Child Poverty in London

This is from a hard hitting report by the Child Poverty Action Group. 37% of children in London (700,000 kids) live in poverty. It is projected to rise 2019-2021 to 41.5%. What a shameful statistic for one of the richest cities in the world. 2/3rds of such children live in families where at least one parent works#.

You can download a London borough specific report here.

Newham has the highest child poverty numbers in London at 36,780 affecting 43% of all our children.

The reasons for this must be linked to fact we have the highest level of low paid residents at 36% (London average is 21%) as well as exorbitant housing costs. The average rent of the bottom 25% of Newham properties is a staggering £1200 per month and the lowest paid 25% of Newham residents spend 72% of their gross income on rent.

All this is a major reason why we in Newham have (arguably) the worst homelessness crisis in England.

#"A child is living in relative poverty if living in a household with below 60 per cent of contemporary median income, according to government measurements".

While I am convinced that the new Labour administration in Newham (I declare an interest) can make a huge transformational difference to many people's lives.  For example by building a 1000 Council homes at a social rent, community wealth building or tackling violence amongst young people by increasing the number of youth hubs. The sheer numbers mean that we will only be able to defeat child poverty in London by a change in Government.

We need a government in power that will tax those who can afford it to really provide for all our children in need. 

Bumbles Green Walk

Off message but another great walk from the free Essexwalks.com site. "Bumbles Green" is within spitting distance of London. It is only 30 minutes drive from Newham and like most walks just outside London, incredibly quiet and peaceful.

King Harold (of "1066 and all that") is thought to have had a hunting lodge and a mistress near here

Early on the walk you pass a 19th century "Coal and Wine" post (picture next to pint of beer in collage). The City of London was able to levy taxes on these goods so such posts used to be placed on all access points to London.  I suspect that locals at the time had a similar attitude to modern day Amazon.com to taxes so I am not sure how successful such posts were.?

Check out the photo in the college bottom right, where on the ridge there some spectacular views of London (click on it to enlarge). A great place to have a picnic. There are remains of military bunkers on the ridge which I suspect were anti-aircraft gun platforms to protect London during the second world war.

The walk is only 6.5 miles and while it has some hills there is nothing too severe. Other points of interest on route is a massive market garden nursery, which we finally managed to work out was growing courgettes and a huge mobile caravan park which appears to have been allowed to turn itself into permanent housing.  I note an advert for a two bedroom caravan at the site going for sale at £199,000. If that does not convince you how ridiculous London property prices are what will?

Many years ago Gill and I were walking in this same area and watched scores of travellers racing ponies and carts up the hill. A magnificent sight to us although I understand afterwards that the local landowner may have had a different opinion.

Unfortunately the King Harold Head pub mentioned in the walk description as somewhere to seek refreshment has been turned into a rather snooty restaurant and when we turned up after the walk to see if we could have a drink we were turned away with disdain. Nevermind, I was able to get a lovely golden beer elsewhere (The Plough in Sewardstone). 

Everyone should pay their fair share of taxes

Totally and utterly agree. If you want to live in this country and enjoy its rule of law, relative low crime and social cohesion then you should at least pay the same marginal rate of taxation as your cleaner.

If you don't want to pay this then can we help you pack? 

Why I like to pay taxes....

Love it. Hat tip the USA coffee movement. Maybe we should form something similar across the pond to counter the uber right wing Tories or their Kipper cousins.

"Charity is a cold grey loveless thing..."

Well said Clem.  Remember there is a difference between rich people doling out charity to please their fancy or conscience and working people showing solidarity to others with their widow's mites.

UPDATE: its been pointed out this this quote is a mis-attribution. It was actually said by Attlee's biographer Frances Beckett summarising his views. This is the quote I think he was referring to - it still all makes sense to me.

 “In a civilised community, although it may be composed of self-reliant individuals, there will be some persons who will be unable at some period of their lives to look after themselves, and the question of what is to happen to them may be solved in three ways – they may be neglected, they may be cared for by the organised community as of right, or they may be left to the goodwill of individuals in the community. The first way is intolerable, and as for the third: Charity is only possible without loss of dignity between equals. A right established by law, such as that to an old age pension, is less galling than an allowance made by a rich man to a poor one, dependent on his view of the recipient’s character, and terminable at his caprice.”- The Social Worker 1920

the poorest pay 47% of their income in tax (the richest pay 34%)

Check out post at TUC Touchstone: "Saving Our Safety Net Fact of the Week: the poorest pay 47% of their income in tax (the richest pay 34%).

Why should the poorest pay the most and don't let the Daily Mail continue to confuse income tax with all taxes and National insurance.

Note: taxes as a proportion of gross incomes

Labour will reverse David Cameron's tax cut for millionaires

How many people really disagree with these statements?

If you are wealthy you have to pay your fair share because it is also in your interests to do so.

“I like to pay taxes. With them, I buy civilisation.”
― Oliver Wendell Holmes Jr.

The Public Cost of Poverty Wages

This cost is to the USA taxpayer but I suspect very much  that the problem is still the same over here across the pond. Lots of companies are "successful" but depend upon the tax payer to subsidise their poverty wages. They also don't pay tax on their profits but that is another (but very important) issue.

Next time you have a Big Mac think that you are not only paying good money to buy this burger but your taxes are also going to subsidise this very rich and profitable company and its payment of poverty wages to its staff. Something very wrong here I think?

A Minimum Wage, A Living Wage or Fair Pay for All?

The introduction of the National Minimum Wage was one of the great successes of the last Labour Government and trade unions such as UNISON who had pushed long and hard for it.

So successful that we now take it a little for granted and forget the huge opposition from the Tories who claimed that it would lead to business failures and mass unemployment.

While a national minimum wage of £6.19 per hour is far, far better than no minimum, it is simply not enough to live on. It is poverty pay. The vast majority of workers on minimum wage will also need to have their wages topped up by the State in housing benefit or family tax credit.  

The idea of a "Living wage" is the amount needed to "let workers lead a decent life". It is currently £7.45ph (and £8.55 ph in London).  Accountancy firm KPMG recently estimated that 20% of workers (5 million) are paid less than a Living wage.

Labour Leader Ed Miliband is in favour of making the Living wage compulsory in the public sector and in their procurement practices. He also believes in naming and shaming other companies that don't pay a living wage.

If this happened it would be a fantastic news for the low paid and also the British tax payers since we will not have to subsidise many poverty pay employers. It would also result in a welcome boast in demand for the British economy.

Yet, at the risk of being churlish, is even a "Living Wage" - not enough?

If you are on a Living wage but become sick and have no income protection you will immediately fall back into poverty. If you retire and have no company pension you will also fall back into poverty in old age. If you are on a Living wage but are on a Zero hour (or Bank) contract and have no employment protection, how can you live a "decent life" with no security? Ed Miliband is also  in favour of restricting Zero Hour Contracts. It has been estimated that there could be as many as one million workers on such contracts. 

What about those traditional low pay sectors which can actually afford to pay more than just a living wage and also pay decent sick pay and a pension?

So what about the concept of "Fair Pay". This is a recognised goal of the International Labour Organisation (ILO). Your pay should not be just about your wage but also about sick pay, holidays, overtime, pensions and employment protection.   There are some private companies competing for public sector contracts who would quite happily pay £7.45 per hour if they did not have to pay for decent sickness protection and pensions.

On the other hand today I met up with my lovely niece, her partner and their young family.  She works as a care assistant in a privately run mental health project. She loves her job but is on the minimum wage and on a zero hour contract. She does not receive holiday pay (which I need to check) and also cannot get family tax credit because she is on a zero hours contract.  She only gets statutory sickness benefits and no pension. Due to her income she is likely not to be eligible to be auto-enrolled into a pension. 

If she was to get a Living wage and an extra £1.26 per hour it would transform her family finances but since she does not know from day to day what hours she will work and has no security of employment, it would still be practically impossible for her to make plans for her future. 

The answer to such poverty pay and conditions is that the next Labour Government must be as brave and as radical on this and other issues as its predecessor in 1945.  While in the long run the best protector of decent pay and conditions are the trade unions. Post 2015 Labour should impose Fair Pay for All.  A living wage, living sickness benefits, living pension and employment security for all. While at the same time introduce binding sectoral bargaining agreements between unions and employers for those sectors which can afford to pay more than a Living wage.

While this will save the Government money by reducing the state subsidy on poverty employers and increasing demand in the economy, it will lets not fool ourselves, cost more, especially in the public sector. This is a price worth paying and will need to be paid for by increases in progressive tax rates on those who can afford to pay more. 

I think to win the next General Election and get rid of the Tories we need to be honest with the public and also offer a genuine alternative. I asked my niece today if she voted in the last General Election. She admitted she didn't. I also asked if she thought the next Labour Government would ensure she would get a Living wage and security in employment would she vote for them? She said Yes. Her current MP is a Tory with a majority of just over 3000.

Hat tip picture to Pay Up Sainsburys.

How to Solve the Recession: End Prohibition and Tax Drugs?

I listened this morning to "From our own Correspondent" on BBC Radio 4. One report was from Uruguay where they are considering legalising drugs. The main reason given for this was to put out of business violent drug gangs.

I remember being at a pension meeting a few months ago where we received a briefing from an economics adviser on the financial outlook. It was pretty bleak with the prospect of years of little or low growth, demand or investment and continuing cuts in public expenditure. The adviser broadly supported current government policy.

I said there is always an alternative economic policy and why couldn't the UK do what governments did before the second world war - borrow money and invest into massive infrastructure projects to pump prime the economy out of recession?

The adviser made an interesting but provocative response. He said that many people who look to the massive state investments during the New Deal economic programme in 1930's America as an example of what we should be doing now miss an important point. This huge investment was largely fully funded and not borrowed. It was paid for by the ending of the prohibition on alcohol in America, which led to increases in taxation, which paid for the New Deal investment.

While I do not accept all his arguments it did bring the question to the fore that should we in Britain legalise and heavily tax drugs in this country to bring in enough Government revenue to pay off the national debt and invest to bring about recovery?

Since we were at a pension trustee meeting, sadly it was decided that such matters were not really within our remit and we continued to discuss the normal "boring but important stuff" such as valuations, fund manager reports etc. 

I have for many years been convinced that we have lost the war on drugs and we should consider legalising them to get rid of the violent drug gangs. There will still have to be safeguards and it will have risks but if by ending this prohibition and then heavily taxing drugs, we can bring about the end of this recession, is this not yet another powerful reason to at least consider it?

Personal views as always. Photo of anti-prohibition pro-Beer Tax parade in 1930's USA.

Poor Pay More in Taxes than Rich

Hat tip to BBC Mark Easton tweet on this table left (click to bring up details).

The poorest 20% of households pay more of their income in taxes than the richest 20%.

36.6% against 35.5%.

Actually the poorest pays more than anyone else! I suspect that the Tory VAT tax hike may be one reason. Indirect tax rises punish the poor the most.

So - we are not all in this together!

Corporate Tax-Dodging Causes Austerity #Boycott Starbucks

Companies such as Starbucks, Amazon.CON and Vodaphone seem to think that only the little people should pay taxes. Bite back little people. 

Another 2010 Christmas Carol

Carol is a single mum with three small children who works in the kitchen of the Executive dining room of a British FT100 listed company in East London. She earns £13,000 per year for an average 40 hour week (the national minimum wage of £5.93 per hour is £12,334). She prepares food and cleans the dishes of people who earn up to 100 times what she is paid. She does not work directly for the company but is employed by a subcontractor on rolling 3 month temporary contracts.

Since her wages are so low she receives working tax credits from the government to supplement her income. She also has housing benefit to help her pay the rent and Council tax benefit at her two bed Council flat. Her children receive free school meals. All of this desperately needed support is paid for by the British taxpayer.

She of course does not receive any company pension or any sick pay. Despite the state benefits Carol and her children live hand-to-mouth and she has to rely on moneylenders to pay for emergencies as well as her children’s birthday and Christmas presents.

It is already pretty well known that the marginal rate of tax for the very low paid is far less than the extremely well paid executives that Carol serves and cleans up after.

But what is less well known that both the company who employs her and the FT100 Company she works at also outsources its revenue and profits abroad and pays the British Government relatively little in taxes.

Therefore the financial supplement to Carol’s meagre wages is being paid for by British taxpayers yet both companies who benefit from paying her poverty wages are avoiding paying taxes to the British government. Double bubble exploitation?

Why should British taxpayers subsidise miserable pay and conditions while at the very same time letting these same Scrooge employers avoid paying their fair share of British taxes. Surely this is not right?

Remember before feeling too outraged and smug that you probably have pension and insurance funds that invest in both these companies and make money out of them. Your future pension could be financed by other people’s personal misery.

Hat tip Fair Pensions. Watch out for their next campaign on a Living Wage for all top FT100 employees and their contractors. 

Check above Picture and the other Christmas Carol

Labourspace - Countering tax evasion by the super-rich

I received an email today about the new Labour movement website “Labourspace” and the campaign to make the super rich pay their fair share of taxes. The TUC reckon that tax avoidance by the Super rich costs the Exchequer around £25 billion per year.

“The TUC are proposing not a higher rate for the richest, but instead a minimum tax rate to help stop the bigger abuses of tax avoidance. Our idea is to introduce a minimum tax rate of 32% for those earning over £100,000, rising to 40% for those earning over £200,000. This is really a pretty modest proposal, leaving room for genuine tax breaks, but suggesting people pay at least a fairer proportion of the tax they are due to pay”.

This has got my vote.

The concept behind Labourspace is simple but clever. Sign up and change your world in 30 seconds.