Tory Liberal failure on the economy – Double-Dip recession

With the news that we are officially in a double-dip recession period LINK it is becoming clearer that the Tory Liberal economic policies are fundamentally flawed. Yes, they inherited a large deficit, but they also inherited a growing economy.

Cutting too far too fast has recklessly damaged the UK’s good prospects of getting our economy moving again. So far, the Tory Liberals have increased unemployment by

  1. Slashing jobs in the public sector on the unsubstantiated claim and risk that jobs will miraculously appear in the private sector to make up for the rise in unemployment in the public sector
  2. Increasing VAT which has an impact on a business’ take home profits, meaning that they have less profit available to employ people and expand
  3. The VAT rise also impacts on consumer spending and disincentivises businesses
  4. Scrapping the Future Jobs Fund which equips young people to be work ready. Indeed the long term impact of this has also been ignored by the Tory Liberals. Even if there is a lack of employment opportunities in the country, it is important that these schemes are invested in so that people are equipped with the skills they need and are work ready for when the economy does recover and there are jobs for people to go into.

Unemployment should never be a price worth paying. The immediate and long-term impact of worklessness is far worse than pursuing an aim to get rid of the deficit in four years. The Tory Liberal Government have made this their priority and ignored the impact that this damaging course has on ordinary people.

The VAT rise also had a detrimental impact on inflation. Naturally, it costs more to buy products because there is more tax paid on spending money. This leaves less disposable income to the individual and what’s more, wages are not going up with inflation. People are being squeezed with higher costs and lower income.

This brings me to my final point on the deficit, which has increased under this Tory Liberal administration – LINK

Growth is a key component to tackle the deficit. Without economic growth, it becomes difficult to address the deficit. This has been the Tory Liberal Coalition’s main failure. There is the issue of the Eurozone crisis that the right wing Government will point to. However, slashing public sector jobs with a front loaded approach and the VAT rise are policies of the Government’s own making.

The Tories are out of touch with ordinary people and their stance on the 50% tax rate at this very moment in time is testament to that. The Liberals aren’t bothered about issues such as employment, jobs, the economy, crime and the NHS – this is proven with how easily they flipped their position on these what I consider core issues. They are far more concerned with the House of Lords and the electoral system and appear more principled on these issues than ones that have a more profound impact on people.

Guest Blogpost from Richard Lynch: Inflation down but still too high

UK inflation fell in December, for the third month in succession, and is now only the third highest in the EU. However it continues to be high by the standards of the past 20 years and is still rising at double the rate of pay increases. The figures for the year to December 2011 (with year to end November figures in brackets) are as follows:

Retail Prices Index (RPI)                                 –        4.8% (5.2%)

RPI excluding mortgage interest (RPIX)          –        5.0% (5.3%)

Consumer Prices Index (CPI)                         –        4.2% (4.8%)

The falls in all the main indices were the result of heavy discounting on the high street during the period around Christmas and falls in prices of food, fuel, clothing and recreation/leisure.

Despite this, there were still some steep price hikes. The CPI figures, for example, showed big year-on-year increases in the prices of oils and fats (13%), coffee, tea and cocoa (9.6%), tobacco (11.8%), electricity (14.1%), gas (19.8%) and house contents insurance (21%). The RPI figures showed many equally high increases, including in the prices of beef (10.6%), lamb (17.5%), oils and fats (14.4%), coffee and hot drinks (12.9%), tobacco (11.8%), electricity (14.1%), gas (19.6%) and vehicle tax and insurance (18.6%).

Overall UK inflation may have fallen in December but it is still high by international standards. In the EU, our 4.2% CPI rate is below the rate in Slovakia (4.6%) and Poland (4.5%) but is well above rates in Germany (2.3%), Spain (2.4%), France (2.7%), the Euro Area (2.7%), the EU as a whole (3.0%) and Italy (3.7%). UK inflation is also higher than in Switzerland    (-0.4%), Japan (-0.2%), the USA (3.0%) and China (4.1%).

Further falls in UK inflation are expected over coming months as reductions in utility prices kick in and the effect of last year’s VAT increase drops out of the annual comparisons.

*The latest Inflation figures are (RPI 3.9%, CPI 3.6%) 

Richard Lynch is a Dudden Hill resident. He is a retired Unite the Union official and currently conducts voluntary work on employment rights for the Brent Community Law Centre. He also acts as an accompanying representative for the GMB union.


Just how bad is UK inflation?

UK inflation is now at its highest level for over 20 years and prices are rising faster here than in almost all of our European neighbours and global competitors. The figures for the year to end September 2011 (with August figures in brackets) show the following increases, together with some frightening underlying increases:

Retail Prices Index (RPI) – 5.6% (5.2%)

RPI excluding mortgage interest (RPIX) – 5.7% (5.3%)

Consumer Prices Index (CPI) – 5.2% (4.5%)

The main reason for the rise in the RPI was an 18.8% increase in the cost of fuel and light, which included a 28.2% increase in the cost of domestic oil and other fuels, a 22.4% increase in the cost of gas and a 12.9% increase in the cost of electricity. Other reasons for the higher RPI included increases in the cost of tobacco (13.1%), clothing and footwear (11.1%), motoring expenditure (8.7%), fares (8.5%) and food (6.9%). Leisure costs, however, had a negative effect on the figures and cost of leisure goods actually fell by 2.4%.

The main reason for the rise in the CPI included increases in the cost of gas (13%), alcohol and tobacco (10%), transport (8.9%), electricity (7.5%) and food (6.4%).

The RPI is now at its highest point since June 1991, when John Major was Prime Minister, and it has been at or above 5% on ten occasions in the year and a half since the coalition took office. By way of comparison, it only reached or exceeded 5% on four occasions during the 13 years of the previous Labour government. The CPI is also abnormally high and its current level of 5.2% has never been exceeded since the index came into existence.

This CPI figure is also higher than comparable figures in Ireland (1.3%), France (2.4%), Germany (2.9%), Greece (2.9%), Spain (3%), the EU as a whole (3.3%) and Italy (3.9%). In fact only one EU country has higher CPI inflation than the UK – Estonia at 5.4%. The difference is even more extreme when we look at non-EU competitors, including Japan, which has zero inflation and the US, which has 0.3% inflation – 17 times lower than our figure!

And what we thought was the one bit of slightly good news, namely that state pensions and benefits would be going up by 5.2% (the September CPI figure) next April, is being questioned. George Osborne, the Minister for Misery, has now announced a review of the link with the September inflation figure and is considering a freeze or sub-inflation increases in these benefits instead!

Richard Lynch is a Dudden Hill resident. He is a retired Unite the Union official and currently conducts voluntary work on employment rights for the Brent Community Law Centre. He also acts as an accompanying representative for the GMB union.

Ed Balls on Fuel Duty and VAT

Shadow Chancellor Ed Balls has commented on what the Government can do to help families cope with financial pressures they are facing.

Revolutions in Egypt and Libya have driven up oil prices but there are four things George Osborne can do now.

While he gave banks a tax cut compared to last year, they are now going to pay £800million more than this Government was planning. He should use the extra money to reverse the VAT rise on petrol.

Secondly, he should look at April’s annual fuel duty rise. Labour often postponed planned duty rises when world oil prices were rising.

Thirdly, he must work with finance ministers globally to keep the oil supply flowing and get prices down.

Finally, he must get our economy moving and get more people in work and paying taxes.

Rt Hon Ed Balls MP

VAT rise set to cost the economy 250,000 jobs

These are Nick Clegg’s own figures which he was so keen to highlight before the May 2010 General Election. He even pulled out all the stops with this huge billboard warning against the ‘Tory VAT Bombshell’. Little did we know that a few months later, he would be patting George Osborne on the back as he announced the Tax hike.

“We will not have to raise VAT to deliver our promises. The Conservatives will. Let me repeat that: Our plans do not require a rise in VAT. The Tory plans do, they come with a secret VAT bombshell”.

(Nick Clegg, 28 April 2010)

Now the Lib Dems will be raising VAT to 20%. Ed Miliband has called this VAT rise the wrong tax at the wrong time that will hit people all the time.

“This is Typical Tory”

Normally blog posts are about the author’s views. But today I draw upon what a local Dudden Hill resident said to me this weekend.

I was out talking to a local resident in Neasden on Saturday conversing about what the Government is doing with regards to public spending.

“This is typical Tory”, he said, reverting back to his memories of the Thatcher Government in the 1980s. “These cuts are all ideological, they just want to cut, cut, cut.”

With most of the cuts yet to even come into force, he said “it’s already affecting people.”

….. and it is. It’s been hard enough for people to cope with the impact of the recession, but to have cuts to services, to benefits for people who may have lost their job during the recession, and the forthcoming rise in VAT, will be hitting people that need help the hardest.