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.

Massive headline on the front of today’s Daily Express: Now The Big Tax Backlash. Not great news for Gordon - he’s gone from hero to zero in a matter of days. The cheers from the Labour benches on Wednesday as he announced his 2p tax cut now a distant memory, and replaced by the jeers and groans of the media and public at large over his con attempt gone wrong. Exposed as a liar and a spinner, robbing from the poor to give to the rich, all in a desperate attempt to win a few lousy votes.

Instead of a tax giveaway, taxes will go up by the equivalent of £100 a year for every household in Britain.

As the backlash began against the Chan­cellor’s blatant deception, experts poring over the Budget small print discovered that Mr Brown is raising taxation by £2billion a year by 2010. And at least one in five families will be worse off as a result.

Mr Brown posed as a tax cutter. But as the Daily Express made clear yesterday, his 2p reduction in income tax was more than offset by other tax rises.

The deception led some to question whether the Chancellor had made the biggest blunder of his career and is losing his political grip.

Surely there can no longer be any question - whatever “grip” Gordon may have had at some point has long since deserted him. Since it has become clear that he is unable to work with others due to his numerous mental defects and attitude problems, who knows how long he can last in number 10?

It hasn’t taken long for the real truth to emerge about Gordon’s budget on Wednesday. 2p off the basic rate of income tax and he doubtless expected to be showered with praise and win votes up and down the country. The abolition of his own 10% tax rate to fund this measure was a mere detail of course. Well thanks to a bit more in depth analysis, it seems that is not the case.

The BBC, probably the most visited news website out there, has an article giving a run down of the winners and losers of the budget, and surprise surprise it seems the poorest will be the biggest losers. So much for Gordon Brown, “man of the people”. KPMG have worked it all out for us, in fact. Firstly the losers:

Taking into account the effect of changes to income tax and NI - although not tax credits - in 2008-09, compared to this coming financial year (2007-08), then most people will be better off because they will be paying less money to the Chancellor.

The most obvious exception will be people earning £17,000 a year or less.

By having a slice of their income taxed at 20%, rather than 10%, they will pay more - £131 a year more, KPMG estimates, if their income is less than £10,000.

And now for the winners:

The biggest winners in this calculation will be those earning about £35,000 a year.

They will keep £353 a year more, according to KPMG.

The rise in the ceiling for the standard 11% NI contribution rate means that those earning about £40,000 a year will gain very little - just £24 a year.

They will now pay NI on the top slice of their income which was not subject to it before.

Meanwhile those earnings more than £43,000 will gain £196 a year overall.

So, typical Gordon it seems. Taking from the poorest and giving to the richest. In fact, as long as you earn more than £17,000 per year, you are ahead. Money taken directly from the pockets of those earning less. A very typical New Labour way of redistributing wealth it would seem.

Helpfully, KPMG have arranged a handy graph for us all to see where we fit in:

See if you can find yourself there. Luckily for Gordon, he’s well above the zero point, as are his friends and colleagues. So that’s all right then.

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.

Unsurprisingly this weekend we were greeted with the news that the National Debt has now passed the £500bn mark. In a “miracle” economy whose foundations are built entirely upon debt, debt and more debt, the news that the country owes more money than ever before can hardly come as a shock to anyone. Gordon has slowly but surely sunk us further and further into the mire, and it’s now anyone’s guess as to whether the house of cards can be supported long enough for him to make the switch nextdoor.

One of the gigantic pits in which our money appears to be gathering is the coffers of various Private Finance Initiative companies, who are seeing profits beyond their wildest dreams, just so Gordon can keep a bit of the countries mammoth debts off his balance-sheet.

One of the more recent symptoms of the whole spiral of debt beginning to unravel seems to have been the fact that even the grossly fudged CPI measure of inflation is hitting new heights, with the Office for National Statistics unable to tweak it any further to cover up the truth. This amazingly seems to have also taken people by surprise, but it appears the cat is firmly out of the bag on inflation now as traders in the City are betting that two more rate hikes will be needed to follow January’s “shock” rise, both likely to be before the summer. But for rates to hit 5.75% could yet prove relatively benign in comparison to the starker alternatives that the Bank of England may be forced into.

The Telegraph continues to admirably stick the knife into Gordon, their Sunday economics editor commenting that “Britain is heading for trouble - and it’s all Mr Brown’s fault”:

Could Britain get caught in a “wage-price spiral? Could our high-performance economy, “the most successful in the Western world” as Gordon Brown likes to tell us, get sucked into the kind of inflationary problems that did so much harm in the 1970s?

It is a horrifying prospect and, in the wake of last week’s price data showing the most important inflation index at a 15-year high, increasing numbers of analysts think such a disaster could happen.

So, in the coming months, as the interest rate rises bite and debt-soaked shoppers scream, the mood in the country will turn against Mr Brown. Of most immediate concern is last week’s news on inflation, and the related danger of a wage-price tailspin. But that is only the latest sign that Britain’s strong economy could soon go into reverse.

Were that to happen, millions of households and businesses would see a swing in their financial fortunes, just as Mr Brown moves into Number 10. His reputation for sound economic management, the centrepiece of his claim to the premiership, would be flushed away for good.

The supreme irony is that come early summer, just at the moment when he achieves his ultimate ambition, the fates have decreed that a toxic combination of rising interest rates, rising inflation, rising taxes and rising industrial discontent will rain on his coronation parade.

Seems dear old Gordon has been caught out fiddling the figures once again, this time it’s unemployment statistics that’s the area of deceit-du-jour. Notwithstanding the creation of countless non-jobs within the civil service as a result of his “record investment” in public services, the masking of official unemployment statistics using various forms of incapacity benefit, single parents etc etc etc seems to be running out of control giving this country a figure of 5.29 million true unemployed, or 16% of the working-age population. Gordon currently doesn’t count single parents or those caring for family members as unemployed, despite the fact that they are of working age and do not have jobs. These conveniently excluded millions (over 4 million to be precise) very nicely spin the unemployment rates down and make it look like Gordon and Tony are doing a far better job than they actually are. They often love to remind us of the 3 million unemployed under the last tory government in 1986, which at the time amounted to 10.6% of the workforce, whereas today their figure for unemployment is running at around 3%, a remarkable achievement if you ignore the facts that have now been brought to our attention. Anything to keep confidence up in the economy and keep consumers spending, it would seem.

The reported July budget surplus of £8.4bn appears to be another area where the figures are not telling the full story at the moment, although these numbers could probably be placed under the category of spin as opposed to outright lying. Seems like the press are becoming more careful when reporting figures that come from Gordon, at long last.

More stories in the press have appeared this weekend about the true rates of inflation being far removed from official government figures, with the Telegraph and the Daily Mail among others running a story stating that CPI is “meaningless” and true inflation for the British middle class is around 10%, which incidentally is 4 times the official CPI figures. A university professor, this time, has joined ever increasing numbers of other independant statistical sources, the E&Y item club etc, and worked out that Gordon’s measure of inflation is meaningless for most people because it excludes increases in council tax, household insurance and more alarmingly school fees and domestic help. Though whether private schools and nannies are exactly essential items for middle class Britain is open for debate. A pensioner near Cambridge has also referred to the CPI calculation as “beyond a joke”.

As if the above dodgy dealings were not pain enough for Gordon it seems that the housing market, which has played a large part in recent times in keeping spending in the economy afloat by way of large amounts of mortgage equity withdrawal on the back of high inflation in house prices, is suffering a small blip. In fact the front page of Rightmove is currently bearing the headline “housing market runs out of steam”, after a fall in their ever-noteworthy asking price index of 1.6% last month. Not exactly headline news in reality (although the Guardian seemed to think so), but sentiment is key, and any sustained downturn could make Gordon’s stay in Number 10 a very short one indeed.

In July 1998, when Gordon Brown announced his plans for a Comprehensive Spending Review, to take place every three years, he promised that this would bring an end to the traditional economic cycle of boom and bust. This unprecedented change to the mechanics of the British economy would be achieved, claimed Brown, by planning government expenditure on areas such as health, education, law and order and defence on a three-year basis. One year later in his 1999 party conference speech, Brown gleefully espoused on the achievements that his policies had already created.

And it is because we rejected not just the Tory policy but the flawed Tory values behind it - their short-termist, take-what-you-can, selfish irresponsibility - and it is because we put in their place Labour values of economic responsibility, planning for the long term, building stability from solid foundations - that we now in our country have mortgage rates around their lowest levels for twenty years, inflation at its lowest level in over thirty years, long term interest rates at their lowest levels in nearly 40 years and not just one hundred thousand additional jobs or 200,000 additional jobs but today in Britain, 648,000 more jobs, more people in work — over 27 million men and women –than ever before in our history.

One of the key factors in a stable economy, of course, is to keep a stable and low rate of inflation. This is certainly one area in which Gordon has been very successful, as the official government measure of inflation has remained around or below the target figure of 2% ever since he took up office over 9 years ago. This success has been made all the more admirable by the fact that it has been achieved in an era of rapidly increasing oil prices, rises in the cost of metals and other raw materials, increases in council tax and a seemingly never-ending property boom.

How has this been done? Has Gordon finally achieved the impossible, ensuring steady growth and an end to the booms and busts of the economic cycle? In actual fact, Brown passed on the responsibility for controlling inflation directly to the Bank of England in his very first act as chancellor in 1997. The Bank’s Monetary Policy Committee is now in full control of any alterations to the base rate of interest charged on all loans and paid on all deposits. Changes to interest rates are the tool which is used to control inflation in our economy, the Bank has the power to raise rates to control inflation, or to lower rates to stimulate the economy in periods of slow growth. The Bank has a target, set by Gordon, to keep inflation at around the 2% mark, and sets interest rates on a monthly basis with the sole aim of achieving this.

With record low inflation at around 2%, there is clearly no need for any drastic calming measures from the Bank. After all, prices are staying low, so everything is under control. But is this really the case? It is often mentioned that certain things such as Oil, Gas, Electricity, Council Tax and Accomodation costs are actually rising far quicker than inflation. How can this be the case? The answer is very simple. Another of Gordon’s clever policies to steer inflation to low levels was to replace the existing measure of inflation, namely the Retail Price Index, with a new measure in 2003. The Consumer Price Index, miraculously, does not include any of the rapidly increasing areas of cost mentioned above, seeking instead to largely concentrate
on the price of food and consumer goods, which of course has been falling in recent times due to cheap far-eastern imports and savage competition between supermarket chains.

Another important use of the inflation figures, perhaps even more so than setting interest rates, is the benchmarking of salaries. The government advises companies to target increases in the wages of their employees to fall in line with government inflation figures, i.e. CPI. This means that most people, unless they are being promoted or changing jobs, will only receive a 2% pay increase every year. The rationale behind this advice is that inflation represents any increase in the cost of living, and therefore for an individual to maintain the same effective level of renumeration, their salary has to increase in-line with inflation.

This method of benchmarking is inherently unfair, as the inflation figures produced by the government on which it is based are a very poor measure of the cost of living. Aside from the reasons already detailed, that the calculation does not include many basic necessities such as energy and housing, there are many other defects in the measure. One such example is the fact that the figures take no account whatsoever of the quality of the goods that they are measuring the cost of. For example, the average price of a loaf of bread has dropped over the past 20 years. But there are many cheaper, lower quality varieties of bread on the market than there have been in the past, and supermarkets have since introduced their own “value” set of products. While the average price is definitely lower, it is unquestionable that the average quality is also lower, and therefore the price that must be paid to obtain a product of the same quality as 20 years ago could very possibly have increased, and certainly has not decreased as much as the official inflation figures show. Another example of a problem with the calculation, perhaps related to the previous example, is that the figures do not take into consideration the rate at which money must be spent by consumers. For instance, a kettle purchased 20 years ago may have cost 50 pounds, whereas kettles can be bought today for as little as 5 pounds, but the expected longevity of such a kettle today is almost certainly far less than a kettle of 20 years ago. Your £50 kettle from 1986 may still be going strong, but it is highly doubtful that your Tesco Value kettle of £4.97 purchased earlier this year will continue to work perfectly up until 2026. In fact, if it lasts less than 2 years, then the price of kettles have in fact increased, despite the fact that the Consumer Price Index will of course show a decrease of 90% in the price. If the cost of housing were still included in the inflation measure, this would be another example. The average house price may have indeed increased significantly in the past 10 years, but in addition to this the size of an average house has in fact decreased. New houses built today are invariably smaller both in terms of bedrooms and square footage than the newbuilds of a decade ago, and yet this fact would feature nowhere in the inflation figures.

In short, inflation is a fiddle, and the value of your salary and the purchasing power of your savings are being eroded day by day far more rapidly than the government will ever admit to.