Consider this a graphic complement to your bluffer’s guide.
1. This is Britain’s fiscal future. Taken from the IFS, it shows how we are not yet half way towards the full fiscal consolidation planned by this government. This amounts to about one-tenth of national income. The colours within each bar show how consolidation is biased towards spending cuts and against tax rises, and how benefit cuts will take up a larger share in the next parliament.
Mike Brewer from the Institute for Fiscal Studies published a cogent note on Tuesday about the UK government’s “tax-free” childcare. It echoes some of the points I tried to make yesterday about the changes, namely that they are broadly sensible but there is no firm evidence to say that they will do what they are supposed to do, i.e., increase the number of parents in work. There is a big risk that simply subsidising demand will translate into higher sticker costs for parents since the supply side of the market is not working as one would hope of a competitive sector. This is without getting to the argument of whether we should think of nurseries as a market in the first place.
But Mr Brewer makes another important point. A household is eligible for tax-free childcare if the parent(s) are both working and neither receive financial support through working tax credits, or in the future, Universal Credit. What do you need to do to be classified as “working” and therefore ensure that your family gets up to £2,000 in support for childcare? You need to self-certify that you earn £50 per week. No income tax or national insurance is paid at this rate, so it would be hard for HMRC to check. “There will also be a very large incentive for some second earners to claim that they are earning that much: it could be worth thousands of pounds in childcare subsidy”, Mr Brewer writes. Read more
The previous post looked at the changes announced on Tuesday to “childcare accounts”, a subsidy to working parents to help pay for nursery and/or childminders. But for lower income parents, there was a more important change announced regarding Universal Credit, the government’s all-singing, all-dancing, not-yet-working reform to the benefits system, due to be rolled out at some point in the next few years.
Most of the coverage on the childcare changes has focused on the subsidy. But the Universal Credit changes are important and they affect a lot of people: about one half of all households with dependent children will receive UC.
The childcare fix announced today suggests how, in a complex system where rates are being changed from year to year, such disincentives can still emerge. The change sounds simple: under UC, the government will now pay for up to 85 per cent of childcare costs, rather than 70 per cent, as previously proposed. This is why it was necessary:
This chart shows why affordable childcare matters:
On Tuesday, the government announced tweaks to the childcare policies it introduced at last year’s Budget. It says that these changes will help parents with childcare costs and therefore support those wishing to return to work. Will they? Read more
Wednesday is the UK’s Budget day. For those who enjoyed exams when they were younger, this is a glorious occasion; the chancellor announces lots of new information, including some things have that haven’t been leaked, and he prompts a scramble to understand what it means. Normal people and the rest of the world find the scene baffling. But there is a good chance you will be called upon to say something intelligent about this unintelligible event – and that this will happen before any typically-brained human being will have been able to analyse the figures.
Here are seven things that you can say in any conversation about the Budget. This bluffer’s guide has the advantage that you don’t have to watch the event.
1. “Any announcement worth less than £10bn is not worth discussing.” No-one wants to seem without perspective or worse, vision. And vision means the big picture and the big picture means big numbers Read more
The nature of low pay has changed since the introduction of the minimum wage, 15 years ago. The chart below from the report shows that extreme low pay – earning less than half the median wage – has been nearly eradicated. But low pay – earning less than two-thirds of the median wage – is as prevalent as in the late-1990s.
Ed Miliband’s announcement on the EU in the Financial Times today is partly a recognition of this:
But it is also made with a keen awareness of this:
The Labour leader is trying to stem the bleeding of support from his party to those on the right. Europe might not be a salient issue but in today’s populist climate, it is a symbolic one. Read more
I know what you’re thinking: Alex Salmond doesn’t need political advice. He is a MacMachiavelli, a crafty schemer, “the best politician in Britain”™.
But if the referendum on Scottish independence due September 18 were held tomorrow, the Scottish National Party leader would lose, opinion polls suggest.
What to do?
I don’t claim to support this idea but what if the SNP leader were to pledge a second vote after negotiations for independence were concluded? Scots could better understand what it is they are actually voting for and perhaps those inclined towards Devo Max would find it an attractive option. Read more
The RMT union leader died on Tuesday, three decades after the outbreak of the 1984 miners’ strike. Jim Pickard’s 2011 interview is the definitive article on Crow.
The chart below shows union membership levels in the UK since 1892.
On Monday, the Labour party announced details of its “job guarantee” scheme for Britons aged 18-24 who have been receiving Jobseeker’s Allowance, the standard unemployment benefit, for more than a year. The Conservative party says that Labour is making an unfunded and unaffordable commitment.
The Treasury estimates that the scheme would cost £1.04bn per year. If that sounds conveniently like ONE BILLION POUNDS, I think you are on to something. The real figure would almost certainly be less than that.