Economy

You’d think the American sub-prime crisis would have taught politicians the world over not to try to rig the housing market. But no, David Cameron is back on it today — about how to ‘unblock’ the system so the debt geyser starts to gush again. ‘The problem today is that you have lenders who aren’t lending, so builders can’t build and buyers can’t buy,’ says the Prime Minister. ‘It needs the government to step in, and help unblock the market.’ The idea that lenders may not lend because they feel the housing market may fall, and people may be unable to repay, is instantly dismissed. He speaks as if debt is the solution, and unavailability of debt is a self-evident problem.

Have you noticed, CoffeeHousers, that our politicians are talking more and more about what they'd do after the next election? This has been happening, really, since last November, when George Osborne extended the forecasting horizon of his Budget to 2017. That had a hint of chicanery about it, ensuring that Osborne continued to meet his first fiscal rule — but it has still triggered a fashion for future gazing. Since then, both Labour and the Lib Dems have talked, in broad terms, about what they would offer for after 2015. I mention this now because of a story in today's Sunday Times (£).

At the end of last year, Ed Balls suggested that Labour would be ‘taking a tougher approach to conditionality [for benefit claimants]. If people can work, they should work.’ Now the party are starting to outline what that means. As the Independent puts it today, summarising a speech that Liam Byrne has given in Birmingham, ‘The unemployed would be guaranteed the offer of a job but could lose their benefits for six months if they turned it down, under a tough new policy on welfare planned by Labour.’ The paper characterises this as an attempt to ‘outflank the Tories on welfare,’ which is surely true. But the whole thing also reminds me of the Brown era.

In a speech tonight, George Osborne calls on businesses to respond en masse to the government’s consultation on whether to exempt small businesses from unfair dismissal claims. The Chancellor will say: ‘And now we’re beginning a call for evidence on the case for a new compensated no-fault dismissal for our smallest businesses. Plenty of trade unions and others will be submitting their evidence for why we shouldn’t do this. If you think we should, and it will increase employment, then don’t wait for someone else to send in the evidence. Send it in yourself.’ The fact that Osborne is personally throwing his weight behind the Beecroft agenda is striking.

Just like fuel duty, George Osborne can't shake off the fury and discontent over the 50p tax rate. This morning, in a letter to the Telegraph, 537 bosses of small-to-medium-size businesses have called on the Chancellor to drop the rate. ‘The tax, which is in effect a 58p tax after national insurance is taken into account,’ they note, ‘puts wealth creators like us in a very awkward position.’   Usually, it's easy to be both sceptical and dismissive of these mass-signed letters. They tend to be party political constructs, such that another group of ‘experts’ will soon reply to profess the opposite. But this one is different, and could help cast the whole battle over 50p in a fresh light.

The government’s official advisers on immigration, the Migration Advisory Committee, have today published a report into the restrictions on skilled migrant workers from outside the EU. Turns out that the much-vaunted ‘cap’ on skilled workers has only been half taken up — with numbers likely to be around 10,000 against the cap of 20,700 — and that this is offset by the high numbers of workers, around 30,000, coming to the UK on ‘intra-company transfers’.

One quirk of the welfare reform debate is that many of the reforms won’t automatically apply in one of the parts of the United Kingdom with the worst welfare problems: Ulster. As Owen Paterson, the Northern Ireland Secretary, points out in a speech tonight, ‘Northern Ireland has proportionately one third more households living on out of work benefits as the rest of the UK’. He also notes that 1 in 10 of the population there are on Disability Living Allowance, double the UK average. But the Work Programme doesn’t apply in Northern Ireland and any welfare reform there will have to be done by the Executive. Paterson is now campaigning to make the case to local politicians for reform, for maintaining parity with the rest of the United Kingdom.