Ed Miliband’s Southwark Problem

An expensive promise of Council-funded gym membership for all undermines Labour’s fragile economic strategy 

As often as he can, Ed Miliband likes to remind us that we’re in the middle of a ‘cost of living crisis’. His strategy is clear: by identifying the problem, Ed is hoping he can position himself as the man with the solution.

And his message resonates with a lot of people for whom the cost of living crisis is real. Over the past five or six years many people have experienced a fall in their standard of living and, in the run up to next year’s General Election, Mr Miliband intends to pin the blame on the Conservative Party. Making that charge stick is the first part of Miliband’s economic strategy. The second (and hardest) part is to convince the public that he and the Labour Party have a credible response.

This strategy becomes harder and harder as the UK economy gets stronger and stronger. And sadly for Mr Miliband, recent evidence doesn’t help: UK unemployment is currently at a five year low; for the first time in six years wage rises have caught up with inflation; the IMF is now predicting the UK economy will be the fastest-growing in the G7 this year; and by the time of the election next year, disposable incomes are predicted to be higher than they were at the time of the last election in 2010.

In response to this, it would be safe to assume that the guardians of Labour’s economic policy are keeping their people on a short leash making sure all MPs, councillors and Party spokespeople portray Labour as the party of fiscal discipline and good financial stewardship. If that is the case, the Labour-led Southwark Council didn’t get the memo.

In their recently-published manifesto, the Southwark Labour Party has pledged to provide council-funded swimming and gym membership for every Southwark resident. No, you didn’t misread that. If you live in Southwark, the Labour council will pay for your gym membership, no questions asked.

The reason given for the policy is to remove “the barriers that prevent people in Southwark from getting fit and leading healthy and active lives.” While this is certainly a worthwhile goal, I think Labour has overlooked an important point. Southwark is home to some amazing outdoor space including Peckham Rye park, which is not only beautiful (I’m biased, it’s my local park), but also offers a free-to-use outdoor gym. Given that Peckham Rye is just one of more than 100 public parks available to Southwark residents, it’s hard to see any “barriers” preventing people from getting fit.

Described on the Southwark Labour website as a “ground-breaking commitment”, the estimated cost of the policy is £6 million. In making the announcement, the leader of Southwark Council Peter John said, “I recognise that we will be implementing this proposal against a tough economic backdrop…” and yet Southwark Labour still thinks this is a good way to spend £6 million of the Council budget.

I wonder if Southwark Labour stopped to think about what else £6 million could pay for in Southwark. Bear in mind that the London Borough of Southwark has the second-highest proportion of 19 year olds lacking level three qualifications, and where two-thirds of wards have a child poverty rate of more than 25%, and where nearly three-quarters of wards have an above-average proportion of working-age adults claiming out-of-work benefits.

For those interested in what else £6 million can buy you in Southwark, my colleagues and I in the Camberwell & Peckham Conservative Association did the calculations: 232 nurses, 220 new teachers, 298 classroom assistants, or 428 nursery places.

It’s important to encourage an active population especially among pensioners, but Southwark already provides those over 60 with access to local gym classes for just £1. What’s more, there is already a policy in place for low income (or no income) residents to qualify for reduced prices on gym membership.

It’s worth mentioning too that Labour’s new policy is hugely unfair on private leisure centres and gym companies most of whom will be driven out of Southwark as residents inevitably opt to use the gyms for which they don’t have to pay. If Labour intend on expanding this policy into other areas, the effect on private leisure centres could be disastrous.

This leads to a wider question of whether this is official Labour policy? If it is, then we can fairly assume that other Labour-run councils around the country will follow suit. But why stop at gym membership? If the aim is to get people more active, how about free running shoes for all? I could do with a new tennis racket, perhaps the council will pay for that!

As I said at the start, Mr Miliband’s challenge ahead of the 2015 General Election is to persuade the public that Labour can be trusted with the nation’s finances. Offering to pay for everyone’s gym membership won’t help him achieve that.

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“We’re Not Greece Yet.”

The view looking across Freedom Avenue, Lisbon

The view looking across Freedom Avenue, Lisbon

Sipping coffee outside a small café on Lisbon’s Freedom Avenue, it’s easy to forget that Portugal is a country in serious trouble.

It is, after all, a country of great history and architecture, incredible weather, and beautiful beaches. It is no wonder that an increasing number of Britons are opting to escape from the cold of the British Isles to visit the sunny Algarve. And yet, even brief conversations with the Lisbon locals reveals that Portugal is a bruised and brittle country. There is hope for the future but this is rarely matched with any real sense of optimism.

While meeting with people in Lisbon this week there was a clear sense that, while the country has been pulled back from the brink of disaster, it is not yet out of the danger zone. It is as if at any moment things might deteriorate once more. At Lisbon University, amid conversations about the financial crisis and the ensuing austerity policy, the most telling comment I heard was: “We’re not Greece…yet.” The inference was clear: yes things have been very bad, and in many respects they still are bad, but we’re not giving up; the future can still be bright.

The University of Lisbon is a fitting analogy of the Portuguese ability to adapt and to thrive by making the best out of what life throws at you. I was hosted by the Instituto Superior de Ciencias Sociais e Politicas (Institute for Political and Social Sciences); a school with a proud history, having taught its first lesson in 1906 in the presence of the then King Charles (whose demise thereafter signalled the end of the Portuguese monarchy). Today the university teaches more than 40,000 students spread across 18 separate schools including another of my hosts, the impressive Instituto de Direito Economico, Financeiro e Fiscal (Institute of Economic, Financial and Fiscal Law).

But while the university offers Portugal’s young the opportunity to learn and develop, the biggest problem facing graduates is the distinct lack of opportunities once they leave. Portugal has an unemployment problem. Moreover it has a youth unemployment problem. The national unemployment rate currently stands at a little over 15% (having come down from a high of nearly 18% a year ago), while youth unemployment stands at a depressing 35%.

I spoke to Alice Trindade, Vice President of the Institute for Political and Social Sciences who spoke of her worry that the talented graduates she sees passing through her classes will have no other option than to search for work outside of Portugal. And who could blame them? Even Portugal’s President Pedro Passos Coelho has encouraged young people in his country to move away from Portugal to find work. While President Coelho’s controversial words may be seen by some as sensible advice for job seekers, as a long-term economic policy it leaves much to be desired.

Proving the maxim that attitude reflects leadership, Portuguese people seem to share their President’s pessimism. Perhaps the most stark reflection of the dire employment situation in Portugal is the mere 7% of citizens who believe that it is a good time to find a job. In Germany, that number is 51%. Further, when asked about their satisfaction with living standards, only 54% of Portuguese citizens respond positively (compared to 82% in the UK).

Attitudes towards the government are equally negative. Government approval dropped from 41% in 2010 to 26% in 2013, which, although low, is unsurprising given the level of dissent over the government’s austerity policies. And it’s not just opposition to policies that’s fuelling the protests. There is a strongly held view in Portugal that government is corrupt. When polled, a staggering 91% of Portuguese people believed corruption to be widespread in government and business. To put that into perspective, that’s the highest percentage in the world on this measure, higher than Zimbabwe (78%), Russia (79%), and Nigeria (87%).

And so what next for Europe’s westernmost country? There are some statistics that are moving in the right direction for Portugal. Measures of entrepreneurship have improved in recent years with business start-up costs falling to 2.3% of GNI (down from 7%). On top of that, a number of social indicators have seen positive changes in the last four years: volunteerism is up by 5%, donations to charity have increased by 12%, and those reporting to having helped a stranger has increased by 13%.

Perhaps these strong social ties are an unintended consequence of the crisis, having caused people to come together to survive tough times. Whatever the reason, Portugal’s social fabric seems to be strong despite difficult national challenges. And that, at least, provides a small ray of optimism for a country in need of some good news.

This post first appeared on the Legatum Institute blog. 

 

Notes:

  • Most of the data used in this post is taken from the 2013 Legatum Prosperity Index™.
  • A country profile of Portugal can be found here.
  • A more detailed briefing about Portugal can be found here.

Technology and Entrepreneurship

At the end of last year I chaired a panel discussion at the Legatum Institute on the subject of technology and entrepreneurship. The discussion explored the role of technology in stimulating entrepreneurship and innovation.

Panellists: Erkko Autio, Imperial College London; Christian Busch, Co-Founder, Sandbox; Luke Johnson, Chairman, Risk Capital Partners / Chairman, Centre for Entrepreneurs; Iqbal Quadir, Founder, Grameenphone / Founder and Director, Legatum Center at MIT.