It’s 25 minutes into this interview on the Victoria Derbyshire show.

The diatribe from the TUC lady (about 29 minutes in) becomes unbelievable, aiming at all sorts of straw men like whether the paper is a call for locally-based minimum wages (it is not).  The TUC’s defensiveness on this is really telling.  They don’t want people paid a different amount in, say, Harrogate than in Surrey, because decentralised wage bargaining damages their position, whether or not it is good for the country, and public services.

At 31 minutes she starts becoming particularly abusive and ad hominem.  Alison – one of the nicest and most fair minded (and far from right wing) people I know – manages to keep her temper while TUC Sarah Veale really loses it.  If this represents the TUC’s best argument, they too are losing it, badly.

Sarah Veale has been at the TUC since 1985. The passion you can hear in her voice is her defending the institutional status quo for the TUC – not a passionate or thought-out argument for what will do best for workers.  Deeply, deeply unimpressed.

As Alison says, read the report to reach your own conclusions.


8 thoughts on “Radio 5 interview with Alison Wolf

  1. Plaudits to Sarah Veale. There’s not many people willing to go on national radio and be an idiot twice in two days. It’s commendable that after a pasting on Monday on Today she came back for more. Astounding.

  2. I think you are using this TUC person as a straw woman. Her mistakes do not validate Wolf’s conclusions.

    Wolf is arguing first that nationally set wages are preventing good teachers working in Tower Hamlets. (I use this rather simplistic argument because she does). That is a uniquely London problem which has been tackled by the use of London weighting. Surely if you lot down there think you are not getting good teachers you can (I don’t say should) argue that London weighting should be increased.

    Secondly, as I put in my earlier post, she argues that higher than free market teacher ( and other public sector) wages in poorer regions are adding to the ‘crowding out’ of the private sector by the public sector.

    This is to completely misunderstand the strength or in fact weaknesses of these regional economies. I wish the BBC had actually named the report that Prof Carol Williams was speaking about on Monday, and I haven’t had a moment to look for it, but it suggested that over the last 10 years virtually all of the net gains in jobs have resulted from (as he calls them) state and para-state activity. The public sector is filling in not crowding out.

    Without this state and para-state activity private enterprise in these regions would be decimated. What is needed is continuing partnership between private and public sectors over a long period to develop the strength of the private sector.

    Cutting public sector services and wage bills in these regions will have a catastrophic effect on these regional economies which among many effects will see further rises in inter-community strife.

    I do not believe people who spend most of their time and earn most of their income in and from London have any idea of just how brittle things are in these regions. Brittle economically and brittle socially. London seems a wonderful example of a multicultural society but this is because for most people there is a feeling of hope, of possibility – avenues for people’s enterprise, or their children’s enterprise.

    In these regions, although there is boundless enterprise – you really can’t teach a person from north Liverpool much about enterprise, even if there are no jobs – there is not that sense of hope and possibility. There are fewer obvious avenues. There is more despair. There is greater intolerance. More people opt out than opt in. That enterpise is used in alternative directions.

    Helping people take and use power in their communities will increase liberty and with greater positive and negative freedoms (which government regional support helps with) will come stronger communities, greater economic enterprise, better health and increased quality of life.

    1. Bill

      Do you really propose, as a long term solution, the idea that regions that have a failing private economy should be permanently boosted by airlifting in jobs to those areas and paying far more than they would need to? Why do you think boosting the wage beyond a market clearing rate is such a good way of helping cure unemployment?

      For me, it sounds like a variant on Dutch disease. Imagine there was a poor country – say Albania – of a few million people. Seeing it was poor, an NGO sets up there, and pays 20,000 Albanians twice the natural wage. What happens? Sure, there is a boost to demand in Albania. But the act of raising wages and drawing potentially useful private sector talent away from other areas adds X% to the costs of any private sector companies looking to invest there. So they don’t, and the private sector stays weak.

      So someone spots this, and has a go at the NGO. The NGO turns around and says “We mustn’t stop paying these fat salaries – look how weak the private sector is!’. Do you think Albania would be a richer place if a select bunch of its citizens were paid 30% more than the private sector could afford? I doubt it – a large chunk of their demand leaks overseas. So too for regions. Pay 5000 more for a teacher in a particular region and perhaps only a third of that might stay in that region – after all, the UK imports 20-30% of its consumption, so imagine how much higher the figure is for a region.

      I have no reason to disagree with yor statement that many of these areas are brittle. I agree that weak areas may need added income from some source. Is this really the right way of doing it? Alison’s paper makes a really strong case for it not being the right way.

      I don’t want to use a corny example. But in 1980, the Soviet Union could have said ‘95% of the jobs created have been created by the state” Of course! It has crowded out the alternative!

      best wishes

    2. Bill, from today’s FT, commentary on Greece:

      “The ensuing credit boom supported consumption but papered over wage inflation that outstripped productivity growth and priced Greece out of traditional export markets. Excessive bureaucracy and rigidities in labour, product and service markets, meanwhile, discouraged investment in high value added sectors, despite wages well below the EU average.”

      I think something similar can happen when a country ‘spends’ credit boom revenues on interregional transfers that make the peripheral regions uncompetitive . . . .

  3. The argument against this policy which I found most persuasive was when you explained that it involved reducing spending in poorer (non-London) parts of the country and increasing spending in wealthier parts of the country. Taking from Sunderland to give to Surrey doesn’t sound like it will do much except increase inequality.

    As for the Albania analogy, people in the UK have freedom of movement – if you reduce public sector wages in the north, more skilled people will head to London. Thatcher and Major tried the policy of holding down public sector wages, and it didn’t lead to a flourishing private sector in the poorer parts of the UK.

    1. I love the collectivist logic – you don’t matter, just your region – that you are intending to aim at the poor public sector worker who can’t afford to pay 10x salary for a house in the South East.

      Wise Central Planner: “Don’t worry, you don’t need to have more money. You are living in one of the wealthier parts of the country. Your region doesn’t need it, so you don’t either. It is your region that counts, you see. DOn’t worry about the state of the public services that results from none of your excellent kind being able to afford to work in this area. The region is doing fine.”

      ‘On yer bike’ Paskini, it sounds you like you ought to be a fan of Tim Leunig’s excellent albeit controversial suggestions for regional aid.
      Let everyone move to where the jobs are overpaid relative to local wages. It’s what they do in ‘freedom of movement UK’ after all. I am not quite sure whether I should be accusiing you of too great a fondness for the region over the individual, or free market idealism . ..

      BTW, Alison’s paper is not about holding down public sector wages per se – just allowing them to reflect conditions on the ground and distort local economies less. Unlike you or my friend Tim, I am more nervous about relying on people moving to the jobs as a way of dealing with this. I don’t propose getting Sunderland to support Surrey. But overpaying for public sector jobs in one area – where the overpayment will mostly leak out of the region – is a really daft way of doing it.

      Sarcasm aside, Alison’s paper makes the issues much better than I have managed here, clearly -ignore what I say and read hers, if you have the time.,

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