Two quick thoughts

ATOS are apparently getting rid of internal email. Apparently it's to improve productivity, which may be true, but I expect - given the dubious nature of what our government employs them to do - that the more transient nature of instant messages compared with email is a big bonus.

Meanwhile, in good news for future ATOS contracts, polling suggests an increasing number of people are blaming poverty on poor people and less willing to pay taxes to help others. Mark Easton says:

One would expect that when the economy goes down people become a little less judgmental of those in need but this year's report finds 26% of people feel poverty is the result of 'laziness' or 'lack of willpower'. In the mid-1990s that figure was down to 15%.

I'm not sure - benefit of hindsight! - one would expect that. Obviously as people get into worse financial situations, their likelihood of being in favour of extra taxes on them personally decreases. Also, of course, there's an important psychological effect of blaming poverty on the poor - if it was due to flaws in character or morals which you, of course, do not share, then it won't happen to you. It's not surprising in these times that the increased number of people who need reassurance it won't happen to them outweighs the increased number of people who know so many exceptions that they know the causes are bigger than that. So far, anyway.

We are the 70-100%. Tax the 40-70%.

While writing my thoughts on Occupy, I was thinking quite a bit about how revolutionary and protest movements are often either explicitly about the interests of the relatively-privileged upper-middle and middle classes, or end up co-opted towards their interests anyway.

And then an example comes along.

I wrote about the tuition fee plans last year when the original Browne Report was published. At the time I thought they were surprisingly good, all things considered - though with some potentially very dangerous and largely ignored consequences.

Political changes to the report's proposals in the process of turning it into legislation took away the most dangerous consequences - but at the cost of taking away most of the proposals' internal logic and consistency too.

My general assessment, though, remains about the same: a surprisingly good deal for students and universities. The protests against the tuition fees - and they're mainly about the tuition fees - are effectively a protest by the rich against the poor. That's not to say that the participants think that's what they're doing - but the protest and anger has been quite effectively co-opted by upper-middle-class interests.

Lets look at the current system first.

A student on a typical undergraduate course will pay around £3.5k in fees a year, and take out around £4.5k in maintenance loans each year, for either 3 or 4 years. This will leave them with a maximum payment requirement of either £24k or £32k (indexed to inflation), to be repaid at a rate of 9% of all gross earnings over £15k. Because that £15k earnings figure isn't indexed to inflation, just about everyone will repay all of it - in 25 years, when the debt is written off if not repaid, the median wage is likely to be around £40k in absolute terms (assuming an average 3% nominal inflation). Repayments will therefore be over two thousand a year even for that salary - and a graduate 25 years after graduation is likely to be earning considerably more. Total real-terms payments are therefore going to be approximately the full value of the maintenance and fees "loan".

Furthermore, if this scheme were to continue, the gap between £15k and nominal salaries would increase, so repayment sizes would rise.

Now compare this with the new system.

Repayments are now at 9% over £21k, but the repayment threshold is itself linked to changes in median wage. This means - using this calculator, which seems accurate - that, depending on the exact assumptions made¹, to repay more than (real terms) £24k under the new system would require a salary greater than around £29k in real terms. A slightly higher salary would be required to repay more than £32k.

On the one hand, £29k is not a huge salary. On the other hand, it's quite a bit higher than the median income - it's currently around 70th percentile of income. It's also higher than the median income for almost any age-band, gender and region combination: that is, the majority of people² will not earn more than £29k (in real terms) at any point, never mind as a career average salary!³

So under the new scheme: The bottom 30-40% don't pay anything under either scheme. The next 30-40% or so pay less than now both in total and per year. The top 30% (by income) pay more in total (though still less in the early years). The ones who have to repay the greatest additional amount under the new scheme compared with the old are the top 10-20%⁴.

Very approximately, therefore, the protests are about trying to persuade a right-wing mostly-Conservative government that it should charge the rich less and the middle more for their education. Even more strangely, the government is refusing: tax rich graduates instead, they say.

Footnotes

¹ I pinned personal salary growth in the simulator to equal the average earnings growth (both at RPI+1 or RPI, it makes little difference) to mimic having a fixed real salary over the whole time period. That's not realistic, but it allows a comparison with median wages.

² Now, graduate salaries are generally higher than non-graduate salaries, and there's nothing like a bit of self-interest, but even then it's mainly benefiting the richer graduates. It's very tricky to assess by how much and there are several conflicting sources (and the premium varies by degree, too) - but it probably works out, on average, at only around £3-4k additional gross earnings a year. Even the median graduate is therefore unlikely to be earning much more than £29k in real terms.

³ And this is also assuming continuous employment for the full 30 years after graduation. Take time off to raise children, or become unemployed for more than a couple of months, or become ill and spend a year off work on long-term sick leave, etc. etc. and the likelihood of repaying more than £24k falls further.

⁴ Above a very high threshold - in to the top 5% or so - total repayments start falling again because their earnings clear the loan before the higher interest rates only charged on higher earners have much effect. But they'll still even in the absolute best/worst unrealistic case (walk straight out of university into a £400k corporate directorship) repay almost twice as much under the new scheme as they would under the old scheme. And someone with that sort of immediate earnings potential probably has sufficient family wealth and connections that the cost of university is largely irrelevant anyway.

The moral equivalency of Miliband

So, Ed Miliband MP (Labour, Doncaster North, Leader of the Opposition) gave this speech today on "Responsibility in 21st Century Britain"

The basic theme - and if you read the speech, you'll see that I'm not exaggerating in the slightest here - is that there is a moral equivalence between:

1. fraudulently running a business for years, stealing millions for your own pockets while leaving your vulnerable customers to face abuse; and
2. claiming benefits instead of getting non-existent jobs.

and between

1. causing a global financial crisis while taking millions in remuneration; and
2. having an overgrown and litter-strewn front garden

and that a future Labour government needs to deal with the people who aren't "taking responsibility" for both.

I'm not going to pick apart the entire speech - it's quite long and just about every line involves some sort of confusion, false equivalence, and/or factual error - but a few examples.

The speech opens with:

While out campaigning during the local elections, not for the first time, I met someone who had been on incapacity benefit for a decade. He hadn’t been able to work since he was injured doing his job. It was a real injury, and he was obviously a good man who cared for his children.

But I was convinced that there were other jobs he could do.

And that it’s just not right for the country to be supporting him not to work, when other families on his street are working all hours just to get by.

Lisa and DaveG at Where's the Benefit? have both written on this already.

Misty's post at Shakesville - "Those People" was written days before Miliband's speech, and about a different country - but could easily instead be about Miliband's bizarre belief that there are tens of thousands of job vacancies just waiting to be filled by disabled applicants, if only they'd apply.

The idea that looking after children is work - though not paid work, which is the only real sort, of course - also appears to have passed Miliband by.

In Manchester, as well as helping the most vulnerable with housing, they give priority to those who are giving something back to their communities – for example, people who volunteer or who work.

They also look to reward people who have been good tenants in the past and who have paid their rent on time and have been good neighbours.

This approach means that rather than looking solely at need, priority is also given to those who contribute - who give something back.

In other words, rather than basing benefits decisions on how much you need the benefit, they will in future also be based on how much Ed Miliband MP approves of your life.

Well, no change from the current or previous government's policy there.

For too many people at the last election, we were seen as the party that represented these two types of people.

Those at the top and the bottom, who were not showing responsibility and were shirking their duties. From bankers who caused the global financial crisis to some of those on benefits who were abusing the system because they could work – but didn’t.

Labour - a party founded by hard working people for hard working people - was seen, however unfairly, as the party of those ripping off our society.

So: Labour were seen as being "not tough enough" on people on benefits. This is despite them bringing in massive restrictions on benefits over the 13 years they were in power - reducing eligibility, making the forms longer, bringing in the widely-criticised assessments for ESA, introducing an attitude of "better ten eligible people don't get benefits than one ineligible person does" to tackling fraud, and so on.

His solution - despite acknowledging that the perception was unfair - is to do it again, only more so, in the hope that it will work this time.

Well, so much for the claims that Labour under Miliband would be different to Labour under Blair. I suppose we've got several more years of headline-chasing to look forward to. Perhaps if a few more MPs had experience of claiming benefits and being looked down on as "scroungers" they might come up with some decent policies instead.

One default man's red tape is another person's necessity.

I've criticised the Equality Act 2010 on several occasions, but, flawed as it is, it still provides more protection than not having anything at all.

So, the government has included it in its "red tape" review, which is currently open for public comment. Heg at Feminist Philosophers has more information.

If you've got a moment, and are a UK citizen or resident, you might want to leave a comment yourself (remember to keep it free of cursing and apolitical, or it will be moderated out). The responses so far are overwhelmingly supportive of keeping the Act, which is good.

On the rest of the regulations, which do appear to be secondary¹ legislation, they say in their FAQ:

Ministers will then have three months to decide which regulations they will scrap, with the presumption that all burdensome regulations will go unless the government departments can justify why they are needed.

It's a rigged consultation. There are a lot of regulations. The vast majority of the population of the country don't need to know about the vast majority of them.

The people who do need to know are the people who - for everyone's good - need to follow them. They, of course, are the mostly likely to think them burdensome and unfair.

The chances of members of the general public being able to look through most of the regulations, find the ones that have affected them, and make a comment is pretty low. I'm fairly experienced at reading government documentation, and I certainly don't have time to look through them all to see what's there.

It's not that there aren't bad regulations in there, and there are certainly plenty that could be simplified, merged, or clarified, but this is a terrible way to gather public opinion on which they are.

Despite this weighting, the balance of comments on a lot of the regulations - for now - is that the regulations are a good thing and should be kept. That's probably not what they're expecting, so Plan B - ignore the comments they disagree with - is likely to be next.

Footnote

Primary legislation is laws passed by Parliament, which can only be amended or repealed by Parliament. Secondary legislation is different - Parliament will pass a law giving Ministers the right to make laws in a particular area.

Major advantages:

• More flexible than primary legislation, since it can be changed without taking up valuable parliamentary time
• More scope for detail about implementation of an Act than could usually be placed in legislation

Major disadvantages:

• Less accountability - Parliament can in theory scrutinise secondary legislation, but the process is very strongly biased towards the changes going ahead.
• Less publicity - primary legislation and planned primary legislation is fairly easily accessible to the public and interested groups. Secondary legislation, again, is easier to sneak in.
• Too easy to reverse - if anything actually important is only in secondary legislation, when the government changes hands, it can be scrapped almost instantly, and without much mention - did you know about these? I'd only heard of a few.

Coalition: untrained and stressed workers better for the economy

On 6 April 2011, parents of children aged 17 were to be given the right to request flexible working from their employers. Not the right to have flexible working, understand - just the right to request it.

The coalition intends to cancel this regulation before it takes effect.

From that press release.

The Government is committed to extending the right to request flexible working to all employees in due course, as set out in the Coalition Agreement.

The aim behind delaying the extension of flexible working is to allow businesses breathing space in the current economic climate.

Flexible working is currently available for parents with children 16 and under and carers.

Okay. So, let's go through this more slowly.

1. The right to request flexible working is currently available for parents of children 16 or under, and carers. Employees do not have to grant flexible working - ever - but the employee has the right to ask and have their employer consider it, and the employer must have a good reason to say no.
2. On the 6 April, the number "16" in that sentence would have changed to "17".
3. But to reduce red tape by keeping the number and complexity of regulations related to flexible working exactly the same, it now won't.
4. This will save the economy, because rather than worrying about whether all their employees with children aged exactly 17 (many small businesses have exactly zero employees fitting that description) were suddenly going to descend on them and ask for flexible working, employers will be able to ... um ... er ... Profit!
5. Later, if the economy is better, they will increase red tape again by simplifying that regulation even further so that it says "all employees" rather than "all employees meeting conditions X, Y, Z"

No surprises for guessing that this sort of change will harm non-default employees - women, disabled people, working class people especially - far more than it harms the default ones (who weren't going to request flexible working much anyway)

And don't think about developing your skills either

Similarly, the right to request time off to train will be removed for employees of businesses with under 250 people.

Most economists would say that increasing the skill levels of your workforce improved productivity and so led to increased economic growth - but not Vince Cable and the Department of Business, Innovation and Skills (DBIS): they know the truth. Their next step will presumably be to rename themselves to the Department of Business, Stagnation, and Lack of Skills, to better reflect what the country needs right now.

Has DBIS said anything economically sound recently?

Hmm... it was also Cable's department that was responsible for the economically bizarre plans for tuition fees:

1. Make students take out at least a "very large" loan to go to university at all
2. Set the repayment terms such that for most of them (except the ones who get rich enough not to care) the total repayments will be exactly the same for a "very large" loan and a "really very large" loan.
3. Let the universities choose whether their students will need a "very large" or "really very large" loan (but give the universities more money per student in the "really very large" case)
4. Act incredibly shocked when every single university says "really very large".

Perhaps they've already fired all their well-trained economists, and aren't letting their replacements read any textbooks in case they learn something. This would explain rather a lot about their recent policy announcements.

Bad for families, bad for small businesses? How very conservative.

The Telegraph reports that "Ministers plan to exempt small firms from maternity leave rules" as part of the Budget.

If the leak is accurate, businesses with 10 or fewer employees would be exempt from the statutory maternity and paternity leave requirements. Instead, employees would have to negotiate it individually.

Bad for families

The bad for families bit is pretty obvious. A lot of people are employed by small businesses, and if they have to personally negotiate their new parent's leave, they're unlikely to get as good a deal as the statutory leave available to people working for larger businesses.

The statutory requirements are currently:

• Maternity leave, available to the person actually giving birth, is 6 weeks at 90% of salary, then another 33 weeks at the statutory rate (either 90% of salary or £124.88, whichever is lower), then another 13 weeks unpaid.
• Paternity leave, available to one partner of the person giving birth - despite the name, this person need not be male or the father - 2 weeks at the same statutory rate.

There must also be the same or an equivalent job to return to at the end of the leave period.

The maternity leave is relatively generous - though much less than provided by some other European countries - and it might be difficult to negotiate something that good on one's own. In a small business, support from a union is difficult to come by, too.

So, that's a lot of new parents who - at an expensive time in their life - will be getting less financial support because they happened to work for a smaller employer than their neighbours. And, of course, the majority of people who are really much worse off as a result will be women. Typical.

Bad for small businesses

Firstly, negotiating leave like this is extra effort for the employer, too - especially if the employee actually puts up an argument. Make too low an offer, and you might not get your employee back after the leave is over, now that they know the value that you place on their work.

Secondly, at the moment, the government covers the expenses associated with statutory maternity and paternity pay. Businesses making less than £45,000 in class 1 National Insurance contributions annually (roughly: businesses with less than £400,000 in staff salary costs, which will be just about every business with ten or fewer employees) can reclaim from the government 104.5% of the costs of paying statutory pay to the employees.

Yes, that's more than 100% reclaimable. Small businesses actually make a small amount of money - in addition to not having to pay their salary (though that might go on hiring a temp) - by having employees on maternity or paternity leave. This is not a well-known fact.

Furthermore, the reclaiming is done by taking the money out of the income tax the business sends to the government for its employees, so the money is available immediately with no delays.

That's at the moment. The government, however, only refunds statutory pay. If a company - as my employer does - chooses to give a more generous maternity or paternity leave package, then the government only allows the statutory portion to be reclaimed.

Now consider the effect of removing any statutory requirement for small businesses - it goes from being marginally profitable (in reality, this is to cover increased payroll administration costs, rather than actual profit) to costing the business several thousand pounds to keep the same terms.

So small businesses that value their employees and want to keep giving the same terms as before - as generous terms, as with other signs that an employer actually values its employees, make it more likely that employees will return at the end of their leave - might end up several thousand pounds out of pocket as a result.

So who is it good for?

The government balance sheets. If they can stop paying maternity leave to employees of small businesses, that's a fairly large direct cost saving overall. (The indirect costs will probably vastly exceed the saving, of course)

It's a leaked proposal, so the details aren't available, and they might instead retain reimbursement at the statutory rates. But if they do that, the proposal basically does nothing other than aggravate employers and employees. In that situation:

• There's no point in paying less than the statutory rates, if they remain reimbursed for small businesses, because it doesn't cost any more.
• For paternity leave, the length of leave is nothing that employees couldn't reasonably take as holiday anyway. There's not much point in trying to argue it below two weeks.
• For maternity leave, the employee is going to have a child and going to need some time off work as a result. If you try to skip that, you'll just end up with them taking sick leave instead, for which the repayment terms aren't as generous. They'll be away long enough that if your business can't manage without them, you'll need to hire a temp - at which point, unless qualified temps are either much rarer or much more expensive than qualified permanent staff (both unlikely, especially with these unemployment levels), the big hassle of temporarily losing an employee is over and done with.
• But rather than this all being agreed in statute, you have to argue over it with every single employee.

In this alternative case the benefit to the government is that it gets to "cut red tape" (by increasing it) and get a policy boost with the "mothers belong at home" crowd, at no direct financial cost.

Racism and benefit claims

The BBC reports that nine men employed by HMRC have resigned or been fired after an investigation found that they had tampered with records to prevent benefits being paid to at least seventeen BAME families.

They were caught after a detailed audit was carried out when one of the families complained that their data was wrong, and back-payments have now been made to those affected. So, as far as that goes, all good - the system has worked in the long run.

The problem is, though, that child benefit is really straightforward as regards eligibility. Approximately, if you have a child under 16, who lives with you, and you are both UK residents and not in certain immigration categories, then you get child benefit. It's not (for now) means-tested and it's not got a 30-page form to complete for it. It is, essentially, not a particularly difficult thing to audit.

This makes it quite a rarity.

Many benefits - Disability Living Allowance (DLA), Job-seeker's Allowance (JSA), housing benefit, Council Tax benefit, and so on - are extremely heavily tested. They have long and complex forms (30 pages or so when I last claimed some of them; I imagine they've got longer since), and similarly complex rules for who can claim, and how much they're entitled to, based on the social panic over the relatively low amount of fraudulent claims.

If the nine men at HMRC had instead been working for the Department for Work and Pensions, or for the local council, handling claims for those benefits, they'd probably still all have a job, and would have been able to dismiss numerous BAME claims. Tracking them down would have been quite difficult, because there's so much scope for sending claims back for "clarification"¹, losing paperwork, and a lot more discretionary decisions - especially with housing benefit where the amount to be paid is very adjustable.

Detecting racism - or other forms of discrimination - for those benefits would be significantly more difficult.

¹ One of my JSA forms got returned twice for "clarifications" of data that was either already on the original form or not asked for in the first place on the original form. Conversely, in one particular case where it wasn't straightforward to prove a particular statement I was making was true, the person handling my case suggested a few possible proofs ("No, I don't have that one either") before giving up and saying that I could sign a piece of paper to declare that it was true (bear in mind I've already, at this point, signed the whole form to declare it was true) and that would be okay. It's very arbitrary, and mine was an extremely straightforward case.

Good news and bad news on leave for new parents

The government is finally announcing a timetable for the introduction of paid paternity leave longer than two weeks. It's the same plan they've had for a while, and placed in the 2005 manifesto - to allow the mother to transfer months 6-12 of their leave to their partner (contrary to the reporting on the issue, and the implications of the name "paternity leave", this need not be the father, and applies equally to same-sex couples). It's not great, but it is a significant improvement on the current situation.

In worse news, that The Times appears to be the only news organisation to lead with, the government's promise from the same manifesto to make all 12 months of maternity leave paid has been abandoned. It's not entirely surprising, since doing this would cost tax revenues the government isn't currently getting - whereas the paternity leave change is neutral in terms of government spending, but it would be nice if for once it wasn't a plan that primarily benefited women that got axed for cost reasons. Harriet Harman MP, one of the few openly feminist cabinet members (and she gets a huge amount of criticism from the media for it), was apparently overruled by Lord Mandelson.

The response from some of the business organisations has been fairly predictable.

David Frost, director general of the British Chambers of Commerce, said it would be a good idea to allow fathers up to six months' leave "when the economy is working at full tilt" but it would harm businesses struggling with the recession.

"This is not the time to do it. It is a huge burden to plan for both a male and a female employee being away," he told the BBC News Channel.

If businesses can plan successfully for a small number of their staff to be unexpectedly ill for several months - and they have little alternative, they can plan for a small number of their staff to be expectedly absent for a well-defined period of time to look after their new children.

The major reason in favour of introducing extensive paternity leave (as has been done in a few other European countries such as Sweden, Finland and Iceland) is that it takes away from the culture that childcare is a woman's¹ role and work is a man's (all three of Sweden, Finland and Iceland do noticeably better than the UK on measures of gender equality). It will obviously take a few years before any significant number of men start taking up the opportunity (and the way the leave is going to be set up isn't ideal), but it should help to erode that stereotype. More leave, better paid leave, and more flexible allocation, as those other countries have, would be better, but this is an important first step.

I do wonder how much of the opposition from businesses comes from "we can't hire a woman, because they might take maternity leave, and now you're saying that we can't hire men either? Who are we supposed to employ?" attitude.

The new leave would be available from April 2011

¹ While the mother isn't necessarily a woman, and their partner isn't necessarily a man, it's by far the most common case, and it's unlikely that the "childcare is a woman's job" crowd are particularly considering any other family situations.