Labour’s Minimum Wage Link – will affect the UK recovery/jobs.

[Isitmebut]

“Minimum wage hike could be coming to Britain”

www.cnbc.com/id/101684423

“Britain's opposition Labour party will pledge to raise the statutory minimum wage if it wins the next election, as the wages of economies' lowest paid workers make headlines worldwide”.

“Labour party leader Ed Milliband will announce plans to increase the minimum wage over the course of the next parliament by linking it to the UK's average earnings.”

“The minimum wage in Britain is currently £6.31 ($10.62) an hour, and is due to rise to £6.50 in October. It is set by the Low Pay Commission, an independent government body.”

“Labour has not revealed what it would raise the minimum wage to, saying the exact amount would be announced closer to the next general election in May 2015.”

“In the U.S., President Barack Obama is trying to raise the federal minimum wage from $7.25 an hour.”

Whether a business is small, medium, or large, it has to plan/budget ahead, the largest several years, looking to invest new money domestically, overseas - or even relocate existing businesses to business friend countries in order to compete in terms of Productivity, in a global market place where the cost of doing business can determine if a profit is made, or even a company’s medium to long term survival.
www.investopedia.com/terms/p/productivity.asp

Wages are a major component of Productivity, so how can ANY blanket national formula work that ties in a national wage average of ALL business sectors, with lower profit/profit margin sectors, where trying to ‘keep up’ with a national wage structure will either make them shed staff, or go out of business.

As the UK recovery gathered pace, IMO the economy could quickly have a dangerous UPWARD SPIRAL of the BoE raising interest our Base Rate to contain inflation, and minimum pay rates continuing to rise along with the economy - which will both become wage growth inflationary and counter economic growth as UK businesses become less Productive – resulting in a kind of self induced ‘norm’ of Stagflation (flat economy & high inflation) affecting peoples spending power.

What with populist rent controls that could smother the Private Rental market when we need it most;
www.mumsnet.com/Talk/in_the_news/1977704-UK-Interest-Mortgage-Rates-WHO-S-in-control?pg=1

And an ‘energy price freeze’ when Energy Minister Miliband left the Uk in a dire nuclear energy situation, totally reliant on the Private Sector to invest in the UK, to stop our lights going off within years;
www.mumsnet.com/Talk/politics/1983467-UK-Energy-Policy-Price-scandal-outages-due

Miliband’s attempts at unworkable State controls, to curb the effects of a SEVERE recession plus the home and energy shortages that are all of their own making, may be populist vote winners that resonate on the doorstep – but they send major alarm signals to business (and landlords) of the negative conditions to expect from 2015 under a Labour administration.

I would therefore not be surprised if on the continuing weight of planned State interference businesses hold back on the further investing and creating of new jobs in Britain - AND put in place contingency plans to scale back the size and employment numbers of their current businesses - until after the 2015 General Election.

In 2015, the UK will still have a large annual Budget deficit and therefore accumulating National Debt; Mr Miliband’s ‘cost of living offers’ may not DIRECTLY increase them via state spending, but as the UK needs sustainable economic growth and/or much higher taxes TO PAY THEM OFF continual threats of State intervention that looks good in pamphlets but will kill off investment, is economic madness.

ttosca ….. Am I “ridiculous’ for pointing out (and qualifying my warning) that businesses are ALREADY very apprehensive about the next Labour administration in 2015 and will reconsider UK investment/jobs, OR bothering to debate reality with someone like you comrade, pushing an ideology that failed the UK economy/jobs in the 1970’s (a major contributor to killing our British company manufacturing base) - and has not worked in any other major nation since?

Hands up ANYONE who has seen Labour Party policies that on balance ever PROMOTES Private Sector investment/jobs that PAYS for the Public Sector, our pensions, welfare, benefits and NHS – rather than slowly slaughtering the business cash cows by ‘a thousands tax raids’ to fund their incompetence - until everyone’s taxes go up to pre Thatcher 1979 rates, of Corporation Tax 50%, the lower income tax rate of 32p, the higher income tax rate of 60% to 80 odd%, with tax on unearned income in the mid 90%.

And regarding my Labour/socialist policy ‘hit list’ on the other page THAT PUTS UP THE COST OF DOING BUSINESS on top of wages, all considered ‘fair game’ by Labour governments, where each item is humped by Labour Chancellors until collectively it kills the Private Sector money cow – HERE IS ANOTHER private sector ‘raid’ being considered by the Miliband Shadow Cabinet for after 2015, likely to be the tip of the ice-berg of what is really being planned for their first year in office, similar to 1997.

“Ed Miliband and Ed Balls are examining options for how Labour could fund additional investment in health over and above current spending plans. Shadow Cabinet sources said no decision had yet been taken on how to fund the pledge, although one option is to introduce a ring-fenced rise in national insurance (NI) contributions both for employers and employees.”
www.independent.co.uk/news/uk/politics/exclusive-labour-plans-big-risein-nhs-spending-9468344.html

“This would mirror Gordon Brown’s raising of NI by 1 per cent in 2002 to fund Labour’s last expansion of the NHS. It is understood this idea is being supported by Jon Cruddas who is leading Labour’s policy review.”

And wasn’t the rise in National Insurance (to cynically come in after the 2010 General Election) originally meant to fund Labour’s temporary 13-month drop in VAT, their GRAND SOLUTION to CREATE national jobs they’d lost e.g. reverse the halving of UK manufacturing on their watch (mostly BEFORE the financial crash), to pay off national debt, to help people with their bills – but what was the downside to their ‘cunning plan;

“Labour's planned National Insurance increase will cost jobs, Alistair Darling admits”

(2009/10) “Labour’s plans to increase national insurance next year will cost jobs, Alistair Darling has said.”

www.telegraph.co.uk/news/politics/labour/7539343/Labours-planned-National-Insurance-increase-will-cost-jobs-Alistair-Darling-admits.html

“In his evidence, Mr Darling defended his plans to increase national insurance, saying it was necessary to raise extra money to reduce Government borrowing, which will be £167 billion this year.”

If for companies it was 'just' upward wage pressures UNDER LABOUR squeezing margins for companies and their shareholders e.g. pension funds, fine, as what governments could do is lighten other costs for them - but with Labour, ALL Their COSTS go up.

With a cnbc (american website) link rather than a UK site straight away I am thinking a US possibly republican troll, the US system believes in minor taxes and no safety net. All that rubbish about productivity, the amount that is lost due to people having to bankrupt themselves to receive treatment (if they aren't covered) which costs much more for the same treatment when compared to the rest of the world (cartels between health providers).

Some scary stuff on the great US system
"In 2010, the percentage of Americans without health insurance was 16.3%, or 49.9 million uninsured people. Source: US Census Bureau

Nearly two-thirds, or 62%, of all bankruptcy filings in the United States in 2007 were due to illness or medical bills. Source: American Journal of Medicine, June 2009

Among the medical bankruptcy filers in 2007, most were well-educated, owned homes, employed in middle-class occupations, and three-quarters had health insurance. Source: American Journal of Medicine, June 2009"

Wages at the top are the problem as these have grown above inflation and not linked to performance

Hmmmm .... I suspect either Breaking is a UK and poster and just on the wrong thread, or one of Mr Axelrod's people have the wrong county entirely. Mr Miliband should ask for a rebate. lol

The problem that I’m alluding to is the VIABILITY of a “significant increase” from the £6.50 ph set for later this year ...

You're not alluding to a problem, you're making one where there isn't one. Miliband has said that he will raise the NMW in line with average earnings. This isn't the same as a "significant increase". Furthermore, the economics does not support your assertion that this will negatively impact on the economy. The effect of an increase in a minimum wage is shown to be minimal. It will not damage any recovery. There will not be significant inflationary pressure.

The inflationary aspects of a significant raising of the Minimum Wage, and the knock on affects in raising the Base Rate faster than might have, is just one aspect, and I find it interesting that you mentioned the lowering of VAT, as some kind of policy fiddling counter balance

I mentioned lowering the rate of VAT as a quick and easy way to demonstrate that raising the NMW will not automatically generate inflation. Remember, we're talking about a policy that would increase the incomes of the lowest paid 3.2% of the workforce. If we were talking about widespread incomes policy I would agree, there would be inflation. It's not automatic that this would come from an increase in the minimum wage rate

As to Productivity (unit cost)
that's not what productivity means.

and “firms are too powerful” ideology; in the former while I’m not sure how non factory workers e.g. the service sector, can become more ‘productive’ for their hourly rate rise

The idea is that people work harder when they're paid more. This is true in the service sector (although it's difficult to measure their product). Low pay can eb thought of as an example of markets failing due to firms not operating under what are considered to be perfectly competitive conditions in the labour market.

...what I do KNOW is that businesses will also have to deal with all the other costs Labour will throw at them, either using their last administration as an example, or already mentioned ‘costing’ other policies

You don't KNOW that businesses will have to deal with rising costs as the result of a new (if not New) Labour government. You are guessing that businesses costs will rise based on your past experience. The two are not the same.

Higher costs of government intervention e.g. Energy Company ‘price freezes

So firms are going to face rising costs as a result of price freezes in the energy sector?

Higher Interest Rate/Borrowing Costs as they ‘normalize’, with or without a Labour policy premium

Interest rates will rise no matter who forms the next government.

Now a much higher Minimum Wage?????

Not a much higher NMW - a NMW that rises in line with the rise in average earnings.

When Labour wants to fund it’s big inefficient State and/or votes, it just taxes without thought of whether businesses can afford it, otherwise they might have helped our exporters in the first several years of their administration, also having to cope with a strong Pound, before those million jobs went by 2005

No government raises taxes without considering whether they're affordable, that's not how you maximise tax revenue.

"The art of taxation consists in so plucking
the goose as to obtain the largest possible
amount of feathers with the smallest possible
amount of hissing." - Jean-Baptiste Colbert

Another thank you IIMB, I got one of my favourite quotes in too! Keep going

The Hammaconda ….. Part One

Re your points mostly suggesting the ‘known , knowns’ don’t necessarily point to another anti business Labour administration in 2015, insensitive to the ‘costs of doing business’, potential job loses, inflation and higher interest rates.

I have broken down your mainly unqualified points into various categories, and will address them one by one, with mainly qualified views.

Miliband’s Minimum Wage Increases over 5-years – not so radical as I am alluding to.

If you read this article, Mr Miliband IS planning something radical, as if he wasn’t, what 2015 electoral drum is he beating, or was this just for the European and Local elections?
www.independent.co.uk/news/uk/politics/election-2015-ed-miliband-targets-minimum-wage-for-maximum-gain-9393068.html

And Mr Miliband has form on this subject, tied in with ‘the cost of living’ mantra he has no real answers to, other than force pay rates over and above what the independent body that sets our minimum wage says they can afford, as we recover from such a long and deep recession.

"(November 2013) Ed's living wage 'is a disaster for jobs' says former Blair aide behind minimum wage"
• John McTernan warned the policy will hit young people particularly hard
• Political adviser helped Tony Blair introduce minimum wage in 1999
• Ed Miliband will suggest people are 'working for their poverty' in speech
www.dailymail.co.uk/news/article-2487479/Eds-living-wage-disaster-jobs-says-Blair-aide-minimum-wage.html

“Ed Miliband’s plan to encourage businesses to pay a ‘living wage’ would put 300,000 young people out of work, a former aide to Tony Blair warned yesterday.”

“The Labour leader will today announce that he would offer tax breaks to firms who pay their employees £8.80 an hour in London and £7.65 in the rest of the UK – far higher than the minimum wage, which is £6.31 an hour.”

“But John McTernan, who helped Mr Blair introduce the minimum wage in 1999, warned yesterday that the policy would be a disaster for jobs and hit young people particularly hard.”

Minimum Wage Effects on Inflation;

While I get your point that the numbers (1 million) on the Minimum Wage is not currently a major threat to a UK that seems to have a higher structurally ingrained inflation than other countries, but it would appear there is another 2 million earning 50p an hour more, and heavens knows how many more at £1 over the MW – so once again, it depends if Miliband is all talk or planning real (upward) reforms to the MW.

Furthermore, as part of the whole workforce, where pay rates are rising as the labour /skilled market tightens, whether thousands of small to medium sized businesses can afford it or not, the BoE’s nightmare has always been wage induced inflation as it then feeds through to prices so they raise interest rates.

“Permanent staff salaries rising at fastest rate since 2007 – REC”
uk.reuters.com/article/2014/04/08/uk-britain-economy-employment-idUKBREA361ZQ20140408

As Central Banks have to look at the big picture of inflation, and if a government fiscal/economic policy in their opinion is judged too inflationary, they then offset it with higher interest rates – so with an already nervous governor Carney waiting to pull the higher interest rate trigger, a radical MW rate that affects several million, no matter how socially correct, can/will raise interest rates faster then the would have been. The additional POLITICAL upward pressure on rates due to Labour, I’ll mention further on.

Productivity increases due to higher Minimum Wage;

As the majority of people on the MW any rise awarded by the Pay Commission will be seen as both lagging costs and frankly derisory (arguably with good reason), it is highly unlikely to boost productivity in the low skilled sector who will have fixed tasks to do in a given day and will matter not a jot if they carry out those tasks a bit quicker with a smile on their faces.

Now a much higher MW that affects those higher up the skills ladder, that has some scope to ADD productivity to their day can be better measured, but once again it depends what levels of pay mr Miliband is talking about – as if not different to the formula of the Pay Commission, he might as well butt out rather than use ideology that may not be affordable to many thousands of small-medium sized businesses.

More

The Hammaconda .... Part Two.

Effect of Wage increases on Business Costs;

For most companies, wages are their largest costs of doing business, and we know in real terms salaries have lagged, but there appears to be other wage disparities that could restrict employers ability to compete for better skilled/educated employees.

“Public sector hourly pay outstrips private sector pay”
www.bbc.co.uk/news/business-26512643
“Public sector workers are paid on average 14.5% more than those in the private sector, according to the Office for National Statistics (ONS).”

“In 2013, average hourly earnings in the public sector were £16.28 an hour, compared to the average £14.16 among private employees.”

"But the difference was skewed because more public sector jobs require high levels of skill and university degrees.”

“Public sector employers also tend to be larger, thus paying higher wages”

How can I ‘KNOW’ under Labour Business costs will go up;

Easy, because that is what they do as evidenced by even the recent threats to home builders, energy companies, landlords, and every company via the minimum wage and National Insurance
www.independent.co.uk/news/uk/politics/exclusive-labour-plans-big-risein-nhs-spending-9468344.html

And over their past 13-years where in times of an annual budget surplus they STILL had to keep a tax frenzy going to feed their insatiable need for bad spending, ticking of most of the items on that list of business costs I listed before, add the 1997 raid on Pensions costs that decimated private pensions, plus others within the link below – AND the tax rises they left for businesses as they left power, in Fuel and National Insurance, to come in after the general Election.

"(1997 to mid 2006) The 80 tax rises under Labour"
www.dailymail.co.uk/news/article-389284/The-80-tax-rises-Labour.html

So like any tax and spend badly Labour government of the 1970’s or 2000’s, that can only regulate/red tape and tax an economy, rather than grow it, listen to what they are saying now on business cost increases, and re spending the new regional economic this, new education bodies in-between Local Authorities, Ofsted and schools that – they are ALREADY planning their new Quangocracy, for socialist sake.

A big fat inefficient State that spends so much effect trying to micro manage everything, with no clue what to do in order to encourage economic growth/jobs to pay for it, but still needs taxes to feed the inefficient State,

“Blair's 'frenzied law making' : a new offence for every day spent in office”
www.independent.co.uk/news/uk/politics/blairs-frenzied-law-making--a-new-offence-for-every-day-spent-in-office-412072.html

UK Interest Rate Sensitivity (upwards) due to a Labour Government;

As you correctly say, interest rates will go up from the all time lows no matter what government is in power. But a Labour government with their unbalanced country economic model will see Sterling fall (which is inflationary) and further upward pressure on interest rates as investors financing our £1.4 trillion of National Debt by 2015, will price in a ‘risk premium’ as they did to a pre 2010 General Election Labour without a deficit/spending plan - when our 10-year Gilt was over 5% and higher in interest rate than Italy’s 10-year debt. However after 2010, due to the Osborne man with a plan, our 10-year rate was trading either side of 2%, and Italy’s (with high national debt and no deficit) traded up to 7%.

The Capital Markets do not like those countries following high state spending socialist agendas and a neglected Private sector, adding ever more national debt and putting downward pressure on bond prices on the bonds they hold as ever more ‘risk’ gets priced in to the government bond market e.g. France downgraded TWICE versus the UK once by two of the three main ratings agencies, leaving us still AAA with Standard & Poors.
www.telegraph.co.uk/finance/economics/10690363/Labours-manifesto-could-truly-damage-our-economy.html
www.telegraph.co.uk/comment/telegraph-view/10595517/Higher-tax-rates-will-hold-back-economic-growth.html
www.trendingcentral.com/francois-hollande-changed-ed-miliband-stayed/
www.telegraph.co.uk/finance/economics/10546875/French-borrowing-costs-rising-at-worrying-rate.html
“Hollande Faces Hurdle to Spending Cuts as Socialists Revolt”
www.bloomberg.com/news/2014-04-21/hollande-faces-biggest-hurdle-to-spending-cuts-from-own-party.html

No Government Raises Taxes Unless They Are Affordable;

We are talking about Labour here, you can not be serious, and “affordable” is relative – but despite numerous examples I can think of, here are a few Labour gems.

I have shown you earlier Darling putting up National Insurance rates pre election for businesses and employees when he testified he KNEW it would cost jobs. When Brown took away the 10p tax rate that helped the lower paid a few years into the recession, didn’t they need it any more? When Brown raised Housing Stamp Tax from a flat 1% in 1997 to 3,4, 5%, fine in a boom when buyers swallow it as hope to get it back via price appreciation, , is it affordable/fair in a crash?

And finally, when Brown believed Private Pensions, then the best funded in Europe, looked too “affordable”. A shame he didn’t socially ‘reinvest it’, in paying the State Pensioners decent annual rises.

“Revealed: Labour's 'stealth raid' took £118BILLION off pensions, 'paving the way for the end of final salary schemes as they were suddenly unaffordable'"
www.dailymail.co.uk/news/article-2613609/Revealed-Labours-stealth-raid-took-118BILLION-pensions-paving-way-end-final-salary-schemes-suddenly-unaffordable.html

“one financial expert calculates that (compounded) the total amount stripped from the nation’s pensions could amount to as much as £260billion. With less money in their coffers and with pensioners living longer and needing money for longer, pension funds soon ran into major difficulties.”

IIMB, I'm sorry, I'm up to my neck in A-level papers at the moment. MN is a very welcome distraction from examining but I'm afraid I don't have the time to write a hugely long response to your posts.

1. According to the article you linked to Miliband is proposing implementing the recommendations of the Resolution Foundation, it's really not that radical. Increasing the minimum wage over five years with the view to raising the NMW to 60% of the median wage.

As for the Living Wage (LW), McTernan either hasn't read the report properly or doesn't understand what it says. The report says that the introduction of a LW would cause, ceteris paribus, demand for labour to fall by 300,000. The DM is not a great source of information on economics, you're much better off reading the original reports/ articles.

2. As long as wage growth is tied to an increase in productivity the should be little impact on inflation. The REC/ KPMG report states that salaries are rising,

3. Your first paragraph doesn't make any sense. Are you trying to say that a rise in the wage rate of low skilled employees will not affect productivity? Think about it this way: If you were employing someone with very few skills for £7ph wouldn't you invest in training them to make sure that you got the very best out of them?

4. Yes, a rise in wages causes a rise in costs. However, there's evidence to suggest that, in a period of growth, firms absorb the cost and reduce their profits.

I'm afraid I don't understand what the relevance to a rise in the NMW o the rest of that part of your post.

5. TBH you've not convinced me that you know that business costs will rise under Labour. You're assuming, based on past behaviour (which is understandable), that costs will rise. I don't really see what the rest of this part of your post has to do with the OP - other than you wanting to stick the boot into Labour.

6. But a Labour government with their unbalanced country economic model will see Sterling fall (which is inflationary) and further upward pressure on interest rates as investors financing our £1.4 trillion of National Debt by 2015, will price in a ‘risk premium’ as they did to a pre 2010 General Election Labour without a deficit/spending plan - when our 10-year Gilt was over 5% and higher in interest rate than Italy’s 10-year debt
   Doesn't make sense.

Sorry, I'm trying to understand. You think that the pound is going to weaken as a result of a Labour election win? Do you mean to link that to an increase in gilt prices: are you implying causality or contemporality? Do you really think that investors will consider the government the biggest determinant of risk on an investment? If it were UKIP I'd probably agree with you but we're not.

I really don't think Miliband is going to follow what I would consider to be a high spend, socialist agenda.

Sorry, that's all I've got time for. I'll try and comment on the rest another time.

The Hammaconda …… no worries about answering me, frankly I wasn’t expecting you to. But I’ll both answer your replies and throw more info out there, and when/if you decide that MumsNet is your real priority rather than pimply ‘youfs’ scribblings, you’ll be back. lol

1. On the Minimum Wage: basically what you are saying is that those commenting on the affects of the new MW formula every business will be worried about planning for the years ahead are wrong; Miliband isn’t really proposing anything as radical as he is making out, and therefore it will be a non event.

As you appear to understand the Median Wage, if you could explain to me WHAT the MW would be in 2014, if 60% of the Median Wage was applied, I’d appreciate it. Meanwhile it is worth regurgitating that if putting up costs to Employers via a bit of National Insurance is known my government to COST JOBS, why wouldn’t any meaningful upward move in the MW not do the same.
www.telegraph.co.uk/news/politics/labour/7539343/Labours-planned-National-Insurance-increase-will-cost-jobs-Alistair-Darling-admits.html

1. On Productivity; easy tiger, you cannot dismiss the Great Recession fallout so easily, wages may be rising but Productivity, the measure of health/sustainability of our economy, is not – so employers under Labour could have low productivity levels, whilst UK interest rates are coming off 300-year lows and annual government increases in their costs of employment/doing business e.g. rises in National Insurance, a jobs tax of choice, even in that stonking recession.

”BoE confounded by low UK productivity”
www.cnbc.com/id/101762062

“The Bank of England has admitted that it cannot explain the "puzzle" of weak levels of U.K. productivity -- an important measure in determining when interest rates could start rising – while other indicators such as employment and economic output seem to be doing so well”

1. On Minimum Wage Growth Productivity; yes I am saying that in very low skilled jobs i.e. waiting tables, working in a shop, a chamber maid, with no productivity enhancements from the likes of the internet, computers, supply chains, logistics there will NOT be an increase in productivity - and as for training, WAKE UP, instead of hiring a spotty UK youf in their teens with attitude, you can obtain a nice shiny and eager East European in their twenties, both over qualified and over here.

This I suspect has quite a bit to do with WHY we have a wage compression for the lower paid, both before and after the recession, and why MW rises over the business sustainable level, will not increase productivity in those with some skills, employers could just employ more East Europeans – hence Osborne is giving employers National Insurance cut incentives to HIRE our youth, rather than putting N/I up and encouraging employers to hire foreign value for their money.

1. On the definition of ‘Firms’ and absorption of higher MW costs; straight way, I have to diss your evidence, as it is from the start of the Minimum Wage in 1999, over the global economic boom, a massive government spending stimulus to the UK economy, a massive personal debt stimulus to the UK economy, stable CPI inflation, falling UK interest rates, plentiful bank loans and most asset prices growth i.e. bonds, stocks, homes, commercial premises – all offsetting Labour’s increases in business costs, so is there any wonder businesses absorbed the MW increases under those positive business influence?

Meanwhile, as we try to escape the resulting Great Recession, the opposite to the majority of the above ‘positives’ are true, creating quite a headwind for businesses growth/profitability, especially in the Small to Medium sized businesses that are so important to this economy. If you have data showing forcing up wages prematurely after a run-of-the-mill recession is easily absorbed, never mind the worst in over 80-years, please provide it.

Part 2.

1. On The Historic Proof of Business Costs Rising Too Much Under Labour Miliband realises any plans for additional government spending will be seen as unrealistic with the levels of national debt we have, so all his ideas/policies involve MORE controls/costs on the Private Sector.

So unfortunately convincing you is not the problem, all businesses planning more than a year ahead will have some concerns about Labour’s current strategy of launching populist policies at some expense to them e.g. new NHS spending via increases in National Insurance, EVEN their own backers in the link below (from what you can see, but get the gist).

(Feb 26 2014) “Miliband rhetoric worries Labour’s business backers”
www.ft.com/cms/s/0/6136bb92-9f0e-11e3-8663-00144feab7de.html#axzz356EnSWwF

“Senior business figures with links to Labour are worried by what they regard as a persistent campaign by Ed Miliband against large companies, saying it marks an alarming shift away from New Labour pragmatism.”

(June 19 2014) “Ed Miliband is confused and unconvincing, Lord Mandelson says”
www.telegraph.co.uk/news/politics/ed-miliband/10911015/Ed-Miliband-is-confused-and-unconvincing-Lord-Mandelson-says.html

“The Labour Leader has "confused" Labour's message on business and is failing to convince voters, the influential former business secretary has said”

The fact is, ideologically Labour neither understands or are comfortable dealing with business, as they represent the employees and like UK trade unions, are not overly bothered of business problems when making demands on them – as proved by the fall in 1 million UK manufacturing jobs from 1997 to 2005, when they clearly needed government help to reduce taxes, red tape and for the Exporters, a strong English Pound Sterling. If Labour need more money, businesses are an easy target and they will keep tapping them.

Labour in their 2010 General Election manifesto stated they would spend and tax more, but cut less than the other 2 main party’s, but didn’t detail it. Businesses aren’t stupid, as any government that does nothing to help small and medium companies and puts up National Insurance a few times in a Great Recession KNOWING it will cost jobs, will be back to the company cash flow well, often.

6 On the Capital markets and Labour ‘risk’; the paragraph you challenge makes perfect sense, as most of it happened before 2010 and the new UK Coalition took a different policy direction to Labour (with less government deficit spending, less targeted taxes that help stimulate the economy and cut more government fat/waste that were well received by the markets), rather than Miliband who was to follow the disastrous socialist policies of France, under President Hollande.

Our UK government bond interest rates e.g. 10-year Gilts, were much higher under deficit denial Labour not willing to outline a post 2010 economic plan. Sterling that had been strong under the myth of Brown’s ‘prudence’ crashed once the extend of our unbalanced economy and banking sector was realised e.g. in late 2008 crashed from around $2.08 to around $1.37 over months, as unlike the Eurozone where an individual country’s problems can be ‘smoothed’ over an entity consisting of 18 very mixed economies – any UK negatives or positives will be reflected fairly quickly into the exchange rate of Sterling.

A weak Sterling due to the perceived negative prospects of the UK may help our exporters (if any left), but it means we import inflation, so the Bank of England would tend to keep our Base Rate higher than they might have, to use higher UK interest rates to try and attract overseas deposits switching into Sterling, thus raising our exchange rate, lowering imported inflation.

The interest rate premium investors would want to compensate them for the additional ‘risk’ of an ‘Oldish’ Labour government polices would be soon seen in the level of rates, the shape of our government bond yield curve (2year -30 years) AND the volatile government bond interest rate DIFFERENTIALS to other country’s government bond yield curves.

Global investors have a huge choice of government bond markets, and institutional investors re evaluate country risk (including fiscal, monetary policies and government debt levels) at least on a quarterly basis. 'Political risk' is not the sole determinant of a country's foreign exchange and interest rates, but they form a big part of it.

isitbutme - you really do not help the cause - even I cannot be arsed to wade through all that
keep to a simple issue, and discuss the main argument on that
copy and pasting/linking to the entire internet is unhelpful to all

caroldecker …… re your accusation that I “really do not help the cause”, firstly I’m not sure WHAT ‘cause’ you are talking about, never mind that I was TRYING to ‘help’ it, or indeed, that I was obliged to post in a manner that you could keep up.

FYI in my OP I made ‘the main arguments’, our fragile economy (and jobs) will suffer if Miliband continues to attack the private sector, especially indicating a significant increase in the MW to the small and medium sized businesses currently struggling and have just seen the MW get the first ‘real term’ increase in several years.

It is The Hammaconda from the 3rd June challenging my ‘simple’ message that boiled down to any fool of a socialist P.M. in waiting can make promises to spend other peoples (private sector) money, after all they did that via taxes whilst in power but it is HE that has wanted to go into detail – and I have both answered and proved my point.

Posting links to the internet both qualifies my points and gives readers further reading and the full context, it is their choice. Post after post to my answers saying ‘in my opinion’ Labour does not/will not continually try to milk businesses to near extinction CAUSES me to qualify my points, HAVE A WORD WITH HIM.

As the Labour Party only offers non detailed populist mantras as policies, they will not appreciate anyone looking into them at detail, which gives me a clue to what ‘cause’ you are talking about.

The median wage was £11.56 p/h in 2013 so having a NMW at 60% of that would give a value of £6.94 (11.56x0.6).

So that's less than the £7.00 p/h the amount Osborne has indicated as his desired rate.

Interesting that you haven't started a thread about Osborne's NMW rise will affect UK recovery/ jobs .

I'm female BTW, don't know why you'd think I'm a fella.

Oh fucking hell, I've been marking these bastard exams for too bloody long. I've just shown my working out. What a twat.

TheHammaconda ….. excuse me for thinking that you are a ‘fella’, as apart from throwing a few choice words my way on one of our earlier exchanges, I had assumed that you chose your posting name to brag, rather than advertise a fantasy. lol

On the Minimum Wage, first of all the £7.00 aspiration mentioned by Osborne (and me on a post to you on the 24 May) I believe was quickly shot down by the IPC that sets it as unaffordable, so no knicker bunching by me, was necessary.

Secondly, as Labour/Miliband is using the Low Pay report by Alan Buckle of KPMG that has “ambitious” plans over 5-years to narrow the gap – and apparently that target will be set prior to the General Election – who (in Labour) has said 60% of the median wage IS the target?

Currently all businesses looking to set their levels of new investment/employment can currently see is Labour’s un detailed plans for dramatic increases over a parliament in not one Minimum Wage, but several set sector-by-sector dictated by GOVERNMENT, rather than the better equipped and independent IPC.

www.independent.co.uk/news/uk/politics/election-2015-ed-miliband-targets-minimum-wage-for-maximum-gain-9393068.html

press.labour.org.uk/post/86155311399/only-labour-will-tackle-the-scandal-of-low-pay

So how can Small to Medium sized businesses hire now, or plan ahead, when they don’t know their wage costs of CURRENT staff from May 2015?

At least a plain vanilla £7 Osborne single rate, with no major reforms threatened with a 5-year promise to narrow the MW to the median, would let them know where they stand NOW.

Labour brought in the MW in 1999 set at 48% of the median wage and did not rise above the current 53% UNDER Labour through a global boom, yet trumpeting that they will reverse years of inequality; yet another social promise along with home building etc, they never got around to in 13-years.

Clearly just raising the ‘jobs tax’ called National Insurance isn’t ideologically damaging enough to businesses, the ‘cunning plan’ here is to reduce the government Working Tax Credit bill and pass the additional cost of employment, onto shops and other SME’s whether they can afford it or not. Is this money savings needed to fund a new bunch of state control managing Quangos.

Typical Labour ideology over a coherent long term plan for Private Sector job creation, as the Trade Unions want government to offer guaranteed jobs after training, but where, in the Public Sector expanded by 1 million in 13-years that expanded our annual budget deficit, or in businesses already hit by higher pay rates?