Posts Tagged ‘Farm Subsidies’

Helping Labour to Win in the Countryside: Financial Support to Farmers

December 16, 2018

A year or so ago Mike over at Vox Political asked what could be done to enable the Labour party to win in the countryside. It’s a good question, as Britain’s rural areas tend to be Tory/Liberal strongholds. The countryside is in crisis. We have seen a number of agricultural crises force small farmers out of business, while at the same time local people are being forced out of their villages because they are unable to afford the house prices there, as housing is bought up by rich outsiders. Local services in these areas are also being cut back. Bus companies have reduced the services to rural areas, post offices, pubs and banks are closing around the country, not only in rural areas but also in towns. This also hits local businesses, and so the small businesses in these areas may also be forced to fold. The danger is that if these trends continue, Britain’s countryside and villages may decline from real, living communities to dormer suburbs consisting of retirement accommodation for the rich.

Brexit may also have an impact on this process. At the moment farmers are, or have been supported by a number of subsidies from central government and the EU under the Common Agricultural Policy. Any subsidies from the EU may vanish if and when we leave the EU. How then can we save our farmers from bankruptcy?

Some indication of how this may be done could come from Roosevelt’s New Deal, as described by John Strachey in his A Programme for Progress (London: Victor Gollancz 1940). In it, Strachey discusses how the Roosevelt administration tried to give help for farmers by reducing the rate of interest on their mortgages and extending credit to them. Strachey writes

It was not, then, mainly by means of transforming the Reconstruction Finance Corporation from being an agency for the relief of big business in distress to a method of providing cheap credit to the American people generally, that the Roosevelt administration began to show it progressive character. It did so rather by a variety of methods of both lending and of spending (distributing money) directly to various sections of the community. Let us pass these methods in review.

The American government began in 1933 to distribute money to two classes of the population-namely the farmers and the unemployed. In the case of the farmers the Government not only spent (i.e. distributed money), but also lent. The farmers were dealt with by the Farm Relief Act which the President signed on May 12th, 1933. This Act was in two parts. The first part set up the Agricultural Adjustment Administration. The Second part, called “The Emergency Farm Mortgage Act of 1933”, was designed to reduce the rate of interest paid by farmers on their mortgages. The principle on which they Agricultural Adjustment Administration, or A.A.A., worked is well known. Substantial payments were made to farmers on condition that they restricted their production of all the basic farm crops and products in accordance with the directions of the Department of Agriculture. The money for these payments did not, however, come out of the Federal Treasury as such, but was raised by a special processing tax, imposed up0on the output of these same farm products as they passed on their way to the consumer.

The second part of the Act established the Farm Credit Administration, to which farmers could apply for loans with which to pay off their existing mortgages. This measure appears to have resulted in a reduction of the interest rates paid by farmers from over 5 per cent to 3 1/2 per cent. Moreover, the average period of these government loans was raised to thirty years, instead of the five years, which was the average period during which the private loans had to be paid off. By September 1934 these government credit agencies held 37 per cent of the farm mortgage debt of the country. This, the less spectacular part of the Act, is often forgotten. But its effect has been of great importance, since it has driven down the whole structure of interest rates on farm mortgages. It affords a model example of the use of government credit to depress interest rates at a particular important point. (pp. 188-9).

I am not saying that this precise policy needs to be introduced, as I understand that at the moment interest rates are low and that, if this country does suffer food shortages due to loss of imports following Brexit, we may need our farmers to increase production rather than reduce it. But it is an example of the general type of policy that may need to be put into practice to regenerate the countryside: aid to farmers and country dwellers to be able to buy their properties and maintain them as proper communities in which people live and work.

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Guy Standing’s Arguments against Workfare: Part 1

August 8, 2016

Workfare is one of the most exploitative aspects of the contemporary assault on the welfare state and the unemployed. It was advocated in the 1980s by the Republicans under Ronald Reagan in America, and in Britain by Thatcher’s Conservatives. At its heart is the attitude that the unemployed should be forced to work for their benefits, as otherwise they are getting ‘something for nothing’. Very many bloggers and activists for the poor and unemployed, including Mike over at Vox Political, Johnny Void, the Angry Yorkshireman, and myself have denounced it as another form of slavery. It’s used to provide state-subsidised, cheap labour for big business and charities, including influential Tory donors like Sainsbury’s. And at times it crosses the line into true slavery. Under the sanctions system, an unemployed person is still required to perform workfare, even if the jobcentre has sanctioned them, so that they are not receiving benefits. Workfare recipients – or victims – have no control over where they are allocated or what jobs they do. The government was challenged in the courts by a geology graduate, who was forced to work in Poundland. The young woman stated that she did not object to performing unpaid work. She, however, had wanted to work in a museum, and if memory serves me correctly, had indeed got a place at one. She was, however, unable to take up her unpaid position there because of the Jobcentre’s insistence she labour for Poundland instead. A young man also sued the government, after he was sanctioned for his refusal to do 30 hours a week unpaid labour for six months for the Community Action Programme. The High and Appeal Courts ruled in the young people’s favour. They judged that the government had indeed acted illegally, as the law did not contain any stipulations for when and how such work was to be performed.

Iain Duncan Smith, the notorious head of the Department of Work and Pensions, was outraged. He called the decision ‘rubbish’ and said, ‘There are a group of people out there who think they are too good for this kind of stuff .. People who think it is their right take benefit and do nothing for it – those days are over.’ This is rich coming from IDS, who was taking over a million pounds in farm subsidies from the EU. Eventually, Smith got sick of the criticism he was taking for the government’s welfare policies, and flounced off early in 2016 moaning about how unfair it all was that he should get the blame, when the notorious Work Capability Tests inflicted on the elderly and disabled were introduced by New labour.

They are in no sense free workers, and it similarly makes a nonsense of the pretense that this somehow constitutes ‘voluntary work’, as this has been presented by the government and some of the participating charities.

The political scientist Guy Standing is also extremely critical of workfare in his book, A Precariat Charter, demanding its abolition and making a series of solid arguments against it. He states that it was first introduced in America by the Republicans in Wisconsin, and then expanded nationally to the rest of the US by Bill Clinton in his Personal Responsibility and Work Opportunity Reconciliation Act. It was part of his campaign to ‘end welfare as we know it’. Single parents receiving social assistance were required to take low-paying jobs after two years. Legislation was also passed barring people from receiving welfare payments for more than five years in their entire lives.

David Cameron, unsurprisingly, was also a fan of the Wisconsin system, and wanted to introduce it over here. In 2007 he made a speech to the Tory faithful at the party conference, proclaiming ‘We will say to people that if you are offered a job and it’s a fair job and one that you can do and you refuse it, you shouldn’t get any welfare.’ This became part of Coalition policy towards the unemployed when they took power after the 2010 elections. Two years later, in 2012, Boris Johnson, speaking as mayor of London, declared that he was going to use EU money from the Social Fund to force young adults between 18 and 24 to perform 13 weeks of labour without pay if they were unemployed.

Ed Miliband’s Labour party also joined in. Liam Byrne, the Shadow Secretary for Work and Pensions, declared that

Labour would ensure that no adult will be able to live on the dole for over two years and no young person for over a year. They will be offered a real job with real training, real prospects and real responsibility … People would have to take this responsibility or lose benefits.

This was echoed by Ed Balls, who said

A One Nation approach to welfare reform means government has a responsibility to help people into work and support for those who cannot. But those who can work must be required to take up jobs or lose benefits as such – no ifs or buts.

Standing traces the antecedents of workfare back to the English poor law of 1536 and the French Ordonnance de Moulins of twenty years later, which obliged unemployed vagabonds to accept any job that was offered them. He states that the direct ancestor is the 1834 Poor Law Amendment Act, the infamous legislation that, under the notion of ‘less eligibility’, stipulated that those receiving support were to be incarcerated in the workhouse, where conditions were deliberately made much harsher in order to deter people from seeking state support, rather than paid work. This attitude is also reflected in contemporary attitudes that, in order to ‘make work pay’, have demanded that welfare support should be much less than that received for paid work. This has meant that welfare payments have become progressively less as the various measure to make the labour market more flexible – like zero hours contracts – drove down wages. The workhouse system was supplemented in 1905 by the Unemployed Workmen Act, supported, amongst others, by Winston Churchill. This directed unemployed young men into labour, so that they should not be ‘idle’ and be ‘under control’. Nor were leading members of the early Labour party averse to the use of force. Sidney and Beatrice Webb, two of the founders of the Fabian Society, were also in favour of sending the unemployed to ‘labour colonies’, chillingly close to the forced labour camps which became such as feature of the Nazi and Communist regimes. Liam Byrne also harked back to the Webbs to support his argument for workfare as Labour party policy. He stated

If you go back to the Webb report, they were proposing detention colonies for people refusing to take work … All the way through our history there has been an insistence on the responsibility to work if you can. Labour shouldn’t be any different now. We have always been the party of the responsibility to work as well.

The result of this is that many unemployed people have been placed on the Mandatory Work Activity – MWA – scheme, which requires them to perform four weeks of unpaid work for a particular company, organisation or charity. The scheme also includes the disabled. Those now judged capable of performing some work are placed in the Work-Related Activity group, and required perform some unpaid labour in order to gain ‘experience’. If they do not do so, they may lose up to 70 per cent of their benefits.

This has created immense fear among the unemployed and disabled. Standing quotes one man with cerebral palsy, who was so afraid of being sanctioned for not performing the mandatory work, that he felt physically sick.

The system also affects those in low-paid part-time jobs or on zero hours contracts. These must prove that they are looking for more working hours or a better paid job. If they do not do so, they may lose benefits or tax credits. In 2013 the Tory-Lib Dem government made it even harder for people to claim tax credits by raising the number of working hours a week, for which tax credits could not be claimed, from 16 to 24.