25 June 2008

Union Demands

While I am not a fan of union's going on strike (who is?), my attention via Tim Worstall has been brought to some recent union demands of this Labour government if they want union cash to keep the party afloat. Some of their demands are perfectly reasonable - like calling for...
the scrapping of the NI ceiling.

I have never understood how the ceiling on National Insurance could be called fair. If people earning over 40k didn't have to pay income tax on that income, there would be an uproar - yet this is precisely the situation with National Insurance which takes 11% of earnings from £5,460 to £40,040 but only 1% above that - so the lowest earners are hit the hardest. Under a so called Labour government how can this regressive measure still stand - this would be the simplest and easiest way of redistributing wealth and surely one that would have majority support (since only 12% of earners get over 40k).

I also think it unfair that 16-21 year olds can be paid a lower minimum wage for doing EXACTLY the same job - another of the GMB unions demands.

Ok! Labour should tell the unions where to go if they ask for unballoted strikes and secondary action - that is clearly not what the country wants or needs but the rest of the measures seem reasonable, easily achievable and potentially vote winning - like the company audits on male and female pay and protection from unscrupulous private equity companies.

Some may raise the point that political parties shouldn't be dictated to by their paymasters in this way. Of course this is true of every political party especially the Tories who do their negotiations behind closed doors with shady businessman - at least union leader demands are out in the open and represent the interests of millions of workers, who does Belize resident Lord Ashcroft represent?

Of course, Labour have been partial to big business donations as well and there really is only one way to stop all this undemocratic charade - state funding of parties. The sums involved are tiny when we consider the ransom demands made on our political parties against the majorities wishes. The only way we can protect the majority is if the majority fund our political parties - it is too dangerous to let them become the playthings of the rich and powerful with no democratic checks. The US shows us how bad vested interests and lobbying will take us - they will never get universal healthcare in the US despite the vast majority of people wanting it.

Of course it doesn't help that local government is 60% dominated by Tories despite them getting only 40% of the vote. If only Labour hadn't reneged on its manifesto promise of electoral reform.

15 comments:

  1. The only way we can protect the majority is if the majority fund our political parties - it is too dangerous to let them become the playthings of the rich and powerful with no democratic checks

    Can't agree with that Neil. Why should people fund political parties that are anathema to their political views? People and pressure groups will always attempt to 'buy' influence and there isn't anything wrong with that in itself. The Labour party was created to give the trades unions a voice in national politics. What we must insist on is complete transparency on the interactions between lobby groups and MPs and ministers. I want to understand why decisions were taken. Policies appear to arise out of nowhere. In understanding the ID Cards fiasco it would be very useful to know about the lobbying that the biometrics and IT industry has engaged in. Is there any coincidence that Entrust is paying David Blunkett a salary of £30,000 a year?

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  2. 1. You have to look at income tax and Employee's NI together. Up to £40k, you pay 31%, over that you pay 41%. It is disingenuous to say NI falls from 11% to 1% without mentioning that income tax doubles from 20% to 40%.

    2.Agreed on NMW, so it might be best just to scrap it altogether.

    3. Unions can call strikes as much as they like AFAIAC, as long as employers have an equal and opposite right to sack striking workers.

    4. We all know that it's mothers, not women, who have lower wages. Now, my wife may well earn less than she 'should', but by reverse token I must earn more than I 'should' and as we pool income and expenses, it's just not an issue.

    5. Private equity companies do not, on the facts, have a record of sacking people. Why destroy the company they have just acquired?

    6. And state funding is ONLY acceptable if it's via an extra box on the ballot paper and the money is given direct to the local party.

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  3. stephen: "Why should people fund political parties that are anathema to their political views?"

    Mark answers this - 'state funding is ONLY acceptable if it's via an extra box on the ballot paper and the money is given direct to the local party [of their choice]'.

    So if people choose not to tick a box, then NO money is given to ANY party.

    We would only be talking about £60m a year - chicken feed out of a £600 BILLION budget. This is a small price to play to stop big business and wealthy individuals dictating policy rather than voters having a say. One thing you can be sure of is that the £60m given by wealthy individuals gets them a healthy return of taxpayers money in lucrative contracts etc and/or lenient legislation that is not in the interests of the public.

    Yes, transparency is important but what use is it if voters are powerless to stop companies bribing ministers with post-government £30k a year and more pay-outs for 'consultancy' work?

    If political parties get their funding from the voters via the ballot box, they have a financial incentive to get EVERYONE's vote. If we introduce PR they also will have an electoral incentive to get at least 50% of the vote on a decent turnout, unlike the present situation where 35% of a poor turnout will do (if you can scare enough people off the opposition - easily for the Tories with their vast wealth and newspapers).

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  4. Mark: When you have private equity bosses claiming they pay less tax than their cleaners - surely something is wrong.

    You say criticising the regressive nature of NI is disingenuous if we don't mention the more progressive income tax, but surely then we should include ALL taxes - VAT and council tax and other duties - all of which are severely regressive. Overall the poorest pay a higher percentage of their earnings than the richest. This simple tweak to NI would do something to address that. The poorest 10% paid a higher proportion of their incomes in tax than the richest 10% - 44.1% versus 35% (pdf).

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  5. Mark: 2. the NMW can go if we replace it with a decent CI, until that day...

    3. Agreed.

    4. There is evidence to suggest married men do best followed by single men, then childless women, then mothers. So single, separated and divorced mothers are the biggest losers. I accept all this is cultural - why for instance, don't many men look after children? But if we do nothing, then nothing will change. I am in favour of complete wage transparency - where everyone's earnings are available on the net. Then let everyone justify what they earn to their colleagues and give all the staff a vote to decide what each person earns - it works elsewhere.

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  6. Mark: I also agree with you completely on point 6, but am dubious as private equity's record on sackings.

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  7. Not only do the rich pay more tax, means tested benefits ensures they don't even qualify for benefits if they fall on hard times!

    I look forward to the day when the Film industry starts paying it's fair share of taxes given that it's stuffed full of Labour luvvies who support wealth re-distribution of other peoples' income!

    PS There is clearly a very simple way for the poor to pay less tax, study hard and get a job that pays more! The opportunity is there for everyone. You just have to apply yourself rather than sign up to Labour's victim mentality and hope other people work hard so that you live off their taxes just like parasites!

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  8. "So if people choose not to tick a box, then NO money is given to ANY party."

    Correct. I vaguely thought that we had agreed on this point, but maybe not.

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  9. And on the 'mothers earn less than other workers' point, this is another reason for scrapping child tax credits and rolling them into a higher, flat-rate, non-means tested Child Benefit paid to mother - that'll make up a large part of the after-tax difference in their wages.

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  10. Mark: Yes more child benefit is definitely better than means tested credits - totally agree. And we are in total agreement on state funding of parties - it can only happen if people tick the boxes on their ballot papers.

    I think 25% of our taxes is paid out directly in benefits - remove the means testing and the savings could be immense. Means testing just creates a lot of jobs for middle class pen pushers.

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  11. We would only be talking about £60m a year - chicken feed out of a £600 BILLION budget

    Well lots of special interest pleading can be justified on the basis that it's only a small sum relative to the whole budget. That's not nearly a good enough reason. It sends out completely the wrong message that political parties are the creatures of the state. They are not. They are there to represent the views of those who support them and those are the people who should pay for them. State funding would amount to state licensing of political activity. There would also be the inevitable rows about non-mainstream parties getting funding. No, it's a divisive and really bad idea.

    This is a small price to play to stop big business and wealthy individuals dictating policy rather than voters having a say

    It might be a 'small price to pay' if that were its effect. But it's not going to have that effect. You can't stop people from giving money to causes that they support - well you can't in a liberal free society. The antidote to influence and back room deals is transparency.

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  12. There is clearly a very simple way for the poor to pay less tax, study hard and get a job that pays more!

    Well Snaufu, many poor people already work pretty hard. On minumum wage they have to.

    The opportunity is there for everyone

    Clearly the opportunity is not there for those who do not have the ability.

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  13. If you want higher earners to pay a higher % of their income in tax (in this case income tax/NI) then the quickest fix is to double the personal allowance. Even at a flat rate of tax/NI (whether 30% or 50% is neither here nor there), this means that the average % paid in tax is progressive.

    And this whole PE bosses/cleaners is a misundertanding, as I explained here. Obviously, the other half of the equation is to scrap means testing (on which we are agreed).

    Finally, yes, VAT is the worst tax of all (followed closely by Employer's NI), which is yet another reason to leave the EU.

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  14. Stephen, many poor people don't work hard as they have an easier life on benefits.

    The poor would be screaming out for better schools if it was the only route out of poverty!

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  15. Stephen, many poor people don't work hard as they have an easier life on benefits

    Shifting you ground again, snaufu. You implied that the only reason why poor people are poor is because of a lack of hard work.

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