PPF index shows a slight slip

The Pensions Protection Fund published the PPF7800 Index today for the end of April, showing the state of health of the 7,400 pension schemes under its supervision.

The Index is currently showing a small net deficit, of £2.2bn, reversing March’s small surplus (£0.3bn). Given the growing turmoil in currency markets during April associated with the financial and economic situation in Greece and other small EU countries, something which was only capped this week with the agreement between EU finance ministers, a drop of the Index back into negative territory is not surprising but the small-scale nature of the drop was a surprise, and a particularly welcome one.

Some 69% of schemes were in deficit this month, more or less the same as the 68.5% in March, which seems to support the view that the picture is, essentially, little changed. Evidently, this remains an uncomfortable proportion of schemes in deficit, even if the overall net balance of assets and liabilities lends the view that the average scheme is not all that much in deficit. The total assets of these schemes reached £913bn, a drop of 0.2% over the month and an increase of 18.2% since April 2009; total liabilities stood at £915bn, a small increase on the month but a drop on the £961bn recorded in April 2009.

During April, the value of both assets and liabilities deteriorated, the latter by more than the former (hence the drop of the net figure into negative territory). Over the year as a whole, rising stock markets have added 16.4% to pension scheme assets, while rising bond yields have added only marginally to liabilities.

So, overall the picture continues to be encouraging, although the change in the actuarial assumptions underpinning the calculation of the Index in October last year continues to affect the figures. Caution remains necessary – pension schemes are far from out of the woods just yet.

May Day 2010

Greetings on labour’s day of remembrance, solidarity, celebration and re-dedication.

Here’s three things that remind me of why May Day remains important to the international labour movement, and of what solidarity means in the new decade of the 21st century if it is to be more than just a slogan:

1. At home: the last weekend of campaigning before the general election and the next big effort to ensure the BNP doesn’t gain a seat in parliament on Thursday. Of course, HOPE not hate is actively campaigning in key target areas and its organisers still need your support. Solidarity means uniting against the fascists.

2. Internationally: the draft text of the EU’s Free Trade Agreement with Colombia has been dissected by the TUC. Solidarity means freedom of association, and free from the fear of death squads for standing up for the rights of ordinary people – yet the proposed FTA brushes this under the carpet.

3. In Europe: At the European Trade Union Confederation, John Monks’s May Day message was based on the need to stand shoulder to shoulder with Greek workers to demand social justice and that the EU act decisively to stabilise the situation. Building the European project demands strength, not vacillation; perspective, not short-termism. Solidarity means having the dream and the vision for a brighter, alternative future – and the courage to express what that is when the practical situation demands it.

A May Day worth celebrating: and achievements to be won to demonstrate in practice what solidarity means.

[6 May edit: the TUC has reported events from May Day celebrations around the world here.]

Credit ratings agencies: the lessons of a children’s fable

Some interesting pieces in the media today on credit ratings agencies, which appear, at least on the face of it, to have been produced pretty much without recognition of each other’s existence: on Peston’s Picks; at Citywire; and by John Gapper at the FT.

The consensus between the pieces appears to be largely that the agencies remain influential, not least in the context of their role in the current financial crises enveloping Greece and Spain, in spite of an inability on past form to recognise – in the gutter language of the day – a turd when they see one and to call as such. Shockingly, it also seems that the agencies were either uninformed (or else misinformed) of the full depth of the products they were rating, or else they simply did not understand them and did not care sufficiently to find out. Either way, I’d have thought that an ability to stand up and say, along with the child in Hans Christian Andersen’s fable, that ‘the Emperor has no clothes on‘ would have been a prime raison d’être for such an organisation – or better said, perhaps, that such an ability ought to be their most highly valued asset in the future. Economies deserve better.

The agencies’ collective ability to resemble the three  ‘hear no evil, see no evil and speak no evil’ – except at the bidding of their masters in the financial investment and speculatory world, of course – renders them ripe for reform by any government intent on tackling the financial abuses which have led to the current scandals and returning national economies to be run in the interests of the people.

Budget 2010 – some reaction

A series of articles giving a trade union reaction to yesterday’s Budget over at ToUChstone and some politics from Hopi Sen. Prospect members can also download a summary of the highlights here.

And some cider reaction over at Liberal Conspiracy – and a petition, too, of course. Not, methinks, a move guaranteed to win much support from the more hirsute members of the labour movement – but then, I can’t recall Alistair Darling ever had a time as a beard wearer within the Labour Party, as the reference in this story seems to prove…

Budget Day 2010

ToUChstone, the TUC’s policy blog, has linked up with Left Foot Forward, Labour List and Liberal Conspiracy in the Progressives Liveblog of this afternoon’s Budget speech.

Click on the link on the right and join ToUChstone for commentary and debate on the Budget from 12 noon today, for coverage of Prime Minister’s questions, and then straight through into the Budget.

Meanwhile, the TUC’s pre-Budget statement calls for:

a Budget for growth, jobs and a better balanced economy that moves away from sucking up to the finance sector and instead invests in productive industries and green jobs,

The statement also calls for honesty in the continuing debate about public services and for politicians to spell out what they mean rather than hiding behind smokescreens and euphemisms.

As far as pensions are concerned, a debate which focuses on the facts rather than the myths would also be helpful.

Recession Report No. 16

The TUC’s last Recession Report was published yesterday and can be accessed via Nicola Smith’s post over at ToUChstone. The topical theme of this issue, in the week that saw International Women’s Day and the TUC’s 2010 Women’s Conference, as well as the launch of a specific TUC report on Women and the Recession, is the impact of the recession on working women. Inevitably, there is a degree of overlap between the two reports.

The headline labour market stats are that 2.457m people are out of work (more or less unchanged on the month and the quarter, but 448,000 up on the year), representing an unemployment rate of 7.8% (again, unchanged on the month and quarter but up by 1.4 percentage points on the year). Some 28.9m people are in work, representing an employment rate of 72.4% (down by 1.7 points on the year). The TUC remains concerned about the numbers of people who are working on a part-time and/or temporary basis involuntarily, and about long-term unemployment, both of which it sees as a sign of a continuing ‘serious weakness’ in the labour market.

Employment rates for both men and women have fallen during the recession but on a far smaller basis than in previous recessions, largely due to involuntary part-time working acting as something of a cushion. The proportion of women who are economically active (not necessarily in employment but looking for work) has also continued to rise in the recession, to a figure of 74.4% (the highest on record) – in contrast to previous recessions. The biggest barrier to female employment remains opportunities to balance work and family life: 41% of women who are inactive but who want a job are looking after a home or family.

The fall in the employment rate has been lesser for women than men, but this is a result of the predominance of women in the public sector, which takes around 40% of women nationally compared to around 15% of male workers. Consequently, large-scale public spending cuts are likely to give good reason to imagine that unemployment may well resume its upwards rise, and may well cause serious hardship to families where a second round of redundancies, this time predominantly amongst women, falls in areas of existing high unemployment.

Given that the public sector is also more likely to provide work-life balance arrangements, spending cuts may well see a reversal of the trend in women’s economic activity rates: representing another aspect of the social, as well as economic, disaster that such cuts would represent.

Robin Hood goes to Strasbourg

The European Parliament yesterday debated a financial transactions tax via an oral question put up by Sharon Bowles, a Liberal Democrat MEP who chairs the Parliament’s Economic and Monetary Affairs Committee, followed by a debate on a formal motion.

The motion was, essentially, a shoo-in (the vote is scheduled for tomorrow), since it is supported by the four largest party groupings in the Parliament, including the Socialists & Democrats; the Greens – European Free Alliance; Liberals and Democrats; and the centre-right European People’s Party (which excludes those parties which are further to the right, including the UK Tories). Between them, these four party groupings control something like 80% of MEPs. Conssequently, such a wide cross-party consensus on the motion for debate adds tremendously to the power of what it calls for.

[Edit 11 March: the resolution was approved with 536 votes in favour – 87% of those voting.]

The motion recalls:

The importance of renewing the economic and social contract between financial institutions and the society they serve,

and seeks to remind G20 leaders of their:

Collective responsibility to mitigate the social impact of the crisis, both in their member states and in developing countries, which have been hard-hit by the indirect effects of the crisis.

The motion identifies the European Parliament behind the EU having its own strategy on a financial transactions tax to take to G20 summit meetings, and for the need to adopt a common position at the G20 on the issue based on:

The options as to how the financial sector should make a fair and substantial contribution towards paying for any burden which it has caused to the real economy or which is associated with government interventions to stabilise the banking system.

(Here, the motion cleverly borrows from the leaders’ declaration from the G20 meeting Pittsburgh last September – see point 16.) In moving towards the definition of such a common position, the motion urges the Commission to elaborate an impact assessment of the potential of a global financial transactions tax both to generate revenues as well as to stabilise markets (here, in particular, the oral question correctly approaches the issue from the perspective of assisting with the development of a much needed long-term orientation to the financial system); of the benefits and drawbacks of such a tax; and of the need for the tax to be sufficiently well designed to mitigate any side-effects.

The motion has been well thought-out and put together, and its powerful language belies the political disparities between the political groupings uniting behind the motion (where the product of establishing such a wide-ranging consensus is frequently anaemic language and commitments). Ultimately, it will provide a further contribution to the body of evidence, on top of that currently being put together by the G20, on what such a tax could look like, and achieve, and is to be welcomed. In this respect, it’s also a good sign of the value of MEPs and the work they do.

Clearly, it does not yet commit the EU to a policy on the tax; it simply asks the EU to investigate the case. Nevertheless, should the impact assessment come out favourably in support of a financial transactions tax, that will give greater power to the elbows of those arguing that the EU should adopt such a tax and would represent a significant, valuable and high profile breakthrough for financial transactions tax campaigners.

Currency speculators: turkeys or Marxists?

Against a backdrop of:

– today’s currency speculation news focusing on the euro and also, yesterday, on sterling (although today’s announcement of a successful sale of £2bn in 30-year gilts – of the sort called for by the NAPF – is welcome news both as regards financial stability and as regards pension fund security)

– yesterday’s ‘advice’ to shell-shocked Greece from EU Commissioner Olli Rehn that it needs to make deeper cuts than those already envisaged if it is to get its economy back on track

– and the concerns of Lord Turner, chair of the Financial Services Authority, appearing before the Treasury select committee, on credit default swaps,

the dropping into my inbox today of the monthly Newsletter of the European Trade Union Congress, containing a number of features on financial speculation, couldn’t have been better timed.

Highlighting the ‘shameless’ activities of speculators betting on the collapse of countries hardest hit by the crisis, at a time of their vulnerability arising from needing to support economies hit by the failures of financial institutions, John Monks, General Secretary, uses his Editorial to argue for stronger powers for market oversight authorities; the regulation of hedge funds, ratings agencies and private equity; the scrapping of tax havens; and for a tax on financial transactions. Further on, the ‘Dossier’ section looks at whether financial speculators are the real winners out of the crisis and contains links to a number of sites including Regulate Global Finance Now! where there is a useful section of links to documents on a financial transactions tax (though not yet to the Robin Hood site).

There are of course, real and immediate worries as to the results of all this currency speculation as regards economies, jobs and livelihoods. However, it seems to me that one of the potential outcomes is that a financial transactions tax appears sooner rather than later. If that’s the case, then either currency speculators really are turkeys getting ready to vote for Christmas; or else they are laying down some sort of a direct challenge to policy-makers ahead of further consideration of this issue, not least ahead of the next G20 later this year; or else, for one reason or another, they are simply not bothered by whether such a tax exists or not. The timing of this bout of speculation is supremely arrogant – that is, perhaps, not a surprise by itself, but the current behaviour of those involved, against the background of high-level discussion of some sort of co-ordinated activity on a transactions tax, is quite extraordinary.

Alternatively, perhaps they are just playing the role allotted to them in the final downfall of capitalism…

Tobin growing stronger

Two quotes taken from a piece on Citywire this morning entitled ‘Pound on the brink of collapse’.

The first, from ‘legendary investor’ Jim Rogers (to set the scene and building on his views of a particularly armageddon-type ‘real recession’ which he believes is about to hit the UK economy):

Other currencies aren’t strong and the euro has real problems, with cracks much wider than Greece beginning to show, but it’s the pound that’s most vulnerable. In real terms, it’s already devalued against virtually every currency barring the Zimbabwean dollar and it’s especially exposed over the weeks running up to the UK election. In a basket of currencies, the pound is potentially a basket case. And that will put Britain in an extremely bad position for the shakedown.

And the second from ‘well-known trader’ Vince Stanzioni:

If the billionaires are betting on a second dip, the rest of the investment community should be doing more than looking on from the sidelines.

Remind me, please: the case against a Tobin Tax to deter currency speculation is what, again?

[Almost immediate edit: apparently the Rogers quote didn’t happen, never existed, quite outrageous, etc etc. Think my comment remains accurate, though!]

PPF Index for January

The Pensions Protection Fund has updated its Index of the collective health of the UK’s 7,400 or so defined benefit pension schemes.

The latest figures (for January) are that the total deficit has widened over the course of the month to £51.9bn, from £32.6bn at the end of December. Some 75% of schemes are in deficit. The reasons for the drop are almost exclusively to do with falling asset values as a result of lower equity prices (particularly over the last week or so in the month); the total value of liabilities having remained almost static. The size of the deficit compares with a total asset base of £859.6bn (thus giving total liabilities of £911.5bn) – so it remains the sort of figure which is well within manageable limits.

Last week’s suspension of the Bank of England’s quantitative easing programme should result in improved prospects for liabilities since gilt yields – which is used to measure the current value of scheme liabilities – should now start to rise as a result. After a rally during early February, equity prices have continued their falling trend, indicating that asset values are – at least this point in the month – still falling. The resumption of the decline in the stock market coincided with the suspension of quantitative easing, leading some to question whether there was a direct link between the two and, indeed, the overall effects of the programme. Others have also wondered whether this may be the start of a mini-slump – or even a ‘double dip’.

For pensions, the good news on the one hand thus looks likely to be counterbalanced by bad news on the other. Well, ’twas ever thus…

Personal bankruptcies on the rise

Today’s Datablog in The Guardian picks up on last Friday’s quarterly report by the Insolvency Service publishing the numbers of corporate and individual insolvencies for the fourth quarter of 2009.

Some one in 320 individuals in England and Wales declared bankruptcy last year, a rise of around one-quarter on the 2008 figures, and the figures are higher than at any point in the years since records began in 1960. There were around 6,000 corporate liquidations and insolvencies. The latter group of figures is clearly linked to the recession (and corporate bankruptcies for Q4 2009 show a sharp drop on the picture one year ago) but, as the historic trends indicate, the figures for individual insolvencies have been rising for some years. In fact, the figures started to take off around 2003/04, substantially before the recession, rising particularly sharply in the first half of 2006, before actually falling through 2007 (and then resuming an upwards trend during 2008/09). The link to economic activity is, in the case of individual insolvencies, thus much more difficult to sustain and the current figures are clearly not an accurate bellwether for the state of the economy.

Behind every insolvency lies a personal tragedy – and, despite the slope of the rise, the relatively low numbers of individuals having to declare bankruptcy do give a lie to the apoplexy which the publication of the figures was greeted from some of the usual suspects. The reasons why insolvencies have risen so sharply remain difficult to fathom. Easy access to credit may be one factor – but this has been case for years and did not, during the 1980s, 1990s and the early part of the noughties, give rise to such figures, although the biggest year-on-year rise in the figures did come in 1991, when the UK was previously in recession.

The long-term decline in the share of national income taken by wages, which fell by two percentage points to 53.2% between 2001 and 2008, is likely to account for a fair part of the rise, leaving people increasingly stretched on incomes which have either stalled or not risen as fast as hoped. This therefore represents something of a double whammy, since a rising share of income taken by non-wage sources also helps to account for the speculative bubbles which caused the recession. Even so, the share of national income taken by wages is still above its record low, in 1996 – though economic growth might then have masked any effects of this at the individual level.

Whatever the factors which explain the rising tide of individual insolvencies, policy solutions which attack wages directly and which threaten the employment prospects of people in work are clearly going to exacerbate the problem still further.

Europe’s sticky iron curtain

The European Commission’s annual report on the social situation in the EU has just been published, revealing not only striking differences between EU member states but also divergent trends between them in the period since the EU was expanded to cover the new member states in central and eastern Europe. For the majority of them (i.e. all of them except Romania and Bulgaria), 2009 saw the fifth anniversary of their accession – time enough, you would have thought, for views to be less, not more, divergent.

The report is supported by a Eurobarometer attitude survey on the social climate, based on the views of around 1,000 adults in each of the 27 EU member states, plus in the three candidate countries of Croatia, (Former Yugoslav Republic of) Macedonia and Turkey, conducted in May/June 2009 and intended to be the first in a series of such surveys. It is striking that people in EU member states in northern and western Europe – regardless of the social measure used, be it within their personal situation, the general situation or in the area of social protection and inclusion – tend to report the highest levels of satisfaction with their current situation and prospects, while people in states to the central and eastern half of the continent (i.e. the new member states) reported the most dissatisfaction.

The reasons why the transition in former communist countries – even those untouched by war – has been so difficult are many, and the tough economic recession, with fragile economies in central and eastern Europe remaining particularly vulnerable, has clearly not helped. Social change, including large-scale population movements, has presented particular challenges. Nevertheless, it is equally true that, twenty years on from the start of the transition, with a whole generation of people not knowing what life was like in the former times, people living in those countries remain much less satisfied with their situation and prospects than is the rule across the rest of the continent. Life remains tough and the potential for disillusion is clear.

In this context, the words of Vladimír Špidla, the outgoing EU Commissioner for Employment, Social Affairs and Equal Opportunities are important:

Today’s report shows once again the importance of our efforts to promote jobs and growth in Europe so as to guarantee people’s social well-being in the future. We must continue these efforts as part of our future 2020 strategy to make the EU a smarter and greener social market economy.

Trade unionists, or European socialists more generally, are unlikely to find much to disagree with there.

What is required, however, is a greater sense of the need to do something more positive on behalf of people in countries in ‘the other half’. In this direction, it is interesting that the new Commissioner, taking the place of Vladimír Špidla, is to be László Andor, a Hungarian whose appointment, therefore, is likely to continue the perspective on the needs in this direction of what were formerly known as transition countries (and which perhaps might still need to be thought of in such a way); Špidla is Czech and, thus, also with a perspective informed by transition. Andor is an economist without much of an evident political background, although his past does appear to have some colour in it, and his appearance in the European Parliament hearings of the new Commissioners have been differently reported (see here and here). At the very least, however, he looks to be a safe pair of hands – and he does appear to be on board with issues on the EU’s social agenda. His tenure at the Commission needs to see greater, and specifically practical, attention paid to the social problems of countries from central and eastern Europe.

TUC Recession Report No. 15

The TUC has just produced its latest Recession Report, accessible here at Nicola Smith’s ToUChstone blog posting. This is the penultimate in the series given that data shows the economy no longer to be contracting – so an official, if somewhat marginal, end to the recession has been achieved. (On this point, see also Adam Lent’s post on why the recovery has been so anaemic in the UK).

The headline data are that: 2.458m are unemployed (down on the month and on the quarter, but up by more than half a million on the year) – at a rate of 7.8% (a slight drop on the month and unchanged on the quarter, but up by 1.6 percentage points on the year). The employment rate of the working age population now stands at 72.4%, down by 0.1 percentage points on the quarter and by 1.7 points on the year. The headline figures are, once again, more positive than expected but evidence of a sustained recovery on the employment market is not yet here and long-term unemployment also continues to demonstrate cause for concern.

The second part to the Report continues the social theme of the previous edition’s specific area of focus, which looked at the effects of unemployment on physical and mental health, by looking at the other social effects of recession, including on poverty, happiness, family life, crime, drug and alcohol use and on the prospects for the children of unemployed people. Nicola had blogged previously on the question of how a ‘social recession’ could be measured and had suggested that the view was, on the whole, satisfactory despite some areas of concern. Here, too, the report argues that, while the UK is weathering this recession rather better than those of the 1980s and 1990s, the negative social effects of rising unemployment will continue to cause damage for some years to come. An important lesson for those advocating harsh cuts to expenditure: cuts are not only economically regressive, they leave the social scars festering, too.

Not just a picture from my hols…

… but also a reference not only to this week’s welcome economic news but also to the TUC’s forthcoming Going Green at Work conference, taking place on 15 March and being chaired by Prospect’s own Paul Noon.

Peston on bank bonuses

Ahead of tomorrow’s questioning of Royal Bank of Scotland Chief Executive, Stephen Hester, by the Treasury Select Committee, Robert Peston has a few choice questions of his own, to whit:

1. What proportion of investment banking profits can be put down as an exceptional windfall?

2. Given that bonuses are discretionary, on what basis have banks decided to pay record amounts to some executives?

3. Are investment banks as dependent on the skills of particular individuals as they think?

Have investment bankers in the world’s five ‘leading’ investment banks, reporting over the next two weeks, really earned $65bn in salary and bonuses for 2009 (a sum bigger than the economies of some EU member countries)?

(Oh, sorry – that was the rhetorical question.) As Nigel Stanley points out over on ToUChstone today, boardroom pay is now ‘well beyond the rational’. Given that the Chancellor’s temporary bank payroll tax is likely to realise – even at expanded levels – some £2bn (a sum which it would be useful to ring fence around a particular stated social use, by the way), the ease with which such a sum could be absorbed by corporate plc illustrates the need for further action on out-of-control pay. (Remembering that the purpose of the tax was to tackle the reward culture that pays out bonuses for excessive risk taking, a likely take some four times the original estimate of £550m (p. 117) has clearly some way to go to achieve its aim.) Even the FT is arguing for some regulation of [finance industry] bonuses where these are paid out by under-capitalised institutions (hat-tip: Tom). So, once again: a high pay commission, anyone?

TUC Recession Report No. 14

The TUC has published its most recent Recession Report, which can be accessed via Nicola Smith’s blog posting on ToUChstone here.

The headline facts are that 2.491m people are unemployed, at an unemployment rate of 7.9%. Unemployment has increased by 30,000 on the month and 608,000 on the year, while the rate is unchanged on the quarter but up by 1.9 percentage points on the year. The employment rate is currently 72.5%, with no change on last month or on the quarter, but down by 1.7 percentage points on the year.

So, the figures on unemployment continue to show a slowing trend but that recovery remains a good way off, with unemployment unlikely to fall for some time after the economy emerges from recession. Part-time working shows a sharp increase, partly as a result of involuntary part-time working; the number of discouraged workers  (those becoming economically inactive because they cannot find work, but who don’t as a result show up in the unemployment figures) is on the increase; and long-term unemployment is on the rise.

This month’s special focus of the report is the links between unemployment and physical and mental health, with a lengthy review of the literature on the issue (to which a commentator on the blog has usefully added further references). Evidently, unemployment adds insecurity and stress to everyone, including those out of work faced with increased money, security and relationship worries, while those in employment are faced with higher workloads and the fear of the dole. Individuals’ mental health can be fragile enough and the pressures caused by recession are often sufficient to deepen, as well as to widen, the worries which affect mental health. Reason enough, as the report argues, to require proper policy attention to unemployment and for a clear strategy to deal proactively with it.

Pre-Budget Report and pensions

The Pre-Budget Report contained some moves as regards pensions, including proposals to cap contributions to public sector schemes and for further cost-sharing measures at levels below the cap. Further details are awaited for both these.

About the other measures that did – and did not – appear in the PBR speech, predominantly the issue of the staged introduction of contributions into the new system of personal accounts, Nigel over at ToUChstone has a useful summary and comment.

Bankers’ bonuses (again)

Apart from Copenhagen, today’s major news stories all feature this week’s much-anticipated Pre-Budget Report.

Significantly, Chancellor Alistair Darling is considering including a ‘crackdown’ on the bonuses of highly-paid City bankers in his PBR speech, via a windfall tax, after apparently having dismissed a windfall tax on banking profits themselves as likely to jeopardise the strengthening of banks’ balance sheets. Larry Elliott in The Guardian summarises the economic and historical case for such a tax, while William Keegan, his colleague over at The Observer, also provides some interesting political context for longer-than-short-term hopes that a revived manufacturing industry (hopefully including, as Elliott argues, a large element of green investment) might take the place of the recent economic over-reliance on the financial services sector.

At the same time, the Engineering Employers Federation, making its own pitch to the Pre-Budget Report, points out that confidence remains fragile even if a recovery is in sight while leading economists have written to the FT to point out that, in this context, public spending cuts will undermine the recovery – a sentiment well in tune with the TUC’s Brendan Barber’s own thoughts on the PBR yesterday and specifically welcomed by him today.

Regardless of its evident populist appeal, a punitive tax on the bonuses of bank executives remains the right thing to do in the context of the banking profits on which such bonuses are proposed having been made on the back of taxpayer-funded bail-outs and on the impact of the Bank of England’s quantitative easing programme. It does, clearly, need to be sufficiently robust to circumvent City creativity (not least to allow the tax to follow bonuses awarded in respect of this financial year but paid in future ones, or in shares), and to be on a sector-wide basis so as to prevent poaching by other financial institutions. Nevertheless, the practical difficulties inherent in a particular policy are rarely sufficient to undermine whether or not it is right to implement it. Darling will evidently need to define the tax carefully – but if it encourages banks to pay smaller bonuses, then it will have done its job. It is, ultimately, a question both of accountability and of legitimacy; in forcing financial institutions to confront the legitimacy gap in what they are proposing on bankers’ bonuses, Darling will be doing democratic values a favour, too.

Some big (and some not so big) numbers

1. £850,000,000,000 – the cost of taxpayer financial support for an otherwise collapsing banking sector assessed and detailed today by the National Audit Office. The actual amount committed so far is actually £131bn – the rest will fall due if it all gangs agley (again) and the sheltered assets need the protection of the guarantees staked on them. Which it won’t, because of big number No. 2:

2. 5,000 – the number of senior executives working in the banking sector which Lord Myners told the House of Lords yesterday are likely to receive a ‘remuneration package’ this year of £1,000,000 (or more): clearly, such awards must mean that everything is rosy in the garden again. Myners is writing to the NAPF, the CBI and the TUC to ask them to use their influence to persuade fund managers to stop these ‘unreasonable and unjustified levels of remuneration’. Nils Pratley in The Guardian today is calling for a windfall tax on executive bonuses.

3. 5p in the pound – what creditors of Farepak, including ordinary families who had committed an average of £400 in hard-earned cash, and some over £2,000, received (starting from October 2009) following the collapse of Farepak (in October 2006) after some ill-advised financial engineering following which HBOS (oh yes) called in the company’s overdraft. The commercial fund set up to support Farepak creditors, including families, raised just £6m – far short of what was anticipated and likely to have provided an earlier (additional) sum of just 15p in the pound.

A windfall tax on (at least) £5bn (though not all of this is bonus) is likely to raise a substantial sum, provided it is set at a punitive level. I can think of some worthwhile uses for it, too.

TUC publishes thirteenth Recession Report

The latest in the TUC’s series of reports on the recession – Moving towards a fragile recovery – is now up on ToUChstone.

Nicola Smith’s blog post is so titled given that falls in employment are showing signs of pausing while there may be some sign of a recovery in employment levels. Nevertheless, the labour market remains fragile:

– employment levels are still falling for young people under 24

– long-term unemployment is still rising

– there is a rising number of people in employment who are in more insecure forms of it – in temporary or part-time work. A proportion of this will be involuntary based on an inability to find fixed, full-time work. Earlier this year, the TUC suggested that one in nine part-time workers were involuntary, although current figures quoted in this report indicate a level rising to over 13%, while the proportion of involuntary temporary workers has risen to nearly one-third. This would be a natural development in a recession (while the proportion of involuntary temporary workers will be rising at this time of year anyway) and the increasing rates would seem to show that the recession (at least, in the labour market) has some course yet to run. The rise in part-time employment in the UK is also higher than the EU average.

This month’s special focus is on international comparisons and shows two main developments:

– the UK employment rate (69.6%) remains around five percentage points higher than the average rate across the EU, although the decline in the rate is, at two percentage points, also 0.1 points higher than the average. (The drop in the UK employment rate is actually the fifth largest, behind Ireland, Spain, Finland and Portugal.)

– schemes for short-time working remain more prevalent in other OECD economies and the UK spending on active labour market measures remains both small and well below the OECD average.

The report concludes that the UK performance during the downturn has been ‘average’. Certainly, it is close to the average figure on key labour market measures – a sign of the integration of the UK labour market with that of the rest of the EU and also an achievement given that the downturn in the UK has been sharper, and has lasted longer, than in many other countries. Thus it is likely that the government has indeed got some things right in all this. As the TUC warned earlier this week, the danger now lies in premature action to close the deficit and in stopping the stimulus package, thus choking off what fragile signs of recovery there already are.