Throwing away jobs and economic growth

Earlier this year, I chaired an all-party committee which looked at regional economic growth. In particular, we were looking at the use of the regional development funds in a context where the government had abolished the regional development agencies.

The European Regional Development Fund (ERDF) is the EU's main tool to reduce economic disparities between the regions. Worth €201 billion between 2007-13, most of the funding goes to the poorer regions in eastern and southern Europe. England's allocation during this period was nearly £3bn, with the largest share of the funds going to Cornwall and the Isles of Scilly, Merseyside and South Yorkshire, all of which face significant and long-standing challenges to economic growth.

It has contributed to major schemes such as the Eden Project in Cornwall, the Sage concert hall and the Baltic art gallery in Gateshead and the Kings Dock redevelopment in Liverpool and, many years ago, the renewal of the Lyceum Theatre in Sheffield. It has also supported many smaller projects across the country to boost enterprise and support small businesses.

However, ERDF funds have to be matched by public bodies in the UK – for every £ in ERDF grant, a public body – like a council – has to invest a similar amount. The abolition of the Regional Development Agencies removed the main source of match funding for ERDF projects, and the economic downturn has reduced the options for match funding even further.

We concluded that the Government simply did not seem to appreciate the problems that projects are facing in securing the match funding needed for them to go ahead. It failed to deliver on its promise to make it easier for projects to use its Regional Growth Fund (RGF) as match funding.  We urged the Government to set aside RGF money specifically for this purpose.

We were quite clear that if urgent action wasn’t taken to spend each region's ERDF allocation before 2015, the UK would not only be returning unspent ERDF grant, but also that value for money would suffer and ERDF would not make the significant impact it might do to generate economic growth in areas with the highest unemployment.

We believed the government was being totally complacent about the matter. Having abolished the Regional Development Agencies in a fit of ideological pique, it simply didn’t understand – or perhaps even care – how important ERDF funds were to local economic regeneration.
Last week, I reminded Michael Fallon - the Business Minister responsible – about the Committee’s recommendations which would have ensured that all the ERDF resources would be used and which the government had rejected.

For the first time he confirmed that ERDF would be underspent. In other words, grant-aid from the EU budget specifically designed to secure economic regeneration in the UK’s poorest areas was going to be returned to Europe.

Thus, at a time when we need to use every endeavor to increase local jobs and to support economic renewal, this government – through sheer incompetence and ideological indifference – has thrown away millions of pounds in grant which would have made a significant difference to the poorest areas in the UK.

Yet the media ignore it. Of course, it doesn’t involve sex, scandal or chocolate. It’s just about a huge loss of jobs and economic growth in communities which need it most. It’s about thousands of people who will remain on the dole instead of working in productive jobs.
It’s a scandal.

Planning to cut growth

The government has introduced a Growth and Infrastructure Bill. The best that can be said is that the title suggests that the government has at last recognized that economic growth and infrastructure renewal are crucially important. The bad news is that the Bill is a rag-bag of measures which have not been thought through.

Construction activity has declined again in both the private and public sectors. 400,000 homes could be built on sites which already have planning permission. 87% of planning applications are approved.

Last year, the government produced a review of the national planning policy framework. The all-party Select Committee, which I chair, took evidence from a wide range of organizations concerned with planning, development and housing. We were unanimous in our report, which was quite critical of many of the government’s key proposals. To give the government credit, it accepted most of the recommendations we made.

Yet, just a few months after that major overhaul, we are back discussing fundamental changes in the planning system. This is despite the fact that our investigation could find absolutely no evidence to support the view that the planning system was hindering appropriate development or house-building. When we asked Ministers, they have been unable to provide a single piece of evidence to suggest planning is the problem.

So, why are we back discussing these measures? Over the summer, we could almost see the wringing of hands at No. 10 and No. 11 because the economy would not move. They were worried about why there was no growth, not sure what to do about it and looking for others to blame. We could almost hear the call to the Secretary of State: “Find me some initiatives. Anything will do, so long as we look as though we’re doing something.” So we end up with a rag-bag of measures which have not been thought through. Government Ministers at the Department, given the job of trying to justify them have signally failed.

But just because they’re a rag-bag, it doesn’t mean they’re unimportant. For instance, the first clause of the bill effectively removes from any applicant the right to appeal to an independent body against a decision of their local planning committee. Having previously asserted their determination to remove all targets and central assessments, the government is to introduce new targets – but we don’t know what they are – and a central assessment process, except that the government can’t tell us what the criteria might be. Taken together, the proposals go completely against localism and introduce centralism to the planning system. 

What we do know is that the new uncertainties which the government has introduced will cut and delay development activity even more.

You can read the debate on the Growth and Infrastructure Bill at Column 596 at

http://www.publications.parliament.uk/pa/cm201213/cmhansrd/cm121105/debtext/121105-0001.htm

You can watch what I said in the debate at:

http://news.bbc.co.uk/democracylive/hi/house_of_commons/newsid_9764000/9764601.stm

Losing Energy

Energy bills are soaring, driving up inflation and contributing to the cost of living crisis afflicting millions of families. The government’s response is to tell consumers they’re to blame for not shopping around enough and to cut back on the support it is offering to help people heat their homes.

Last week the Prime Minister promised to legislate to force energy companies to put everyone on the cheapest tariff. Within 24 hours, this policy had completely unraveled. Now, all the Government is actually promising is to get the energy companies to write to people.

It is clear that nuclear energy will continue to play a key role in a balanced energy strategy, especially when addressing climate change. The UK currently has 10 operational nuclear power stations, but all have scheduled closure dates between 2014 and 2035. Delivering on new nuclear power is a huge task. Investors need certainty and confidence about the Government’s direction of travel and commitment to nuclear power.

Yet the government is all over the place. This is not surprising as the Liberal Democrat Minister for Energy was responsible for launching a ‘Say No to nuclear’ campaign in 2006.

And now the junior Conservative Energy Minister John Hayes declares that building “onshore wind farms is at an end. Enough is enough”, whilst his boss, Liberal Democrat Energy Minister Ed Davey, says “He doesn’t make policy. There’s going to be no change in the government policy on renewable energy. Onshore wind is one of the cheapest renewables. It has an important role to play in our energy future.” What a shambles.

The most sustainable way that people can cut their bills is by reducing energy use, mainly by insulation improvement. However, the government has slashed the Warm Front programme which had secured insulation improvement in more than 2 million homes over the last 10 years and - despite the fact that nearly 30,000 qualifying applications were turned away last year – plans to abolish the scheme next year.

In its place, the government has proposed the Green Deal – basically a pay as you save scheme. . Homeowners install measures such as insulation, lagging and double glazing with no upfront cost. The costs are then paid back over a period of up to 25 years with the savings expected to be made from lower energy bills. In April, the Deputy Prime Minister Nick Clegg said: “We'll ensure customers are never charged more for the home improvements than we expect them to make back in cheaper bills.”

However, the government is now proposing that the interest rate on the loan will be at 7.5%. The typical scheme is estimated to cost about £10,000, which at that rate would require an annual repayment of about £886. As the average annual dual-fuel bill is now £1,335, that would require cutting the typical household energy bill by two thirds just to break even. You’re right, it doesn’t stack up.

Meanwhile, our fuel bills will continue to rise and the energy companies will continue to make super profits.

Shark alert

It’s good to know that we’re all in it together, as David Cameron and Nick Clegg keep reminding us. However, I don’t suppose that they’ve ever been in a position where, at the end of the week, the coffers are completely empty and there are urgent bills to pay or food to be bought. Yet, in the current economic situation, more and more people - especially as low-income working families discover the real impact of benefit cuts – find this is the reality.

Our TV screens are filled with those adverts from companies who are only so, so willing to provide a quick loan to tide us over until the next wage packet comes in. The sharks have arrived. The temptation is enormous.

In 2006, the payday loans industry was worth about £350,000 a year; last year, it had increased to more than £2bn. Interest rates can be 4000% and more. Nearly half the people taking out payday loans are doing it to pay off another debt – usually one with a  vastly lower interest rate.

A year ago, I called on the government to take urgent action to cap interest rates on loans. Bluntly, the whole business is just obscene. But, I’m sorry to say, the government has refused to act. The Office of Fair Trading has done a few spot investigations on some lenders about loans being given without checks being made about the ability to repay. Wonga – the biggest shark - was censured for employing “aggressive and misleading” debt collection practices. But that isn’t the real issue.

Even the Channel Islands have refused to issue banking licences to these payday lenders. So, why isn’t this government acting? Well, it doesn’t look good that Wonga was paying the Conservative Party to meet government ministers last month. And Adrian Beecroft, who earns millions in dividends from Wonga and donates some of those to the Conservative Party, was the person commissioned by David Cameron to recommend that protection for workers from unfair dismissal should be lessened. And now we learn that one of David Cameron’s key advisers has left to join Willy Wonga’s money-making factory. Bluntly, it smells.

The only good news on these issues is that UNITE, the trade union, is actively exploring expanding the ability of credit unions to offer short-term loans at low interest rates.

However, I repeat some simple advice for people who might be tempted by a payday loan:

“Don’t do it. Don’t even think of doing it. If you’re struggling with debt, go to your local CAB now before you do anything else.”

The Pickles Tax

The government, supported by much of the tabloid media, portrays those in receipt of benefits as workless and idle. The reality is that many of those benefits go to working families on low incomes, and they are going to be the hardest hit by a series of cuts in financial support.

Council Tax Benefit provides support to 5.9 million low-income families – including many pensioners- more than any other means-tested benefit or tax credit in the UK. The government is devolving decisions about and the budget for the benefit to local councils from next April. However, at the same time, the government is cutting 10 per cent off the funding it provides for council tax support, but limiting how local schemes can be constructed. Clearly the intention is that the government gets the credit for cutting welfare spending and councils get the blame for the cuts.

About 2 million low-income working households currently receive council tax benefit In fact, many more working households will be affected, as many low-income families experience temporary or short-term work and go in and out of benefit during the course of a year.

From next April, they will face a cut in that benefit of about £250 a year – for some it could be even bigger. Councils will be faced with the considerable expense of trying to collect £5 a week from millions of households. It’s little wonder that Conservative Lord Patrick Jenkin – who conceived the original Poll Tax – has described this as Poll Tax Mark 2. Personally, I think it should be called the Pickles Tax, after its originator Eric Pickles, the current Conservative Secretary of State for Communities and Local Government.

Now, after councils have ended consultations on local council tax benefit schemes, Eric Pickles has suddenly realized that his tax is heading for disaster and panicked. He’s suddenly announced a one year £100 million package – from the annual £500 million he’s cutting – to try to avoid the shambles ahead.

However, the conditions that Eric Pickles is proposing – and remember it’s only for one year – almost certainly mean that councils could only access these funds by increasing even further the cuts to other council services. Councils will be damned if they do, and damned if they don’t. Does Eric Pickles care? I doubt it.

Well, I’m badgered!

Mr Brock has received a stay of execution. At the last minute – just as the guns were about to fire - the government has announced it will delay its planned cull of badgers in England until next summer.

The Conservative Secretary of State, Owen Paterson said the cull "should have begun earlier this summer but had been delayed until after the Olympics and Paralympics, with recent bad weather also hampering preparations.”

Well, I have to say that the badgers were as surprised as me to learn these reasons. Were Mr Paterson’s ‘trained marksmen’ all competing in the pentathlon and shooting events? Were G4S meant to be making the security arrangements for them? Were the badgers all taking part in some Olympian underground event that the media failed to report?

The truth is that proposed cull is scientifically unjustified and the government's handling of the badger cull is simply incompetent and shambolic.  I’ve been telling the government for the last two years that a cull would be bad for farmers, bad for taxpayers, bad for wildlife and, most obviously, bad for badgers.

I’m not alone.

Professor Lord John Krebs, the Government’s own Chief Scientific Adviser and who led the 10 year trial of badger culling says  "The scientific case is as clear as it can be: this cull is not the answer to TB in cattle. The government is cherry-picking bits of data to support its case."

And Professor Lord Robert May, a former government chief scientist and president of the Royal Society says "It is very clear to me that the government's policy does not make sense."

As RSPCA chief executive Gavin Grant now says "We welcome this postponement, but this must not be a temporary reprieve, but must mark an end to all cull plans. Science, the public and MPs from all parties had said very clearly that a cull is no answer to bovine TB."

The cull’s postponement is just the latest episode in David Cameron’s omni-shambles. Why doesn’t he do the right thing for once and just permanently cancel the cull?

Young people paying the price

Sheffield’s young people are paying the price for this government’s economic failure, as long term youth unemployment in our area continues to soar.

Today’s national unemployment figures are masking an increasing crisis in Sheffield and our region.

There is no let up for young people in Sheffield who are increasingly shut out of the job market because of this Government’s economic failure.

Long term youth unemployment in Sheffield has increased by 149% - from 490 to 1220 - in the last year. Each of those is a tragedy, and the government’s lamentable failure to act leaves them with little hope.

And, there were just 3,652 vacancies for the 18,023 people looking for a job in the city.

 
There is now a real danger that Britain is becoming a very divided country. Yet the government is busily taking money – in local government, public health, transport, education and more - from the areas with the biggest challenges and giving it to those areas in the south-east with the least.

Long-term unemployment has risen yet again. The number of young people out of work and claiming benefits for more than a year went up yet again, and three-quarters of Britain has higher unemployment than at the election.

More than a third of people out of work have been jobless for more than a year in the clearest sign yet that the Work programme is not doing the job.

The national increase in people in jobs has come from an increase in those in part-time jobs or on temporary contracts.

Energy prices up – do something

Did you, like me, have a letter from your energy supplier this morning?

Did it tell you that prices are going up, but not by how much? Well, it’s an open secret that energy prices are likely to rise by 6-9% in the next two months.

Energy prices went up by 20% last year, and nearly 50% over the previous four years. Last year, the average duel fuel bill was £1345 per household and standard tariffs rose by £175 between May and October. Pensioners, families and businesses all felt the squeeze as electricity prices rose by 10% and gas by 17.4%.  Yet, energy companies had seen their profits soar in the same period.

And, what was the government’s response? It cut winter fuel payments by £50 for the over 60s and £100 for the over 80s. Most aged 60-79 got £50 less, and those who were 80 or older got £300 instead of £400. Before the last election, when challenged that a Conservative government would cut the winter fuel allowances, David Cameron had said “These are quite simply lies.” You can draw your own conclusion.

Energy bills are now one of the biggest costs facing households - but only 20% of people are currently on the cheapest deal. This isn’t surprising when research by consumer group Which? showed that, even when people try to shop around for a better deal, energy companies don’t give them accurate information in a third of cases.

It’s clear that hard-pressed families and businesses need more transparency on costs, pricing and profits to know whether they're getting a fair deal. But they’re clearly not going to get much help from this government, which shows no interest in protecting struggling households and vulnerable customers from being ripped off.

However, a new initiative launched today might just help. Switch Together helps people to club together to negotiate a cheaper deal with energy companies. You may have seen websites where you can compare energy costs to find the cheapest rate. But this is different because if lots of people get together and switch all at once, there is greater potential for a good deal. This is what Switch Together scheme does.

It's easy and safe, and support and guidance is available throughout the registration and switching process.

You need to register before 25^th November 2012. After the deadline they'll hold an auction with energy companies to find the cheapest deal - which will then be available to everyone who signs up. They’ll do all the work for you and let you know if you could save money.

There's no obligation to take it if it's not cheaper than your current deal - but the more people who sign up, the more likely it is that it will help households cut their costs over winter.
Sign up at www.switchtogether.org.uk before 25^th November 2012.

LINE UP – we’re being taken for a ride

This week, SKY announced that it will increase phone line rental charges by more than seven times the rate of inflation from December. The line rental charge will jump from £12.25 to £14.50 a month – that’s 18%. Sky is also increasing the cost of daytime calls, from 7.95p to 8.41p a minute and its call connection fee will go up from 13.1p to 13.87p.

Similarly, BT has announced a rise in line rental charges £14.60 a month to £15.45 from January 2013. And, BT’s call charges will also go up. Full-price daytime calls will rise from 7.95p a minute to 8.41p and the call connection fee will rise from 13.1p to 13.87p.

Virgin and TalkTalk have already implemented way-above-inflation increases in line rental charges, but BT and Sky are the dominant domestic telecoms suppliers.

There are a number of things that strike me about these announcements.

First, what is the justification for these inflation-busting increasing line charge rentals? I can’t think of one. One telecoms supplier – Primus – charges £8.25 a month. It uses the same infrastructure as the other suppliers. Is it subsidising its line rental costs? I don’t think so. So, why are the dominant suppliers charging nearly 90% more for that part of the bill which is inescapable?

Secondly, increasing the line rental charges means that those who make the fewest calls – typically pensioners on the lowest incomes – are facing the highest percentage increases in their bills.

Thirdly, in what the suppliers call a ‘highly competitive market’, how do BT and Sky manage to arrive at exactly the same costs for daytime calls and connection fees? Is it coincidence? I don’t think so.

That’s why I’ve called on the Competition Commission and the Secretary of State for Trade and Industry to launch an investigation into the telecoms’ suppliers and, particularly, these latest announcements.

The straw that breaks the camel’s back

90% of the benefit cuts, that the government has announced so far, are yet to be implemented. And, because the coalition government’s economic strategy has failed, David Cameron has announced that an additional £10bn cut in the welfare budget must be made. The media were briefed that these additional cuts would be targeted at financial support for people in work.

Already, changes in the rules on eligibility for working tax credits have had a big impact on families who have been unable to increase their working hours. From next year, changes in housing benefit and council tax benefit will hit many low income working families very hard.

Let me tell you about Janet.

She left school at 16 and went straight into full-time work. It was low-paid and the prospects were poor. Later, she started evening-classes, got some qualifications, but had to move away from home to get a better job, but her bigger income was swallowed up by rent and travel costs.

When she was 25, she met Paul. Like her, he’d also got on his bike to find a job. They saved up and got married 2 years’ later, but found that, despite both working full-time, they would never be able to buy a home in London and the high rent meant there was little spare cash.

Paul was offered a job back home in Sheffield. They jumped at the chance, found a private flat to rent and, after a couple of months, Janet also got a part-time job. House prices were increasing rapidly, again out of their reach. They put their name down on the council’s waiting-list.

Then, Martin arrived; they hadn’t planned to have a baby then, but they were delighted. Janet gave up work to look after him. When he was 5, they were offered a three-bed council house; it wasn’t in the area they wanted, but they’d make it their home. Janet went back to work part-time. They paid full rent and council tax. They put all their spare money in to decorating and furnishing the house just as they wanted; they never borrowed for anything.

And then, when Martin had just started secondary school, Paul became ill. The cancer was ravenous. He had to stop work and, as he became more ill, Janet gave up work to look after him. Last year, Paul died. Janet and Martin were devastated. The funeral costs wiped out their savings. Janet’s mum gave them a lot of support, travelling 30 miles to stay with them for two nights each week. They’ve had to make a new life.

Janet has now got a part-time job, but her employer can’t offer her the extra hours necessary for working tax credit. Financially, they can keep their head just above water. But, she’s worked out the sums. Next year, she’ll have to pay more council tax, because of the government’s cut in council tax benefit. And, now, they’re deemed to be living in a house which is too big for them; so, her housing benefit will be cut as well. Together, she’ll be about £20 a week worse off. If she moves to a smaller home – from the one they’ve carefully made into a home over the last 7 years – she can’t afford to re-furnish it, and her pensioner mother would have to sleep on the couch.

Janet and 39 other similar Janets will be facing financial catastrophe and family disruption so that a millionaire can have a £40,000 tax cut next year. For Janet, these cuts will be the straw that breaks the camel’s back.