A Growth Concern – Budget Review

‘It can’t be worse than last year’ was almost certainly the buzz phrase around the treasury in the run up to George Osborne’s fourth budget as Chancellor, following the so called ‘omnishambles’ of caravans, charitable donations and Cornish pasties in 2012.

While his budget has certainly not been torn apart in the same way, there has been intense speculation and assessment of the measures Osborne laid out.

The growth, debt and deficit figure were never going to make for happy reading, although the Chancellor did his best to paint them in a positive light, however, the alterations to tax and housing policy have been the main talking points (face it, we do not need the Office for Budget Responsibility to tell us how badly the economy is performing).

Osborne’s ‘Help to Buy’ scheme was this budgets flagship policy. The basic idea involves interest free loans of up to 20 percent of the value of a new house and government guarantees to underpin new mortgages to the tune of £130 billion.

The expected outcome is an increase in demand for new homes, resulting in more home building by contractors, leading to greater employment in the construction sector. However, there are certain flaws in this policy.

Essentially this idea build on the 1980s policy of ‘Right to Buy’ where council house tenants were allowed to buy homes at a huge discount, improving their credit rating and making it easier for them to get loans.

The problem was councils, in a desperate attempt to raise cash, sold almost all social housing and the private sector did not meet the demand for low cost housing. In the long term this has led to the almost weekly newspaper articles about a single mother with four children or a large immigrant family living in expensive properties at the taxpayers’ expense.

Already there have been issues raised with the policy, although the government has been keen to point out the details have not yet been decided.

The main issue seems to focus on abuse of the system. The Labour party and interest groups fear the people who will take up the scheme will be people buying second homes and buy-to-let landlords, which will not result in the require increase in demand for new housing or help first time buyers onto the property ladder.

However, there could potentially be another significant problem. The economy’s major fault at the present time is non-existent demand from consumers, the reason for this being a lack of job security meaning people are saving rather than spending. This issue is then compounded by businesses and financial institutions sitting on capital and waiting for fair economic weather before investing or loaning money.

This policy seems to assume there is zero demand in the housing market, when the fact is people want to buy homes, but just cannot afford them. The interest free element of this make almost no difference to the average first time buyer who would still have to pay a substantial deposit, which many people cannot afford due to stagnant wages.

A welcome policy could help this, with the extension of the income tax threshold to £10,000. This will be of huge benefit to low and middle income earners who will see a significant rise in their monthly pay cheques.

However, as welcome as this is, it only partially bridges the gap caused by inflation and frozen wages. It is this annoying trend which seems to continue through the rest of the budget.

The proposed 3 pence rise in fuel duty in September has been scrapped. Again, thank you George, but what good does it do when people cannot afford the petrol in the first place.

Beer duty as well will be reduced by 1 penny a pint, as if this is going to make any difference to the amount of money in people pockets or the profitability of pubs.

A National Insurance cut of £2,000 for every business, while 450,000 small firms will pay no employer NI at all. You will not hear any company owner complaining about this policy, but its small potatoes and will likely have no effect on business investment or employment rates.

An extra £15 billion in infrastructure spending by 2020, starting with £3bn in 2015/16. This is tantamount to battling an inferno with a garden hose. Many of those calling for increased capital spending are arguing for at least £15bn straight away, while £3bn will barely cover administration cost of a new project.

There are essentially two ways to go with the UK economy at the moment. Firstly large increases in capital spending to increase investment in infrastructure, support greater employment and encourage growth, or secondly massive spending cuts to rapidly reduce the deficit and debt, restoring faith in the fiscal solidity of the UK.

The overriding problem with this latest budgetary offering from George Osborne is it is neither one thing nor the other.

He came to power claiming he wanted to erase the deficit by the next election, a target he will not even get close to, and at the same time he refuses to increase capital spending to improve growth.

Regardless of whether you are a Keynesian or a Friedmanite what this economy actually needs is action in one or the other direction.

What Osborne has done is land himself in economic purgatory, where he is neither one thing nor the other, which has resulted in a stagnant economy, flat-lining growth and a steadily rising, not falling, national debt.

We all have our personal views on what Osborne should do, now we just need him to make up his mind and actually take some action one way or another.

The only conclusion it is possible to draw is Osborne suffers from the same issue as the Con-Dem coalition which, instead of taking significant long-term action, prefers to deal with an issue of the week, before it is forced into a humiliating u-turn.

Regardless of your views on the government as a whole and its handling of the economy specifically it is time for them to do what they were elected to do and show strong leadership, a quality severely lacking since it took office. 

Official Respect - Can Football Learn From Rugby?

Arguably the most striking difference between the sports of football and rugby, apart from the shape of the ball, is the apparent respect the players of the oval-orb game have for the match officials. A decision by the French Rugby Federation has called into question the tactics used by football associations in dealing with on-pitch decent.

In a recent Top 14 match against Bordeaux Begles, the talismanic Italian number eight Sergio Parisse was sent off while paying for club-team Stade Francais for insulting a referee and initially banned from all competitions for 40 days, with 10 of those suspended.

On appeal his sentence was reduced to a 20 day ban and, most interestingly of all, he will also have to attend a refereeing course.

This allowed him to play for his country against England at the weekend, a match he clearly had a huge impact on, but compare his punishment to the non-existent deterrents for footballers who vigorously protest almost every decision going against them.

No fan wants the referee to get a decision wrong, particularly not when it goes against your team or adversely affects the outcome of a match and in the passionate arena of sport it can be hard to keep emotions under wraps.

Current Scotland manager Gordon Strachan once said on BBC Football Focus, when asked about this disparity, the advantage rugby players have is the physicality means any frustration can be got out of the players system much quicker than it can in football. His argument boiling down to the fact rugby players can tackle their way out of these situations.

While his point certainly has merit, it is hard to recall a time, even after a game, when a rugby match official was heavily criticised for their performance. Compare this to the almost weekly rants by managers and players in the Premiership and lower down the football leagues.

Are rugby officials simply wrong less of the time than they are in football, do instant replays mean fewer important decisions are given incorrectly or is it simply footballers acting like petulant teenagers?

Take a decision this weekend when well-established football referee Mark Clattenburg gave an injury time penalty to Norwich City against Southampton. The penalty, at best, was a soft decision, but it was saved by the South-coast team’s keeper the game ended 0-0.

The fact the decision ended up bearing no relation to the result did not stop the Saints players and manager, Mauricio Pochettino, mobbing Clattenburg at the final whistle to complain about the decision. This is certainly not a isolated incident and is just one of many examples from the weekend.

If we face facts it is unlikely it would be possible to instil the inherent respect rugby players have in footballers, but the Parisse incident and subsequent punishment should certainly be taken on board by football associations.

In a recent article The Guardian website chronicled the day at a football refereeing centre for sports writers, with the unsurprising conclusion being it is more difficult than it appears.

So why do the FA not force players and managers who consistently lambast refereeing decisions to go and try officiating for a day?

This would show them just how difficult it can be to make split second decisions, demonstrate the pressure officials are under and hopefully generate in them more respect.

Football players should be punished for descent as they are in every other sport. However, any punishment is pointless unless they learn something from it and unfortunately footballers do not respond to pointless match-bans or ludicrously small fines.

So while there may be a limit of what the players of each sport can learn from each, maybe the FA could learn something from rugby’s governing bodies in terms of handing out punishments.

Underestimating the Unemployed – IDS and the Back-to-Work Programme

Following the landmark decision by the Appeal Court last week the governments sector-based work academy programme is the latest Conservative policy to hit the metaphorical buffers, but what does this decision mean for the job seekers and what is the problem with the system?

It should be made clear right from the start the Appeal Court did not say the programme, which was criticised for being tantamount to slave labour, was illegal. The issue was about the lack of information being given to benefits claimants and the suggestion it was a mandatory requirement.

The programme itself works like this. Job seekers are placed into unpaid work, usually stacking shelves or other low-paid work, and in return receive government benefits. The idea is this gives them relevant experience, gets them into the habit of going to work and increases their chances of getting full-time paid employment.

However, right from the start the policy was fundamentally flawed, something which the recent court decision brought into the spotlight.

Cait Reilly, one of the claimants in the case last week, is a 24-year-old geology graduate from the University of Birmingham. Having left university she volunteered at a local museum, but was on benefits as she was unable to find full-time paid employment.

As part of the scheme she was told she had to go and work at a local Poundland store stacking shelves for no pay if she wished to continue claiming. This meant she had to give up her voluntary work and had less time to apply for paid work.

Regardless of your view of people who claim unemployment benefit it is hard to see any benefit for a well educated university graduate to get ‘work experience’ stacking shelves when it is clearly not what they are interested in or trained for.

The truly ironic thing about this is volunteering at a museum was actually better work experience for her and more likely to result in gainful long-term employment than the government scheme.

Long-term unemployment is a major problem in this country. There are far too many people leaving education with no qualifications who then spend years on unemployment benefits at the tax-payers’ expense.

It is these people who benefit from the sector-based work academy, not a university graduate.

When I finished training as a journalist at the height of the credit-crunch in 2009 I came out into one of the worst job markets in history and was forced to claim unemployment benefits and although this scheme did not exist at the time I suffered from many of the same problems.

Job Centre staff did not care about my qualifications, skills and experience and were only interested in getting me to apply for as many jobs as possible, almost all of which had no bearing on my qualifications or experiance.

At one point I was effectively ordered to apply for a temporary Christmas position in a retail store at a local shopping centre. I then had to explain to the advisor that, while I was willing to apply, there was no chance of me getting the job as it was the kind of position offered to 17-year-olds looking for work during the school holidays.

Thankfully I now have a great job working for a media company in London which I love and is well paid, but being asked to stack shelves would have, if anything, hindered my chances of this.

The experience of Ms Reilly and myself just goes to show the Job Centre is not fit for purpose when it comes to dealing with educated people who are unemployed.

To make matters worse over the weekend Work and Pensions Secretary Iain Duncan-Smith had the audacity to criticise people “who think they’re too good” to stack supermarket shelves, then saying those involved in the programme were not unpaid as they were “paid” job seekers allowance.

The problem is Ms Reilly did not feel she was too good to stack shelves, it is just it is not a suitable work-

placement for somebody who is a university graduate.

Has this government completely given up on people who have aspirations to get into more gainful long-term employment, or does it honestly believe the privileged should be able to do what they want and the rest should go and work in Tesco?

Anybody taking more than a cursory glance at the policy can see how to get it to work.

Firstly look at the job seekers CV. What is their highest level of qualification and do they have any marketable skills or experience? If the answers are in the negative, or they are long-term unemployed then yes, getting them into any workplace is going to be beneficial.

Secondly, for people who have higher qualifications, for example, degrees, A-levels and the equivalents, look at their areas of specialisation and find out what can be done to help them into employment in their area of expertise, be it volunteering, internships or apprenticeships.

People stay in school and go to university so they can get better paid work, not so they can graduate and get a job in Poundland. It is not that they are too good for the job, it is that they have made the effort and are trying to get a better future for themselves and their children.

This in fact might be the first time in history a government has been against people aspiring to do better by staying in education.

Ms Reilly was not caught in the vicious circle of unemployment, she was just unlucky enough to graduate into an artificially uber-competitive job market.

There is nothing wrong with the sector-based work academy, it is just it has been implemented really badly by an organisation [Job Centre] who have no interest in actually helping people into relevant employment.

If this programme was aimed at the right people, people with no qualifications and the chronically unemployed, then it would be a great programme, but it should not be seen as a one size fits all solution to joblessness in this country, particularly not for skilled workers and graduates.

Auf Wiedersehen Pope – Benedict XVI Resignation Sets Precedent

The Catholic world is reeling following the shock resignation of Pope Benedict XVI as the head of the church and its 1 billion followers worldwide, but while a resignation of this nature is unprecedented is it likely to become the norm for future Roman Catholic leaders? 

It has never been impossible for a Pope to step-down from his position, but it is almost unheard of. The last to do so was Pope Gregory XII in 1415, who resigned due to a dispute over who was the true Pope.

The nature of their respective departing mean there are very few similarities to be drawn between Gregory and Benedict, but the 600-year gap between these two historic events says a lot about the Papacy.

Almost since the formation of the Vatican and the appointment of Papal leaders it has been accepted the position is a lifetime appointment, much like a monarchy, with the only previous deviation of Gregory being under extraordinary circumstances.

However, certain modern factors certainly need to be taken into consideration. Firstly people are living longer and medical care is much better. This means there is a much greater chance for a Pope to suffer from degenerative illnesses, such as dementia or Alzheimer’s, or even severe health problems such as cancer, where treatment will have a major impact on their working lives.

Secondly, the nature of the church and Papal leadership has changed. This is no longer a religious figurehead, but can more accurately be compared to the chief executive or managing director of a large multinational corporation.

It is perfectly reasonable to say this level of leadership in the age of 24-hour news is physically and emotionally impossible for someone who is suffering with the common afflictions of old-age.

An interesting comparison here can be made with US President Franklin Roosevelt who, like many Popes in Rome, died in office. Despite having been elected to the Whitehouse on numerous occasions and almost staggeringly high approval ratings the people were shocked when he passed away after a stoke.

Many asked why he had not told the general public about his rapidly diminishing health and this episode in American history led to the creation of the constitutional line of succession and the two-terms only policy. It is perfectly reasonable to argue the day-to-day rigors of being President are not comparable to what a Pope must endure, a common quote from Catholic leaders is the church thinks in centuries, not decades.

However, you must also consider Pope’s are already of an advanced age when they are elected. Benedict was already well into his 70s by the time he became Pope, compared to David Cameron who was just 43 when he became Prime Minister and Barack Obama who was elected President at 47.

In a democracy it would be almost impossible for a person over the retirement age to be elected to the highest office. In the corporate world older people may continue to be involved in the running of a major business, but this will take the form of a less-stressful board membership, while younger people are more directly involved in implementation and execution.

The issue remaining is politicians and business leaders are expected to step-down and retire, while it is accepted the Papacy is a life-long appointment, meaning there is more comparability with a monarch than a President.

In the UK it is incredibly rare for a King or Queen to abdicate and, although there are examples of it happening, the same can be said for all kingdoms across the world.

One of the biggest issues raised following Benedict’s resignation is his influence over who will be his successor, a problem never before faced by the Conclave of Cardinals. Similarly, whoever they choose will have to lead despite his predecessor still being alive, another conundrum never before faced by the church. 

The fact this is the first time a Pope has stepped-down for health reason is a complete paradigm shift and one which may become increasingly common for future generations. It could be argued Benedict’s lasting legacy will be Pope’s will no longer be expected to hold office until death and will allow for much younger people to take the reins of one of the largest organised groups in the world, but is this necessarily true.

Benedict’s predecessor, John Paul II was evidently unwell and frail during his final years at the Vatican, but this made his position arguably stronger as an elder statesman and as somebody able to lend both a theological and historical perspective. However, it must also be accepted John Paul was a beloved Pope and a very charismatic leader, characteristics which do not necessarily lend themselves as well to his successor. 

In the wake of Benedict’s announcement, many have suggested resignation may become the norm for future Pope’s and this is certainly not impossible and may in fact be beneficial for the church. However, realistically what Benedict has achieved is to open this door as a realistic exit strategy.

Yes, it is likely in the future a Pope resigning will be more common place, but there is certainly no reason to suggest it will become the norm. After all, those elected Pope see their selection as the choice of God, not of the Cardinals.

What this eventually comes down to is another example of the Catholic church modernising itself to be more in line with global democratic principles and the development of itself as a corporate entity, where an aging man can no longer be expected to look after both the spiritual health of its followers and maintain the complex organisation structure of a multinational organisation.

Has Benedict fundamentally changed the nature of the Papacy? Almost certainly yes. Will his successors similarly resign?

Almost, certainly no. It is impossible to say whether the next Pope will leave under similar circumstances, but what Benedict has done is remove an historical barrier allowing those following him to leave in this manner if they feel unable to execute the office.