Category Archives: Alternatives to Cuts

So Sneaky – Council Tax And Disability In Birmingham

We’ve recieved this letter regarding the cuts to council tax benefit which will see unemployed and some disabled people having to find 20% of their council tax bill out of their benefits. You can check if you are eligible for continuing exemption from council tax you can check with the council benefit team through this webpage.

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Occupation and Demonstration Greet Labour Councillors Meeting To Vote On Budget Cuts Proposal

feb 4 demo (2)The Labour group met yesterday to agree internally their budget proposal which accepts the £110m of cuts to the council budget as a result of the Tory coalition slashing central government grants. The full council meets on Tuesday 26th February to discuss and vote on the proposals put forward. In protest at the cuts and the Labour group’s decision to implement them on behalf of the Tory coalition, 20 people occupied the council house balcony from lunchtime until 6pm, and a demonstration of around 200 people marched up New Street to the council house where the meeting took place. There was coverage of these actions in The Birmingham Mail and BBC Website.

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2012: The Year Austerity Economics Started To Unravel

In 2012, austerity economics produced a double dip recession with zero growth across the whole year. Mass unemployment continued, real wages shrank and benefits were cut. Crucially, our budget deficit started to rise. Across Europe, economies continued to struggle, with Greece and Spain now looking to be trapped in a depressionary cycle that has produced 50% youth unemployment. Continued austerity measures across Southern Europe will only make these problems worse.

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Alternatives: Quantitative Easing For The People

This is a post in our series on our suggestions for alternatives to cuts and austerity.
In this post we explain Professor Steve Keen‘s idea – Quantitative Easing for the People.

We all know that over the past 3 years, the Bank of England has printed lots of money to give to the banks, in exchange for their bad debts – £375bn in fact. This money was supposed to stimulate the economy – to shore up the bank’s reserves so that they would lend to business and help to drive the economy forward. In fact very little of that money has found its way into the economy as there is already too much private debt and little willingness to either lend or borrow more money. Quantitative easing (QE) has in fact only helped the richest 10% of people, who have gained an average of £322,000 in value of their assets as a result of QE.
With the economy continuing to stutter, and inflation slowing down (although still rising faster than wages), there is talk of more QE, perhaps another £50bn like in July.

Instead of quantitative easing for the banks, Prof. Keen says we should give it to the people instead – in the form of a debt jubilee, a move he has called “Quantitative Easing for the People”

Skip to 4:07 to hear Prof. Steve Keen talk about his idea of a debt jubilee:

So instead of handing money to the banks, where it will sit in reserves and benefit the richest, this money would be given to everyone. If we assume for the sake of simple maths that there are 50 million adults in the UK (which is probably about right, but I’ve not been able to find an accurate number for this, sure it must be available from the 2011 census somewhere), that would mean £1,000 each in the event of a further £50bn QE being created by the Bank of England.

That money would have to be used to pay off debts, and any money left over people would be free to spend as they wish. That would mean anyone in debt would pay some or all of their debt off, and have a reduction in their outgoings, leaving them with more disposable income each month, whilst people without debt would see a cash bonus that would probably be spent, directly increasing demand in the economy.

Prof. Keen says The broad effects of a Modern Jubilee would be:

  • Debtors would have their debt level reduced;
  • Non-debtors would receive a cash injection;
  • The value of bank assets would remain constant, but the distribution would alter with debt instruments declining in value and cash assets rising;
  • Bank income would fall, since debt is an income-earning asset for a bank while cash reserves are not;
  • The income flows to asset-backed securities would fall, since a substantial proportion of the debt backing such securities would be paid off; and
  • Members of the public (both individuals and corporations) who owned asset-backed securities would have increased cash holdings out of which they could spend in lieu of the income stream from ABS’s on which they were previously dependent.

To read more about this plan, click here and scroll down to the section titled “modern jubilee”

So as the Bank of England talk of more QE for the banks, you should be calling instead for QE for the people. £1,000 for everyone to pay down debt or spend if they are debt free. Money into the economy instead of the bank’s vaults, leading to increased aggregate demand which will give confidence to the private sector, creating jobs and growth.

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Alternatives: Investment in Zero-Carbon Infrastructure and Technology – Getting Birmingham Back to Work

This is the latest post in our series exploring alternatives to cuts and austerity. Rob Marsden from Socialist Resistance explains how Birmingham City Council could look to invest in our local economy, and uses Ten Point Plan created by Birmingham Friends of the Earth as an example of this. This would act as a mechanism for investment in our economy, producing jobs and building confidence in the private sector that will create further investment. As with any structural investment, we should always be looking to achieve other policy aims and improvements rather than just undertaking major works, and here we see an opportunity to put people – as communities, workers / producers, trades unionists, activists and interest groups at the heart of shaping the future – in contrast to the current council’s business led agenda as evidenced in the current make up of the Birmingham City Council Green Commisssion.

The commission, headed by Councillor James McKay, includes representatives of business – Amey and British Gas – academics and the environmental think-tank Green Alliance as well as, we are pleased to note, Northfield Eco-centre. However, there are some glaring omissions.

No representatives of the trades unions representing the interests, knowledge and expertise of the hundreds of thousands of working people in the city. Unions such as the Communication Workers Union (CWU), the Public and Commercial Services Union (PCS) and the University and College Union (UCU) have been centrally involved in the Million Climate Jobs campaign They should have representation on this commission to balance the over-representation of business interests.

No representatives of environmental campaigns, in particular the key activist grouping Friends of the Earth. Birmingham FoE has already produced a set of policies for the city – we reprint their Ten Point Plan for a Better Birmingham below. Surely the Commission would benefit from their input?

And no representation of local communities. The Council is committed to more devolution and more local empowerment – why doesn’t it put it into practice by involving local communities in the Commission? We note that the Council’s Districts and Public Engagement O&S Committee has just launched an inquiry into ‘Devolution: Making it Real’ and they are inviting participation from trade unions and citizens – why doesn’t the Green Commission do likewise?

The Green Commission hasn’t yet published its schedule of work, but we would argue that it should include- before it draws up its findings – a series of public forums and/or a major public conference to take on board local views- not as a tokenistic ‘consultation’ exercise but in order to fully engage with the people of Birmingham.

What would a Green Birmingham mean?

Cllr James McKay is absolutely correct to say “we need a clear plan and carbon and energy road map if we are to drive that progress forward at the pace we need to.” However, if it is to really achieve significant reductions in carbon emissions, this road map will have to be one with far fewer cars on it than at present! Transport (accounting for approximately a quarter of carbon emissions), along with housing, energy efficiency and greater use of renewable sources, must be at the heart of the plan.

There needs to be a huge expansion in heavily subsidised, public transport linking all parts of the city- a carrot rather than a stick to reduce car use to a bare minimum. Clearly, bus deregulation has failed to deliver and the council should use its powers to the full extent to restore a publicly owned and funded service. This should go hand in hand with measures to pedestrianise more of the city, reduce speed limits in residential areas and make our roads much more cycle-friendly.

Domestic housing is the single biggest contributor to greenhouse gas emissions in Britain yet the energy saving and insulation techniques to remedy this exist right now.

The city council has already announced ambitious plans to increase the numbers of houses built in the city of the next few years. We welcome this and intend to hold them to their promise, but we would go further and insist that all new housing developments be built to the highest possible standards of energy efficiency and utilizing only the most eco-friendly construction materials available.

However, the council must also draw up plans to properly insulate the entire stock of both private and social housing in the city. This cannot be left to the private sector. Council direct works departments must be expanded to recruit and train an army of bricklayers, glaziers, carpenters and electricians to take on this urgent task.

Finally, the council needs to set itself the short term goal of moving to 100% renewable energy. A city which prides itself on the creation of its own electric, gas and water supply utilities under Joseph Chamberlain in the late 19th century should show similar vision in investing in projects to generate its own electricity from wind, solar and geo-thermal sources.

Renewable energy is far more labour intensive per kilowatt hour than either fossil fuels or nuclear power so the transition to a sustainable, zero-carbon future would mean a net gain in high quality, skilled jobs. Let’s put thousands of former workers in the car and engineering industries back to work and also start to transfer the scientific, technical and engineering skills from industries such as aerospace and power generation to develop the green technologies of the future.

Birmingham Friends of the Earth – our ten-point plan for a better Birmingham

1. Plan to phase out the burning of rubbish as a fuel – make Birmingham a ‘no incineration’ city with a zero carbon waste system and clean air.

2. Create jobs by re-using or recycling waste items and working with social enterprises to help them develop locally relevant projects.

3. Street bins will have sections for recyclable items.

4. Aim to get 5% of journeys within the city made by bicycle in the next 4 years by prioritising safety on the roads through 20 mph speed limits and creating safe cycling corridors. Also, aim to massively increase the number of school journeys made by walking or cycling by resourcing “walking buses” or “bike trains”.

5. Plan a bus system for the 21st century, so people have a real alternative to the car – this would include better stops with cycle facilities, better interchange between different bus routes and bus and other modes, clear mapping of bus routes and interchanges, better frequency, dedicated lanes and smart ticketing.

6. Energy conservation should be made the major priority, especially on council-owned buildings, as it is deliverable much more quickly and the returns on investment are higher than any other measure.

7. Birmingham Energy Savers should be expanded in a way that maximises the potential for local job creation, the development of local manufacturing, training up young people and dealing with the most acute cases of fuel poverty first.

8. Local procurement should be a major part of the council’s strategy to create jobs and also drive sustainable practices amongst local companies by building in expectations on environmental standards to contracts.

9. Spaces for growing food should be an integral part of every neighbourhood and access to these spaces a right of every citizen. This should be part of local planning policy on new developments.

10. Recognition of the importance of Green Infrastructure (parks, trees and green spaces) needs to be core to planning every area of the city because of the benefits it provides.

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Alternatives: Scrap Trident Nuclear Weapons

This post is part of our series exploring the alternatives to cuts and austerity. We already posted about how money spent on war could be spent on welfare, and now will examine one specific proposal – scrapping trident and trident replacement.

This week, the first of £3bn of contracts was awarded – £350m to start the design of new nuclear submarines to replace the current ones when Trident is taken out of service in 2028. The full cost of building the submarines is expected to be £25bn, with an additional £4bn-£6bn for the nuclear warheads and infrastructure costs. (PDF, page 9)
There would then be an annual expenditure of at least the £2bn per year that Trident costs us now.

Aside from the cost, there are other reasons to get rid of Trident nuclear missiles:

They make us less secure and safe
Senior British military figures have declared that nuclear weapons are completely useless as a deterrent to the threats and scale of violence we currently face or are likely to face, particularly international terrorism.
• There is no threat to our security from any other nuclear weapon state according to the Ministry of Defence (MoD). Instead it identifies the main threats to our security as coming from terrorism, cyber-attacks and major accidents (all of which nuclear weapons can never be useful against).
• Yet by having nuclear weapons the UK continues to encourage others to develop them too. If we say we need nuclear weapons for our security then any other country in the world can say the same, particularly those that are more vulnerable or threatened.

The UK agreed to begin disarming in 1970
• The UK signed a legally binding international treaty many decades ago (the nuclear Non-Proliferation Treaty which entered into force over 40 years ago) agreeing us to negotiate in good faith the goal of general and complete nuclear weapons disarmament.

It is illegal to use or threaten to use nuclear weapons
• The International Court of Justice in 1996 judged it generally illegal to use or threaten to use nuclear weapons.

So what does that money represent? Well £350m is similar to the amount that is being cut from the annual budget at Birmingham City Council. This cut has come at the cost of over 6,000 jobs, pay cuts and changes to conditions and the closure or cutback of council services.
The £2bn annual cost of trident is the same as is being cut from the Ministry of Justice, where 15,000 public sector workers are expected to be made redundant, and many courts and court services will close.

CND have an excellent interactive site to help show what is being cut in order to keep trident.

Clearly there would be some jobs lost both in the military and in the areas that the arms companies that will build the submarines exist, and money saved from scrapping trident should rightly be spent in these places, to ensure that any communities dependent on these businesses do not suffer disproportionately. Programmes around house building or creating climate jobs and businesses would be suitable replacements.

Between now and 2016, the government will spend £3bn, before even deciding that they will definitely replace Trident. At a cost of around £800m each year, that decision should be made now – scrap Trident replacement, invest the money in our economy and communities.

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Alternatives: Invest in a New Generation of Social Housing

This is part of a series examining the alternatives to cuts and austerity. In this post we look at building a new generation of eco-friendly social housing. This investment would be funded directly by the government and not through expensive PFI deals, creating a stock of council houses that would provide affordable housing, cover increasing demand and help to meet our carbon reduction targets to avert climate change.

At the moment, the construction industry is in trouble, with a fall in output of 4.8% in Q2 2012 as the UK goes back into recession. The Housing report for 2012, compiled by National Housing Federation, Shelter and Chartered for Institute of Housing identifies rising overcrowdedness and homelessness, and cuts to housing benefit see many hundreds of thousands at risk of being unable to afford their homes, including over 11,000 families in Birmingham. On top of this, there is identified a growing demand for housing which will not be met at current rates and locally the Labour Party has said 70,000 new homes will need to be built by 2026 – we are currently building around 1,000 a year (Labour Party Local Election Manifesto, PDF, page 13).

Has there ever been a clearer example of market failure? Here we have a situation where there is spare capacity in the industry and excess demand in the marketplace, but supply is not increasing to meet demand – so all that happens is prices go up and quality goes down.

Although there are specific issues around availability of land that will restrict the supply of housing, the biggest issue is that private investors are nervous, and they are concerned that there will be a further crash in the housing market, perhaps looking at Ireland where years of austerity have devastated the construction industry and left many half built houses and estates.

On it’s own, this market failure would be a good argument for the public sector to intervene and build to provide new homes directly, but in fact it is only a starting point for the case for this investment.

Right now the government can borrow at astonishingly low rates – 0.5% for long term gilts. This is far lower than the private sector can borrow, and makes good sense to do. As the linked article states, we could raise £30bn, paid for by the pasty tax.

Now there are many things that £30bn could be used for, but an investment in housing would not only fulfill a growing need, it would be a profitable investment for two reasons.

The first is that council housing makes a profit. Although it is widely believed that council houses are subsidised because they are so much cheaper than private rentals, in fact, council housing made the taxpayer £194m profit in 2008/9, and that figure is expected to rise to nearly £1bn/year in the next ten years. In fact, as this article explains, more subsidies are paid to the private sector than the public sector. The investment made in housing will pay itself back over time.

There are many reasons why council housing is cheaper than private rentals – longer pay back times for the investment, a large amount of housing stock which has already paid for its investment cost, a lack of profit motive, and the rise of buy-to-let mortgage rentals as investments which contributed to and came alongside sharp rises in house prices which meant that rents needed to be higher to cover larger mortgages.
All of this happened without the downward pressure on rents of large scale social housing because demand has exceeded supply – especially in the south east.
However, one thing is for certain, council housing is not cheaper because it is subsidised by the tax payer – it is cheaper because it is council housing.

The second reason is to reverse the rise in cost of housing benefit. Time to dispel another myth. Housing Benefit is not just paid to people who are unemployed. In fact, in 2007/8 only 12.5% of people who claim housing benefit were unemployed. This had risen to 22% by 2010, but 26% of claimants were employed in low paid jobs often at minimum wage, and many in London where £6.08 an hour (or less for younger people) is a real struggle to get by. Other claimants include pensioners (over a quarter of claimants in 2012), disabled people and carers. In fact it is in-work housing benefits payments that have increased recently, accounting for 93% of new claims – another sign that wages are being pushed lower as rental costs increase.
Housing Benefit costs £21bn/year, much of which goes to private landlords – the same private landlords who charge more than council housing. If we build council housing, and rent it at affordable levels to people on housing benefit, then that cost will be reduced, directly through the provision of cheaper housing and indirectly by putting a downward pressure on private rental cost as supply of housing comes up to meet demand. In this way it will benefit those who remain in the private rental sector.

This is another policy area in which this investment would produce positive results. Right now house prices are at a record high, out of reach to buy for most people and expensive to rent. It is no coincidence that these price rises have come alongside the sell off of council housing and deliberate decision not to build new stock. We can bring down rental prices for everyone, and this would particularly help those most affected by austerity – those on low incomes, as Shelter tells us that 55% of local authorities have rents which are (on average) considered to be unaffordable, costing over a third of the median wage for the area. Birmingham is considered to be slightly unaffordable, with rent costing an average of 34%-39% of wages (PDF, Page 35)
The money that is saved on rent would no doubt be spent quickly in other areas of the economy, providing a further stimulus effect, as the cash flows through the productive economy rather than to landlords and banks.

Alongside achieving all of these positive outcomes, the investment would also help government finances indirectly. By stimulating the economy – both directly in the construction industry, and indirectly through savings made on rent payments, it will create growth, which increases tax revenue and decreases benefit claimants. Doing so in the construction industry primarily would be an ideal place, as it is shrinking fast, and has spare capacity right now. This is where the investment becomes part of a strategic alternative to austerity – one which is focused on creating jobs in a direct manner, all working towards a sustainable, zero-carbon economy, and at the same time reducing the deficit in the medium term – something which austerity is set to fail to do.

Zero Carbon House in BirminghamMoving towards a zero-carbon economy is absolutely vital, and housing produces 26% of the UK’s carbon emmissions. The government could lead the way in building a new generation of zero-carbon and carbon-positive housing, designed around our needs in a post-oil future.

So by investing in social housing we can stimulate the economy, create a long term revenue stream to pay back that investment, reduce rental costs for everyone and housing benefit costs for the taxpayer, make serious moves towards transitioning to a zero-carbon, post-oil economy and all at the same time as meeting a rising demand that the private sector cannot meet for the homes people need to live in, where they need to live, and all at the same time as tackling our economic woes.

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