Sometimes there's so much going on, it's hard to know where to start ... the three year delay of ID cards, the global stock market crash, the effective nationalisation of Northern Rock and unwinding of the government's "stable" economy, the not so liberal LibDems to vote against any referendum on the European Constitution Lisbon Treaty. What do you think of the week's big issues?
Treasury minister Kitty Ussher today launches a three-month consultation into issuing Islamic "sukuk" bonds, which are compliant with the prohibition on interest found in Shari'a law. The government's goal is to introduce the bonds in next year's budget with the view to establishing the UK a key world centre in the development of Islamic finance, a market started just five years ago with the first $600 million bond issue by the Malaysian Government and now estimated to be worth $400 billion globally.
Coinciding, as it does, with the ongoing global impact of America's sub-prime lending crisis and warnings that repossessions in the UK will keep on rising over the coming months, perhaps it is time for Christians to revisit the Biblical injunction against interest† and consider whether this is a product that we should use. For, as Thomas Aquinas famously observed, "To take usury for money lent is unjust in itself, because this is to sell what does not exist, and this evidently leads to inequality which is contrary to justice."
When Jesus applied the Old Testament teaching against taking interest for his disciples in the Sermon on the Plain (Lk 6:34-36), his concern was that we might be kind and merciful. One of the issues, as Pope Gregory IX noted in the thirteenth century, is whether the lender shares in the risk associated with the loan or profits irrespective of what happens to the borrower. When you see the likes of Theo Paphitis, Duncan Bannatyne and Peter Jones investing their thousands in novel business ventures on Dragon's Den, you are witnessing the start of a relationship between lender and borrower as it is in the dragon's interests to ensure the entrepreneur makes the most of the borrowed funds. In contrast, when you or I visit the bank to negotiate a new mortgage, the bank is effectively able to ignore the needs of the borrower thereafter as they and their anonymous shareholders will profit whether or not we are able to make our monthly repayments.
The Islamic bonds, sukuks, are asset-based and tend to be used in conjunction with a structure where lease rental income provides a profit for the sukuk holders or where the profit share provides a return. In either case, the sukuk holder not only profits from the income generated from the underlying asset, but also holds a proportional ownership in it, so consequently assumes all rights and obligations for the maintenance of the asset. Here, at least there is shared risk, yet it still lacks the proximity of relationship seen in the Dragon's Den.
Once the Government has introduced the legislative framework to allow such bonds, promising to entrench London as "a global gateway to Islamic finance," perhaps Christian businessmen could devise a new set of financial institutions that would enable people to borrow and invest in a way that both shares any risk equitably and cultivates closer community relationships?
† See Ex 22:25, Lev 25:35-37, Dt 23:20-21, Lk 6:34-36
Once again, Simon Heffer does not mince his words in today's Telegraph:
This week, we were told there were 11,000 foreigners in our prisons – one in seven of those inside – and the Government, with typical incompetence, is struggling to negotiate deals to have these people serve their sentences back home.
Yesterday, an independent body called the National Housing and Planning Advice Unit said that the Government's plans to build three million new homes by 2020 were not nearly adequate.
Of course they are not, because of the state's determination to allow unlimited immigration and, with it, the end of the indigenous cultural identity. The tensions of what used to be called "multi-culturalism" are dangerous enough: but so are the practical issues.
Large parts of England will be concreted over to accommodate all these new people. There will have to be new roads, railways and airports. And since we are already full up, and our public services buckling, where are we going to put everyone?
Labour has covered up its failure to control our borders by saying that our economy needs immigrants.
Well, if you are determined to have a welfare state that tolerates about eight million economically unproductive people of working age – the unemployed, those in "training" and those on various benefits because they believe they are unfit for work – then of course you will. It is time someone got serious.
Remember the days when everyone knew their bank manger and the Man from the Pru would visit to collect his premium? It's not that long ago since people still seemed to have an important place in financial transactions. Now, though, everything seems to be automated or online — even applying for a loan or larger overdraft. Having unquestioningly accepted the flexibility and convenience that technology has offered our individualistic age, it might seem strange to hear anyone calling for a people-centred economy in which morality replaces mathematics in tackling problems caused by global capital. Yet, in criticising the global economic system for creating "material and spiritual poverty," that is precisely what the World Council of Churches programme executive for Economic Justice, Poverty and Ecology has done.
The Tanzanian Rogate Mshana suggests that one solution to the globalisation of capital could be the introduction of "participatory capitalism, which provides a way to connect people to their economy, their community, to their work place, and to each other," for instance through employee ownership schemes. He also called for the promotion of fair trade to respect the needs of small-scale farmers in poor countries and the support of economic initiatives that focus on social rather than economic performance.
I am reminded of an observation made in the ground-breaking Jubilee Manifesto (by Michael Schluter & John Ashcroft), it its discussion of the consequences of the debt-based financial system that has predominated in the West in recent centuries: "It is ironic that anti-globalisation campaigners decry the activities of multinational companies because of their scale, their dissociation from local communities and the frequent excesses of executive pay. These are all the inexorable results of the principle of limited liability, but rarely does one hear the correct diagnosis of the underlying problem."
If the Conservatives are serious about tilting the domestic and international balance back from "economy-friendly families to family-friendly economies" — or even, if I might be so bold as to suggest, community-friendly economies — then they would do well to listen to the likes of the WCC's Mshana.
Source: Ecumenical News International
Having forced the Conservatives to reveal some of their trump cards last week (in readiness for the election that never was), the Government is being accused after today's pre-budget report and comprehensive spending review statement of "stealing" Conservative and LibDem policies — notably, on raising the inheritance tax threshold for married couples and those in civil partnerships, on reforming aviation duty so it is paid per plane rather than per passenger, and on reviewing loopholes for non-domiciled tax payers. However, if all our elected representatives have our best interests in mind, then surely we want the Government of the day to draw upon the best ideas from across the political spectrum and it doesn't matter who gets to implement them?
Except that "pick'n'mix" politics is unlikely to result in a stable economy and strong society. In order to achieve that, one needs a coherent vision and clear objectives. Only once core values have been identified and principles and beliefs clearly defined, is anyone in a position to evaluate how effectively any given policy fits into the overall scheme for the nation and what contribution any particular set of policies might make towards stated goals.
So, if your vision recognises marriage and the family as a means of fostering strong local communities and family-based support networks, it makes sense to introduce transferable tax allowances between spouses — on income tax, not just inheritance tax. However, it would also make sense to exempt the main family home from inheritance tax — and makes no sense to have a conflicting tax credit system that penalises couples who want to get together or who are struggling financially and want to stay together!
The reason I supported David Cameron in the leadership contest two years ago is that, whenever he spoke, he appeared to be presenting an overall vision for the country rather than piecemeal policies. He has spent the last two years first defining the aims and values of his party (in "Built to Last") and then conducting wide-ranging policy reviews. Now that each of the policy groups has reported, the Conservative leader is in a position to evaluate their many proposals against his broader vision for society.
In contrast, Gordon Brown repeatedly tells us that he has a vision but has so far failed to tell us what that vision is, which begs the question as to whether he really has one — or even understands the need for one. Ultimately, it is this that means Labour's "plagiarism politics" will fail to transform the breakdown in society and the slowdown in the economy — and why, to coin a phrase, it is time for change. Sadly, it seems we're going to have to wait two or three years more until we are given the opportunity to effect that change.
Gordon Brown repeatedly boasts that he was the first chancellor to preside over almost a decade of economic growth. Today, uSwitch.com gives us the figures: a 42% rise in the cost of essential household goods means that disposable income now stands at its lowest level as a proportion of overall income since 1997. Despite a rise in average household incomes, the amount of "disposable" income has dropped 2% and net household income as a proportion of gross household income is down 5% compared with when Gordon Brown took control of British domestic policy.
The closer we look at the Prime Minister's economic record, the less competent he appears as a leader.
"While our economy is getting richer, our society is in many ways getting poorer."
I'm not sure that the economy is actually getting stronger - though Gordon Brown would like to convince us that it is - but David Cameron, picking up on what Iain "The Passionate Man" Duncan Smith said yesterday, is surely right that society is getting poorer. As he noted earlier in his speech, "We've got to make families stronger and society more responsible."
Yet, somehow I have yet to hear any politician make the crucial observation that would transform our whole approach to the challenges facing our country and our world. Namely, life is all about relationships. Family relationships, community relationships, corporate relationships, international relationships - everything we treasure most and everything that determines the opportunities available to us - revolves around relationships.
Yes, Britain is broken. Society needs mending. However, I think we have yet to grasp the full extent of the problem ... and, therefore, also of the solution.
Writing in today's Times, David Willetts says he believes that increasingly we are a society divided by age. In a nutshell, his argument is that "young people have to sacrifice a lot of their income today to afford the high house prices that boost the wealth of older people. But the older people are reluctant to borrow against this wealth so their living standards don’t rise either."
Changes in the housing market and resulting wealth transfers have thus weakened the legitimacy of the intergenerational contract in areas such as the NHS and state pension — both of which are largely funded out of taxes from the working age population, while their services are drawn upon more significantly by people in retirement. As a result, the discussion paper accompanying the research referred to by Willetts, published yesterday by the International Longevity Centre, consequently poses some difficult questions:
Having seen such dramatic asset accumulation, can older cohorts expect to rely on the young to pay for them in retirement, and more generally, the costs of the UK’s ageing population? If not, how can the Government create greater awareness that older cohorts will have to use their housing wealth to fund retirement? How can the Government go about changing attitudes which are often entrenched against such an idea?Some of the ideas mooted in response have significant merit (for instance, the possibility of incentivising down-sizing among older people by waiving stamp-duty for those in retirement moving to smaller accommodation) and quite clearly Government will have to play a role in facilitating a solution to this issue. However, both the level at which these questions are pitched and the nature of the recommendations made in the paper indicate an over-reliance on looking to the State for economic answers.
James Stewart on the Northern Rock crisis ... A tale for our times?
GEORGE: Hey what's going on, Uncle Billy? What's happened? All those people out there-For the video, visit YouTube.
UNCLE BILLY: This is a pickle, George. All I know is the bank called our loan an hour ago. I had to hand over all our cash.
GEORGE: Holy mackerel!
UNCLE BILLY: Whole town's gone crazy- the bank's in the same spot we are!
GEORGE: Our charter too-
UNCLE BILLY: -What about our charter?
GEORGE: Our charter says we have to stay open till six pm. The state can take away our license if we don't!
UNCLE BILLY: How can we stay open till six without any money? George, where're you goin'??
GEORGE: Out to talk to those people. C'mon!
SFX: DOOR OPENS/CROWD NOISE
CROWD: (ad-libs)George, where's our money?
GEORGE: Now listen, folks! Just a minute, please!!
TOM: How about our money, George? Where's our money?
GEORGE: Wait a minute, now! Listen to me! Now you're thinking of this place all wrong. Your money's not here!
CROWD: (ad-libs) What?
GEORGE: Your money's in people's houses! In the Kennedy house, and the Mclarin house, and your house, and a hundred others. Now what are you going to do -- Foreclose on them?!?
TOM: I got two hundred and forty dollars in shares. Now lemme have it!
GEORGE: All right, all right Charlie. You'll get your money in sixty days.
TOM/CROWD: (ad-libs) Sixty days?!?
GEORGE: Now look that's what you agreed on when you bought your shares.
RANDALL: (coming up to mike) I got my money! Old Man Potter's taken over the bank!! He'll pay you fifty cents on every dollar!!!
CROWD: (ad-libs) Fifty cents on the dollar?!?
TOM: (to CROWD) Let's take our shares to Potter! Half is better than nothing!!!
GEORGE: Wait a minute, wait a minute, please folks! I beg of you not to do this. If Potter gets hold of your shares he'll be owning this building and loan. He's got the bank. He's got the bus line. He's got the department stores. And now he's after us because he wants to keep you living in his shacks and paying the kind of rent he decides to charge. Now, we can get through this thing all right, but we've got to stick together! We've got to have faith in each other!
MRS. THOMPSON: My husband's out of work! We need money!
ANGRY MAN: I got doctor bills to pay!
WORRIED WOMAN: I can't feed my kids on faith!
CROWD: (ad-libbing) Me too! What about that George!?!
MARY: How much do you need? We've still got some money!
GEORGE: Hey Mary!
MARY: Here it is, George! You told me to hold on to it. Would have made a nice honeymoon -- bought furniture, too!
GEORGE: Wait a minute, folks! Listen, I got two thousand dollars! All right, Charlie, how much do you need?
TOM: (doggedly) Two hundred and forty dollars.
GEORGE: (pleading) Now, Tom, just enough to tide you over!
TOM: I said two hundred and forty dollars!
GEORGE: Okay, okay. Uncle Billy give Tom, two hundred and forty dollars. All right Ed, how much just to get by?
ED: Twenty dollars, I suppose.
GEORGE: Now you're talking! Mrs. Thompson, how about you?
MRS. THOMPSON: Twenty dollars will do me.
GEORGE: (counting it out) Good, twenty dollars. Uncle Billy? Pay it back when you can now. All right, all right who's next?
MFX: EXCITED
UNCLE BILLY (excitedly): Look at the clock! Look!!!
GEORGE: (counting) Five seconds... four seconds... three... two... one... six o'clock, we made it! Lock that door Eustace, quick! Boy, we're still in business, Uncle Billy! We even got two bucks left!!
"If we are to create a way of living that we can sustain, then water, waste, transport and energy, as well as farming, food, fishing and the built environment, have to be thought of as a whole."
Launching the Conservatives' Quality of Life Policy Group report, a day after the price of crude oil reached a record $80, former Environment Secretary John Gummer is surely right to place the emphasis on sustainability.
At the end of the day, for all the uncertain predictions about an imminent big freeze or, conversely, a global heatwave and for all the questions about the extent to which man has exacerbated the planet's natural cycles of climate change, one thing is certain: the world's reserves of fossil fuels will one day run out. Whether we make them last 50 years or 100 years, or even 200 years, won't ultimately affect mankind's carbon footprint. What our rate of fossil fuel use will affect is the timeframe available in which we can invest in the research and development of renewable sources of energy — during which we can answer the really big question: How can we sustain life and civilisation as we know it? Or, as the report puts it, given that there are plenty of other symptoms of the damage wrought by humans' modern lifestyles — such as desertification, soil erosion, and the destruction of forests — can we continue to be an economically successful nation and, at the same time, an environmentally and socially healthy one?
Does the report provide a satisfactory answer that is "entirely consistent with long-standing Conservative principles"? The introduction notes that "Instead of wanting the State to intervene and control, Conservatives seek only to ensure that the market framework is capable of delivering the nation’s requirements and that people, communities, and organisations, whether for profit or not, are empowered and trusted to play their proper and fullest role." Yet, about aviation, it complains:
"Growth in demand is heavily concentrated in short-haul leisure flights taken by UK residents. Between 1994 and 2004, 70% of the additional international trips that occurred were UK residents going abroad for leisure. From the perspective of the UK economy, this is arguably the wrong sort of growth. Shorthaul leisure flights exacerbate the country’s tourism deficit – the difference between what overseas visitors spend in the UK and what British citizens spend abroad – which already stands at around £15 billion. Today, over half of all air trips arriving or departing UK airports are UK residents travelling for leisure, and this proportion is set to increase." (p.355)Thus, some of what are already its most criticised recommendations, such as no further airport expansions, rethinking Heathrow's proposed runway, and no new runways at Gatwick or Stansted, seem to burst with big state interventionism. The authors argue that "Scaling back airport expansion plans would lead to more efficient use of existing capacity, and accelerate the allocation of flight slots to parts of the market that value them most" and that this "does not mean that there would be a diminution in the cheap flights already available," but it is hard to see how such an approach could not but damage Britain's economy and international competitiveness.
How do we summarise the Economic Competitiveness Policy Group report, given that it has already been drip-fed to the media for almost a week? Rather than listing specific proposals, such as the abolition of inheritance tax, perhaps we should simply quote John Redwood's co-author, the chief executive of Next, Simon Wolfson, who says the two most significant messages are:
Download the full report from Stand Up, Speak Up
I find the media coverage of John Redwood's economic competitiveness report, due to be released this Friday, rather amusing. Compare these headlines and see if you can match them to the papers on the right (reveal the answers by hovering over each headline):
| 1. Tories plan to make £14bn savings in radical move to slash red tape | A. Daily Mail |
| 2. Cameron on offensive with call for tax cuts | B. The Guardian |
| 3. Cameron would slash services to pay for tax cuts | C. The Telegraph |
Compared to the UK average, economic output per head has reportedly risen in London (and very marginally in the South East and South West) under Labour. Consequently, it has therefore fallen in other areas, most noticeably in the West Midlands and Yorkshire & the Humber (and to a lesser degree in the North East and North West of England)."I cannot see how 'Dave' offering my £1000 a year to vote Conservative would influence me to get married if I wasn't already going to do it. All it is, in my view, is a cynical attempt to buy votes from those who are already married."Thus opined Norfolk Blogger about Iain Duncan Smith's Social Justice Policy Group proposals earlier this week. He clearly misses the point that for many who are struggling to makes ends meet, the Government's present perverse policies DO result in families breaking up around the country who would otherwise seek to provide their children with the stability they need and most benefit from. The News of the World carries the story of a married couple who have chosen to split up purely because Gordon Brown's tax and benefits system encourages them to do so:
A MARRIED couple revealed how they split up —because under Britain's crazy benefit system they are BETTER OFF living apart.
Sean Ash and wife Chloe agreed to break up after realising they would lose out even MORE when he takes a new job.
They spoke in the wake of a major political row this week, sparked by Tory leader David Cameron's tax-break pledge to give married couples an extra £20 a week.
Sean and Chloe, who have both been on benefits, explained why they decided to join what Mr Cameron called "our broken society".
As a couple, they had a joint net income of £1,702 a month. But after the split, Sean now gets £1,184 and Chloe £1,396—making a total of £2,580.
That means they are £878 a month in benefits better off leading separate lives.
Writing in the overview to the Social Justice Policy Group's report, Breakthrough Britain, Iain Duncan Smith says, "Breakthrough Britain advocates a new approach to welfare in the 21st century. We believe that, in order to reverse social breakdown, we need to start reinforcing the Welfare Society. The Welfare Society is that which delivers welfare beyond the State." He identifies two specific areas why their approach is unique: "Firstly, we have recommended a range of policies which are designed to break the cycle of disadvantage in the early years of a child’s life. Secondly, we wish to strengthen families by removing the perverse disincentives in the fiscal system which are an obstacle to stable families."
It is understandable that media coverage has so far focused on the group's marriage and tax-related suggestions. After all, the Government has spent ten years creating a tax and benefits system that perversely penalises married couples, perpetuating poverty for the 76% of children who live in couple households. However, any attempt to heal our broken society will need to change more than just the tax system. Duncan Smith explains the significance of the five pathways to poverty identified by the Group:
"Our approach is based on the belief that people must take responsibility for their own choices but that government has a responsibility to help people make the right choices. Government must therefore value and support positive life choices. At the heart of this approach is support for the role of marriage and initiatives to help people to live free of debt and addiction. Government has to be committed to providing every child with the best possible education and giving the most vulnerable people the necessary support to enter active employment. The problems of family breakdown, drug and alcohol addiction, failed education, debt and worklessness and dependency affect us all, either directly or indirectly, as Breakdown Britain showed."The Difference offers the following list of highlights from the report that it is hoped will receive due attention in the coming hours, days, and weeks:
"The document that will shape Tory policy, obtained by the BBC, paints a picture of Britain as a broken society riddled with debt and addiction, welfare dependency, family breakdown and educational failure."
Today's news on Breakthrough Britain, the report due out next week from the Conservative Party's Social Justice Policy Group, reminded me of Peter Franklin's Diary entry in last month's issue of The Difference:
There was once a time when the role of a politician was to the sit the nation down and break the bad news. A succession of economic crises meant a succession of grave announcements — of austerity budgets, three-day weeks and belt-tightening exercises. But with the partial exception of the early 1990s, we've had none of that for 20 years or more. Politics has become a soft-soap exercise: a slippery attempt to claim credit for the economic good times; a shower of schemes for spending our money on our behalf; and a lather of excuses for why so much cash has left so much undone. Politics has become a matter of breaking the good news even when there isn't any. ...If David Cameron is right that the big challenge that we've all got to deal with today is social breakdown, then the first step will be accepting the extent of the problem, however uncomfortable the facts make us feel.
We're richer than we've ever been, but unhappy. We're deep in debt, our families are falling apart, there are guns on the streets and the weather's gone all weird. Despite our material comforts we know where's something wrong with the way we live. When a politician articulates our secret fears we may react with anger, but at least we recognise the bad news for what it is: the truth.
Our past-his-'use by date' prime minister today challenges us to "Look at our economy":
A new report by The Prince's Trust confirms fears expressed by this blog as recently as Sunday, that Labour's neglect of the needs of young people over the past decade has lost us a generation.
The report reveals that:
In his first Budget, Gordon Brown gave a statement of the Government's intent to tackle the debilitating impact of state dependency with a £5 billion windfall tax on the privatised utilities to pay for an ambitious welfare-to-work programme. The scheme envisaged four options for the young unemployed: a government-subsidised job, voluntary work, full-time education or training, or a place on an environmental task force. "There will be no fifth option to stay at home on full benefit," the Chancellor warned. ... A "lost generation" of young people seem to have found Mr Brown's non-existent fifth option.Having so thoroughly identified and described the problem, it is imperative that we now find new ways to re-engage young people and enable them to turn their lives around, helping them to gain the skills and qualifications they need to get a job, especially in the UK's poorest areas.
