Afternoon:
15°c
On this page in recent months, I've bemoaned the City folk who fail to give anything back. I make no apology for that — on their heads be it as they wonder why the fat cats of the Square Mile continue to be held in such low esteem by the rest of society.
One who has set out to use at least part of his fortune, estimated at £110 million, to good effect is Clive Cowdery. That's right — the Clive Cowdery who made his reputation on deal after deal in the insurance sector, via the Resolution Trust buyout vehicle he founded.
What isn't so well-known about “Big Clive” — as he became known in reference to his girth, since much reduced — is that he established the Resolution Foundation, an independent policy and research organisation to try to highlight, and improve, the lot of the nation's low-income earners.
The think-tank's aims are dear to Cowdery's heart. The middle of five children, he never knew his father and was brought up by a single mother in Bristol. Indeed, he describes himself as “a privileged beneficiary of the welfare state”.
His foundation, he jokes, is his “light” side (as opposed to the “dark” side of his other business affairs). I would not want to cross Cowdery. Which is why I would offer this warning to the Government: be careful.
Since the Spending Review, the economists who work for Resolution Foundation have been crunching the numbers on how the cuts affect the less well-off. What they've discovered is that the changes to the tax credits system will deprive working families (that vast body of people so beloved of leading politicians in their party broadcasts, literature and conference speeches) of £6.2 billion over the next four years.
To put that into sharp focus, says Gavin Kelly, chief executive of Resolution Foundation, that compares with £5.5 billion saved by the Government from scrapping child benefit for higher-rate taxpayers and £5.3 billion from the housing benefit reforms. And both those initiatives have received acres of publicity, much of it hostile.
“The tax credit cuts are a longer, slower burn,” says Kelly, “but they may provoke a much bigger row.”
There are nine different ways identified by Kelly's body that the Government is moving against households earning £12,000 to £30,000 a year, the so-called “squeezed middle”.
Among them is altering the childcare voucher payments, which will make a family with one pre-school child £1,000 a year worse off from 2012. Another is the withdrawal of the educational maintenance allowance for 16 to 18-year-olds from poorer families in further education. They will lose £1,200 a year.
Add these and other moves together, and you arrive at what the foundation is terming “stealth cuts” of £6.2 billion on those from lower-income households.
“The sums we're talking about,” says Kelly, “are on a much greater scale that those in the 10p tax furore [when the previous government removed the 10p tax rate for low earners] and they're much greater than families are going to receive from increases in personal allowances [trumpeted by the Government]. The pain for these working families is much greater than the gain.”
What we've seen to date smacks of “classic disinformation” as Cowdery terms it, in which the net effect of the Spending Review on those receiving moderate incomes has deliberately not been highlighted. All the attention so far has been on child benefit, housing benefit and university finances. The impact here, coming as it does on those at the bottom end of the pay scale, is much more severe. The Government, I suspect, is going to have some awkward explaining to do.
The army of Whitehall helpers' that's just ignored
Another week, another raft of appointments from the higher echelons of business to help government ministers.
In fact, in the last week, we had two lots: the new trade “ambassadors” and the “non-executive directors” to assist departments in the making
of redundancies.
There are now so many captains of industry being dropped off for meetings from their chauffeur-driven cars in Whitehall that I'm wondering whether there are any left to do that old-fashioned activity of making money? I had lunch with a former minister last week who declared his scepticism of so many hirings.
Between us, we ran through all the different advisory panels and councils. He chucked in two more that I'd forgotten: a group that assisted the Treasury on the economy, and the Court of the Bank of England. Did Treasury ministers or the Bank Governor, really pay any attention to them, we speculated.
He said that in his time in office, he could not think of a single occasion when a senior minister or civil servant had deferred to an outsider from business. They were there to make everyone feel better, and to look good — and that was all.
His message to those tempted to sign up for national service was to be under no illusion: you may have the opportunity do a lot of talking, but don't suppose for a second that anyone is listening.
Educate us with some answers, Nick
Nick Clegg is saying that he reversed his view on university tuition fees because when he got
into power, he did no realise how bad the figures were — that the economy was in a worse predicament than he thought.
To which I can only say: pull the other one. I and doubtless thousands of future students and their families would love to know what he found that forced his U-turn. Come on Nick, do tell.
While you're at it, Nick, could you please also explain why, exactly students in Wales, Scotland and Northern Ireland will not be required to pay up?
When I last looked, we were the United Kingdom and large subsidies derived from our taxes in England went to the Celtic fringe.
We pay for their defence, their roads, hospitals and education. But our students pay more. Why?
