Michael Meacher MP

The government’s capacity to manage competently has become badly unhinged in the last 10 days.   In quick succession the 5p top rate cut combined with the granny tax in the budget, the scandal of secret business dinners at up to £250,000 a head with Cameron and Osborne, the absurd but telling saga about costlier pasties, and now the transparent attempt to profiteer politically from the tanker drivers causing a national panic are, together, a sign of government in serious disarray.   It is probably 3 years to an election, so there is still plenty of time for the government to recover, but a reputation for competence once lost is difficult to regain.   In many ways the techniques of this government are similar to those of the Blairite administration, with a priority each day to control the news headlines, a determination to squeeze the last drop of political advantage out of every incident that arises, an over-dependence on the leader and the small unelected clique around him, yet no vision or sense of long-term direction. (more…)

The latest evidence showing UK disposable incomes fell last year by 1.2%, the biggest fall since 1977, together with marking down economic growth in the last quarter of last year to -0.3%, is a frightening warning that the UK may still, despite Ministers and the City puffing up the recovery, be heading for another recession – a bouble dip whether mild or more severe.   The drivers are high energy prices, relentless government cuts, and the Eurozone sovereign debt crisis which, even if collapse has been averted, still seems likely to be headed for a recession in the Euro-area.   The obvious question arises: how much worse has this got to get before Osborne is forced to change course?   How long can he continue to crucify the economy on the cross of the bond markets?

There are two ways to cut the deficit.   Osborne’s involves weaker (or even non-existent) growth, which means lower tax receipts and higher benefit spending, and by also dragging down aggregate demand  it pulls growth down another notch, and the cycle starts again with the risk of a self-reinforcing downward spiral.   That is a ver real risk when only 6% of the cuts have so far taken effect, and 94% is still to come.   Indeed that is exactly what happened when this so-called ‘expansionary fiscal contraction’ was tried twice before in the last century.   The Geddes Axe in 1923 and the May Committee in 1931 stifled growth, rocketed unemployment, and stalled recovery all the way to the Second World War.

The alternative way to cut the deficit is a jobs and growth strategy which would put the unemployed back to work, reduce benefit spending, and have a direct impact on growth in a way that quantititative easing and credit easing will never do.   The only argument that Osborne has ever used against this strategy is that the bond markets would never stand for a rise in expenditure that increased the deficit.

But that is exactly what Osborne has just done by giving away £3bn to the super-rich, when there is not a shred of evidence to support the Treasury myththat tax avoiders will come flooding back home from Bermuda and Monaco in order meekly to pay their taxes because of a 5p cut.   Equally Osborne has chosen to give away another £1.5bn to big business through the 2% cut in Corporation Tax, even though these businesses are already sitting on an unprecedented stash of £700bn, equal to half Britain’s entire GDP, which they’re not spending.   Why? – because there’s no growth and aggregate demand is still falling.   That £4.5bn that Osborne could have used instead, without in any way disturbing the bond markets, to generate a quarter of a million jobs.   That could have marked the beginning of a real turnaround in the British economy.   It is unforgiveable that the Tories are still determined instead to bleed the economy into the ground in order to push through at whatever cost their ultimate ideological objectives of shrinking the State, squeezing out welfare, and privatising whatever is left of public services.

The report on the riots just published by the Riots Communities and Victims Panel is a welcome alternative to the establishment’s atavistic call for revenge in the days and weeks after August last year.   It is right to demand that everyone should have a stake in society and at least half a million ‘forgotten families’ who ‘bump along the bottom’ don’t.   It is right too to demand that schools that fail to teach children to read properly should be penalised, that more should be done to get young people into work, and that schools should concentrate on developing character.   All estimable aspirations.   But is there the will to push through radical reform, and anyway are these prescriptions nearly enough? (more…)

Pickles’ statement in the House today aimed to embed in the planning system a presumption in favour of development, combined with proposals to speed up the planning approval process for major infrastructure projects.   But that misses the point about the real flaws in the planning framework.   The real problem is that it is already massively tilted in favour of corporate power and against democracy.   It is already the case that the developer almost always and inevitably gets his way whilst even the most resolute and determined objectors are virtually always forced to concede.   The odds are already stacked so unevenly, yet the government ignores it. (more…)

Cameron dodged the Government statement today which has him at the centre of the scandal, and put up Francis Maude instead to take the flak.   But he can’t run away for long.   There are several unanswered questions which go to the heart of the money for access scandal, and they all involve Cameron and seriously call in question his judgement as Prime Minister.   Did he breach the Code of Conduct which inter alia forbids the use of Government property for party fundraising and prohibits the taking of donations from non-UK citizens abroad?   Why is he resisting an independent public inquiry into the whole murky affair and trying to fob off critics with an internal Tory party review?   How many private dinners have there been with the PM or Chancellor since the election which involved fund-raising and have never been reported, either what was discussed or the level of funding raised?

But above all the scandal revolves round the luring of huge donations in order to gain inner access at the top to influence over policy.   Cruddas, the Tory co-treasurer whose ego and bumptiousness betrayed the whole exercise, boasted that people who paid a quarter million to get into the ‘premier league’ were at liberty to “ask him practically any question you want.   If you’re unhappy about something, we will listen to you and put it into the policy committee at No.10″.   This immediately raises questions whether this secret inner network with a price ticket of £250,000 were behind the decision in the last few weeks to cut the 50% tax rate, and also perhaps behind the sudden about-turn on re-opening the option of a 3rd runway at Heathrow?

Of course none of this is going to get very far if Cameron succeeds in heading off an open independent inquiry.   It would then degenerate into an internal review by the Conservative party, of the Conservative party, for the Conservative party.But it’s unlikely he would get away with it.   This matter really goes to the heart of the issue of power in a democracy.   If the hyper rich can suborn the democratic process by secret access to the levers of policy, what is the point of elections?   How can the 99% prevent an effective takeover by the plutocracy, unaccountable, out of sight, out of control?   What is really worrying is that the whole point about elected politicians is that they’re meant to hold the ring in the public interest between competing sources of power, yet here they have been found out getting into bed with the most dangerous source of all – unbridled wealth and corporate power.

The reporting this weekend is very revealing.   A few months before the election Cameron asserted that “secret corporate lobbying was the next big scandal waiting to happen”, but he would run a sleaze-free government.   We now know he apoointed 3 weeks ago as Tory party fundraiser a man who made nearly a £1bn fortune from financial spread-betting and who advertised that the Prime Minister would be open for business to anyone who joined the ‘premier league’ by donating £250,000 to the Tory party.   Osborne promised in his budget a crackdown on tax avoidance, but 3 days later the Tory co-treasurer is revealed soliciting donations from Liechtenstein, a well-known tax haven, as well as actually illegal under electoral law.   Now we learn too that the Tory decision before the election to block a third runway at Heathrow is to be reversed; having won votes before the election protecting communities in west London, Cameron now finds it expedient to succumb to the business lobby (or was this always a well-prepared fix beforehand to gather in votes in advance of the money?). (more…)

There can be no doubt that the nation’s revulsion against awarding a £10,000 tax break to the top 1% of earners and no less than a £40,000 tax cut to 14,000 millionaires was dramatically sharpened by the fact that it was funded by depriving 4.5 million pensioners of £83 a week.   But even if that had not been so (a politically explosive mistake that Osborne will learn to rue), the sheer provocativeness of giving away such huge sums of money (probably nearer to £1bn than the absurdly inaccurate £100m claimed, to ward off the political flak) would have made this at a time of austerity unforgiveable.   But of course that’s just the point – the Tories now feel they can get away with anything – not just handing a tax break to 300,000 people on more than £3,000 a week, but also to chief executives of big companies on an average £86,500 a week and even to Bob Diamond, head of Barclays, on £307,600 a week! (more…)

After a dreadful budget we should be grateful for small mercies.  But one large one is that his tenure over the last 2 years has shot just about every fox in the right-wing locker.   Cutting tap at the top would benefit the whole country because the benefits would trickle down to the rest of the population in higher productivity and growth.   But the super-rich, the 1% getting over £3,000 a week, are mainly the non-doms and internationally mobile who largely spend their money on hugely expensive properties, yachts, helicopters, bling, overseas speculation and widespread tax avoidance; rarely do they spend anything on factory investment or job creation.   Or, it is said , the rich increase productivity and growth, so they must be kept sweet.   But in the last 2 years directors of FTSE-100 companies have been kept very sweet with salary hikes of an average 49%, yet productivity and growth has stagnated or fallen. (more…)

The central test for this Budget is whether it is likely to get growth going again.   It clearly won’t.   The biggest economic problem in Britain today is not the budget deficit, but the lack of aggregate demand which is still shrinking.   If demand were boosted, the deficit would start to tumble down fast.   If on the other hand prolonged austerity continues to eat away at the level of demand (and only 6% of the benefit and expenditure cuts have so far been imposed, with the deadening impact of 94% still to come), then recovery continues to be postponed indefinitely.   Proof that lack of demand is the key missing factor lies in the extraordinary and unprecedented background to this budget, namely that private (non-bank) companies are now sitting on the biggest stash in recent corporate history – an incredible £700bn which is still rising at almost 6% of GDP (£90bn) a year.   They have such utter lack of confidence in the future of the UK economy on its current course that they prefer to sit on a gargantuan pile of cash rather than invest.   Has the budget changed that?   Not one smidgen. (more…)

We shall be regaled by Osborne yet again tomorrow that this is a Budget for growth, with all the paraphernalia of the right-wing media’s propaganda inflating the message for all they’re worth.   It is typical of Whitehall and the most slippery of politicians to magnify out of all proportion a theme for which there is virtually no evidence base whilst at the same time ignoring or damping down the elephant in the room that blots out the chosen theme.   It is bizarre for Osborne to rattle on about growth because he’s chopping up planning standards, taking a scythe to environmental regulations, privatising the road system, cutting pay in the poorer regions, and giving millionaires a handsome tax break when at the same time he’s concealing or playing down the overwhelmingly central fact that he’s deliberately ruled out the option of a growth and jobs policy to reduce the deficit in favour of decade-long austerity, the most vehemently anti-growth policy imaginable. (more…)

No doubt Osborne will never dare use his infamous phrase again “We’re all in it together”.   If it was ever true, it was only till the rich wanted out, and as we now see in the run-up to this budget, that was almost immediately as soon as it had the slightest adverse impact on themselves.   Never mind that it’s going to cripple hundreds of thousands of ordinary families who will lose child tax credits because they can’t get the extra hours of work to stay qualified.   Who cares in this Tory crew about those on the breadline?   Not a bleep.   But what is really causing a rumpus is that persons on £85,000 or more (£1,635 a week) might lose their tax credits.   Now that would be really unkind, wouldn’t it?   But that’s not the half of it. (more…)

To give a tax break to people on more than £150,000 a year when the rest of the population, and above all the bottom half, are on the rack for a decade of austerity takes some doing.   It shows more acidly than anything else could the sheer psychopathic mania of the ruling Tory elite for relentlessly squeezing the mass of the people in order to consolidate the power and wealth of a miniscule set of the ultra-rich.   It is extraordinary that after a century of democracy marked by the rise of the Labour Party the Tory guardians of the rich can still resurrect, and even surpass, the inequality extremism of the Victorian-Edwardian age.   It shows the overweening self-confidence of the governing Tory circle, as well as the terrible impotence of the Labour Movement to prevent it.   But who are these people before whom Osborne is debasing the whole country? (more…)

To introduce regional pay in the public sector (i.e. lower pay in the poorer regions) after already subjecting employees to a 2-year pay freeze, pension cuts and a quarter of a million job deliberate job cuts – in the same budget as removing the 50% tax rate on the 1% ultra-rich – is making this government (totally Tory in all but name) into a byword of greed and selfishness for the extreme rich on a scale that even Thatcher never attempted.   Thatcher dramatically enriched the top tenth of the population, and particularly the topmost 2-3%, but this was against the background of a boom, and she never drove down to the same degree the income of the poorest by huge benefit cuts, expenditure cuts, and deliberately harsh austerity measures.   But even leaving aside the issue of provocative injustice, there are strong arguments against introducing regional pay in principle, and especially at this time. (more…)

If Osborne wanted to be as provocative as possible (which he probably does want, to appease the Tory right, his future backers for the leadership), he could hardly put together a more incendiary mix than cutting tax rates for the ultra-rich in the 21 March budget and then 2 weeks later impose swingeing cuts on some of the poorest families in the country.   On 6 April working couples around the country on £18,000 a year (or £346 a week, just three-quarters of the average wage) will lose £77 a week.   These families contain nearly half a million children, and their income is being cut by more than a fifth.   Contrast that with Osborne’s plans for the super-rich: if he cuts the top rate of tax for this 1% richest clique in the country from 50% to 45% (as he has just leaked – so much for the days when Chancellors were sacked for revealing even the smallest details of their budgets before they were delivered to the House), that is worth nearly £100 a week extra to someone on £250,000. (more…)

Perhaps we should be grateful to Goldman Sachs.   It is so brazen in its greed and ruthlessness that it exposes the ugly face of capitalism far more crudely than its detractors ever could.   Now we have the resignation letter of one of its executive directors, Greg Smith, to confirm from the inside what Goldman is really like.   His main charge could hardly be more damning, that Blankfein the chief executive and Cohn the president had “lost hold of the firm’s culture on their watch”.   Whereas once the culture, Smith claims, was all about “teamwork, integrity, a spirit of humility, and always doing right by our clients”, those values had now been superseded by unadulterated ‘ripping off of clients’ denigrated  contemptuously as ‘muppets’.   The incidents he cites bear out these attitudes even more acidly and show they’re not just confined to G.S. (more…)