Why is Labour so quiet and timid about the super-rich, those on more than £3,000 a week, and the ultra-rich, the FTSE-100 bosses who now average $.4 million a year remuneration, or to put in more readily used terms, £86,000 a week? There are 3 good reasons why Labour should open up a major broadside against the very rich and the stratospheric rich. One is that it would be very popular. The public hostility towards the bankers and their multi-million bonuses (NB the outrage of some bankers reported a few weeks ago that they were only being given bonuses of £4 million compared with the £6 million given to some others) and the visceral hatred felt towards the greedy profiteering of the Big Six energy companies are an open invitation to Labour to go over on to the attack relentlessly and persistently, and not just because it would be popular, but because it’s right. There is no justification for these obscene levels of pay and remuneration appropriated by the wealth elite, it has nothing to do with the national interest, it is no reflection of merit – it is simply a reflection of their power in the market-place and their insatiable self-interest. That’s why the public hates them so much and why they offer such a tempting target to Labour on moral and ethical grounds and not just for funding reasons. (more…)
Osborne’s performance today in the mis-named Autumn Statement (which might be better titled Pummelling the Opposition, with occasional fleeting references to the economy) was a mix between a fragging operation beloved of the Bullingdon Club and a fantasy presentation of how he was going to produce a budget surplus by 2018 (or was that 2030, or never?) when last year the budget deficit (technically net public sector borrowing) was still a massive £115bn, having just reduced from the previous year by just £3bn. It was a tour de force of voodoo economics, the witchdoctor himself hardly able to believe his luck when unexpectedly after drinking poison the economy revived in March, to his own amazement as much as everybody else’s, allowing him now to come to the House only 9 months later and with brazen arrogance pretend that he had all along had a long-term plan.
If ever he did indeed have a long-term plan, it wasn’t to cut the deficit (except incidentally) but to put the genie back in the bottle from which it temporarily escaped after the last Great War and restore Britain to its rightful order in which everyone knew their place, the rich prospered mightily and the poor went to their duly appointed workhouse (or, in modern garb, got sanctioned and starved all the way to the nearest foodbank), and hierarchy and class and money prevailed, before all this pseudo-democracy and equality stuff prevailed. How the Tories loved it. (more…)
The Autumn Statement tomorrow will push privatisation even further when the record is already deplorableDecember 4th, 2013
The public’s demand for re-nationalisation is steadily growing, partly because the record of privatised companies has been so poor, partly because the excuse of globalisation is now seen not to betoken greater efficiency but rather funnelling increasing assets to the very rich and undermining job security for workers, and partly the big new outsourcing companies have so blatantly abandoned the national interest in pursuit of gross profiteering. The Big Six energy companies have become a byword for greed and exploitation. The water companies have indulged in a bonanza for directors and shareholders, but have set aside wholly inadequate sums for necessary investment and Thames Water is even refusing to pay for the £4bn necessary new London super-sewer and demanding that the taxpayer should instead, i.e. privatising the profits but still repatriating the cost to the public sector. The banks have repeatedly been found guilty of rigging interest rate benchmarks (Libor, Euribor, forex market), mis-selling faulty or irrelevant financial products on an industrial scale, money-laundering, massive tax avoidance across the globe, closing down viable businesses in order to profit from the proceeds (RBS) – every misfeasance you can think of except meeting the loan requirements of UK industry. (more…)
Contrast govt treatment of employers paying below the minimum wage with their treatment of jobless & Atos-assessed disabledDecember 3rd, 2013
HMRC, those sleuths ruthlessly tracking down tax avoiders, seem to turn the same blind eye to employers paying their workers below the national minimum wage. Some 300,000 workers have been found paid less than £6.31 an hour, yet only 2 firms have been prosecuted! This is despite the fact that over 10,750 companies have been investigated by HMRC on suspicion that they were breaking the law on low pay and that nearly £16m was collected in arrears payments and fines were imposed of more than £2m. Yet only 0.02% of these forms were taken to court. Probably about the same proportion as the number of tax avoiders who end up in court. Moreover, despite ministers regularly claiming that they were now naming and shaming firms that refused to pay their workers even as little as £235 a week, just one firm has been thus named and shamed. (more…)
When will Labour tackle head-on the private markets that have failed & revive the role of the State?December 2nd, 2013
The roll call of shame and disgrace about the record of the private banks, privatised utilities and outsourcing companies has now reached such a pitch that surely Labour must now challenge the whole culture of ‘the market knows best’ and in the extreme form of the neoliberal ideology that ‘government should get out of the way and leave it all to the market’. That is now so utterly discredited that patching up a failed system or tweaking at the edges the overblown corporate power or regulatory cosiness simply will not do. As everyone can see, the marketising obsession that Thatcher and Reagan initiated in the 1980s has now run its course, disastrously, not only in bringing about the worst financial crash for a century and the prolonged austerity that has followed, but now an almost daily succession of scandals that should destroy any political party that continues blindly to pursue it.
The worst recent example of banking misfeasance is the claim made by Vince Cable’s adviser that RBS deliberately wrecked viable small businesses in order to make profits for itself. If that charge is proven, then there is a strong case for bringing a criminal prosecution against RBS. But that is only the last of a very long list of criminal misdemeanours by the big banks that exposes them as out of control. That list includes Libor rigging (Barclays and many others), money-laundering for drug cartels and pariah states (HSBC), mis-selling of pensions & product protection insurance & interest rate swaps, and now the likely manipulation of the foreign exchange market for the benefit of the banks’ trading at the expense of millions of clients. The penalties which run into billions of pounds are paid at the expense of shareholders, but at no financial or occupational loss to directors, and no custodial sentencing even for the worst offenders. The current banking system is now so rotten, it is so over-powerful and yet so unwieldy and unmanageable, that it should be broken up. Either, as Cable’s adviser proposes, no bank should have more that a 10% market share, or RBS and Lloyds should be retained under public control and if Barclays and HSBC do not conform to the national interest, they too should be brought into public ownership.
A similar pattern of incompetence, mismanagement and fleecing the public revenues for private profit can be seen in the record of privatisation and outsourcing. The nationalised industries which were subject to real accountability have been replaced by private semi-monopolies that are virtually unaccountable – the likes of G4S, Serco, Capita and Atos. All of these have been found seriously failing, whether over the Olympics, claiming huge taxpayer funding for tagging prisoners who were either dead or had left prison, or making work capability assessments of the disabled which were wildly inappropriate and often made by staff without the relevant skills. The energy companies and the water companies have become bywords for exploitation and profiteering. These broken systems will not be made good by tighter regulation. They are corrupted from within and will only regain the public’s trust and display the integrity and high standards the public demands if their free-wheeling market deregulation if reversed. It is time Labour took a stand.
The latest revelation that Goldman Sachs advised floating the Royal Mail at £3.30 a share, but now puts a price target on the shares 6 weeks later of £6.10 per share, is clear cause for a public inquiry. Either Goldman should be forced to pay back the fee they received for this sham exercise or, if they were simply following government pressure to underplay the price in order to ensure the IPO was fully taken up, the government should be held to account for knowingly under-selling a prized and treasured public asset by no less than 85%. The government’s determination to fix the price as low as reasonably possible in order to give maximum boost to the privatisation, regardless of the enormous loss to the taxpayer, is shown by the announcement just now made that Royal Mail’s operating profit doubled to £283m in the first half of the year, a fact that both the government and the financial advisers must have been aware of. It was large enough to raise the Stock Exchange value of the company to £5.7bn. The share price, already at over 70% above flotation, has been further massaged by a £45m VAT credit and lower depreciation charge plus £50m lower transformation cost than last year. (more…)
Directors’ pay up 14% last year, CEOs now on £4.4m a year, top 1% now on £1,917 per week, average incomes of 90% down 9%November 30th, 2013
Is there no end to rising inequality? Probably not, until the 90% take a stand and push back hard, refusing to take it any more. Reaching that point of real resistance would be helped by the Labour party telling the truth that austerity is not about paying off the deficit – we’ve already suffered enormous pain and hardship and injustice, but the deficit has hardly been cut at all – it’s really about shrinking the State and extending the market into everything, so you’ll only get what the market pays you – £85,000 a week at the top, £285 a week for the 5 million workers paid below the living wage, and next to nothing if you’re one of the 2.5 million unemployed, and actually nothing at all if you’re one of the 860,000 persons currently ‘sanctioned’. It would be helped if Labour would set out a clear plan as an alternative to austerity, namely public investment in house-building, energy and transport and IT infrastructure, and laying the foundations for a low-carbon economy, getting 1.5 million people off the dole and into work within 2 years and restoring full employment as the central goal of economic policy. But for the moment the increasing figures of obscene inequality, as Income Data Services shows, tell their own story. (more…)
The boisterous pantomime that is Boris Johnson may well have taken a step too far in his irrepressible flair for self-publicity. To observe that “as many as 16% of our species have an IQ below 85, while about 2% have an IQ above 130″ in order to justify ‘shaking the pack harder so it will be easier for some cornflakes to get to the top’ says a great deal, not only about Johnson himself, but about the Bullingdon Club mentality which so strongly infuses the menagerie of characters around the Tory leadership. This was an unabashed assertion that the super-rich deserve all that they have ‘because they’re worth it’, even though he expressed the forlorn hope that the “Gordon Gekkos of London are conspicuous not just for their greed as for what they give and do for the rest of the population” – fat chance of that. And harking back to classic Thatcherism he added that “I hope there is no return to the spirit of loadsamoney heartlessness – figuratively rifling banknotes under the noses of the homeless”. He doesn’t seem to have noticed that this is already happening ever more starkly. (more…)
Osborne’s ‘recovery’ – as in First World War we have advanced a few dozen yards, but absorbed fearful casualties to take itNovember 28th, 2013
The Tories suffered a miserable debate yesterday, and I hope my remarks contributed to it:
The cost of living crisis has had a fairly good airing in this debate and has been poignantly described in some detail, so I intend to concentrate on the second part of the motion, which concerns the Government’s economic policy and, on the cost of living crisis, to ask the obvious question: was it all necessary? The Government’s answer, as provided by the Financial Secretary in a rather frivolous and provocatively partisan knockabout, was, predictably, yes. He simply repeated the well-worn Tory mantra that we all know: Labour left behind a huge economic mess; there was no other way to deal with it other than through massive cuts in public expenditure; we were “all in it together”; and now the Chancellor’s policies have been vindicated as it has all come right. All four of those statements are flat wrong.
First, Labour did not leave an economic mess. The budget deficit in 2007-08, just before the crash, was 2.6% of gross domestic product—one of the lowest in the OECD and about the same as Germany’s. It rose to 11.6% in 2010 only as a result of the bankers’ bail-out. I noted that the Financial Secretary did not even mention the banks today, so I was beginning to wonder whether he had even heard of the bankers’ bail-out. [Interruption.]I am prepared to give way at this point, before going on to answer in some detail
That may well have had something to do with it, but it happened also because the Tories decided to blank out the bankers’ bail-out and put the whole blame on the Labour party. For any objective economist or objective observer of any kind, that is obviously absurd.Michael Meacher (Oldham West and Royton, Labour)
Secondly, there was another and much better way to deal with the budget deficit than through semi-permanent austerity. It is costing the country £19 billion a year to keep 2.5 million people unemployed. I simply say that it would have been far better to get these people off benefit and into work through public investment, so that they could earn and contribute to the Exchequer through taxes and national insurance contributions. I well know that the question will come, “How do we pay for that?”, so I shall answer it. This can still be done—and it could have been done three years ago—without any increase in public borrowing at all, despite the Chancellor’s continuous jibes to the contrary, by a further tranche of quantitative easing targeted not on the banks but directly on industry, or by instructing the publicly owned banks RBS and Lloyds to prioritise lending to industry, or by taxing the ultra-rich. (more…)
The EU Commission has today outlined its attack on the artificial hybrid structures used by multinational companies to reduce or entirely avoid their tax liabilities. Three companies – Tate & Lyle (sugar), FirstGroup (transport) and Linde (industrial gases) were specified as saving as much as $150m a year by lending billions of dollars to their own US subsidiaries and then exploiting legal differences between the US & UK to offset the interest payments against tax both in the US and the UK. The hybrid structures work by inserting a new UK subsidiary, which typically has no employees, into the company’s US group. The new entity is then lent large sums by another British subsidiary, resulting in both interest payments and receipts in the UK. But US tax rules allow the UK company to be treated as part of its US parent, thus allowing it to claim tax deductions on its interest payments in the US as well. Significantly, it is the EU, no the UK, which is trying to block this tax avoidance device, and the UK government may well try, under lobbying pressure from the City, to water it down in Brussels.
Another breakthrough is currently being promoted in the US. It is proposed in the US Congress that a 20% tax be imposed on the estimated $2 trillions of cash held overseas by American multinationals. The aim is to clamp down on the widely adopted practice of US companies keeping their profits overseas to avoid paying the 35% tax rate, one of the highest in the developed world, that is applied to repatriated cash. But it is also being put forward to generate more than $200bn in revenue for the government to be used to replace spending cuts, stimulus measures, lower tax rates elsewhere, or shrink the deficit. In addition, it is argued, it would reduce distortions, make the tax code more competitive, eliminate the lockout effect, and obviously encourage jobs and investment in the US. So why is there no push for similar measures in the UK? (more…)
The decision by RWE/nPower, the big German energy company, to drop the £4bn Atlantic Array windfarm project in the Bristol Channel sends out alarm bells in all directions. First, it shows the unreliability of depending on foreign suppliers of energy who, when in economic difficulties, will cut back on commitments abroad in order to maintain their focus on domestic customers unscathed. Half the Big Six energy giants are now foreign-owned, and will feel no compunction in disadvantaging other nations in a way they could not easily get away with at home. RWE claims the economic no long add up with Atlantic Array, yet none of the economics have changed. What has changed is that RWE now has debts of £30bn, so they have to make cuts, and Britain is an easy target. It is already clear they may their sights on pulling out of other projects in Dogger Bank, Hornsea and East Anglia. (more…)
The US-Iran agreement, albeit temporary, may well be the diplomatic coup of the decade, or indeed the biggest peaceful shifting of the tectonic plates since the last World War in the most dangerous area on the planet. But it is as well, for future reference, to identify the specific mechanisms which allowed this breakthrough to proceed. First, it came about because sanctions were applied to Iran which seriously threatened the political and economic stability of the country. These pressures had caused Iran’s currency to halve in value against the US dollar in the last 2 years, its foreign exchange holdings in excess of $50bn to be frozen, and crucially its oil revenues to be cut by more than half. Restrictions had been placed on Iran’s trade in gold, petrochemicals, car and plane parts which cumulatively took their toll.
Second, the lessons from the Bush era have been learnt and should continue to be borne in mind in future. Bush started two wars, neither of which the US won, whereas here war has been averted which could have consumed the whole of the Middle East in a regional conflagration. And it is worth noting that if Miliband hadn’t rejected the government’s determined intention to back a US missile strike against Syria, it would almost certainly have happened, which would have ended any rapprochement with Iran for at least a decade. Equally it has deflected Netanyahu’s trigger-happy readiness to launch a pre-emptive attack on any challenger in the region to Israel’s self-ascribed right to a nuclear monopoly. Dogged, lengthy, painstaking diplomacy has been given a chance and it has worked, warmongers should note. (more…)
It is now more than 2 years that the Chilcot inquiry into the origins and management of the Iraq war have been stalled in Whitehall, and it has now emerged that this is because the Chilcot panel has been told they cannot disclose 25 notes which Blair wrote to Bush, plus more than 130 records of conversations between the two, as well as information concerning 200 cabinet discussions. All of this material is obviously central to any assessment about the UK’s support for the invasion of Iraq and for subsequent decisions on Britain’s continued involvement. So who took the decision that it should all be withheld? We now know that there was a terse exchange of correspondence about this matter between Chilcot and Gus O’Donnell who was cabinet secretary at the time of the war. Chilcot argued that the release of the official papers would “illuminate Blair’s position at critical points” before the war, but O’Donnell said that releasing Blair’s notes would damage Britain’s relations with the US and (favourite phrase of civil servants when caught in a tight corner) would not be in the public interest. But what is key to this is that O’Donnell consulted Blair before forbidding Chilcot to release them.
So why should the one person who almost single-handedly took Britain into an illegal and unjustifiable war be granted the right to veto the disclosure of documents that will finally reveal the full truth of what actually happened? Heywood, who succeeded O’Donnell as cabinet secretary, takes the same stance as his predecessor. But that’s another blatant conflict of interest since Heywood was Blair’s principal private secretary from 1999-2003 and is therefore the last person to be entitled to a say in this matter. But there are three considerations which should override. One is that the right to democratic accountability, on such an issues as to whether Blair deliberately deceived parliament and the nation in order to bow the knee to the Bush agenda, should be supreme. It should certainly not be subordinated to such unwarranted and unexplained claims of the public interest. Second, it cannot be right that the public is stripped of every last vestige of privacy by the mass surveillance secretly imposed on them, yet at the same time the nation’s leaders can weave any excuse to hide behind a bunker to exculpate themselves from the most serious charges imaginable. And third, it is absurd that Blair himself in his autobiography and Campbell and Powell, his two chief aides at Downing Street, can disclose privileged information whilst a committee of privy counsellors established by a former PM to investigate the truth cannot.
But perhaps the most important point of all is that this whole issue of blocking the disclosure of official papers would never have arisen if the committee appointed to examine the full background to the Iraq was selected by Parliament, not by the Prime Minister who had a strong vested interest to keep a lot of relevant information firmly under wraps. If that committee then reported to Parliament, not the PM, the latter would have no locus to exclude any of the information uncovered. If there is one lesson to be learnt, it is that that should be the model in future.
The government has decided in the wake of the Mid Staffs Hospital scandal that doctors, nurses and NHS managers should face up to 5 year in jail if they are found to have been wilfully negligent of their patients. So why are bankers who are wilfully negligent of their duties and responsibilities to businesses, individuals of the State not subject to similar penalties? It may of course be argued that medical personnel work in a unique context in that matters of human life and death are involved. But bankers also have a uniquely dominant role within the current financialised capitalism in being responsible for the economic health or otherwise of whole communities and indeed of the State itself. Certainly doctors who have been extremely negligent in their duties or in mistreatment of patients deserve severe punishment, being struck off the medical register and in the worst cases given a custodial sentence. But bankers whose self-interest, greed or indifference to their wider community responsibilities have wrecked human lives, destroyed businesses and endangered the integrity of the State should be subject to no less severe penalties. They should be disqualified from ever working again in the finance sector and in the worst cases jailed for 5 or more years. (more…)
A genuine recovery has to be built either on a rise in business investment (or of course public investment), a growth in productivity gains, or a sustained expansion of exports. UK business investment, having plummeted by a disastrous 25% at the 2008-9 crash, has still never recovered and as a percentage of GDP it is now 159th lowest in the world, just behind Mali, as I told the PM two days ago. UK labour productivity has fallen drastically as employment, albeit at the lowest wages or on zero hours contracts, has increased significantly while at the same time output has flatlined; productivity cannot rise while wages, already 9% below their 2007 level, continue to fall. And exports, despite a 25% fall in the exchange rate since 2007, are still flat and will remain so while manufacturing remains hollowed out and the exchange rate is still not at a competitive level. So what has taken the strain in this much-hyped recovery? Yet again, personal debt, the one foundation that is anathema to sustained recovery. (more…)