Gordon Clown .Com

A new study shows that the “low unemployment” which Gordon’s much heralded “miracle” economy has been built upon, is a mere sleight of hand, and that actually unemployment is much much higher than the government are willing to admit to.

Unemployment is almost three times as high as the Government’s official figures a new study has claimed.

A report by Sheffield Hallam University said 1.7 million “hidden jobless” should be added.

In particular, the report said that at least one million of the 2.7 million people on incapacity benefit should be classified as unemployed.

However, official unemployment has fallen by 15,000 to 1.68 million in the same period. The claimant count has fallen for eight months in a row, the longest continual reduction since the summer of 2003.

The claimant count, which covers people eligible for jobseeker’s allowance, fell by 9,300 in May to 880,400, the tenth time the figure has fallen in the past 11 months.

The claimant count has fallen for eight months in a row, the longest continual reduction since a run of 20 consecutive monthly reductions which started in the summer of 2003.

But the figures were overshadowed by a big increase in the number of people classed as economically inactive, which includes students, those looking after a relative, workers who have taken early retirement or given up looking for a job.

The figure increased by 77,000 in the latest quarter to 7.95 million, the highest figure since comparable records began in 1971.

The number of jobs in manufacturing firms also fell to a record low of 2.96 million after a fall of 49,000 in the latest three months compared with a year ago.

Today’s data from the Office for National Statistics also showed that the number of people in work fell by 10,000 in the quarter to April to just over 29 million.

The claimant count is now at its lowest total since September 2005 and is down by 71,500 on the year.

Average earnings increased by 4 per cent in the year to April, down by 0.4 per cent from the previous month.

Excluding bonuses, the figure was unchanged at 3.6 per cent. Wage growth was 4.2 per cent in private firms, down by 0.6 per cent on the previous month, compared with an unchanged figure of 3.1 per cent in the public sector.

There were 638,000 job vacancies in the three months to May, up by 21,700 from the previous quarter.

There were 2,000 days lost through industrial disputes in April, the lowest monthly total since January 2005.

The UK still has one of the lowest unemployment rates in Europe at 5.4 per cent, but the figure has increased by 0.2 per cent in the past year compared with an average European Union fall of 0.9 per cent.

Jim Murphy, Minister of State for Employment and Welfare Reform, welcomed today’s figures, saying: “Since 1997 the numbers on jobseeker’s allowance, incapacity and lone parents benefits have fallen by over 900,000 and they continue to fall. Today’s figures show that the number on jobseeker’s allowance has now fallen for 10 out of the last 11 months.

“Our welfare reforms, combined with a strong economy, are helping more people to come off benefits and look for work - but we are determined to go further still, and to break for good the cycle of poverty and dependency.”

Meanwhile the bond markets are making things uncomfortable for Gordon’s coronation, with long term interest rates rising by about 0.50% in the last week alone.  The market is doing the MPC’s job for them and there’s nothing Gordon can do about it.

The Independent lays into Brown today, saying that he is a nasty piece of work for the way he has treated those people who’ve been unfortunate enough to see their pensions go belly-up.  But to expect anything different from the Iron Chancellor is clearly misguided, as he has shown his true colours only too well in recent times.  Public dissatisfaction with Brown is bad, but with the move nextdoor and more and more past mistakes coming to light, it’s likely to get far worse.

Gordon Brown is a pretty nasty piece of work. Over the past three years, he has done everything in his power to prevent the Government having to provide financial help to the 125,000 people who lost their occupational pensions when their companies went bust. And every concession that has finally been made, every penny that has eventually been paid, has come only after a lengthy battle.

By the time this year’s Budget came round last month, the political pressure had become so intense that Brown finally conceded to enhance the grossly inadequate Financial Assistance Scheme (which he set up in 2004 to stave off another backbench revolt). However, his new and more generous package still fell short on just a few details.

For a start, one of the biggest problems with the FAS is that those who qualify aren’t getting the money quickly enough - some died before they saw a penny. As a result, the campaigners had proposed that an emergency fund be set up to help those most in need. Getting rid of archaic rules that force bust pension-funds to buy annuities for their members was another suggestion that would help the remaining cash in distressed pension schemes be released immediately.

And finally, while the new FAS will cap benefits at £26,000 a year, well above the £12,000 cap originally put in place, there is still no inflation protection - ensuring that pensioners’ incomes will be reduced in real terms every year.

The combined cost of sorting out these final niggles would be negligible. However, when the opposition parties laid down an amendment to the Pensions Bill this week, which would have dealt with all these issues in one fell swoop, the Government whipped its members to vote it down. Although several Labour MPs rebelled, the Government still narrowly won the vote - a political victory for Brown, but yet another blow for those who lost their pensions.

It’s sad that this issue has got caught up in Brown’s campaign to become the next Prime Minister, and disappointing that he didn’t realise he could have done the right thing and emerged looking compassionate rather than mean-spirited. Who knows; the public may even have started to believe in the cuddly image the Chancellor has been trying to cultivate by pretending that he listens to the Arctic Monkeys.

Although the Government began trying to fight off its responsibility to the 125,000 victims of this scandal by saying that it was not its job to underwrite private sector pensions, the precedent of this case is no longer very important. With the Pension Protection Fund in place, people who lose their pensions in future will have a lifeboat waiting to rescue them - funded by private, not public, money.

The real message that the Government’s stubborn stance has sent out is that, while it might be willing to send money to the other side of the world if there’s a natural disaster, it’s not prepared to put its hand in its pocket for its own citizens when their life savings have been washed away through no fault of their own.

This week’s defeated amendment still has life. It must be voted on in the Lords, and if it is upheld there, the Government will face yet another Commons vote. In the meantime, however, thousands of people struggle on without the pensions they are owed.

This is Brown’s chance to show that he has an ounce of compassion in him.

Hardly likely.

The Daily Mail has unearthed a 200 page pamphlet produced by Gordon in his socialist student days, giving parasites a load of helpful hints and tips about how to sponge a living from state benefits. These days, Gordon has translated his ideas into a reality with the highest number of people off work on sickness benefit ever seen.

It is not a leaked copy of Gordon Brown’s manifesto in his campaign to succeed Tony Blair, but a 200-page booklet produced as a socialist student leader in the Seventies, long before “stealth taxes” were invented.

However, cynics will say the seeds of the welfare State boom under Labour can be seen in the document edited by 22-year-old firebrand Brown when Rector of Edinburgh University.

Entitled Alternative Edinburgh, it provides a revealing insight into his attitudes to the State and the law in its suggestions of ways to live for free.

“If you’re British and can give an address, free money is available from social security, basic £5.80 per week,” it says.

“Social and medical benefits are your right, not charity hand-outs, so never be reticent about claiming them. For whatever the reason the so-called welfare State was brought into being, it can and must be used to its full extent.”

Young Brown had his own “five-year plan”: a council takeover of shops, pubs and cafes, a crackdown on car owners and a 50 per cent rise in local taxes to help the working class.

Some may say little has changed.

A taste of things to come once Gordon moves nextdoor to become Prime Minister, perhaps?

It appears that when Gordon vacates number 11 later this year, he will leave behind a legacy of tax-and-spend that sees the Government’s spending as the largest share of national income for nearly a quarter of a century. But it’s all alright for him, as when the house of cards collapses he can simply blame it on whichever sucker steps up to take his place. It seems as though Brown is planning to use Jack Straw, one of the biggest suckers around, as his sacrificial lamb. This Sunday’s Telgraph says:

Gordon Brown’s 10th - and final - budget is on March 21. In the run-up to his swansong, it is increasingly clear that the Chancellor has driven Britain onto the fiscal rocks.

New official figures suggest that this will be the seventh successive budget in which Brown is forced to revise his borrowing figures upwards.

Between April 2006 and January 2007, the central government current budget deficit - tax revenues minus day-to-day spending - was £11.6bn. That’s almost £1bn more than the comparable figure last year, despite Brown’s insistence that the deficit would shrink.

These numbers add to a growing sense that the Chancellor has spent too much taxpayers’ money, without securing a compensating improvement in public services.

Richard Jeffrey, the economist, calculates that government spending under Brown has risen by 98 per cent in cash terms, while the economy overall has grown by 69 per cent. That’s why government spending last year claimed its biggest share of national income since 1983.

The International Monetary Fund, the world’s most important financial watchdog, is now raising concerns about Brown’s “credibility”.

In its latest report on the British economy, published last week, the IMF said the Chancellor faced a “critical test” and called on him to rein in public spending after years of largesse.

Brown’s actions have led to “a sharp deterioration in the fiscal balance and rising net public debt”, said the IMF, while predicting that government borrowing would spiral beyond the Treasury’s forecasts.

And next week business leaders too will indicate how worried they are that this high-spending chancellor is undermining Britain’s ability to compete.

“We are at a fork in the road,” says Miles Templeman, the director-general of the Institute of Directors, in the IoD’s forthcoming Budget submission.

“There is nothing inevitable about a rising burden of taxation - since 1993 public spending in Spain has fallen by almost 11 per cent,” he says. “Perhaps the UK needs some Spanish lessons, as the current size of our state is not globally competitive.”

The IoD document highlights how “fiscally exposed” we are in the event of a sharp downturn. “There is no buffer in the public finances to absorb the impact of such an event,” says Templeman.

That’s true - even Brown’s repeatedly rigged “golden rule” shows a surplus of just 0.1 per cent of national income.

The Chancellor knows the fiscal crunch is coming. That is why he has deferred the tough decisions until the second Comprehensive Spending Review (which has itself been postponed from the summer to the autumn).

By then, of course, he will be ensconced in No 10. Brown can then blame the fallout on his successor as chancellor - his new friend, Jack Straw.

When the IMF starts sending out the warning signals, you know things are getting serious.

Newspapers are reporting today that the International Monetary Fund has sent a severe warning to the “Iron Chancellor”, that taxation is at breaking point and public spending must be slashed to avoid disaster for Britain’s public finances. The news will come as a blow to tax-and-spend Gordon Brown, who has in the past 10 years shown his love for all things civil service by pumping cash into the public sector.

The IMF also warned that there is a “significant chance” of a fall in house prices, an event that - if it were to happen - would surely spell disaster for an economy built on debt, perpetual house price inflation, and consumer spending funded by second mortgages. The IMF also urged the Bank of England that interest rates must be upped to 5.5%, and soon, to avoid sending the economy into an inflationary spiral.

The IMF calculated the tax burden, based on the ratio of taxation to Gross Domestic Product, is now at 38%, a level last seen in the mid 1980s. Their calculation, of course, does not take account of the fact that official government statistics consistently underestimate the level of inflation, although this is not so much taxation as institutionalised systematic confiscation of an individual’s wealth.

The Telegraph gives this news front page billing, as shown above, not a very pleasing sight for Gordon. The summary below the headline even includes the dreaded bullet point: “Property prices headed for a sharp fall”, doubtless striking fear into many of the great British public. What a mess Gordon has got us into. The treasury, of course, chose to focus on past performance, stating that “the economy has seen continuing economic growth, for a record 58 consecutive quarters”, failing to mention the obvious flaw in that argument, that Britain has been the only major economy without a recession in that time, thanks to an ever inflating debt bubble that is inevitably set to burst. The IMF had this to say about the housing market:

“In the short term, forward-looking indicators of housing market activity suggest that house price growth is likely to remain elevated.

“In light of estimates that house prices are already overvalued, this would increase the subsequent risk of an abrupt downward adjustment.”

In other bad news for Brown, the Times led with the frontpage headline “Record Tory poll lead, and it’s likely to grow”. Seems that the polls are continuing to show that Labour are well behind the Tories, and that were Brown to replace Blair, the Tory lead would be extended even further. Gordon had better enjoy the 3 or so years he is likely to get as Prime Minister, because it doesn’t look like it’s going to last much longer than that…

Desperate to save as much money as possible to balance the books, Gordon has announced that public sector wages will increase by an average of 1.9% in this years pay round. Given that RPI, the traditional measure of inflation used when calculating pay increases, is currently running at 4.2%, this makes a real terms wage cut of 2.3% for the public sector, or £38 a month for a civil servant earning £20,000 a year. Gordon is truly stuck between a rock and a hard place this time around - he is potentially throwing away the votes of over 6 million public sector workers - votes he cannot afford to lose if recent polls are anything to go by. On the other hand, he is currently about 20 billion pounds in the hole with public sector finances, so every pound saved is vital. The third aspect to the conundrum is the spectre of wage inflation that faces Gordon head-on. If wage inflation spirals out of control as some say it might, interest rates will eventually have to be risen to match, which would permanently destroy any remaining reputation of Gordon as a steady hand on the economic tiller. The only direct influence he can bring to bear on wage inflation is by setting the wages of his own 6 million employees, and praying the private sector does likewise. Some hope.

Trouble is already kicking off over this, and strike action may threaten at some point, as reported in the Guardian today:

Some union officials warned that the increase might trigger calls for industrial action in the NHS. Amicus said it understood the health sector’s pay review body had recommended a rise of 2.5%, but the Treasury had decided that the rise should be staged.

Health minister Lord Hunt, asked what he thought about possible industrial action by nurses, said: “I certainly hope that would not be contemplated, I do not see this as a pay cut at all.”

He added of the unions: “They may be disappointed about the staging decision, but the important thing to remember is that we have accepted the pay review bodies’ recommendations in full.”

His lordship’s comments about the unions must be like red rag to a bull. Implying they no longer have any power to influence decisions on wage bargaining may be something he later lives to regret.

The situation must be fairly serious for nurses and the NHS, as apparently they now have to rely on charitable donations from footballers, a few of whom have agreed to give a days wages to effectively help subsidise the NHS:

West Ham United captain Nigel Reo-Coker is one of several soccer stars to have signed up to the Mayday for Nurses campaign and agreed to donate their wages for May 13 to help nurses.

The campaign’s founder, Noreena Hertz, said she was hoping to sign up all 556 Premiership players, as well as managers, commentators and others in the football community. Any money raised will go towards a hardship fund for nurses who get into financial difficulties in the first few years of their career.

The campaign is also calling on the government to raise nurses’ wages to bring them in line with comparable public-sector workers such as social workers and police officers.

So there we go, not just the NHS but whole swathes of the civil service to be bailed out by the football industry. I wonder if this is what Gordon had in mind when sculpting the “miracle economy” we now bask in. The votes appear to have been cast, as witnessed by the number of sign-ups to the may day campaign.

Meanwhile, the economic miracle has been stuttering fairly severely in the city this week, with massive losses hitting the FTSE. Things seem to be turning fairly serious fairly quickly for good old Gordon.

The desperation of Gordon to keep house prices rising and therefore keep the public borrowing was demonstrated again yesterday with the announcement of the Open Market HomeBuy scheme which has been designed to help key workers buy their first house. The possibility that the reason they cannot afford to buy a house in the traditional fashion lies with the vastly overinflated debt bubble that the UK finds itself in today has been all but ignored, and Gordon has decided instead that the best course of action is to continue inflating debt and waste £230 million in the process on a scheme which will only help around 20,000 people. The other obvious implication is that the salaries of teachers, nurses etc. determined largely by the government are set too low and eroded each year by pay rises linked to the massively fiddled inflation figures of CPI at roughly 2%, when the cost of living is increasing at a rate far far higher. The likelihood, as pointed out by the RICS, that assistance for new purchases from the government is only likely to worsen overall affordability in the long term seems to be largely irrelevant to Gordon.

In April 2002, following a budget speech that marked five years in office as Chancellor of the Exchequer, Gordon Brown was voted in a MORI poll to be the most popular Chancellor for 30 years. At the time, it was not difficult to understand why - after all, he had managed to sustain economic growth above the european average, and provide a period of the lowest unemployment figures for many years - achievements he was keen to remind people of at every opportunity.

He had also managed to keep Labour’s 1997 election promise of not raising the dreaded Income Tax (although he had raised the standard contribution rate of National Insurance, and increased the overall tax burden by several percent). These achievements were unquestionably impressive for a Chancellor who had no training or background in economics and whose education and past experience had purely been in politics until 1997.

How has Brown been so successful when other Chancellors have failed so miserably in the past? How has he managed to outshine his predecessors to such a degree? The full story of the economics involved is currently emerging on a daily basis, and the consequences of such prudent policymaking and execution are becoming ever more clear.

Many if not all of these various nuggets of information warrant delving into in greater detail, but for now we will just examine some simple measures of success that we find associated with the British economy today.

Gordon Brown and more widely the present Labour administration have been successful in achieving a very low level of unemployment throughout their term. This has been due in no small part to having spent vast sums of money on public services, resulting in the employment of a great deal more staff in various civil service organisations around the country. In fact, while during the years 1992-1998 public sector employment fell by around 800,000, Brown has reversed that trend and increased the public sector by around 100,000 staff per year every year since. This obviously helps to keep unemployment figures low but also costs the country a great deal of money, so much so that the annual deficit in the public finances has increased from 1.5% of GDP in 2002 to the present level of 3.6% in 2005, or more than double in three years.

The continued growth of the economy is another large part of the success of Gordon Brown. British people clearly feel that they are better off financially than in the past. Consumer spending has remained high enough to keep companies in business, in contrast with the seemingly long gone days of recession in which businesses were going bust left right and centre. The wealth that exists in the economy to pay for goods and services surely has been maintained, if this was not the case then what would the source of all this money be? Well the answer to that question is debt. Personal indebtedness in Britain is increasing at a rate of around 10% per year, and in April 2006 reached £1,191bn. (The main beneficiaries of this increase are, of course, the banks.) As long as the economy can remain healthy thanks to consumers borrowing more and more money, the threat of recession will be easily avoided. But debt has an unfortunate side-effect that many people in modern Britain appear to have forgotten, which is that it must, one day, be repaid.

A consumer boom, and all the luxuries it provides, has been facilitated to a large extent by cheap borrowing i.e. low interest rates. One of Gordon Brown’s first actions in 1997 when he came to office was to give the Bank of England full responsibility for setting interest rates, the percentage which determines the cost of borrowing money and hence drives the degree to which consumers are willing to take on debt that is offered to them by lenders. Brown set the Bank a target to maintain inflation at an annual rate of 2%, in order to keep at bay the traditional dangers of boom-and-bust, and instead ensure a steady and controlled long term period of economic growth. Thanks to the careful management of inflation within or around this 2% target, the Bank have been able to give us a sustained period of some of the lowest interest rates in living memory. All the time, the cost of necessities purchased by the average family has remained within this 2% annual growth target, and refrained from spiralling out of control as can often happen when a supply of borrowed money is made cheap and plentiful. In fact the supply of money (a measure commonly known as M4) is now increasing at a rate of 13.5% every year, the highest rate since 1990.

Some things, of course, have increased in price faster than others. Take, for example, council tax. Every home in the country has to pay council tax, there is no choice in the matter, and therefore it would certainly come under my definition of a necessity. Council tax has increased at an average rate of 7.7% over the past 5 years. Another example is the price of petrol. Many if not most people own cars and use them to get to and from work. But far from staying within the target level of 2% inflation, the price of petrol has actually increased by 12% in the past year. And finally we have that other favourite household bill, electricity and gas. In the past year, this has in fact increased by an average of 28.2%! That is an incredible 14 times the size of the government’s 2% inflation target.

How on earth, given these huge increase in the price of these three necessities, has the level of inflation been kept steady at around 2%? The answer is very simple. The revised measure of inflation, the Consumer Price Index, which was devised by Gordon Brown in 1997, does not include any of these items. Meanwhile, real inflation is clearly above 2%, as the ever increasing prices of oil, gas and electricity demonstrate. Wage inflation, on the other hand, remains steady at around 4%.

So the value of your savings, and the purchasing power afforded by your wages, are being eroded every day. Meanwhile, the amount of personal debt in Britain is increasing at the rate of 10% per year. These trends cannot continue, and history tells us that situations such as ours can only have one outcome. Gordon Brown has led Britain sleepwalking into a disastrous situation, carefully covered up by a combination of media spin and fiddled figures.

Welcome to Britain’s economic miracle.