October 2009 Archives
Blogged by Prof David Bailey and Dr Helena Lenihan
News that the European Globalisation Adjustment Fund (EGF) will release some Ã¢ÂÂ¬15 million in November to assist laid-off Dell workers in Ireland is welcome news for the workers who will potentially benefit (I'm still scratching my head as to why we haven't bid for this money here in the UK - see an earlier blog here).
With unemployment rising rapidly in Ireland, prospects for such workers look bleak. Recent estimates suggest that Irish unemployment could be heading towards 14-15%, with it peaking in the Mid West region as high as 20%.
In fact the Mid West - like our region the West Midlands - has been especially hard hit: both regions are suffering rapidly rising unemployment as manufacturing has been hard hit by the downturn.
But before Ireland forks out up to Ã¢ÂÂ¬23 million (including the EGF money) on responding to the Dell shock, perhaps policy makers could pause for a moment to see how neighbours like the West Midlands have responded in similar situations.
By Paul Bradshaw
The question is 'Can West Midlands creative industries revolutionise the UK Economy?' The answer is 'Yes, but'. And the 'but' is 'if we have the data to do it'.
What is data? Data can be anything from how many people are dying from a particular medical condition every year, to what your council spends their money on, or what time the number 33 passes your house.
Why is it important? Because it can create a new marketplace. And it's a marketplace that the West Midlands is already well positioned to benefit from.
So after five quarters of decline Q3 UK GDP failed to move into positive territory. Manufacturing up - services down - all going to show the danger that Britain has established for itself by having a poor balance between the two.
Cadbury will be under the spotlight this Wednesday when the confectionery firm unveils its latest trading results. These will be critical in its fight to remain independent and avoid a Kraft takeover. The latter has kept its corporate head down after announcing its 745p a share offer last month.
Kraft has been waiting for this Wednesday's figures to see what to do next. It might not reveal its hand straight away, but may well wait until after its own trading update on November 3; that would give the US giant a few days to put in a formal offer before the Takeover Panel's deadline of November 9.
Last week a JP Morgan research note suggested that Cadbury's sales were below the company's target of 4-6 % revenue growth. We'll see. As the Daily Telegraph reports here, Cadbury has a long tradition of exceeding expectations when it announces its results. The JP Morgan note may actually turn out to quite useful for the firm, lowering City expectations ahead of the trading figures.
My erstwhile colleague Professor Alex de Ruyter has pointed out repeatedly of late that job losses have come so fast here in the Midlands and other manufacturing regions that the real level of joblessness is already well over 3 million.
His argument has been that when you factor in those who have left the labour market for incapacity benefits and those not eligible for benefits at all then the 'real' level of unemployment is much higher than even the OECD's Labour Force Survey (LFS) measure suggests.
He's right, as a fascinating yet depressing report by Professor Steve Fothergill for the Industrial Communities Alliance has just highlighted. Fothergill is a highly respected expert at Sheffield Hallam University and has written extensively on closures and unemployment. His work helped shape the scope of our recent MG Rover study which looked what happened to ex-Rover workers three years after closure.
According to Fothergill, the real level of unemployment is now around 3.4 million; that's more than double the official claimant count of 1.6 million and higher than the latest LFS figure of 2.47 million. The 'real' jobless calculation of 3.4 million in his study was arrived at by taking the 1.6 million on the official claimant count and adding 900,000 people classified as jobless under the government's alternative unemployment measure and a similar number of people hidden on incapacity benefits.
By Anna Blackaby, Birmingham Post Creative Industries Editor
There's some interesting discussions going on on at Clarity Digital sparked by the Big Debate's question around the role of the digital sector in the wider economy.
Here we go again. The assets of Birmingham van maker LDV have been bought by the firm Eco Concepts Ltd. This is owned by Dr Qu Li, who has close links with Shanghai Auto, the owner of MG Cars.
Let's be clear. In effect, this is a sad day for the region. Jobs, capacity and potentially R&D will be lost forever. Yet again a major local producer has gone under and will be shifted east.
By Jason Hall, Screen WM.
Let's assume that the creative industries can revolutionise the UK economy. Let's further assume this is already happening. So the question is, how do we prove it? This is a big issue, because if you can't prove the impact, it's almost impossible to unlock the investment required to continue the good work.
Blogged by John Clancy and Professor David Bailey
We enjoyed Stuart Premble's anti-blog piece 'Aux armes, citoyens' here. And in keeping with posting a blog rather than a comment we thought we'd respond with a Blog too.
Firstly, thanks Stuart for taking the time to write on this, and in such a witty way. John Clancy is honoured and flattered as he does indeed fancy himself as Danton, whilst Prof Bailey wonders if Robespierre once played as a winger for West Brom in the 70s.
Abitrary our land policy may appear. But what is more arbitrary is how this land came to be held in the way it is, and for centuries.
It is the nature of government and policy-making that it appears arbitrary sometimes. Government at the sharp-end is precisely about deciding where to draw lines. The choice we make as to when someone starts paying tax is an arbitrary decision within certain non-arbitrary policy-agreed bounds.
So are the actual choices about at which levels of income the 40% (or even 50%) tax-rates apply. Which products, and the industries which supply them, should be subject to VAT and at what levels are, similarly, essentially arbitrary decisions, but within non-arbitrary policy frameworks.
The real danger in government is that laws are applied and policies made in an arbitrary manner, that's where real injustice comes in.
Talking of taxes, if we looked at a tax on land, for the sake of argument, we could simply introduce a land tax and set its level arbitrarily at ÃÂ£700million in landholding value. It could be ÃÂ£850million, yes. It could be ÃÂ£500million. It could be ÃÂ£1.5billion. But, the point is that once you get beyond a certain level of personal land wealth you enter another realm which is not arbitrary at all.
The structure of personal land-owning wealth is such that if you apply a tax at, say (arbitrarily), ÃÂ£1billion-worth of land value, the actual tax take will be very much the same if you applied it at ÃÂ£100million, even ÃÂ£10million. This is very much our point. The lower you go, the more negligible is the difference in the tax take (or the asset sale or income). The law of diminishing returns applies in reverse here. It's the opposite of the argument often put recently that the new 50% tax band will not increase the tax take very much overall at all.
To put this further into perspective, only some 26,000 people had land worth more than ÃÂ£1million in 1999, the other 14,121,000 owners of land had property worth less than ÃÂ£1million*. So, only 0.0018% of land owners and 0.0004% of the population had land valued even at ÃÂ£1million or more. The exponential gap between the top 100 landowners owning land valued in the hundreds of ÃÂ£millions and even this next group down of 25,900 (never mind the rest of us) is so vast that it is not a logical next step to move surreptitiously further down. The top 100 are in a unique class apart, in every sense of the word. So the charge that extending the policy would be seen as a next effortless rational step does not hold.
The media at the moment is full of reports of MP's who are furious at Sir Thomas Legg who they claim has "changed the rules" on MP's expenses. They insist that it is unfair that they are being asked to pay back amounts which were within the rules when originally paid.
Welcome to the real world that the rest of us inhabit!
Many taxpayers have sacrificed over many years in order to put money into their pension schemes secure in the belief that they would reap the benefits in their retirement. They confidently expected that all the funds would be used at retirement to provide a tax free lump sum plus a pension taxed at their marginal rate of tax
In April 2006 Government changed the rules with retrospective effect to cap all existing pension arrangements. A pension cap of ÃÂ£1.5million was set and any fund value in excess of this is taxed at 55%, as well as 40% tax being due in the normal way on any pension paid from the remaining funds.
In response to suggestions by the relevant professional bodies in 2006 that the ÃÂ£1.5million cap would simply stay at that figure and be eroded by inflation, Government maintained strongly that this would not be the case and they even announced the increases from 2006 to 2010 to back up their assurances. The figure rose each year in stages from ÃÂ£1.5million in 2006 to ÃÂ£1.8million in 2010.
Then, of course, last year Government couldn't resist the opportunity to claw back more money in stealth taxes and so the ÃÂ£1.8million limit was frozen for five years between 2010 and 2015. So someone with a fund of ÃÂ£1.8million in 2010 earning a return of 3.0 per annum on their fund will see it rise to ÃÂ£2.08 million by 2015 and Government will take nearly ÃÂ£155,000 of that increase, in spite of the fact that inflation will have reduced the real value of their pension in that five years.
So much for being prudent and saving for your retirement! Is it any wonder that people are now wary about saving via their pension fund? What future retrospective raids will Government make on taxpayers hard earned savings.
It really is not nice to have the goalposts moved after the event and perhaps MP's will now have some personal understanding of the deep resentment and mistrust felt by the electorate who having saved for their retirement have had their pensions pots raided.