Category Archives: Corruption

Packing the Lords has become plaything for patronage & consolidating power of PM

Cameron’s decision to toss another 45 peers, mostly party hacks, into the Lords is really shameful.    The motivation is to remove any obstacles to the swift and easy transmission of government business.   Since the whole purpose of Parliament is to hold the Executive (the government) to account, it is truly scandalous that the leader of the Executive has untrammeled tights to appoint whatever number of new peerages will defeat this purpose.   This is a serious source of corruption at the very heart of government.   I certainly strengthens the case for an independent Parliamentary Ombudsman who could make a formal statement, as presidents do in other European countries, condemning what he/she believes is a constitutional abuse designed to sidestep the proper working of Parliament, as well as giving MPs and indeed members of the public the opportunity to make a formal protest.

There are several other aspects too to this sordid affair.   Of the 45 new peers, 32 are former politicians and 7 used to work in the party machines, making a total of 85%.   Moreover, of the 189 peers created between the two elections of 2010 and 2015, no less than 68 had been elected politicians and 26 had been political staff – that is fully half of the new intake.   The Lords is increasingly becoming a repository for Westminster bubble insiders, including those most recently rejected by electors at the polls just 3 months ago.

It’s also becoming a repository for donors to the Tory party.   Of course it has been accepted ever since the time of Lloyd George, the arch peerage salesman, that the selling of honours was illegal.   But is there much difference between an outright sale and making a large contribution to Tory party funds and then waiting for the Tory party hierarchy to reward such generosity?   It doesn’t always happen of course, but an academic stidy has shown that giving large sums of money does have a remarkably positive effect on the donor’s talents being recognised.

Then there the numbers.   There are now 828 members of the Lords and if MPs are added there is grand total of Westminster legislators of 1,476.   Cameron said before the election that he would cut both the number and cost of parliamentarians.   What he has done in practice is the exact opposite – he has appointed new peers at a faster rate than any PM since life peerages began in 1958, even more than Blair.

Packing the Lords with cronies is a shameless way for the PM to extend his patronage and secure compliance as well as smoothing the way for an uninterrupted legislative programme.   Having lost votes in the Lords over devolution, the EU referendum and EVEL (English votes for English laws), Cameron is determined to stop that happening again.   That he has the idiosyncratic power to do so only exposes how drastic is the need for radical Lords reform.

Osborne’s giveaways come back to haunt him

Following Osborne’s triumphant releasing of pensioners to unlock their annuity contracts to spend how they will, there were many siren voices raised that that risked exposing many vulnerable elderly people to crooks and scammers selling dud investment projects as the road to riches.   The results have turned out even worse than feared.   City of London police are now having to wage a huge campaign against the use of some of the Square Mile’s most prestigious addresses as a cover for scams purporting to sell overseas land for investment as well as wine, diamonds, etc.   Police say such scams cost mostly elderly and vulnerable people at least £1.7bn last year, with fraudsters typically returning to their victims a second timein the guise of ‘asset recovery specialists’ who pursue lost money for a fee.
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Tory privatisation economics: try the London sewer, the mother of all scandals

As an illustration of what the Thatcherite privatisations of the 1980s now mean, you could not have a better example than the London super sewer.   It costs £4.2bn, and you might expect that Thames Water, the privatised company that controls the whole of its length, should obviously be expected to pay for it.   Not a bit of it.   They will fund just a third of it only, and the rest will be met by a team of investors which will own, manage and finance the projedt during construction and then supply sewerage services to Thames Water on a 125-year concession!   But that’s just the start.   Unusually for a construction project, the investors will receive an income from the first day, paid for by Thames Water’s 15 million customers.   The surcharge on London water bills is likely to be £80 a year in perpetuity.

But here’s the main point.   The risks of construction, including cost overruns, accidents or any other incidents at the project’s 42 sites, as well as any financial risks – such as another global collapse in credit – will be borne by taxpayers because the government is acting as guarantor.   This is common for infrastructure projects where traditional insurers won’t cover the risk, so once again the privatisers take the gains and the public take the potential losses which could be billions of pounds, and Thames Water walks off all the way to the banks.   There are two enormous scandals here.   One is that if Thames Water were a publicly owned company or part of a national water company, the sewer could be built far more cheaply because governments can borrow money more cheaply than anyone else.   Second, why shouldn’t Thames Water be made to pay for the project themselves when they have paid out dividends of £1.1bn over the past 5 years?

Then there are the tax implications.   Thames Water is owned by a Luxembourg-domiciled consortium which includes the (Australian) Macquarie European Infrastructure Fund as well as Abu Dhabi and Chinese sovereign wealth funds.   So Thames Water is racking up huge debts using EU-blacklisted tax havens to pay out massive dividends and executive fees, at the same time as expecting household consumers to pay a big chunk more themselves.   Alongside a one-third increase in billing to its consumers, Thames Water have seen fit to grant a 60% pay increase to £2 millions a year to its chief executive – what for exactly?    The mother and father of all financial skulduggery?


The ugly face of Tory callousness exposed

With the world’s biggest refugee crisis since 1945, it is perhaps predictable that the Tories’ reflex response is to sensationalise the issue, lie about the facts, and pull up the drawbridge.   May kicks it off with the falsehood that the vast majority of migrants to Europe are Africans motivated by economic self-interest, when in fact 62% reaching Europe by boat this year were escaping persecution from Syria, Eritrea and Afghanistan.   Foreign secretary Hammond portrayed them as marauders risking the collapse of European civilisation, when in fact the number of migrants who have arrived so far this year is precisely 0.027% of Europe’s total population.   Cameron himself described them as a swarm intent of getting welfare benefits, when in fact the number of migrants reaching Calais of those arriving in Europe this year is just 1% and each asylum seeker in Britain gets a measly £36.95 a week to live on, only just over £5 a day, and is not allowed to work to supplement this sum.

Nor has Britain taken anything like its fair share of refugees under the vindictive and callous standards of the Tories.   Last year 25,870 people sought asylum in the UK, but only 10,050 were accepted.   Germany took 97,275, France 68,500, Sweden 39,905 and Italy 35,180.   Calculated as a proportion to population size, Britain comes even lower.   Calculated on 2015 rates, Britain has been even meaner in its reception of asylum seekers than impoverished Greece!   Against the hysteria the government has generated, you would scarcely believe it that the number of refugees in the UK has actually fallen by over 75,000 in the last 4 years.

Then there is the deeply unsavoury Tory involvement in trafficked workers debt-bonded and forced to work in slavery conditions that has just come to light.   Noble Foods, the UK’s largest egg company, used labour provided by DJ Houghton, a gangmaster operation run by Darrell Houghton and Jacqueline Judge at Maidstone, Kent, and its chairman has been a major Tory party donor and lent Cameron a helicopter for the election.   The Lithuanian workers were held in overcrowded accommodation riddled with bedbugs and fleas, denied sleep and toilet breaks, and had their pay repeatedly withheld while Lithuanian supervisors acted as the Houghtons’ enforcers intimidating the workers with fighting dogs and threatening them with instant eviction if they complained.   So much for Cameron’s promise earlier this month to tackle modern slavery in Britain.

Now that the election is safely out of the way, other Tory acts of harshness and vindictiveness have started to trickle out.   They have shelved their manifesto commitment to cap care costs for the elderly in order to save £100m (out of a deficit still stuck at £90bn), on top of cutting by a quarter of a million the number of elderly and disabled persons receiving social care at all.   They have concealed till now that 1 in 6 of all job seekers are hit by benefit sanctions even though the independent social security advisory committee, chaired by the ex-permanent secretary of DWP, have made the case that there is no certain evidence that sanctions actually work in forcing people back into work, but they do cause hunger and impoverishment.


Osborne shows his true colours: in the pocket of the banks

Osborne’s sacking of Martin Wheatley, head of the Financial Conduct Authority (FCA) says it all.   His sin was that he was too tough on the banks.   The banks are the most powerful section of the Establishment which runs Britain, and Osborne is one of their chattels who does their bidding when half of the Tories’ annual income comes from the UK finance sector, so Wheatley had to go.   This is a political ousting of the worst kind.   Wheatley was a tough regulator which was needed, and is still needed, when almost every week new scandals are unearthed in the finance sector, when the banks cost the UK £70bn in bailouts and a doubling of the national debt to £1.4 trillions, and when new areas of systemic financial risk including the revival of derivatives that caused the crash in the first place and the growth of the shadow banking sector threaten another financial armageddon.
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Why should a teacher or senior nurse pay a higher tax rate than a millionaire fund manager earning 200 times more money?

The Finance Bill which starts next Monday in the House Purports to stop hedge fund and private equity fund managers from claiming artificial costs to reduce the tax they pay on their ‘carried interest’ (i.e. their personal share of the profits from the funds they manage).   The Treasury thinks this will raise over £350m a year from the few thousand hedge fund and private equity personnel.   Of course Osborne announces a crackdown on tax avoidance in every budget, but it usually turns out to be a fraction of what he claimed, like the Swiss deal which was supposed to yield £5bn, but actually raised only just over £100m.

Once again he shows himself willing to hurt, but afraid to strike.   He omits the most obvious way by which private equity fund managers currently shrink their tax bills, by arranging to pay 28% capital gains tax rather than 45% income tax on their carried interest.   If ever there was a tax fiddle, carried interest was it.   Carried interest is their remuneration for managing other people’s money, and should therefore be taxed as income tax.   Their ability to pay CGT on what is properly income also allows fund managers to avoid paying any national insurance contributions on a major portion of their income.
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The arrogance and selfishness of the banks takes one’s breath away

With a week to go to the budget, the banks’ lobbying muscle is at full stretch to pressure the government into returning the finance sector into the status quo ante that existed before the crash.   They actually have the gall to be demanding an end to criticism of the banking industry, as though (i) they weren’t the largest single cause of the crash in the first place, (ii) that crash hadn’t triggered bailout costs of £70bn plus a doubling of the national debt from £0.7tn to £1.4tn now, and (iii) the consequential recession hadn’t bred the longest, slowest and feeblest recovery since the Victorian times.   What is insufferable about the banks is that there is not a smidgeon of remorse about the catastrophe they imposed on the UK, let alone any acceptance of the (minimalist) reforms that have been put in place to prevent a recurrence of their recklessness and insouciance.
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Labour must present alternative to Tory orgy in 8 July budget

Some of the details of Osborne’s ‘go for broke’ budget in a fortnight’s time have been deliberately leaked (a sacking offence in 1946 for Dalton in an era with a very different morality).   They are enough to set the tone for likely the most extreme right-wing budget in living memory.    Cameron calls it a ‘low tax, low welfare’ budget which is scarcely veiled version of ‘stuff the mouths of the rich with gold while battering the poor further into the ground’.   Osborne has been itching to reduce the top rate of income tax to 40% and has prompted Lawaon, Thatcher’s chancellor, to give it public support.   It would give 108,000 millionaires an extra £14,000 a year (nearly £270 a week).   Lawson says it would cost nothing, the Treasury says it would cost £900m in a handout to the rich.   Of course Cameron says he wants to help poorer workers – by wage rises to replace benefits; to which the director of NIESR has retorted: “to claim that cuts in tax credits will be picked up by employers who’ll raise wages is pie in the sky”.   No stone is to be left unturned as we learn, almost unbelievably, that Osborne is priming even the Green Investment Bank  for sale as well as  even sending Treasury staff to advise China on PFI for public projects!
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Scandal of 100,000 UK properties covering 1/2 million acres now owned by companies in tax havens

The Eye has done a remarkable service in exposing the magnitude of offshore ownership of the UK’s historic country houses and of the huge swathes of the British countryside that they control.   Using FOI applications and extensive analysis of other data, it has found that since 1999 titles to no less than 97,500 properties covering 490,000 acres have been acquired by companies vested in tax havens.   With much land already acquired by offshore companies before that date, it is likely that the total area acquired could be a million acres or more.  
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