by the economic decline in the early 90s, but he was.

The Clinton Administration, while divisive, led to the creation of a budget surplus of $128bn, 18.6m new jobs but increased income taxes.

Boris Johnson could take a lesson from Bill’s book. In the 60-page booklet, published by 10 Downing Street, the Government demonstrates a firm understanding of the kind of tactile approach necessary to emerge from the crisis.

The Clinton Administration, while divisive, led to the creation of a budget surplus of $128bn, 18.6m new jobs but increased income taxes.

“COVID-19 is a new and invisible threat. It has spread to almost every country in the world… The Government’s aim has been to save lives. This continues to be the overriding priority at the heart of this plan. The Government must also seek to minimise the other harms it knows the current restrictive measures are causing – to people’s wellbeing, livelihoods, and wider health.”

Transparency and the safeguarding of lives and livelihoods aside, the impact of COVID-19 on all accounts is demonstrable.

For example, the Government has since reported that 1.8 million households made a claim for Universal Credit between 16th of March and 28th of April. This is shockingly high and to make things worse GDP will fall by 35 % later in the year, according to OBS.

In April alone, unemployment rose from 850,000 to 2.1 million. A staggering rise not seen since records began. Photo by Emiko K from Pexels

The situation is bad for everybody as more and more jobs will be lost as businesses fail, look for example at British Airways who announced layoffs of 12,000 people last week, despite the Government’s furlough scheme.

I’m unsure which industry will seek to purge costs through staff wages in an attempt to stay alive next, but I know there is more to come.

These measures are hitting working people hard. Simon Dolan, the man, taking the Government to court over human rights violations due to this lockdown, shared a message from a supporter called Robin Hunter.

Robin states that his 20-year career in hospitality was eradicated, with little chance of getting back on his feet due to his age. To make matters worse, he was laid off before the furlough scheme was introduced, and now lives on a sofa in his mums flat, while receiving £74 a week from the government.

This could happen to anyone, as thousands of small business have not been trading over the last three months and possibly even longer. What’s worse is this could happen to you next.

Boris needs to do something quick; he needs to reopen the economy and get Britain back to work. This isn’t a matter of money over lives: I grasp that people are dying, but poverty kills too.

In the previously mentioned report, the government openly admits that the country needs to get back to work and produce. The report made clear that the longer the sustained lockdown and the reduction in economic activity, the harder to maintain public finances, including services like the NHS.

https://twitter.com/ClarkeMicah/status/1260185663284150272

It’s simple: the longer we’re in lockdown, the harder it’ll be for the economy to recover. This will lead to a significant reduction to our current living standards as compared to the past as we will have to accept a crumbling public purse and even smaller private one.

This will lead to thousands more avoidable deaths through things like suicide and poverty. When it does not kill, it mentally scares and scars the lands around it, in the words of Lord Sumption. Therefore, we must end the lockdown as soon as possible to save the economy, save the people and save the future.

While the Clinton presidency is a divisive one, a pedal-to-the-metal approach is one that the British Government needs to have at the forefront if it is to emerge from the present crisis.

CommonWeal are wrong – Scottish land seizures would be disastrous

Public authorities would be allowed to seize land under the “Public Land Value Capture” proposal suggested by Scottish think tank Common Weal think tank. In short, public authorities should have the legal means to purchase land at the existing “use value” rather than at the anticipated future value once planning permission is granted (known as ‘hope value’).

Public authorities would borrow against the future uplift (upswing) in land value from the granting of planning permission to develop the site. This borrowed sum could then be used to fund the master-planning, infrastructure and construction of public-rental housing, while some plots could be sold-off to the private sector at a profit. Either way, the reductions in land costs would eliminate land speculation in the development process and increase the affordability and quality of housing development.

What a grand idea! Let’s do it!

Not so fast

A major reason for the housing prices is overregulation and the difficulty of getting building permits. There are planning and zoning laws, building codes, height restrictions and greenbelt policies to restrict the supply. There are help-to-buy schemes, low interest rates, tax privileges for mortgage holders and other policies to drive demand through the roof. Landlord registration, stamp duty and HMO licensing limiting the number of people who can share a flat push up the price of renting to the sky. And so on and so forth.

That’s why building land ends up being so expensive. And that’s also why those darned developers are making a lot of money – but it’s not money for nothing – otherwise everybody would be jumping in on investing into land!

Let’s take a little peek at the planning performance of the local authorities: http://www.gov.scot/Topics/Statistics/Browse/Planning/Publications/planapps2017annual

For “local” developments, the average time was in the last year about 12 weeks. 3 months will be spent on haggling with the council whether you can build on your land, hoping for the best. That’s not too bad although the time can easily climb to 30 weeks and more, the better part of the year.

For “major” developments, the average time was about 45 weeks, easily a year and sometimes two. (All of these are averages so who knows what extremes hide behind them – at the top is Midlothian with 5 developments and an average time of 96.2 weeks.)

These are just the times spent on the permit itself, not preparing the papers or anything else. If you want to build and you find a piece of land, you still have to wait for months or years for the permit.

The elephant in the planning room

But let’s get rid of a moral issue first: the kind and gentle ability to “compulsory purchase land at existing use value” is nothing else but the power to expropriate. The unfortunate victims of this landgrab will be reimbursed – but don’t expect them to make profit out of their own land or being able to stay on it.

The paper perversely quotes a planning academic: “planning permission is a public gift, restoring to applicants the right to develop land when it is clear that this is in the public interest. Any increase in land values is also therefore the property of the community”. The right to develop your own land was taken away and when and if it is most graciously returned, it is to be considered a gift! Any increase in value for having to go through the bureaucratic hell is to be taken away.

However, the paper strangely forgets that this very law proposal will do away with “applicants” – the purchases will be compulsory. What a tragic attitude in a land that has suffered the Clearances!

This introduces a great motivation for the council to find potentially profitable land, buy it for cheap, kick out the people owning it and sell it off.

It’s all for the good of the people.

Why don’t we just let councils invest?

Public authorities can already invest and if they build more new houses for cheap, what’s the problem?

After all, the process will be based on a careful analysis and with due public consultation… meaning it can take years before even getting to the permit stage. One can only hope that CommonWeal takes these costs into account.

Worse, the council will have to go through the same long permission process as the developers. The paper seems to assume these costs away for some reason. If getting a permit is a simple affair, clearly the greedy developers oriented on a quick buck are doing something wrong. Or maybe the councils are wasting everybody’s time – but let’s think positively.

If the permission process takes months or years, the council will have to jump through the same hoops and expend similar amounts of money as the developers. That assumes the bureaucrats will be efficient and they won’t make the process even slower but let’s remain positive.

This is supposed to be an “extremely safe investment”, as long as the planning permission is granted. If the council does everything as it should, this extremely safe investment will be as speculative as that of those tricky developers. If the application fails, the council will be stuck with the loan. If the costs end up being too high, the council may lose out on the whole deal. That’s how investment works.

Introducing moral hazard

Of course, the council could find it very easy to get a planning permission – after all it’s granting the permission to itself! Since large amounts of money and political futures will be on the line, the council will be strongly motivated to make sure any permits are quick and painless.

This is not a problem if it’s just pointless bureaucracy. But if giving a permission is really such an incredibly valuable and arduous process for a good reason, the council will be motivated to skip all those environmental checks or listening to those pesky citizens, who rarely seem to want new construction. Because now, the council is a profit-hungry developer, too. And it doesn’t need to ask anybody for the land. It can just take it. For a reasonable price, you know.

How will this work out in practice?

The hostile competition option or how to ruin a market

The council will be competing with developers on a market with a limited supply of land. But the council doesn’t have their limitations – it can pick and choose pretty much any land it declares to be useful to itself (a “simplified development zone”). The council could in fact take over any land that is under development. Wherever developers find a good spot the council can just march in and destroy their investment.

Landowners will suffer from an additional source of uncertainty. What if your council decides that it wants your land? What if it just “starts planning”? Who in their right mind would build anything on their land or invest in it if it can be taken overnight – or five years later?

But this is only the small and medium-sized landowners and developers. The large companies and owners – and especially the politically well-connected ones – won’t have a problem with the council. This will lead to more centralisation in the housing market and more entanglement in bureaucracy.

And house prices will go even higher.

The friendly competition option – or how to make lots of money with corruption

But why can’t they all just be friends? The developers don’t need to fear the council. In fact, they can use the council to help them to invest.

The developers will pick and choose a good spot for new housing construction. They don’t need to restrict themselves to landowners who want to sell or offer them more money. The council will work its magic and remove all obstacles – people, properties, paperwork. Then it will sell the land back to the developers who will save time and money on permits and negotiations. The more useful councillors will be invited to give a presentation in Tahiti and everybody will be happy.

Except for the people that wanted to keep their land or make something out of it. Never mind that. Victory for the big guys!

But there’s more. Sub-contracting will “possibly be a procurement process” whereby contracts are given on a case by case basis and with specific contractual requirements for build design and quality. Although this is claimed to benefit small and medium sized businesses, the “specific contractual requirements for build design and quality” will probably mean that only large companies will be able to fulfil them.

Who knew Public Land Value Capture could be so useful? Big developers will be sure to line up to support CommonWeal and their proposal!

Tackle Tax and let the UK Prosper

Tackle Tax and let the UK Prosper

In the 2019 General Election, Jeremy Corbyn’s taxation policy was radical. He wanted to raise an extra £82.9bn by increasing Income Tax for those earning above £80,000 to 45% and 50% for those with incomes above £125,000. Corporation Tax was set to rise from 19% to 26%, and the introduction of a second homes tax was planned at some 200% of the Council Tax bill. The list goes on.

Keir Starmer is likely to be more reserved, especially as his popularity is on the up. In his leadership campaign the new Labour Leader was deliberately ambiguous about his ideological position and took care to distance himself from the radical Left, whilst simultaneously doing the same from the Blair years and the right of the Party.

Starmer has shown that he is ostensibly a left of centre Liberal, and we can speculate that his fiscal policy will certainly be less radical than that of his predecessor.

The general view on taxation amongst centrist Liberals is that a percentile or two extra on tax rates will provide more funds for our public service, whilst having little effect on commerce and the economy. But does this idea really hold true?

The Government and a vast majority within the Tory right would disagree.

Indeed, the alternative view would be that If you want to provide longevity to the prosperity of an economy a tax increase is not the solution, no matter how miniscule the percentage rise might be.

Taxation, no matter how small, will have a contractionary effect on the economy. The level of that contraction will not always be directly proportional to the percentage of the change. But the fact remains that the economy will still be constricted either way.

Tax Increases may provide short term revenue to the Government. But in the long term it will only decrease the amount of tax procured to the State.

Across the Pond in the United States, The National Bureau of Economic Research state how “an exogenous tax increase of 1pc of GDP lowers real GDP roughly 2 to 3 percent.” This is a fitting illustration of the effect of Taxation on an economy. More tax leads to a lower GDP, leading to less tax receipts, less Government revenue and therefore it leads to less money being available to spend on vital services for our communities.

An increase in tax today will lead to a loss of future tax receipts and Government revenue. We have been here before and the figures speak for themselves:

In 2010, Alastair Darling raised the top rate of tax to 50% of income after it was predicted that such a move would raise £3bn. In the short run it only raised £1bn towards address the debt accumulated due to the 2008 Bank Bailouts. In George Osbourne’s 2012 budget the top rate of Tax was lowered to 45% and a later HMRC report indicated the cut raised an additional £8bn.

The figures speak for themselves. Tax increases will provide short-term revenue, but that revenue will ultimately fall as the economy continues to be constricted.

With indications that the Chancellor is considering Tax rises as a step to offset the Lockdown debt, the Government may not be giving adequate consideration to the real financial issues the Country faces. An increase in tax today will not help our prosperity in the long run.

Government must avoid seeking yet another quick fix. They must take the difficult decisions that will be beneficial in the long run.

It should be a no-brainer. Let’s reduce Tax and let Great Britain prosper.

EMPLOYEE GRIEVANCE PROCEDURE: NEEDS TO BE LEGALLY BINDING?

There has been a huge commotion in parliament over the last few days. Particularly involving
certain MPs and their overzealous acts of sexual conduct towards women, some of those
working in parliament themselves. This then calls for some sort of solution to fix the issue (or
at least reduce the risk). Theresa May as the PM comes under intense scrutiny for the need
to address the issue. To which she proposed that the code of conduct in parliament should
have some “legal standing” and a contractually binding grievance procedure for all MPs set in
place.

There were allegations made regarding the Tory party, including some senior ministers who Mrs. May
was working closely with in parliament. There were also allegations made towards MPs
from the Labour party. Did May know what was happening? If she did that’s a worrying concern
for the young female professionals, who have been reported to have been victims of these
alleged groping and propositioning incidents. But even then, many leaders lose sight of the
issues on their own team as I’m sure they would expect their team players to uphold the same
values as they do. Well, that clearly wasn’t the case and May is in a huge frenzy to have a
reshuffle of her cabinet.

We’ve been told government officials keep a “black book” of allegations against MPs hidden
away. So that leaves us to question, how long does the list track back from? And why has it
taken this long for these allegations to come into the public consciousness?

What was of shock to me regarding the scandal is that there is a “WhatsApp sex pest group”
that women who include parliamentary researchers, secretaries and aides are all a part of.
Who claim that politicians on both sides of the house have pestered them and given them
lewd nicknames. The code names for some of these MPs in parliament who committed the
acts were described as “Lift Lunger”, “Happy hands” and “Taxi Tickler”. All involved in groping
women in enclosed environments and even in public, which reveals the lack of awareness or
care these perpetrators had for the actions they were partaking in.

The recent allegations have come into fruition in the light of the recent global social media
campaign called #MeToo launched by Alyssa Milano, an American actress at the forefront of
it, who too was a victim of sexual assault. The campaign encourages all women to confront
the men they know, whether their brothers, friends or work colleagues about their attitudes
and behaviours. Thousands of women have come forward sharing their stories since the social
media hashtag was created. No doubt this had huge influence regarding the women in the
political sector to share their own stories, despite huge risk to their careers within parliament.
I say that as MPs hold immense power and as the young employee with a lack of voice
compared to their older counterparts, particularly when female, societies attitudes can be off
putting in believing their reports.

Alyssa Milano, the actress who started the #Metoo
campaign on Twitter

Echoing what Theresa May has proposed in her comments concerning the MPs in the scandal.
The current grievance procedures in government we have regarding employees and their
employer are not legally binding. It’s expected that the employer follows the necessary
guidelines to tackle the problems that may arise through complaints from the employee in the
work environment. But we know this is not always the case and it’s pretty difficult as a young
professional who are the most vulnerable in the workplace, due to their lesser status and lack
of experience. Combining that with being a female in the workplace, it’s an even tougher task
to share your grievances towards your employer, especially one who holds immense powers
in parliament. For a lot of women, they do not bother reporting incidents or if they do, it is not
taken as seriously.

Theresa May’s views on the grievance procedures should be the agenda needed to create
some legalities around the topic. Implementing some sort of policy around the instances of
sexual conduct towards employees and making it legally binding needs to be a course of
action in parliament. It’s a sad shame knowing what it is morally right and wrong cannot be
the indication we need to take complaints of sexual conduct in the workplace more seriously.
It seems when employers are threatened by legal action, they may tend to take matters as an
urgent need for attention rather than sweeping cases under the rug like many in parliament
have been doing to protect the most powerful and senior members of staff. Well this needs a
complete reform and female employees in this case need to know that their issues will be dealt
with accordingly and the relevant persons will not go unpunished. I think it will also be a wakeup
call for those who commit these revolting acts, that there will be repercussions for their
actions. Hopefully, it will also allow them to get the help they need for their habits.

Campaigns such as #Metoo are giving women and (men) the opportunity to voice their stories
more bravely than in the past and help others in the process to share theirs. Building a
community of victims to overpower the perpetrators who inflicted any sort of harassment or
assault towards them. Theresa May, now needs to enforce laws that are contractually binding,
that involve the issue of grievance in parliament and the workplace. That may be just one way
of tackling this ever troubling problem.

A CEO Pay Cap Would Cap The Welfare Of All

The share of national income going to top CEOs is going up and up. Government intervention to restrict this commits twin errors of assuming that rising pay at the top is an unwarranted endemic and assuming that intervention seeking to constrain pay at the top will necessarily improve the labour market opportunities of those at the bottom. Neither of these assumptions holds true. Governments trying to restrain CEO pay will hamper economic growth whilst simultaneously doing much damage to the living standards of those at the bottom of the earnings distribution.

A recent Institute of Economic Affairs publication by Ryan Bourne and Professor Len Shackleton reviewed a series of damaging changes proposed by those across the political spectrum. This included Jeremy Corbyn’s plan to “institutionalise fairness” by setting a maximum pay ratio between CEOs and the lowest paid worker and a proposal from the High Pay Centre that publicly listed firms in the United Kingdom should be forced to publish data on the ratio of CEO pay to median earnings. It concluded that concern over inequality at the top end of the pay distribution would be better dealt with by “a fundamental simplification of income tax to eliminate exemptions, loopholes and tax shelters” which would also work to affect other high–earning individuals such as private equity investors, business owners and celebrities.

Before exploring the potential harm that the proposed regulations could inflict, it is first interesting to challenge the idea that rising CEO pay necessitates regulation at all. Many politicians argue that extreme income inequality at the top is a symptom of some terrible corrosion of societal morals, holding back growth and damaging the life chances of those at the bottom. These claims are simply unfounded. The OECD found no evidence that “those with high incomes pulling away from the rest of the population harms growth”.

Conversely, rising CEO pay is actually associated with increasing firm value. When former Prudential Chief Executive Tidjane Thiam announced his move to Credit Suisse, the total value of their shares rose by £2 billion. The high pay earned by Thiam was clearly deemed worth it by shareholders. Increasing pay at the top is a reflection of an increase in the (perceived) value added. It has not caused those at the bottom to get any poorer. Why should the government intervene?

Attempts to regulate or cap CEO pay could seriously damage economic growth. Switzerland dodged a bullet by voting overwhelmingly against a reform that would see CEO pay capped to twelve times that of the lowest paid worker in the firm. Jeremy Corbyn’s proposal that the UK should adopt similar regulation is a plan to shoot oneself in the foot. There are three obvious ways that businesses can reduce the pay ratio between their cheapest worker and CEO: slashing CEO pay, grossly augmenting the pay of the lowest–paid, and cutting low–paid workers altogether. None benefit the economy.

FTSE–100 CEOs are currently paid almost two hundred times the pay of the average worker. To bring this ratio down via a reduction in CEO pay down to any so–called “sensible” level would require extreme cuts. Since few countries have regulations requiring the publication or capping of such a ratio, in an increasingly globalised market CEOs would simply jump ship.

Top CEOs bring much value to their organisations – such a loss of talent could seriously harm companies. Many businesses would be forced to either relocate to regain access to top executives or shut down altogether. Both responses damage economic growth and result in unemployment, particularly amongst immobile lower–paid employees.

Since a slashing of CEO pay appears unviable, firms might instead reduce their ratio by increasing the pay of the employees at the bottom of the pay scale. Since labour expenses often account for a large portion of business costs, this would be hugely damaging to a business’s profits. Furthermore, for competitive companies with large numbers of employees, the extent of wage augmentation needed would simply be unfeasible. Increasing the wages of those at the bottom of the wage ladder would lead to increases right up it to ensure some extent of differential pay based on value. This would be extremely expensive.

To add to this, a cap on the ratio would severely restrict the size of these value–based differentials, crushing incentives for workers to add to their human capital or encouraging higher–value workers to move abroad where regulations would less stringent, enabling them to earn fairer wages. Regardless, in the long–run, workers cannot be paid significantly above the value they add to a business. If firms are forced to pay some workers more than their value it is likely that other workers will pay the price: unemployment.

It would clearly be difficult for businesses to artificially manipulate their ratios by cutting CEO pay or increasing the wages of the lowest–paid workers. This means that many companies would likely be forced to take the uncomfortable step of making workers redundant. There is already a huge shift towards the mechanisation of work; the laws and requirements proposed above would unnecessarily and inefficiently speed up this process. Low–paid jobs would be outsourced or removed altogether. This would increase unemployment, with the bulk of displaced workers being the less–educated. Such a policy would not help the low–paid or the well–paid. It would help noone.

Bourne and Shackleton conclude that a war against high CEO pay would both be unsuccessful and highly detrimental, causing “collateral damage” across the economy. Basic populist rhetoric on the topic skates over many of the important issues and so should not form the foundations for effective policy design. They state that the government should not extend requirements on firms to publish data on executive pay. If, despite the overwhelming evidence suggesting otherwise, high pay is felt to be a problem, “it should be dealt with through simplifying the tax system and eliminating loopholes” not through rules and regulation which leave everybody worse off.

A Libertarian Approach to Student Debt

Both the Tories and Labour Party have attacked the current higher education funding system for leaving thousands of students in debt that they can never repay. While Corbyn admitted he could not promise to wipe debt, Theresa May has launched a review into student debt and tuition fees. At the moment, fees are capped at £9,250, but come with a punishingly high interest rate of 3%above RPI. This interest begins to accrue from the day that students start university. How can we ensure equality of opportunity for young people of all backgrounds without leaving the next generation of workers in enormous debt?

Reducing Interest Rates

The simple fact is that the loans offered to students are too expensive, with three quarters expected to never repay the full amount. The burden of paying back this debt therefore falls onto the taxpayer, so that those who never went to university are paying for those who did. A true libertarian approach would cut interest rates to be in line with market values.

Senior economic advisor at PwC, Andrew Sentance, argues that 2018 could see interest rates triple, due to high inflation and global economic growth. To charge students an extra 3% above inflation is creating unnecessary debt. This is caused by state intervention rather than the invisible hand of the market.

Diversifying the Market

The UK has one of the highest tuition costs in the world, largely due to an unfree market. Almost half of school leavers now go to university, even if it isn’t the right option. For a genuinely free market to keep costs down, there needs to be a wider range of options.

This can be achieved through the use of apprenticeships or work placements for those who thrive in a vocational sector. Not everyone is suited for university, but many see it as the only option. Furthermore, many courses are charging the same amount despite varying in costs. Different courses should set different prices according to market forces.

Encourage Private Sponsorship

The most effective way to lower costs and the debt burden on students is for the state to be rolled back. Instead, private companies should provide sponsorship and bursaries where they see potential in students. More debt reduction and consolidation companies may enter the market in order to further ease the burden without the need for state intervention.

Successive governments have done a great disservice to our young people in the way they fund tertiary education. Interest rates should come in line with the market and private companies should be given greater freedom to sponsor students. By diversifying the education market for over 18s, overall costs and therefore debt can come down.

Taking a glimpse at the Rothschild Bank

Emmanuel Macron is the youngest President France has ever seen, stamping his name into the fabric of political history. Although he is considered by many in France as the best of a bad bunch, his victory at the mere age of 39 is undeniably impressive. As a British bystander, taking a loose and yet concentrated interest in Macron’s campaign, I couldn’t help but notice the constant repetition of that same description: “former Rothschild investment banker”. It was as if his association with the Rothschilds was more significant than his time working in a senior position in Mr. Hollande’s staff, or, as Minister for Economy under Manuel Valls.

Having heard some rather far fetched conspiracy theories concerning the Rothschilds’ ability to manipulate global affairs, I thought it would be interesting to have a closer look at the bank’s history and how they operate. For lack of wanting to entertain internet conspiracy – as some would now considering we have a former Rothschild banker as French President – I have steered clear of any David Icke type sources. Lizard shape shifters aside, the Rothschild story remains an interesting one.

Mayer Rothschild

Originating from Germany, the Rothschilds became a prominent family, establishing banking and finance houses in 18th Century Europe. Mayer Rothschild (1744 – 1812) sent his five sons to live in various capital cities across the continent. When in Frankfurt, Naples, Vienna, Paris, and London they set up individual banking establishments under the Rothschild name. Effectively, the Rothschild bank was the first of its kind to work across international borders. By lending to governments helping to finance war operations the family was able to accumulate bonds and support additional wealth from a vast array of different industries.

In true aristocratic fashion Mayer Rothschild wanted to keep his empire very much within the family. This required a certain amount of inbreeding between cousins. It has been reported that four of Mayer’s granddaughters married grandsons, and one poor girl married her uncle.

Of Mayer’s four sons, Nathan Rothschild (1777-1838) was the biggest success. Based in London, Nathan was the pioneer of international finance. Soon establishing himself as the central bank for Europe. He monopolised Europe’s financial systems brokering for kings, bailing out national banks, and funding the development of infrastructure that sparked the beginning of the industrial revolution. In this time he established the bank we know today as N M Rothschild & Sons Ltd. England’s seventh oldest bank in continuous operation.

Nathan’s major benefactor came when he took an enormous gamble during the period of the Napoleonic Wars. In 1811 N M Rothschild & Sons managed various subsidies that the British government sent to their allies and loaned them the funds they needed to pay their army. Effectively Nathan was single handily financing the British war effort. At the same time, however, unbeknownst to the British, he was also funding Napoleon Bonaparte behind their back.

His gamble came when the war was coming to its crescendo in 1815 with the battle of Waterloo. Nathan’s network of couriers reported the grave losses being faced by Napoleon to the British government. As the information did not come from their own scout the British were sceptical of this report and rejected it as mere fallacy. Instead they were convinced the British were on track to lose the war. Seeing an opportunity, Nathan Rothschild enhanced these rumours and sold all his bonds on the English market in light of the Brits’ apparently grave future. After such a loss British bonds would be plummet in worth. His influence surged a panic in financial England with a mass selling of bonds that quickly resulted in the collapse of the London stock exchange.

Knowing that the British were actually on course to win the war, the Rothschild network began to start buying back British bonds at record-low prices. Two days later Wellington received the news that Napoleon had in fact suffered a crushing defeat. British bonds went back up in price and the Rothschild bank was in complete control of the London stock exchange.

Nathan’s cunning manipulation of two warring factions and the British financial elite paid off in almost immeasurable amounts. As of 2015, the British government was still paying back the money owed to the Rothschild family from the Napoleonic period. That is a lot of debt.

Today, the Rothschild bank is one of the world’s largest independent financial advisory groups specialising in private wealth, asset management, and merchant banking. The family, like many who maintain such a high level of wealth, are involved in charitable pursuits across the globe. Their main office aside from London is based in in Switzerland; the Edmund de Rothschild Group.

There are those that claim the Rothschilds still maintain a monopoly over Western financial markets through their control and ownership of the world’s central banks. These are denounced by any officially trusted financial source with such claims usually being attributed to the anti-Semitic nature of the discussion. For example, Rothschild & Sons reported a net revenue of 423.8 million GBP in 2015 when Morgan Stanley racked up a huge 37.95 billion USD revenue in 2016. The difference here is significant.

The Rothschilds remain an extremely tight knit and yet influential player in the financial game. With only around 2,800 employees their affairs are handled by very few. With such responsibility so thinly spread it is not surprising their work is handled with a serious amount of discretion.

Considering the way they revolutionised international finance the Rothschild family history is remarkably interesting – the even after only having scratched the surface here. Will Macron bring this Rothschild investment style to the French economy with the same success? Only time will tell.