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To be able to defend his Budget, Osborne must cut Defence spending

Mar 19

Posted by Jeff in Defence, Economy | 3 Comments

It is easy to fall into the trap of low expectations from budgets. Any one individual typically only ever hears the details from their own Chancellor and not those from other countries. This dulls the imagination of the range of ways in which taxes can be spent, a sort of mental paralysis that I fear parts of the UK is currently in the grip of.

For example, did you know that you get 2 days paternal leave in Greece but 12 months in Germany? Or that Finland recruits its teachers from the top 10% of graduates (and all must hold a Masters degree in Education)? Or that Sweden spends more on pre-school childcare than it does on Defence? Unthinkable in the UK, but already a reality in parts of Europe. Also in Sweden, nursery care is capped at 3% of a family’s salary. 3%. That’s enough to make some British parents sob hot tears given how many thousands of pounds many of them fork out on day care each year.

I wonder what we do here in the UK that our fellow Europeans look at in wonder. Don’t all rush to answer at once…

So, for my own benefit, I wanted to compile a breakdown of different countries’ budgets to get a feel for how much each spend on health, education, defence etc across Europe. Sadly, this proved too difficult an exercise, but I was able to pull together some useful lists showing spending as a percentage of GDP for certain countries (see list below).

These lists show that the UK is not the worst country in Europe in terms of value for money, but it is a far cry from being the envy of the Continent. Even our hallowed health spending on the NHS is middle of the road, as is our spending on education.

The spending on welfare was surprising, given we are close to the bottom. This certainly calls into question (moreso than already) the wisdom of the bedroom tax and the other harsh cuts to social security. Incidentally, if you aren’t marching against the bedroom tax in Glasgow or Edinburgh, you probably need to question what you would March against.

That said, the relatively high level of debt that we are exposed to within the UK does highlight George Osborne’s lack of options in terms of levers to pull to boost growth. We are, whichever way you want to look at it, in a bit of a pickle relative to other countries out there and I don’t envy Osborne the task ahead of him tomorrow.

The one area where we are top of the pops is Defence, the only area of spending that has no direct impact on quality of life at a civic level. I admit I was surprised that this level of spending is low in absolute terms relative to other government expenditure but it’s clear that this is where there is the greatest scope for savings, our budget’s area of least resistance if you like.

Reducing the £46bn cost of Defence to German levels would save £21.2bn/year, to Swedish levels £24.8bn/year and to Irish levels £35.4bn/year. That’s an expensive set of nuclear weapons that will never be fired and a pricey permanent seat on the UN Security Council. How many nursery place could those savings pay for? Cuts to this budget don’t even necessarily have to involve significant job losses given the £46bn works out at a massive £670k per person employed by the MoD.

Achieving Sweden’s success by investing more in our children than in weapons can be achieved in two ways, spending more on childcare or spending less on other areas, like Defence. Maybe it’s time we gave the latter a go.

Lists of countries ranked by various spending, employment and debt:

Education (%age of GDP)
Denmark – 7.8%
Iceland – 7.4%
Norway – 6.8%
Sweden – 6.6%
Belgium – 6.0%
Finland – 5.9%
France – 5.6%
UK – 5.5%
Austria – 5.4%
Netherlands – 5.3%
Portugal – 5.2%
Ireland – 4.9%
Germany – 4.5%
Italy – 4.3%
Spain – 4.3%

Defence (%age of GDP)
UK – 2.6%
France – 2.3%
Portugal – 2.1%
Italy – 1.7%
Norway – 1.5%
Finland – 1.5%
Germany – 1.4%
Denmark – 1.4%
Netherlands – 1.4%
Belgium – 1.2%
Sweden – 1.2%
Spain – 1.0%
Austria – 0.9%
Ireland – 0.6%
Iceland – 0.1%

Health (%age of GDP)
Netherlands – 12.0%
France – 11.9%
Germany – 11.7%
Denmark – 11.5%
Austria – 11.0%
Belgium – 10.8%
Portugal – 10.7%
Sweden – 10.0%
UK – 9.8%
Iceland – 9.8%
Norway – 9.7%
Spain – 9.6%
Italy – 9.4%
Ireland – 9.4%
Finland – 9.0%

Public Social Expenditure (incl Health) (%age of GDP)
France – 32.1%
Denmark – 30.5%
Belgium – 30.0%
Finland – 29.0%
Austria – 28.3%
Sweden – 28.2%
Italy – 28.1%
Spain – 26.3%
Germany – 26.3%
Portugal – 25.0%
Netherlands – 24.3%
UK – 23.9%
Ireland – 23.1%
Norway – 22.1%
Iceland – 16.4%

Pensions (%age of GDP)
Italy – 15.4%
France – 13.7%
Austria – 13.5%
Portugal – 12.3%
Germany – 11.3%
Belgium – 10.0%
Finland – 9.9%
Spain – 9.3%
Sweden – 8.2%
UK – 6.2%
Denmark – 6.1%
Norway – 5.4%
Ireland – 5.1%
Netherlands – 5.1%
Iceland – 1.7%

Debt
Italy – 126.3%
Portugal – 119.1%
Ireland – 117.7%
Belgium – 99.0%
Iceland – 94.1%
Spain – 90.7%
France – 90.0%
UK – 88.7%
Germany – 83.0%
Austria – 74.3%
Netherlands – 68.2%
Finland – 52.6%
Norway – 49.6%
Denmark – 47.1%
Sweden – 37.1%

Employment Rate
Iceland – 78.2%
Norway – 75.3%
Netherlands – 74.7%
Denmark – 73.4%
Sweden – 72.7%
Austria – 71.7%
Germany – 71.1%
UK – 69.5%
Finland – 68.1%
Portugal – 65.2%
France – 64.0%
Belgium – 62.0%
Ireland – 60.0%
Spain – 58.6%
Italy – 56.9%

Arguments over how much oil there is are missing the point

Mar 11

Posted by Dom in Democracy, Economy, Energy, Environment, Ideology | 15 Comments

An independent Scotland will ban nuclear weapons, we are told. Top stuff. I’m all for it.

Nuclear weapons are amoral and have the potential to kill millions of people if they were ever used, as well as belonging to an age now past.

But there is a bigger threat to  global peace and wellbeing lurking in Scottish waters, one which the more head-in-sand types in the SNP leadership and UK government are all too eager to embrace.

Scotland is about to undergo a second oil boom apparently. At least according to the First Minister.

And in the week that a leaked document accepting the idea of change and adaption as a central component of any society made the headlines, we are told that things shall always be as they have been, for ever more. The boom becomes a beat and the beat goes on.

What is pretty clear is that we can’t just turn off the oil industry. The Scottish economy would collapse, and thousands of people would lose their jobs. Like those peace-loving Swedes exporting Bofors armaments far and wide with a shrug of their shoulders and and a nod to the employment statistics, it is easy enough to take away the pain of responsibility with a few spoons of relativism.

And it is incredibly tempting, because all those guns and all that oil pays for the welfare and investment in the public good which so many right thinking people want in a society.

But the kind of politicians who would take the oil and look away are the same type of person who would use the cheats on Championship manager, only to wonder why winning the European Cup carries no sense of achievement. It’s the Dorian Gray of natural resources, and for every single drop pumped out the official portrait at Bute House will turn a touch more grotesque. Or maybe Faust if you want. They’re all the same basic metaphor.

It’s our oil till we’ve sold it, and then it’s another man’s grievance.

There is no denying that the low-carbon world which we must inevitably transition to – either by design or by sheer necessity – will and must come. I’ve stood in the gallery at Holyrood and watched the whole parliament pat itself on the back over climate change legislation. You can call yourself world leading or pioneering as much as you like, but if you then choose to adopt a position which runs counter to received scientific wisdom and moral defensibility you will find yourself leading a world of one.

Because the emissions from an ever expanding Scottish oil industry will kill more people than Trident, be it in the form of air pollution or crop failure, flooding and conflict.

And because we must transition to a sustainable economy, does it not make sense to do it immediately?  I’ll be voting Yes to change Scotland into the country it can be, not into an unthinking and morally indefensible oil state.

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Jumping into bed with the Swedes

Feb 15

Posted by Dom in Culture, Economy, Education, Energy, Environment, Europe, Gender, Holyrood, Ideology, International | 8 Comments

Shetland's hybrid Scots-Scandinavian flag

Shetland: Already halfway there

There have, in the past week, been a few noteworthy articles regarding the Scandinavian shadow which looms large over the issue of Scottish independence, as well as the future and makeup of Scotland’s economy, welfare system and society more generally.

Now I write this as somebody who knows a fair deal more about Scandinavia than most, for both personal and professional reasons.  A colleague of mine in the Greens remarked that the next Scottish Green manifesto should just be called ‘Scandinavian Nirvana’, such is the appetite in the party for increased welfare, greater social freedoms, gender equality and local democracy. I wholeheartedly agree.

Which brings me to something said by Blair McDougall in a BBC interview on the independence referendum. He accuses his opposite number in the Yes campaign, the significantly more articulate and less hackish Blair Jenkins, of wanting ‘57 per cent tax like in Norway’. There are indeed people in Norway paying that much tax, but these kind of people are not the salt of the earth working men and women which McDougall thinks will be crushed by the weight of Kaiser Salmond’s iron taxation, if he did indeed have such plans.

Then there was a report in The Economist which made the odd logical step of collating the radical reforms by centre-right governments in Sweden and formerly in Denmark with the high living standards and safe economies of the Nordic countries. As the Swedish journalist Katrin Kielos noted, there is an awful schizophrenia about the new craze for the Nordic centre-right, in that it assumes that being Scandinavian is a virtue in itself and argues that the path forward for these secure and durable systems is to follow a more British or American model . It is a trend which wishes to dine on the fruits of the Scandinavian countries’ labour whilst seeking to undermine it at its foundations.

The whole thing is illustrative of the fact that there is a huge amount of ignorance about the way in which Scandinavian society functions, and that this ignorance can be used to significant political advantage. It is also debatable to what extent it is even appropriate to address the Nordic countries as a single unit. There are however certain things which underpin  ‘the Scandinavian model’ which Scotland would have to adopt were it to develop in such a direction.

The first is a strict ethos of universalism. Not all services are free in Sweden or its neighbours, but notable by its absence is the incredibly British notion of selective assistance. Britain seems to implicitly accept that there should be huge gaps in income between different levels of society, and that one of the roles of public welfare is to alleviate this. It is a mode of thinking which the New Labour project perfected with its targeted alleviation, support for bright pupils from state schools and university access bursaries, without ever tackling the structural causes of poverty and discrimination.

Secondly, the way in which Scandinavian trade unions work is different to the British model. The nostalgia for the 1970s which pervades much of Britain’s left ignores the fact that old British models of trade-unionism were what allowed public support for the radical reforms of the 1980s. The systems of collective bargaining employed in Sweden and relatively high levels of unionisation amongst what might be termed normal people means that it is both destigmatised and can claim to represent large portions of the population.  This system has come under attack from centre-right governments in recent years but has survived relatively intact. The Scandinavian countries do not have a legal minimum wage, but they do have an effective minimum wage proportionally higher than Scotland, leading to a reduction in income inequality before the tax system has even played its redistributive  role.

And once tax is collected, where does it go? Not into benefits as they might be normally understood, but rather into the provision of universal services.  Childcare, incredibly well funded education systems, transport and infrastructure and healthcare.  The biggest challenge to Scotland is whether it is possible to transfer to this type of system given the appalling disparity evident in the country and present. It is in the interests of every Scottish woman to vote for a scenario which will provide the funding and structures for them to work and live on the same terms as men (and from a male feminist perspective, in men’s interest too).

Now to return to Blair McDougall and his mythical 57 per cent tax rate, I would say that it would only become an issue when you earn as much money as a senior press adviser or an MP.  Having large tax reserves means that in times of crisis governments are able to effectively deal with them, unlike the British model of medium taxation on an out of control financial system without any thought as to the after effects.

So to be realistic, adopting a Scandinavian social model would involve higher rates of tax, but it would also involve higher wages and better public services. In real terms incomes might well be higher, or at least remain static whilst providing for higher levels of public investment.

The whole thing is also dependent on a grand narrative. People vote for things because they believe in their viability, and the Scandinavian system is underpinned by a notion of functional redistribution different from the dominant discourse in Britain, and even in Scotland. It isn’t about smashing the rich or shooting bankers at dawn, but rather about building a cohesive society which works in the interest of all. As Norwegian Prime Minister Jens Stoltenberg says, “to create we must share, and to share we must create.”

David Leask’s excellent ‘As Others See Us’ column in the Herald, in which a group of Norwegians were asked for their opinion on independence, was revealing. The lack of interest in Scotland’s constitutional future was unsurprising – I frequently find myself explaining to Swedes the ins and outs of the independence movement – as Scotland is not politically visible. The Swedish daily Dagens Nyheter  recently published a feature on Europe’s contemporary independence movements which mentioned Scotland in the same breath as the Northern League in Italy and Flemish separatism in Belgium, entirely ignoring the broadly leftist motivations found in the majority of pro-independence groups and parties in Scotland. The challenge will be to explicitly build the construction of a sustainable and humane welfare state into the Scottish cultural narrative at home and abroad.

Neither would we or should we transform Scotland into Scandinavia overnight. When talking with a good friend of mine about how I hoped to live in a Scotland where I felt the state and society treated me and any potential wife/partner equally she smiled wryly and wished me good luck, with some justification. But that isn’t to say that we shouldn’t try. I answered that to combine the best aspects of Scotland and Sweden would create something beautiful, but that it would require the type of radical social change not seen since the 1960s. It would be a national project which larger countries would be entirely incapable of, but which might just work in Scotland. Scandinavia might be a fluid concept with many faces, but the values which it ostensibly represents are what we should really be aiming for. Both financially and morally, we cannot afford not to.

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Stuff your management buyout

Feb 3

Posted by James in Constitution, Economy | 17 Comments

MonacoThe longer this referendum goes on, the clearer it becomes that both sides have limited internal common ground. I don’t hold with the SNP attack on Labour’s position – the argument that they’re obviously Tories in disguise because they’re campaigning together on this issue. Were the SSP basically just Tories because they campaigned against the Edinburgh congestion charge with them? No, just misguided.

As discussed before, if both sides are internally indistinguishable, it would also make me essentially Jim McColl, because he’s in favour of independence too. And I could hardly respect him less. In evidence to a Holyrood committee, he said Scotland should cut corporation tax to Irish levels, an approach that suits rich men like him and which plays beggar-your-neighbour with other European countries’ tax bases.

He’s also personally based in Monaco and in the same meeting admitted not paying full UK income tax. His startling reasoning there was as follows: “if you look at the wealth created here by me and my team, it puts into insignificance anything that I might pay if I was a full-time resident here“. Of course, the actual wealth is created by his workforce, not him, and they presumably do pay their full UK taxes. The logic is stark: the richer you are and the bigger the business you own the less important it is for you to pay taxes. Taxes are for the little people.

It’s all quite petty too. My guess is that he’d still be pretty rich if he paid his full taxes here, which should be the minimum requirement before pontificating about Scotland’s future.

His contribution today is consistent with his extraordinarily unpleasant vision for Scotland (if you look beyond the empty guff about compassion and renewables). Independence would, he says, be a “management buyout”. Don’t be led astray: this is not a metaphor, it’s literally what he wants. The thing about a management buyout is you’re left with the same people in charge, but they’re personally doing much better because less of the revenue gets passed elsewhere. Jim McColl and those like him are already the “management”, they are already Scotland’s establishment, and he wants a Scotland where that doesn’t change. In fact, he wants a Scotland even more closely recast in line with his kind of selfish tax-dodging capitalism.

The historic left opposition to independence, which was dominant until the formation of the SSP and its precursors, ran roughly like this. The purpose of independence and nationalism is to divide the working class and to let local capitalist elites carve out more for themselves without interference from the imperial centre. You don’t have to be a Trotskyist to see that’s precisely what Jim McColl wants to see from independence.

Fortunately, though, if we win it won’t just be up to him to shape Scotland, especially if the current SNP leadership don’t get to run that post-independence administration. It’ll be up to the people of Scotland to decide whether they want a Scotland where business pays its fair share, or whether they think Jim’s spot on and the Tories ought to have bent over even further towards the interests of business. Jim McColl may be working for a management buyout, but there’ll be plenty more of us pushing in the other direction, towards a more co-operative Scotland.

Swedish welfare reform – unemployment benefit which benefits everyone.

Nov 26

Posted by Dom in Economy, International | 1 Comment

Sweden is on the cusp of pushing through a cross-party welfare reform which will both guarantee a minimum level of unemployment benefit and allow higher earners to insure against the risk of unemployment. This week a parliamentary commission came to agreement on reforming the unemployment benefits system in a way which will accommodate the twin requirements of maintaining a reasonable standard of state benefit and accommodating well established union-linked unemployment insurance funds.

One of the big lessons in the UK of the financial crisis and subsequent recession has been that, rather than unemployment benefit being the preserve of all those fabled tracksuit-wearing benefit scroungers, a large number of middle income people with families to feed and mortgages to pay found themselves having to survive on Jobseeker’s Allowance and what savings they may have had. The cruel irony of wealth is that the more people accrue in terms of financial obligations (and there are very few who are lucky enough to be able to buy houses, cars and much else outright), the larger the fall when their income stream is taken away from them.

A signature visual trope of the global financial crisis has been Americans bedding down for the night in tents and cars after losing their homes – the product of a society where there is no real apparatus for helping people cope with a sudden inability to meet their financial obligations when unemployed, and very little consumer protection to stop banks doing as they please.

Now the bottom-most rung in Scotland were poor before the recession, are poor during and will most likely be poor afterward if we continue with the current financial and welfare model. What is more concerning is when people who are, in statistical terms, safe and middle class find themselves spiralling downward.  Even if downsizing is an inevitability, many do not even have the time to take stock of their assets before the wolf comes knocking. This underlines one of the biggest problems with contemporary society – the constant fear experienced by those without significant liquid assets that their life might vanish in an instant.

Jobs for life are now a thing of the past. People pursue multiple careers and during that time they will often spend months between jobs – months in which bills need to be paid, mortgages serviced and essentials bought.

It is of course unworkable that, without taxing everybody at eighty per cent, we should expect state unemployment support to replace the income of somebody earning upwards of 40,000 pounds a year. It is however morally and economically necessary to provide a basic level of income support which allows people to survive unemployment with their dignity and will to work intact.

The Swedish reform is designed to unify the roles of state unemployment benefit and the so-called ‘A-Kassa’, or unemployment fund. This is in effect a form of insurance against unemployment which, like a pension fund, is paid into and grows from private contributions, but is protected by the state. In the event of unemployment it then pays out at a rate relative to earnings which will function as a cushion above and beyond the basic level of unemployment benefit.

It is very difficult to make a moral case for taxpayers’ money being used to defend the accumulated assets of individuals above the basic standard of living which everyone in our society should enjoy, but it IS in the public interest that those on medium incomes should be given a framework of protection which will prevent them from entering a downward spiral. One of the most absurd things about the UK government’s current welfare reforms is the insistence that the system should be completely devoid of any cushioning elements whatsoever. As we all know, the stress and fear of losing everything you have ever worked for is the best possible motivation for finding a new job as quickly as possible. Why else would the men with the most embrace a welfare system which takes this as one of its core beliefs?

Imagine, for example, that you are a self-employed shop-owner or a freelance consultant of some form. In a good year you might hope to take 50,000 pounds or so, but come a recession, or a decision by your landlord to hire your premises to someone else, your work may dry up. As there is no severance package, you are essentially on your own. You might, in theory, have some assets which you could turn into liquid capital by remortgaging your house, or raiding your pension, but neither of these are particularly sensible long term options. Neither is it a question of lifestyle. You might possibly try and save energy, buy cheaper food and go out less, but these things will never vanish completely. Moreover, not having a miserable life and staying positive when unemployed is actually quite important, so eating Lidl value pasta seven days a week and leaving people to the joys of daytime television for lack of opportunity to do anything is not the kind of lifestyle we should be forcing people into.

Now, the beauty of the A-kassa system is that it makes a direct link between work and the amount of money you get back. It is in the interests of benefit claimants to seek work (combined with measures such as the living wage where working is actually a means by which people can take control of their own lives instead of servicing somebody else’s), and once you start paying in you can expect the fund to pay out. This is all in addition to your basic state unemployment benefit. Before anybody accuses me of wishing to burden people with more tax to pay for the unemployed, I should point out that this is a proportional tax which benefits the people who pay it.  Like National Insurance, it builds upon the idea that not everybody will become ill at the same time, but that in the event of illness the cost burden has already been dealt with or will be dealt with through future payments. We can try to build a society where fewer people become ill in the first place, just as we can try and remove the scourge of unemployment through more sustainable economics and foresight, but neither illness nor unemployment will ever vanish completely.

Becoming unemployed is actually a fairly natural event which will likely happen to many of us at some point, and it is time that we had a welfare system which recognised that unemployment is not the preserve of only the poorest. Green policy already envisages a basic level of income via the citizen’s wage, a simple and basic unit of government benefit essentially payable to all, but in the majority of cases recouped via higher tax receipts. The A-kassa system is designed as protection above and beyond this, meaning that unemployment need not result in the spectre of home repossession, rental eviction or severe financial hardship, and that working pays even when unemployment rears its head – a particular help to people working in changeable, short contract jobs. It also has the benefit of allowing people to feel that they are investing instead of throwing tax money at something which is of no benefit to them,

Not everything from Sweden is great, but breaking down the work/benefits dichotomy and helping people to recover from unemployment is something which can only ever be a public good.