“Average Private Patient Income per Foundation Trust is up 58 per cent since 2010, including a 17 per cent rise in the year the Tory-led Government abolished the Private Patient Income Cap.” – Labour press release, 25th April This is right, if you don’t include ambulance trusts in the figures. Labour told Full Fact they […]
Editor, It is totally misleading to cite health and safety regulations as a reason for a dentist refusing to treat overweight patients (dentist tells the obese they are not welcome, p10, July 31). This is simply a case of some patients being beyond the weight limit of the dentists’ chairs. It’s like complaining that you […]READ MORE
From 7 Novemberthe maximum that people can claim in total for certain benefits will be lowered to £23,000 for families in London, or £20,000 outside London. For single people without children it will be £15,410 per year in the capital and £13,400 in the rest of the country.
The IFS says that two key changes will take place regarding the people it affects.
The first is that “its impact will be somewhat less concentrated on households with lots of children”.
The second is that it is now much more likely that the Benefit Cap will affect families outside of London. Under the previous cap, 42% of households affected were in London. From today the benefit cap will affect a lot more people than before, but a smaller proportion of that total (22%)will live in London.
Why are there changes to the types of families affected?
The IFS’s analysis found that families with lots of children or high rents were more affected than any others previously because “there is almost no other way to be getting so much in benefits”. It said that more than half of households previously affected had at least four children, and so received more in Child Benefit.
As 42% of all households affected were in London, they had high rents and so received more in Housing Benefit than other households.
South Africa’s minister of human settlements, Lindiwe Sisulu, said housing delivery has almost halved over the last six years. Official statistics back this up, but their reliability has been questioned.
Discussion continues on the economy today, following on from the briefing on the parties’ spending plans published by the Institute for Fiscal Studies (IFS) yesterday. The Conservatives are expected to publish their ‘English manifesto’, while Ed Miliband will be giving a speech on foreign policy. Meanwhile, we’ll be continuing our analysis of the manifestos. The Times leads […]
Former member of parliament, Andile Mngxitama, made several claims about race, poverty and inequality in South Africa in a recent article on behalf of the Black First Land First movement. Africa Check found three to be incorrect, while two were in the right ballpark.
A story on page 4 of The Herald newspaper today (it is not online), which led to this editorial comment in the same edition, did not include HSE’s comment in full. For the record, HSE said: “We recognise the concerns of STUC that despite having one of the best health and safety performances in the world […]READ MORE
The Bank of England has published its latest Inflation Report alongside forecasts for economic growth and a decision to hold interest rates. The background to those announcements has echoes of almost 50 years ago, when sterling was devalued by 14% against the US dollar. The then prime minister, Harold Wilson, stated: “It does not mean that the pound here in Britain, in your pocket or purse or in your bank, has been devalued.” This, of course, was nonsense: except for any consumers that were not buying any goods or services produced abroad.
The 1967 devaluation caused political turmoil. Right now, since the referendum on the European Union, the pound in our pockets has, in effect, been devalued. Sterling has fallen by more than 18% against the US dollar. As with 1967, the current fall in the exchange rate is adding to uncertainty and the under-fire Bank of England takes much of the responsibility to sort out the economy. Some of that responsibility should soon pass to policy makers at HM Treasury.
The Bank has an annual consumer price inflation target (set by the government) of 2%, and current inflation is below this at around 1%. But the latest report shows that the Bank believes that inflation is now increasing and will be above its central target of 2% in the near future. Much of this can be explained by the recent fall in sterling.
The chart below shows what the Bank expects inflation will be in the future. As there are uncertainties surrounding such projections the chart is shown as a “fan diagram” where the darker colour is considered the most likely outcome. In its central projection, the Bank predicts inflation will be around 2.7% in 2017 and 2018.
A fall in the exchange rate has a mixed impact on the economy. First, it increases inflation and devalues the pound in our pockets. Second, it reduces the foreign price of our goods and services which should stimulate exports.
A growth in exports will boost GDP but, despite this, the Bank’s estimates (as shown in the chart below) suggest that future economic growth is going to be very sluggish. The Bank’s central forecast suggests that growth will be 1.4% in 2017, 1.5% in 2018 and 1.6% in 2019. These growth rates are much lower than would be expected in “normal times” and indicate that the legacy of the financial crisis combined with the prospect of Brexit are constraining growth.
This creates a policy dilemma for the Bank: it can try to stick to its inflation target, but this will lead to slower growth of the economy. The Bank’s decision to leave monetary policy unchanged indicates that it is taking the alternative course for the time being: letting inflation overshoot its target to help maintain economic growth.
The limits of monetary policy
The Bank is running out of options to stimulate the economy. Interest rates are near to zero and the impact of quantitative easing is uncertain. But criticism of the Bank and its governor is not helpful as the Bank has been doing what it can but is now running out of ammunition to generate growth. It is time for government to use the tools at its disposal. When the chancellor of the exchequer, Philip Hammond, delivers his Autumn Statement on November 23, it will be an opportunity for the government to engage in a fiscal stimulus – particularly to boost spending on infrastructure.
There is also the vital need for a coherent and transparent industrial policy to support the production of tradable goods and services and to ensure that the prospect of Brexit does not lead to a major fall in foreign direct investment.
Here the portents are not good: the deal with Nissan smacks of a secret deal for a powerful multinational. This is not evidence of a transition to a world of free trade and open competition but the desperate support for vested interests.
The evidence from the Bank and others, such as the National Institute of Economic and Social Research, suggests that the economy is moving into a period of higher inflation and slow growth. This will affect the pound in our pockets – we will have fewer of them than we expected and those that we do have will not buy so much.
It is unlikely that Brexit will lead to a major recession – but the early signs are that it will lead to a persistently slow-growing economy. This is not part of so-called “project fear” but the reality based on the emerging facts and not on a plague of factoids.
Michael Kitson has received funding from BIS, HEFCE, EPSRC, ESRC, AHRC, NERC and MRC.