About Face: Is Ed Miliband Serious?

During the Tony Blair years if the organised left were as excited about a conference speech as they were about Ed Miliband’s this week it would have normally spelled trouble.

It was certainly a day for the liberals, and yes even socialists, to celebrate with the return of “Red” Ed.

New policies included a rise in corporation tax to offset lower rates on small businesses, a threat to reclaim land which developers did not build on and, most controversially, a promise to freeze energy prices for two years.

This last policy, unsurprisingly, was met with a veritable tidal wave of criticism from the Tory party and the big-six energy companies, although the Liberal Democrats were suspiciously quiet on the subject.

Few would deny there are numerous problems with energy production and supply in this country.

Price spikes and volatile supply from fossil fuels, ineffective renewable alternatives, unpopular fracking and nuclear power, green taxes, carbon reduction targets and substantial price hikes forced onto consumers at a time of stagnant wages are just a few of these issues.

Nevertheless, direct price controls are, to put it mildly, controversial. There are few examples of them working and when they do it is normally with nationalised, not private, energy companies.

The concept is incompatible with a free-market economics and will incense energy firms who might decide not to invest at all in the UK and, assuming Labour got into power, challenge the policy through the courts.

This, in theory, could lead to energy blackouts and other energy supply problems, although it is hard to imagine any energy company would get into financial problems over a two year price freeze.

However, could there be the possibility Miliband does not want to implement this policy at all?

Sounds ridiculous, but this could be his plan.

There is massive public support for some measure to reduce the cost of fuel, giving Miliband and the Labour party a big stick to hit with.

Imagine this scenario.

The energy companies, worried about appearing as if they are gouging the life out of hard working people with substantial price rises, offer a compromised deal, possibly involving a guarantee on lower pricing over a fixed period of time while still offering infrastructure and “green” investment.

Ed moves the goalposts, claims victory and bags a ten-point lead in the polls while David Cameron is left scratching his head wondering why Lynton Crosby didn’t think of the same idea.

The same could be said about reclaiming not being built on by the developers.

The legal ramifications of this policy are staggering and could take years to iron out, but if the developers, again afraid of being on the wrong side of public opinion, offer guarantees on building affordable housing over a set number of years Ed could easily claim another victory.

What this comes down to is policy bait-and-switch, pulling a political white rabbit out of a hat, essentially launching a policy he does not want to introduce, instead hoping to steal the agenda, ride the positive wave of public opinion and get a compromised deal even more beneficial to the public than his original policy.

If this is what Miliband is going for, and this is certainly up for question, it could be a great example of politicking and make the often-criticised Labour leader a major player at the next election.

Of course there is the possibility Miliband is serious about these policies, in which case he faces an uphill battle to convince the middle-class, whose votes he needs to get into government.

However, there are still numerous Blair and Brownite big-business pragmatists on the Labour benches who will not want to see a return to the extreme left of the 1980s, lending credibility to the argument Miliband is not going as hard-left as it might appear.

This strategy, if it is attempted, is risky and leaves Miliband open to attack, but this would not be the first time a political rope-a-dope has been attempted and successful.

But, as with everything in politics, it comes down to maintaining momentum.

After last years “One Nation” speech Miliband and the Labour party disappeared, unable to make ground on any of its key policies.

If this more high-risk strategy is to work for the leader and the party the same drop-off in political energy cannot be allowed to happen.

Maintaining Relevance: Labour, the Unions and Modern Politics

As we enter the early days of conference season attention turned towards Bournemouth as the Trades Union Congress meets to discuss its agenda for the next year. However, members of all unions meet against a rapidly tarnishing backdrop.

In the last few months notable members of the TUC have struggled to stay out of the headlines following the Falkirk by-election debacle, Labours funding switch and the threats of industrial action over pay and conditions.

The major question, from alternative perspectives depending on your political orientation, is how relevant are the trades union in the modern age.

After all we now have health and safety, equal pay, labour and discrimination laws, minimum wage and employment rights. What more can the unions actually achieve in the era of private companies in the public sector?

Labour, whose leader was elected largely thanks to trade union backing, now want to slash its own funding by rejecting trade union donations, while the Conservatives, who have never liked the unions, argue they are out-of-date, out-of-touch and, with regard to strike action, out-of-order.

This is not helped by what is arguably all trades union biggest headache, their poor public image.

When any of the major union leaders go on television they appear like shouty, football hooligan types, who complain about pay and conditions when almost every non-union worker suffers with the same issues.

After all, we no longer live in the age of cotton barons, child labour and worker exploitation and mainstream politics has moved to the centre ground where a balance must be struck between big business and employee rights.

Even the far-right of the Tory party is not going to suggest abolishing the minimum wage.

No matter how suicidal Ed Miliband’s stance on union funding might be for the Labour Party, many on the 

left would agree it is an undue influence, verging on the unacceptable, on the modern geopolitical and socioeconomic landscape.

However, disregarding the unions is in itself short-sighted. After all workers will always require protection and there are examples today of where unions would be better off focusing their attention.

Zero-hours contacts are a prime example of this. This kind of contractual agreement could clearly be used, if it has not already, by companies to exploit workers.

Similarly, at a time of private and public sector cost cutting, it is not a huge leap for this to result in unfair dismissals, worsening work conditions and health and safety violations.

Then there is the decline in living standards across the country as wages fail to keep pace with inflation.

Foreign workers, who may not know what rights they are entitled to in the UK, are also heavily at risk and need a union-based set up to ensure they are not taken advantage of.

These are, for the moment, all just hypothetical, but, in the same way the European Court of Human Rights is there to ensure another fascist dictator cannot start randomly imprisoning dissidents, the trade union movement is needed to guarantee UK workers never have to face industrial revolution style working conditions.

This shows the trades union are far from irrelevant, but suffer from three main issues, a lack of focus, a lack of discipline and a bad public image.

Over the years many unions have split, fractured and even sub-divided to the point where the delegate list at the TUC is an unholy spectacle of acronyms with several unions representing the same interest groups.

Industry specific unions are vital for industry specific issues, for example ensuring teachers have the relevant training, but need to be brought back under a single umbrella union so each sector can pinpoint specific and wider raging areas to deal with.

A major reason for this, and a cause of the trade union movements seeming irrelevance, is because a large number of people, many not associated with, or even lacking access to, a union struggle with the same problems.

With this in mind it is time for the unions to rethink how they operate and stop being the fire and brimstone style agitators they were during the 70s.

As the UK has developed as a country many of the issues unions were formed to fight have been solved, however the movement as a whole still campaigns in the same way as when they were opposing child labour in cotton mills.

What this leads to are regular strike threats which are never taken forward because industrial action is the first weapon taken out of the bag.

Having the right to strike is important, but low voter turnout at the union ballot boxes results in it being more of a legal battle of legitimacy of the action rather than the issues they are fighting for.

If unions restructured themselves along the lines of think tanks, lobbyists or focus groups, with industry specific unions offering greater focus and the TUC offering oversight on all UK workers, they would bestow a level of legitimacy not seen for many decades and be able to achieve some good for the workers of Britain, not just its card carrying members.

To reach this point however the unions need to address the biggest issue. Its PR problem.

Put any of the major union leaders in a debate with a politician and the union leader ends up looking like a foolish, badly behaved child, not because their arguments have no validity, but because they appear like a football terrace hooligan.

Instead of criticising the New Labour years maybe they should take a leaf out of Tony Blair and Alistair 

Campbell’s book and polish up its communication skills so they can become the strong, legitimate force for good they could be in British politics.

In the political world there are some people who are never let in front of a television camera, because they do not come over well on screen, the most damaging problem for the unions at the moment is they have no one who looks good and sounds intelligent on camera.

What this comes down to in the end is not a case of whether or not the trades union are relevant in the modern world, but a case of how can they make themselves relevant to today’s workers as a whole, not just its traditional membership.

New World Order – Pensions, Retirement and Saving

Worried about your nest egg?

The financial crisis has not had the seismic effect many were expecting on the capitalist system, but in its wake is it time for us to rethink how we go about living and saving?

Since 2009 salaries in both the public and private sector have stagnated, while inflation has risen making everything from the weekly grocery shop to housing costs more expensive.

Pension funds took a battering on the stock market, with many now planning for retirement with much less in the bank.

House prices, particularly in London, have continued to rise, and the cost of renting in the capital has become unsustainable for those on lower salaries.

All this has resulted in low consumer spending as people scrimp and save to afford life’s basics.

However, for younger people in particular should this actually be seen as an opportunity to change the way we pay for life and more specifically cope with retirement.

A recent press release by financial advisors deVere suggested people should be saving over £800/ month by the time they are 30 to afford to maintain their lifestyle during old age, while a Barings Asset Management survey suggested people under 35 expect just 40% of their retirement income to come from a traditional pension.

The key issue with both of these statistics is they assume what could be a called a “traditional retirement”, but the kind post-work lifestyle our grandparents, or parents will be able to enjoy will not be available to the current groups of under 30s.

The main reason for this is the current crop of whippersnappers is the first generation who will probably never be able to afford to buy a house. This might seem extreme, but it is true.

Currently statistics suggest people are having to borrow, on average, £200,000 to get on the property ladder and pay about £50,000 up front as a deposit. For the vast majority of people this is unrealistic.

In the past this was less of an issue as people could expect to inherit a property, but with these conditions our children, and even us, might not even have this luxury.

However, panic not, because this could end up being the saving grace for our generation.

House prices are high because developers are not building anything affordable. Instead they build more expensive houses which are then sold as buy-to-let properties, which are rented out at highly inflated prices.

Although there has been outcry over the cost of renting, so far little has been done to tackle the problem, but this is likely to change.

The last 10 or 20 years have proved no amount of well-meant rhetoric is going to get low-cost housing built in this country, because private developers make more profit with selling to the buy-to-let market, which realistically could result in a renters, rather than a buyers, market.

Over the course of your lifetime renting is of course more expensive, however, on a month-to-month basis is not as financially challenging as saving for a deposit or paying of a mortgage.

Renting also ticks the social mobility box. With jobs likely to start migrating from the capital, renting rather than owning offers a level of flexibility the younger generation is keen on in their working lives.

People who own a home are far more socially immobile as they have set roots, whereas renters are able to move much more freely, particularly when it comes to taking a new job, or moving to a different part of the country.

Germany offers an interesting comparison here. In das Vaterland home ownership is not the obsession it is in the UK. For example, in 2011 90% of the residential property in Berlin is rented.

Even in German states where buying is the most popular option, renting still accounts for 40% of the market.

There are many reasons for this, including Germany not experiencing a housing boom like the UK, but rental costs are still 30-45% lower than UK equivalents.

How they have managed this is quite simple. There is so much competition for rented property landlords put prices down, not up.

This model is something the UK, and other countries suffering from similar problems, will have to look at.

Admittedly it would be impossible to recreate the situation in Germany, but a sensible approach to how much rent can be charged (maybe based on Council Tax brackets) could help make housing far more affordable and remove the rather out-dated concept of home ownership.

Pensions are another area where the current crop of under-35s could manufacture for themselves a better future by ignoring traditions.

Every survey and statistic is based on leaving the workforce at the current retirement age, but this assumption corrupts the results.

Hopefully this will come as no surprise to anyone, but anyone under 40 will not get to retire at 65, mainly due to the pressures an aging population is putting on the public finances.

When President Franklin Roosevelt introduced the New Deal in the 1930s people were only expected to live 10 years after retirement. Today, thanks to medical advances, better nutrition and generally healthier lifestyles, people could quite reasonably expect to enjoy 20 or even 25 years after leaving the workforce.

Although no concrete legislation has been passed on this issue, those yet to reach the big three zero can probably expect to be working until their mid-70s and possibly longer.

This results means, unlike our parents, the younger generation will have at least a further 10 or even 15 years to save for a shorter retirement, with the only unknown factor being the increase in life expectancy, which many experts expect to rise at a much slower rate in the coming decades.

In fact we have already started to see this happen, with older people staying in work longer, or taking part-time work during retirement to get themselves through the financial crisis, a factor which is having a detrimental effect on the employment prospects of those just entering the job market.

The idea of having to work later into life might seem depressing, but this is not just a vague theory, it is in fact an economic reality we will all have to learn to live with.

While the raising of the retirement age will come in naturally over time, moving the UK on from the addiction to home ownership and towards a rent-driven housing market is a much tougher proposition and will not be easy to implement.

However, as fewer and fewer people become able to buy a house this too might end up happening naturally.

For the first time in modern history, due to high house prices and the cost of old-age care provision, children can no longer expect to inherit a home, which consequently harms their chances of being able to get on the housing ladder.

This, in time, should result in a competitive rental market where rents are driven down by increased long-term demand, rather than up as landlords try to appeal to more affluent tenants.

Overall, the most important factor in this change may be growing demand for flexible housing as people travel further for work and as a result require more leeway in their housing arrangements.

There are already numerous economic and human resource studies which indicate generation Y in particular will change jobs more frequently and demand increased workplace flexibility.

People should certainly not be discouraged from aspiring to own their house or even taking early retirement if finances allow, but the underlying point here is these economic forecasts are fundamentally flawed because they assume a static retirement age and a maintained level of home ownership, one of which is impossible and the other undesirable.

So next time you start worrying about how you do not earn enough to buy a house or start saving for retirement take a deep breath a remember the basis of society is changing and making assumptions about your life 30 or 40 years in the future based on current conditions is a pointless exercise.