← More or Less
More or Less
UK Election Podcast 3
00:16:46
Are we witnessing a jobs ‘miracle’? Also under scrutiny - Scotland’s deficit; a...
Loading summary
Transcript38 lines
- [00:00]
A
Hello and welcome to the More Or Less Election Podcast Number three. A collection of interviews that were first broadcast on Radio 4's PM programme with Eddie Mair, Tim Harford and Ruth Alexander took turns to shine a light on the numbers of the campaign. On Friday 17th April, the Office for National Statistics published its final set of Labour figures before the election. Ruth Alexander was invited on to discuss them. So employment's up. As we know, there are more than 31 million adults in employment now. That gives us a rate of 73.4%, the highest employment rate since comparable records began in the in the 70s, 1971. One of the big trends is rising self employment and the unemployment rate is down to 5.6%. That's the lowest it's been since July 2008 and much lower than the Eurozone average and better than the us.
- [00:55]
B
And David Cameron says he's overseen a jobs miracle.
- [00:58]
A
He does, yes. The Conservative campaign message is that 2 million jobs have been created since 2010. About 1,000 jobs a day, as they also like to say. And it's about right. But it's politically difficult for David Cameron that about half of these jobs have gone to people who weren't born in the uk, although a good chunk of these people are UK nationals. So about a third of Cameron's new jobs have gone to non UK nationals. Taking a longer term view, it's interesting. The Number of non UK nationals working in the UK has tripled since 1997 when labour came into office. There were almost a million then and almost 3 million today, making up just under 10% of the workforce. And this is in large part down to new countries entering the EU with their populations gaining the right to work here.
- [01:42]
B
Labour argues the new jobs are low quality.
- [01:45]
A
Yes, although we struggle here because there's no official job quality indicator we can turn to. What we do know is that part time jobs were a fifth of all new jobs over the past year. However, 16% of people with part time jobs, 1.3 million people, said that really they wanted a full time job but hadn't been able to get one. That's dropped a little over the past year or so, but these numbers are still higher than they were before the economic crash. There's a lot of concern about zero hours contracts, isn't there? And Ian Duncan Smith saying today he suggests that they just need a rebrand and be known as flexible hours contracts. Anyway, unfortunately it's hard to work out what the trend is in terms of how many people are on zero hours contracts. A survey of workers found there were 700,000 people on them, a bit more than 2% of people in employment. This was a big increase on the previous year, but it might be that people are just familiar with the term now and so more likely to say, oh, yes, I'm on a zero hours
- [02:40]
B
contract, but we can look at pay, I suppose.
- [02:42]
A
Yes. And the Green Party's Natalie Bennett made a point about this in the election debate on BBC1 last night. She was expressing sympathy for new graduates on the hunt for jobs. You're going out into a workplace where one in five workers is on less than a living wage. People aren't paid enough money to live on. They're indeed stacking up debts just to meet their basic costs.
- [03:03]
B
Is she right that one in five workers is earning less than the living wage?
- [03:07]
A
Yes, pretty much. It's an estimate by kpmg, but a fairly good one. So it's not a solid number, an estimate, but still the living wage, in case you're wondering, it's £7.85 an hour and is said to be what you need to earn to cover basic needs. It's more than a pound higher than the national minimum wage, the legal requirement, which is £6.50 an hour, turning them both into full time annual salaries. The living wage is about £15,000. The minimum wage is about £12,500.
- [03:37]
B
So those figures are easy to quantify. More difficult, I suppose, is working out how people feel about their working lives.
- [03:43]
A
Yeah, we've been making enquiries today. Apparently the most significant research in this area is the Measuring National Wellbeing Survey from the Office for National Statistics. It shows that people in the UK are, on the whole, very satisfied with their lives. It's only been going three years, but it corresponds with research over the past 25 years which shows that happiness increases as unemployed and crime falls.
- [04:04]
B
Ruth Alexander, thank you.
- [04:06]
A
On Monday 20 April, the SNP launched its manifesto.
- [04:11]
B
The Scottish Nationalists, Tim, say they are taking a bold stance against austerity. Is that claim justified in one big way?
- [04:19]
C
It is, and I'll get to that in a moment. But in other ways perhaps not. So I suppose the natural question, if you're talking about anti austerity, is to say, well, is the SNP to the left of Labour on these big issues of tax and spend? And it's not clear that they are. So the details of the pledges are different, but the broad fiscal stance of the two parties seems quite similar. The SNP say they'd like to increase public spending by half a percent a year above inflation, for example. Now, the Institute for Fiscal Studies say that that spending goal is compatible with Labour's broad plans for the deficit. So another SNP policy is to build 100,000 affordable homes a year. So you look at the Green Party, they want a similar number of homes, although they want social rental homes rather than affordable homes. The Labour Party are hoping to get to 200,000 homes a year by 2020. They may be affordable, they may not be. I suppose building more homes makes all homes more affordable. The Liberal Democrats, who are part of the outgoing coalition government, they want 300,000 homes a year. And on taxing the rich, the SNP and Labour seem to have similar plans. They want to raise the tax rate on people earning more than £150,000 a year from 45p to 50p.
- [05:31]
B
Right, but you said that in one way the SNP is making a bold stance against austerity.
- [05:35]
C
Yes, in one way. So it's at this point I need to mention the phrase full financial responsibility, which is something that the SNP wants for Scotland, although they say that's a long term goal, not immediate. Now, full financial responsibility, formerly known as full fiscal autonomy, refers to the idea that the Scottish government would raise its own tax revenue and it would use that to fund its own public spending. And here's why that sounds anti austerity to me, because there is nothing more anti austerity than running a hefty budget deficit. And as best we can tell, a fiscally autonomous Scotland right now would be running a budget deficit that is substantially larger than the deficit in the UK as a whole. Now, it's hard to be sure exactly how much, because to figure all that out, you need to say, well, certain taxes were raised south of the border or north of the border. Attribute spending on something like the Royal Navy or MI5 to Scotland or to the rest of the UK. Always room for arguments. But if we turn, as we so often turn to the Institute for Fiscal Studies and their analysis finds that this year Scotland would need an extra 7.6 billion pounds, not to balance the books, but just to reduce the deficit in Scotland to the same level as the
- [06:48]
B
UK as a whole, how big a number is that?
- [06:50]
C
Well, £7.6 billion is more than £1,400 a person. And actually the UK budget deficit itself is bigger than that per person. So what we're saying is Scotland's budget deficit, this is all notional. Scotland's notional budget deficit is almost, but not quite twice as big as the
- [07:07]
B
UK's but is that figure widely accepted?
- [07:10]
C
Well, certainly, I think there are a lot of people who don't accept it. And the Institute for Fiscal Studies analysis came as a shock. And the reason it came as a shock is because for the last few years, Scotland's fiscal position has looked a lot better. So 2008, 2009 was a particularly striking year. Scotland's deficit then was much smaller than the UK's as a whole. Now, thanks to tax revenue on oil, which you can largely attribute to Scotland, nationalists have quite truthfully been able to say that historically, Scots have paid more tax per person than the UK average for years and years and years.
- [07:43]
B
So what's going on?
- [07:44]
C
Well, what's going on is the collapse of oil revenues. So if you look at Scotland without oil, you see a country that raises very similar levels of tax to the rest of the UK. Very slightly lower, but similar, but substantially higher public spending, £12,500 a person, which is about 10% more than the UK average. Now, that's partly because the Scottish government has different priorities. It's also because the geography of Scotland makes it expensive to provide some services. So you've got similar taxes, you've got higher public spending per person. The obvious way to fill the gap is with oil revenues, and historically that's been perfectly possible. But production in the North Sea is in steady decline. And to make matters worse, recently oil prices, which were very, very high for the past few years, have been falling sharply. Now, the Independent Office for Budget Responsibility forecasts much, much lower tax revenues from North Sea oil and gas in the future. And in fact, after decades of contributing more tax per person, UK average, the forecast is that tax revenue in Scotland per person is going to dip below the UK average. So the challenge is declining oil revenues, and the SNP say they'll meet that challenge by getting Scotland's economic growth rate up.
- [09:00]
A
On Tuesday 21 April, attention turned to the subject of a mansion tax.
- [09:07]
B
More than one party suggesting it. How much would it raise?
- [09:10]
A
Well, Labour say it would raise 1.2 billion pounds a year. The Lib Dem say it would raise about a billion pounds a year, and it actually probably would raise as much as they say because they've built in wiggle room to their plans. They can make it happen. Just to explain what the idea is, they'd both raise a tax on properties worth more than 2 million pounds. Like council tax, properties would be put into bands and charged accordingly. Let's take a closer look at Labour's plans. So properties worth 2 to 3 million pounds would be charged a flat 3,000 pounds. And they haven't said how much more expensive properties would be charged. But you know, it would go up in tranches. Lib Dem plan similar. They tax homes worth between two and two and a half million pounds, two thousand pounds a year. And again, it would go up in bands from there. And we know they tax homes worth 4 to 5 million pounds, 9,000, but they haven't said how much tax would apply for homes worth more than that.
- [10:04]
B
And they could make their sums add up.
- [10:06]
A
Yes. I mean, no one knows how many properties there are that are worth more than £2 million. But some estate agents have had a go working it out and their estimates cluster around the hundred thousand mark. So again, let's take Labour plans as an example and do some politician maths. Savills, the estate agents have said that they think there are 40,000 properties worth 2 to 3 million pounds. So that would raise 120 million pounds, far short of the 1.2 billion pounds thereafter. So the assumption is that Labour would just adjust the charges for the properties worth over 3 million so they could raise the rest. And this, the Institute for Fiscal Studies reckons, would mean they charge those property owners £19,000 on average. I mean, it would be more or less, depending what band your house was in. And again, the Laird Dems could do the same for properties worth over 5 million.
- [10:54]
B
Easy when you know how it is, isn't it?
- [10:56]
A
Certainly easier than ordering a revaluation of council tax bands, which could turn a lot of voters against you if their bills went up. And it's easy for Scottish Labour's Jim Murphy to campaign about mansion tax, for example. I mean, it's estimated There are only 800 properties in Scotland that would attract the mansion tax. And Jim Murphy says it's a tax that would be levied against people in London and the southeast of England in the main. Indeed, Boris Johnson has described it as a tax on London, but actually it wouldn't even affect many people there. Although it's true that more than three quarters of the homes that could be caught up in mansion tax are in London, in reality, it's only about 90,000 homes, less than 3% of London properties, many of which will actually be concentrated in just five boroughs where the average house price is more than two thirds of a million. So, in fact, it would probably be more accurate to call it a tax on Kensington and Chelsea, Westminster, Islington, Camden and Hammersmith and Fulham. Of course, it wouldn't be a popular policy with those small number of people it would affect. I mean, the former singer Myleene Klass has been rather outspoken about this. Not because she'd be paying the tax, I'm sure. She says she's worried about all the grannies, as she puts it, who'd get caught out. After living an ordinary life in a modest home in an area of London that just happens to have shot up
- [12:15]
B
in value, the parties want to spend this money. How quickly could the mansion tax raise money?
- [12:19]
A
Yeah, well, the Lib Dems say they'd introduce it in a couple of years time. Labour, though, think it could start raising revenue this fiscal year, so by next spring. And they say they don't expect to get the full £1.2 billion then. But still, it's hard to see how getting much money would be possible at all. I mean, how would the valuation of the properties be done? Who'd send out the bills? What if people object? Who'd collect the money? Would it be HM Revenue and Customs or your local authority? And then, you know, what if values of homes shift? It's not even outside the realm of possibility that the new tax could change the valuation of some homes. I mean, a large tax bill could shave a chunk off a home's desirability, I'm sure. In short, there's a lot of detail to be ironed out. So, I mean, Labour's Jim Murphy can probably fairly say, as he does, that the mansion tax would pay for an extra thousand nurses for Scotland. Back of the envelope sums done for us by the health think tank cost the. The King's fund suggests that 1,000 nurses could cost about 45 million pounds a year to employ. I mean, that doesn't include training, but still, it's likely within the scope of the mansion tax revenue pot. However, it's hard to believe the money would come rolling in for those nurses this financial year. And by the way, 1000 nurses for Scotland is actually quite a small number. It means you'd be making the workforce bigger by about just one and a half percent.
- [13:37]
B
Ruth, thank you.
- [13:44]
A
On Thursday 23rd April.
- [13:47]
B
Tonight, Ruth Alexander has been looking at the front page of the Daily Telegraph. Miliband SNP pact would cost families 350 pounds each, it said. Labour, of course, denies that such a pact would happen, but what do you make of the figure? Is it true?
- [14:02]
A
Well, it comes from an interview they've done with the Chancellor, George Osborne, during which he highlighted an independent treasury analysis. But on closer inspection, he's also been doing some politician maths. The SNP plan to borrow more than the current coalition government. And the Chancellor's added up the treasury costings of this over four years and come up with a big number, £148 billion. Now, this extra borrowing would mean higher debt interest payments. The Chancellor has then added up the extra debt interest payments the treasury says the S and P plans might generate. And that gets him a nice big number of about £6 billion over these four years. He then divided that number not by the number of people in the uk, not by the number of households, but a smaller number than even that, the number of working households, to get himself a nice big final number. £350 for every working household. But that's £350 over four years. The yearly cost would be about £85, which is, I mean, it is less. That's not a headline grabbing number really, is it?
- [15:05]
B
But is it a helpful number?
- [15:07]
A
Well, not according to economists I've spoken to today. For a start, there's no reason to believe that the costs of extra debt interest payments would be divided equally among working households alone. Rhetoric from Labour and the SNP suggests that they might tax the rich the most. Also, you can play with the Chancellor's numbers to tell a bit of a different story. If you take that 148 billion pounds of extra borrowing and divide by the number of working households, as he likes to, you come up with 8,500. Now that's £8,500 more money per working household that the government would have to potentially spend on public services, libraries, schools, roads and welfare, like child benefit, working tax credits, disability benefits, housing benefit, all of which some working households receive. So all this tells us that the voter has a real choice. Would you like the UK to have lower borrowing and debt which might maybe possibly save you you 350 pounds over four years? Or would you be happier with higher borrowing and debt and an extra maybe £8,500 of public spending? You know, it's just. If only there was some way to make your choice and have it heard. Like an election. Thanks for listening to the More or Less Election podcast. Next Friday, More or Less returns to Radio 4, so you can expect a full 28 minute podcast. If you have any story ideas for us, please email moreorlessbc.co.uk or tweet BBC more or less.