Are the Tories planning to bury us in debt when interest rates rise?

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Don’t look so smug, George – we know what you’re trying to do.

It is surprising that they don’t seem to think we can make the connections.

Two articles have leapt from the national media to trouble us this week. The first, in the Telegraph, states that the economic recovery that has made George Osborne so proud is built on mounting consumer debt and a housing bubble.

(This is something that has been known to us for several months, in fact. Osborne’s ‘Help to Buy’ scheme is the principle cause of the bubble, and it was recently revealed that there is no way to slow it down. Let’s not forget that the taxpayer is underwriting the scheme – so when the bubble bursts we will have to pay both as individuals and as a nation!)

The second article is on the BBC News website, which tells us that up to 1.4 million extra households could face “perilous” levels of debt when interest rates begin to rise – in addition to the 600,000 families already in that situation.

(It adds that mortgages are the largest source of household debt.)

Vox Political has long held the belief that the Conservatives have been trying to increase personal debt. Whether the plan was to decrease the national debt in this way is debatable as the deficit has plateaued at around £120 billion for the last few years.

When Mark Carney became governor of the Bank of England, he said he would not raise interest rates until unemployment falls below seven per cent – which might provide a bit of breathing-room for those having to deal with mounting debt.

However a few months ago, at the Conservative conference, we heard that George Osborne wants to falsify unemployment figures by putting the long-term unemployed on Workfare indefinitely.

If a person is put on Workfare, they are removed from unemployment statistics, even though they only receive social security payments for the work they do.

We already know that figures show a larger fall in unemployment than commentators had anticipated, so it now stands at 7.4 per cent, according to official statistics. Putting hundreds of thousands more people on Workfare should cut that figure below Mr Carney’s benchmark.

Meanwhile, household debt is due to rise to 160 per cent of income by 2018, partly because wages are dropping in comparison with inflation. The number of households using half their disposable income to repay debt could rise from 600,000 to 1.1 million if interest rates rise to three per cent (according to the Resolution Foundation, as quoted in the BBC piece) – and to two million if rates hit five per cent.

In the light of this information we must ask ourselves: Is this a Tory trap? Are they trying to create conditions in which more people on low or middle incomes become indebted to the rich, just by fiddling interest rates?

What do you think?

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The Queen’s Speech (translated) – brief words signifying so much harm

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A true pro: It is a testament to the Queen’s professionalism that she is able to get through her speech at the annual opening of Parliament without either laughing at the stupidities or choking in horror at the implied threats to her citizens.

Today the Queen made her speech at the official opening of Parliament. Her words were, as always, written by the government of the day, and therefore it seems appropriate to provide a translation, as follows:

“My government’s legislative programme will continue to focus on building a stronger economy so that the United Kingdom can compete and succeed in the world.” Focus on it, but do nothing about it.

“It will also work to promote a fairer society that rewards people who work hard.” If you haven’t got a job, you’re shafted.

“My government’s first priority is to strengthen Britain’s economic competitiveness. To this end, it will support the growth of the private sector and the creation of more jobs and opportunities.” There is no intention to take any action in this regard; the government will simply applaud actions taken by others.

“My ministers will continue to prioritise measures that reduce the deficit – ensuring interest rates are kept low for homeowners and businesses.” Interest rates are nothing to do with the government. It is easy to make promises when no action is required.

“My government is committed to building an economy where people who work hard are properly rewarded. It will therefore continue to reform the benefits system, helping people move from welfare to work.” My government is committed to building a low-wage economy where people have to work hard simply to keep what they’ve got. It will therefore continue to erode the benefits system, forcing people to move from welfare to destitution as a warning to those who’ve got jobs, that this will happen to them if they make a fuss.

“Measures will be brought forward to introduce a new employment allowance to support jobs and help small businesses.” A bung for our friends.

“A bill will be introduced to reduce the burden of excessive regulation on businesses. A further bill will make it easier for businesses to protect their intellectual property.” Deregulation worked so well with the banks in 2007, we thought we’d give other businesses a chance to ruin the economy. And it’s not enough that Facebook now owns everybody’s photographs – corporations want everything else as well.

“A draft bill will be published establishing a simple set of consumer rights to promote competitive markets and growth.” The rights of the consumer will be restricted to what we say they’re allowed, to protect corporate freedoms.

“My government will introduce a bill that closes the Audit Commission.” We don’t want the public to know the facts about our spending and where it goes (into our pockets).

“My government will continue to invest in infrastructure to deliver jobs and growth for the economy.” But we’re not saying where the money will go (into our pockets).

“Legislation will be introduced to enable the building of the High Speed Two railway line, providing further opportunities for economic growth in many of Britain’s cities.” Future economic growth, of course – we won’t see the benefit for many, many years.

“My government will continue with legislation to update energy infrastructure and to improve the water industry.” At huge cost to everybody who has to pay the bills.

“My government is committed to a fairer society where aspiration and responsibility are rewarded.” This is meaningless.

“To make sure that every child has the best start in life, regardless of background, further measures will be taken to improve the quality of education for young people.” This is meaningless.

“Plans will be developed to help working parents with childcare, increasing its availability and helping with its cost.” Private childcare organisations, starting cheaply but costing more as they get a grip on parents.

“My government will also take forward plans for a new national curriculum, a world-class exam system and greater flexibility in pay for teachers.” We’re going to stamp on teachers hard. And the new national curriculum means nobody from state education will be able to compete with our children at Eton.

“My government will also take steps to ensure that it becomes typical for those leaving school to start a traineeship or an apprenticeship, or to go to university.” We’ll shoehorn the state-school mob into something under threat of destitution, and save university for people who can pay for it (like us).

“New arrangements will be put in place to help more people own their own home, with government support provided for mortgages and deposits.” More second homes for Tory voters, as set out in the Chancellor’s Budget speech in March.

“My government is committed to supporting people who have saved for retirement.” If they have savings, they won’t need the national pension and can give it back, like Iain Duncan Smith suggested.

“Legislation will be introduced to reform the way long-term care is paid for, to ensure the elderly do not have to sell their homes to meet their care bills.” They can die there instead.

“My government will bring forward legislation to create a simpler state pension system that encourages saving and provides more help to those who have spent years caring for children.” It’ll encourage saving because it won’t be enough; and carers can have the kids taken away from them.

“Legislation will be introduced to ensure sufferers of a certain asbestos-related cancer receive payments where no liable employer or insurer can be traced.” Otherwise we’ll get the blame for abandoning them.

“My government will bring forward a bill that further reforms Britain’s immigration system. The bill will ensure that this country attracts people who will contribute and deters those who will not.” We’re scared that UKIP is taking our voters away.

“My government will continue to reduce crime and protect national security.” We will privatise the police, MI5 and MI6.

“Legislation will be introduced to reform the way in which offenders are rehabilitated in England and Wales.” If you thought our prisons were schools for criminals before, we’re turning them into universities.

“Legislation will be brought forward to introduce new powers to tackle anti-social behaviour, cut crime and further reform the police.” We will privatise the police and introduce curfews.

“In relation to the problem of matching internet protocol addresses, my government will bring forward proposals to enable the protection of the public and the investigation of crime in cyberspace.” We want to know how it works so we can make money off the internet.

“Measures will be brought forward to improve the way this country procures defence equipment, as well as strengthening the reserve forces.” We’ll buy the cheapest equipment we can find and ask the reservists to do it for no pay.

“My ministers will continue to work in co-operation with the devolved administrations.” Wales, Scotland and Northern Ireland will get even less cash.

“A bill will be introduced to give effect to a number of institutional improvements in Northern Ireland.” It’s too peaceful over there and we need something to distract the plebs from the mess we’re making in the rest of the country.

“Draft legislation will be published concerning the electoral arrangements for the National Assembly for Wales.” If we give the sheep the vote, they might vote Tory.

“My government will continue to make the case for Scotland to remain part of the United Kingdom.” We want their money; we want their oil.

“Members of the House of Commons, estimates for the public services will be laid before you.” Prior to privatisation.

“My government will work to prevent conflict and reduce terrorism. It will support countries in transition in the Middle East and north Africa, and the opening of a peace process in Afghanistan.” We want their money; we want their oil.

“My government will work to prevent sexual violence in conflict worldwide.” We can’t even stop it here.

“My government will ensure the security, good governance and development of the overseas territories, including by protecting the Falkland Islanders’ and Gibraltarians’ right to determine their political futures.” They’re strategically important so we’ll rattle the sabre for them.

“In assuming the presidency of the G8, my government will promote economic growth, support free trade, tackle tax evasion, encourage greater transparency and accountability while continuing to make progress in tackling climate change.” We’ll blame the other nations when none of these things happen.

“Other measures will be laid before you.”

That’s not a promise; it’s a threat.

Why we’ll never have full employment – even though we need it

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Today Vox Political is offering a guest blog, for your edification and education. Graeme Beard wrote the following in response to ‘Millionaire’s government will make paupers of us all’. It’s far too long for me to put in the ‘Comment’ section of that article but far too interesting to let it go unpublished. Therefore I am reproducing it as an article in its own right. If anyone else has anything they want to get off their chests, I’ll happily consider other submissions as well.

Over to Graeme:

OK – well let’s get something rather nasty out of the way first. Austerity for the masses is an extremely efficient and effective macro-economic device. Absolutely counter-productive and even destructive to a consumer based economy it is the best way by far, (apart from slavery) on a macro-economic level to shift money from the pockets of the poor to the pockets of the rich.

Make no mistake, the austerity measures being introduced are moving £Billions ‘upward’. None will come ‘downward’. The national debt will be paid off by the poor and the poorer. It will not, and is not being paid off by the rich and affluent. They are untouched and seem to be untouchable. In fact the rich and affluent are seeing their personal wealth increase at an incredible rate.

The following is a global perspective but it applies just as strongly to the UK. The rich are enjoying a boom time and for this particular conspiracy theorist I am of the opinion that it is a deliberate measure. They want it all.

Secondly, let’s state the ‘bleedin obvious’: We live in a consumer society. Like it or not – want to change it or not – it’s what we got, playmates. To that end we have to play the ‘consumer game’ cards in hand. There is no choice. It is a given.

A consumer society (be it local, national or global) depends almost entirely on consumers having a disposable income. That is, money above and beyond that which they need purely to survive. If they do not have a disposable income over and above that needed to satisfy their basic needs such as food, clothing, utility bills, shelter etc then, in many ways, they become what economists call ‘non-consumers’.

For instance, they can’t spend money on what some would consider to be luxury goods like new or used motor cars, or books, or education, or to replace a cooker or fridge that’s on its way out. They make-do, make-shift and mend. Their ‘extra’ spending on consumer goods (the very goods we need to be purchased by consumers in order for the economy not only to grow, but survive) is dead in the water. If they haven’t got it they can’t spend it. The more that have no – or diminishing – disposable income, the more the economy will contract.

It’s happening now and there’s more to come. Far more. People thrown out of work, because of slowing demand or even a demand crash in consumer goods they make or services they provide, or those that become disabled and draw state benefits, are a prime example. They do little more than survive and become non-consumers above subsistence in double quick time. Ergo they are lost to the consumer society. It is a downward spiral and the Multiplier Effect takes over in negative form. See below.

Now this is not rocket science and can plainly be seen repeatedly with only a cursory glance at macro-economic history. Don’t believe me? Look for yourself! To introduce and pursue measures of austerity for the mass of the population in an attempt to ‘heal’ a consumer economy is like trying to catch hold of the world by the arse and pull it uphill.

These austerity measures are either being pursued in ignorance (which I find very hard to believe) or as a deliberate measure to engorge the rich and affluent at the expense of the poor.

For 35 years, post-Second World War, the UK had full employment. Bankrupted by the conflict and in massive national debt, the population was fully employed; the NHS was introduced; the welfare system proposed by ‘The Report of the Inter-Departmental Committee on Social Insurance and Allied Services.’ (The Beveridge Report) was adopted and applied with vigour. People had jobs with disposable income; they consumed (and in quantity – demand for consumer goods went through the roof); tax incomes to the government went up enormously; numbers of people on benefits were minuscule (they had jobs); the construction industry went off ‘bang!’; etc etc. I’m sure you get the drift. John Maynard Keynes’ ‘Multiplier Effect’ in motion and this time in positive mode.

Bit of a problem though! Full employment came with a terrible cost. It gave those in employment power – mainly the power to withdraw their labour and expertise.

And that’s the reason we will never have full employment in the UK ever again.

It gives people at the bottom power and those at the top really don’t want that. They need the sticks of unemployment and poverty for them to sustain their lifestyles.   People on the breadline and/or in debt or under threat keep their heads down, live smaller and smaller, and consume less and less in the hope it will eventually, by some kind of magic, get better. It rarely does.

In concert with that, and at the very same time, those who feel insecure and threatened but are in decently-paid jobs and who could shut down their spending too and save more and more for their (maybe) ‘rainy day’ are also removed, if only in part, from the consumer society that we all depend on.

So, actually impoverishing consumers – the very consumers who could – and, history shows, would – drag this economy out of the faecal mess that the cretinous politicians and bankers put us in in the first place, means they are unable to do so – because they are struggling with ‘austerity measures’ and seeing their disposable income decrease alarmingly.

Full employment, as dangerous to those ‘above’ as it may be, is good for a consumer society. Taxes are paid alongside National Insurance contributions; welfare payments reduce exponentially because people have jobs; demand for consumer goods increases and, via the ‘multiplier effect’, more jobs come online and more money is made available to spend. It is an upward spiral.

If you want to heal a consumer economy, don’t introduce more disease. Austerity for the masses is exactly that – a disease – to a consumer society. Don’t believe me though – gawd forbid! Look around you, because it’s happening now, and happening just about everywhere apart from the more affluent areas of the UK.

And that, in part, is why our towns as a working example are full of charity shops, pawnbrokers, and people wanting to buy your surplus gold for two and a half buttons so they can get rich and you can eat or heat next week.

As an addendum: http://www.ted.com/talks/richard_wilkinson.html?utm_source=newsletter_weekly_2011-10-25&utm_campaign=newsletter_weekly&utm_medium=email