Industrial scale tax evasion and avoidance is not only symptomatic of the insatiable greed of the hyper-rich and the over-mighty corporations, it also serves another purpose which is much less recognised. The touchstone of the neoliberal ideology is globalisation – let the markets be all-powerful and governments get out of the way. That is served by light-touch (i.e. minimalist) regulation, blind trust in free markets, and the unfettered mobility of capital. But it further demands that the State should be kept deprived of adequate funding so that its capacity for intervention is short-circuited. That is exactly what widespread tax evasion/avoidance achieves. A State starved of tax revenues – even HMRC admits it loses £35bn a year on tax scams, though Richard Murphy of Tax Justice Network argues it’s nearer £120bn a year – cannot deliver the goals of social democracy which a majority of the electorate desire. Increasingly the government falls prey to the markets even to raise its own revenues.
With the erosion of its tax revenues the State is forced to resort to debt to finance social infrastructure. Increasingly the political emphasis shifts to placating the financial markets and the agenda is dominated by debt repayments, the interest rate cost of debt, and the corollary – the squeeze on public services. That inevitably produces a smaller but more compliant State, which the Thatcher-Blair neoliberal ideology so strongly demanded, leaving ordinary people to face the erosion of their rights and purchasing power and almost permanent austerity.
This is why the coming election is arguably the most critical since 1945. What is at issue is the final roll-back of the social democratic consensus of the 1940s and its total replacement by a fully marketised State in which all public services are subverted into fee-charging organisations on a free market basis. What is urgently needed is a Labour counter-narrative to expose and challenge this anti-democratic Tory goal.
The Tory narrative goes like this. Labour left a terrible economic mess (actually it was the bankers and the international recession), and we had to clear it up (actually they made it worse by importing persistent austerity). It’s been painful, but we’re all in it together (actually incomes have fallen by an average of 8% for almost everyone except the top 1%, those with incomes of over £3,000 a week, who have made large gains). Now with the economic recovery we’ve brought about, stick with us (actually it’s been the slowest economic recovery for a hundred years and it’s already fading, with all the economic indicators pointing negative, and the only light in the tunnel from the halving of the global oil price, no thanks to Osborne).
Labour’s counter-narrative should go like this. When the banking crash occurred in 2008-9, Alasdair Darling, the Labour Chancellor, did the right thing by enabling the economy to grow, which brought down the deficit by £40bn within 2 years. Osborne dropped this sensible policy like a hot brick and imposed relentless austerity which contracted the economy so far that the deficit, still stuck at about £100bn, is not now being reduced at all. The real Tory goal is not primarily to cut the deficit, but to use the deficit to force Britain away from social democracy with high-quality public services to a market-driven State where fee-charging is dominant and only the very rich prosper. Vote Labour to stop this hi-jacking of the State by the rich and powerful and to restore a society which protects the weakest and gives a fair chance to all.