The question that hasn’t been asked

I’ve been watching the “Challengers’ Debate” this evening. I watched the Leaders’ Debate the other week. Yesterday, I was at a local hustings meeting with our own local candidates for Mid Worcestershire.

At all of them, many questions were asked. But one subject was a glaring absentee at all of them.

Obviously, with time being limited, it’s impossible to ask every question. So, just on the off-chance that any politician competing for my vote happens to read this, this is the question that I would have asked:

We’ve heard a lot about people who don’t pay tax. Tax dodgers, users of corporate tax havens. But I want to ask a question about those of us who do pay tax.

Like most people with a job, I pay tax. Several taxes, in fact.

Income tax. National Insurance. Council tax. Value Added Tax. Vehicle Excise Duty. Fuel Duty. Beer Duty. Wine Duty. I don’t smoke, so I can’t complain about Tobacco Duty, although I’m sure many other people here will. But I did get stung by Stamp Duty when I bought my house.

And it isn’t just me. Take a walk along our High Street, and you’ll see empty shops. Step inside the open ones, and you’ll hear stories of how difficult trading can be. When I talk to local shopkeepers, I hear over and over again how business rates can be crippling. When they do manage to scrape a profit, they are taxed on it at rates higher than in many other countries, including the ones which are our biggest online competitors.

So my question for the panel is simply this: How do you plan to reduce this burden on me, on my family, and on my community?

Zero Thought

One of the subjects that cropped up in the Leaders’ debate yesterday evening was zero hours contracts. Ed Miliband wants to effectively abolish them. David Cameron’s response was that Labour have a “zero jobs” approach. In the double-header interview previously, Jeremy Paxman had repeatedly pressed David Cameron as to whether he could work live on a zero hours contract, finally eliciting the answer that no, he couldn’t.

Zero Thought Ed

So, what is it about zero hours contracts, and why are they a political hot potato?

To begin with, zero hours contracts are not a new thing. The phrase is simply the current jargon term for what used to be known as “casual labour”. As ACAS puts it:

The term ‘zero hours’ is not defined in legislation, but is generally understood to be a employment contract between an employer and a worker, which means the employer is not obliged to provide the worker with any minimum working hours, and the worker is not obliged to accept any of the hours offered.

That’s important, because to listen to some politicians you’d think that zero hours contracts are some recently invented device intended to exploit workers who would otherwise have “proper” jobs. But that’s not the case. Casual labour has always played a major role in employment, particularly in sectors where demand is variable and hence the need for staff is equally variable. Catering and service industries tend to be the main users of casual labour, but manufacturing and retailing also use it to meet seasonal demand.

The term “zero hours” became more popular as a result of the minimum wage legislation introduced by Tony Blair’s administration in 1998. A consequence of the new law was that employers couldn’t just pay casual staff for the work they did, because the minimum wage is based on contracted hours rather than actual performance of duties – someone sitting around doing nothing had to be paid at least minimum wage while doing nothing, so long as their employment contract considered them to be at work while waiting to be assigned a task. So casual employment contracts were changed to make a clearer distinction between “at work” and “not at work”, and made it equally clear that a casual employee was only at work when called on to actually do work.

This made no difference to the actual practice of how casual labour is organised. It was simply a way of making sure that employment contracts were compatible with the new legislation.

The second key fact is that there hasn’t been a huge growth in zero hours contracts under the current administration. Again, if you listen to certain politicians you might get the impression that all the growth in employment over the past five years has been insecure casual work. But this simply isn’t true, as an article on the BBC website makes clear. Zero hours contracts make up only around 2.3% of the workforce.

Interestingly, though, the article does show a significant increase in the number of people reporting that they are on zero hours contracts – up from around 586,000 to 697,000 people. But a lot of these are people who had been on the same contract a year before. So they were on a zero hours contract, but didn’t call it that the previous time they were surveyed.

That goes back to my first point. Zero hours contracts are not new. It’s just a relatively new name for a long-established system. So a lot of the apparent growth in zero hours contracts is simply a result of more people using the term – quite possibly as a result of being misled into thinking that it’s somehow different to casual work.

Having established that zero hours contracts are neither new nor unduly numerous, does that mean there’s no problem with them?

Well, yes and no. Obviously, there are people who actually want to work casual labour. And there are many reasons for that. Casual labour is an established first step into the first step into the employment market for teenagers after leaving school, often as a means of gaining experience that will stand them in good stead for getting a better, and more well-paid, job afterwards. Seasonal casual labour is also a common source of top-up income for students during the holidays. Some people want to work part time, and are happy with a flexible arrangement which means they aren’t tied to fixed hours. And casual work is not necessarily badly paid – while a lot of it is at the lower end of the salary spectrum, there can be good money to be made doing casual skilled work if you have the skills.

Anything which effectively abolished casual labour would, therefore, clearly be a bad thing. A lot of the zero hours jobs which currently exist wouldn’t convert into full time jobs, they would convert into no jobs. It would deny flexibility to the people who want to work like that, and it would make it much harder for businesses with variable demand to meet the needs of their customers. So it would be bad for consumers, too.

There are, though, some people on zero hours contracts who would prefer to have full time jobs – or, at least, to have guaranteed hours on a part time job. These are obviously the people that Ed Miliband is hoping to appeal to with his promise to make zero hours contracts automatically convert into fixed hours contracts after a set period of time. And there are issues with lower paid casual jobs and benefits, particularly in the way that they interact with housing benefit, working tax credit and jobseeker’s allowance. It’s a lot easier to get employment-related benefits when you’re on fixed hours than it is when your hours, and hence your earnings, are variable.

Again, this isn’t new, and it isn’t a growing problem. It’s one of the downsides to casual work, and always has been. But it is, nonetheless, a problem for some people, even if not as many as you might have been led to believe. So how do we address it?

Well, one option is to do something with the benefits system so that it doesn’t penalise casual workers. This is the approach which I would expect a concerned Labour politician to take. It fits in with the basic principle that benefits should be on the basis of need, and avoids affecting people who are in casual work by choice and are not suffering financially because of it.

The downside, of course, is that doing so will cost money, because it increases the total welfare bill and adds to the complexity of administering it. And that’s a very good reason why Ed Miliband doesn’t want to go down that route, because he knows that he won’t be able to afford it. So, instead, he’s intending to fix the problem by loading the costs onto businesses, consumers and workers and hoping that nobody will notice.

Neither of those, though, is the ideal solution. A better approach is to look at the reasons why there are people in casual work who would prefer a full time, or fixed hours, job.

Apart from the small number of people who are reduced to low-grade casual work simply because they are too incompetent for anything else, most people who are doing casual work but would prefer fixed hours are doing casual work as a stop-gap while they look for a better job. So the best solution is to make sure that there are plenty of better jobs available.

One of the biggest weapons an employee has against an exploitative employer is the ability to look elsewhere. The freedom to hand in your notice and take up a better offer elsewhere is fundamental to a healthy labour market. By contrast, where there is a shortage of jobs, unscrupulous employers can treat their workforce badly in the knowledge that their staff have nowhere better to go.

In the long run, therefore, the only effective solution to the problem of too many people being unwillingly on zero hours contracts is a healthy, prosperous economy with plenty of jobs – of all sorts, at all levels, full and part time, flexible and fixed hours, skilled and unskilled.

That’s the solution that I prefer. I think it’s the solution that most people who actually care about making things better for people who want a better job would prefer. And I think it’s extremely telling that Ed Miliband doesn’t prefer it.

Knee-jerk reaction….

Well, I’ve just watched the leaders’ debate. Here are a few random impressions of how it went.

The questions weren’t particularly well distributed. Two on education. Nothing on tax, the economy only addressed in passing.

Everyone knows that the SNP are whipping Labour’s backside in Scotland. Many English voters will have seen why for the first time. A very impressive performance from Nicola Sturgeon.

Leanne Wood also had a good evening, possibly benefiting from being by far the least known. But a good showing for Plaid only piles yet more misery on Ed Miliband.

Speaking of which, Ed barely smiled all evening. He looked like someone who really didn’t want to be there. His attempts to be measured and statesmanlike merely made him sound terminally dull. His best – well, only – joke was spoiled by poor timing.

Most people, including myself, were probably expecting another car crash from Natalie Bennett. In fact, she did very well. Although that’s mainly because nobody challenged the Greens’ more loony policies, preferring instead to take potshots at Labour and the Tories.

Nick Clegg didn’t perform as well as he did last time round, but that was only to be expected. He didn’t really manage to square the circle of attacking the Tories while taking credit for the success of the coalition. But did land some good blows on Labour.

Nigel Farage seemed to revel in being politically incorrect. But there’s only so far that playing the role of court jester can take you. Leanne Wood’s slapdown of him was priceless.

David Cameron seemed to be deliberately trying to remain above the fray, which was probably the best course of action for an incumbent. He will have enjoyed Miliband’s discomfort.

I don’t think there was a clear winner. Farage dog-whistled throughout and will have had his supporters nodding along, but won’t have convinced any waverers. Bennett avoided the massive bear traps inherent in her party’s policies and came across as positive and passionate. Sturgeon lived up to expectations. Wood exceeded them, but only by comparison with what would be expected from a non-entity (in England, anyway). Both the nationalists probably made a lot of English Labour supporters wish they could vote for them. Cameron avoided taking any major hits, but didn’t really land many either. Clegg ducked and dived and came across as a bit slippery – a definite drop in performance from 2010. But Ed Miliband was the clear loser, coming across as wooden and lacking in gravitas.

Will it make any significant difference to the outcome of the election? Probably not. There’s not going to be anything like the Clegg bounce from 2010. It was noticeable how little anyone said “I agree with…”. But if the Nats get a boost then that makes it harder for Labour to get a majority, or even be the biggest party in a hung parliament. Ditto the Greens – any electoral gain for them is likely to be mostly at the expense of Labour. Meanwhile, a lot of people on the moderate right will have watched Farage’s performance and concluded that they’re better off sticking with Cameron. So, in party terms, it’s probably been a good night for the Conservatives.