Michael Meacher MP

The latest child poverty figures make sober reading. They show that the proportion of children living in poverty has doubled in the past generation, and the UK now has proportionately more poor children than most other rich countries. This is not what was promised or expected. In 1969, Thatcher having tripled child poverty in the 1980s, Tony Blair committed Labour to halving it by 2010 and eliminating it altogether by 2020. By 2005 there were still 3.4 million children living in poverty (i.e. living in households whose income was less than 60% of full-time median earnings), the number having been reduced by 600,000 since the pledge was made. However, this was well short of the cut rrquired since the reduction was just 17% whereas the target was 25%. What is more disturbing is that the total, having been cut inadequately, is now starting to rise again significantly. This is freversible, but not on current policies.

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Now that Alan Milburn has been made czar for promoting the working class to top jobs in the middle class citadel, the next thing they’ll be offering are social mobility allowances. Already a Cabinet Office report published two months ago has claimed, even before Alan Milburn had time to take credit for it, that social mobiloity is increasing. Sadly, the research proved nothing of the kind.

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The so-called welfare reforms could potentially offer a better future for thousands currently abandoned to poverty on benefits, though it all depends how Purnell’s conditionality is exercised. But the real problem is that these measures are being introduced at the wrong time, in the wrong way, and without adequate support facilities to make them work properly. And the punitive language of both Purnell and Cameron isn’t helping.

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So it’s not only the bankers who through greed and recklessness cock-up the financial markets and wreck the real economy and then expect to be generously treated with colossal bail-outs and even retention of their bonuses. It’s the lawyers too and other professionals. The latest PAC report yesterday have just uncovered that 36 barristers have been forced to return £605,000 to the tax authorities. Hundreds of thousands of pounds have also been recovered from other white collar tax evaders – surgeons, medical consultants and landlords. Already 57 barristers have been caught evading tax. Yet none of them has been prosecuted. Instead private deals are reached with the Inland Revenue. HMRC estimates that as much as £2bn a year may be lost to the Exchequer as a result of the cash-in-hand culture, yet only about 2 in a 1,000 get prosecuted. In the case of benefit fraud cases, the DWP says it’s 60 prosecutions per 1,000. Could class bias in the operation of the criminal law be more flagrant?

HOW TOMORROW’S P.B.R. SHOULD CUT BACK POVERTY
Whatever other help to people on low incomes Alistair Darling may have in mind for tomorrow’s Pre-Budget Report, he should focus on two key objectives.
1 Whilst his raising the personal allowance to £6,035 per year compensated the great majority of 10% tax rate losers, it still left around one million people losing out. These are largely people on the lowest incomes who are neither tax credit claimants nor pensioners over 65, and they are some of the most vulnerable in the current economic downturn. They are still worse off than in the last tax year, and should as a priority be fully compensated now.
2 Tax credits have helped a great many out of poverty, but they can still often trap many who do not take quick enough action to a void being overpaid. There are three areas where alleviation of tax credits debt is now urgently needed from the Chancellor:
(i) Working tax credits are currently lost whenever a person in receipt loses their job or if their hours are reduced. Where the Revenue has hitherto been recovering an overpayment by regular reductions from a person’s continuing award, the claimant is now required to repay within 30 days or reach a deal with the Revenue about the repayment period. The Chancellor should now suspend the requirement to repay in such circumstances when the claimant loses his job until such time that he can start repaying again.
(ii) When a person starts or ends a relationship, they have to make a new claim to align with their new circumstances. If they fail to do so, or do not do so in time, they are currently obliged to pay back all the credit paid to them after their relationship changed. Worse, the overpayment is not reduced by the amount of credit which they would have received if they had made a new claim in time. Until May 2007 the Revenue did permit the setting-off of this amount of credit, and the Chancellor should now use this opportunity to reinstate it.
(iii) A very large number of tax credit claimants are still being penalised by disputed overpayments from the period when the tax credits system began, when overpayments of thousands of pounds were caused by the Revenue’s own mistakes. The Chancellor should now pragmatically write off all outstanding overpayment debt from the first 4 years of tax credits which was caused or exacerbated by official error.
I have written to the Chancellor asking for these changes to be made as a priority in tomorrow’s Pre-Budget Report.

With Revenue and Customs paying an informant to expose secret accounts in the Liechtenstein tax haven, it might seem that the war on tax avoidance is gearing up.
But even if this results in recouping some of the £100m in back taxes owed by the super-rich it is still a flea-bite considering that a TUC study a month ago found tax avoidance by Britain’s biggest companies and wealthiest individuals now amounts to £25bn a year. The Tax Justice Network has also recently documented that the wealthiest people in the world hold a staggering $11.5 trillions of assets in tax havens.
But what is novel in Britain is the way that wealth and power over the last decade have been consolidated in a tiny new class at the top. They are epitomised by the egregious earnings of Stephen Schwarzman, chief executive of Blackstone private equity, who took home £200m last year (£3.85m a week). But that is only the extreme example of a new hyper-wealthy elite marked not only by extravagance of personal consumption, but also by a hold on economic and political power rarely if ever equalled in the past.
Britain now has five distinct classes. The poor, conventionally defined as those with less than 60% of median earnings, have to get by on less than £217 a week. But included with them should be the 1.5m people whose household incomes are no more than £10 above that, and constantly afflicted by insecurity.
Next come the largest class, those around the median income in Britain today of £23,600 (or £454 a week). This embraces a wide range of occupations from sales assistants and retail check-out (£240 a week), through nursing assistants, secretarial, security work, plant and machine operatives, electrical and construction, civil service executive grades, sales reps, to nursing, police and fire service (around £520 a week). Mostly they are secure, though at the lower end they remain vulnerable to economic downturns or if housing equity turns negative, as it may well be about to do for several tens of thousands.
Then comes the comfortably off managerial and professional class. Middle class is now too diffuse a term to be accurately descriptive, and would now be seen as including many in the previous category. But the professional-managerial class includes those in teaching, health and engineering (from £650 a week), through marketing and sales managers, production managers, up to corporate and senior management (around £1,670 a week).
In the higher reaches of the income scale there has always been a rich class, which might be arbitrarily defined as the top 5%. Numbering 1.4m, their income, according to the latest official Survey of Personal Incomes, averages £96,000 a year, with average investment income on top of that of £12,400 (totalling therefore £2,085 a week). Some might think, however, that the real rich category is confined to a much smaller group, say the top 1%. Their average earned income is now £220,000 a year plus £35,200 investment income, so they take home just over £4,900 a week.
However, a wholly distinct class has now developed at the very top end of the income scale which is entirely separate in the influence it wields through being embedded in the power structure at the highest levels. Even this class, tiny though it is, contains a vast range. At its lower end it starts from the top 0.1%, numbering just under 30,000 persons, each with an average earned income of £754,000 plus £146,000 investment income a year (just over £17,300 a week). It then rises into the stratosphere. The latest annual survey of the chief executives of the top 100 FTSE companies shows them taking home on average £2.8m a year (£53,485 a week). But that is only the average in these ultra-select and powerful groups. The top end, represented by the £27m (£519,230 a week) paid to Bob Diamond of Barclays Capital, is seen by many as greed incorporated when living in the same society are those on a minimum wage of £198 a week. A ratio between top and bottom incomes, which was less than 50:1 only 30 years ago, has now risen to 2,620:1.
What is even more striking is that these Babylonian excesses are now locked in more closely than ever to the exercise of power. In the last few years this has been exemplified by the rise of private equity. Buying up large public companies with huge debt leverage, selling off the property portfolio to transfer the debt to the company, and cutting costs via large-scale redundancies is the economic and personal price paid by others to secure the 2% annual management fee plus 20% of the profits for the private equity partners under the so-called “carried interest” system from which they can extract £20m or more apiece.
There are countless illustrations of this intertwining of wealth and power at the highest levels. The taper relief loophole by which top executives pay tax at a lower rate than their office cleaners was closed in 2003, but private equity was uniquely given exemption by the government. Sir Ronald Cohen, a guru of private equity, remains a close friend of Gordon Brown, who has also just appointed Damon Buffini, boss of Permira which recently loaded AA and Debenhams with huge debts and job losses, to his new Business Council of Britain.
The indefensible non-domicile tax loophole, which benefits some 60,000 hyper-rich individuals with personal fortunes reckoned to total £126bn, has only survived intensive lobbying against it in the past because its beneficiaries persuaded Brown as Chancellor that the privileges of the City must be protected at all costs. And the storm over cash for peerages further exposes just how far wealth now suborns the governing process in the hope of underhand reciprocal gain.
There is now increasingly a consensus, even among the well-off, that these excesses of power and wealth have gone too far. There is even a substantial degree of cross-party support in the Commons that the tax asylum seekers slipping through the net via non-domicile tax status should be brought to book by ending this loophole. The Treasury Select Committee recently reported that the taper relief concession for private equity buccaneers should be modified and “carried interest” treated for tax purposes as the income it clearly is. As the credit crunch consequences bite ever deeper into the incomes, not only of the poorer half of the population, but also of not-so-wealthy Middle England, the cry against greed incorporated will get a lot louder.
This article appeared on Comment is Free on 20 June 2008: http://www.guardian.co.uk/commentisfree/2008/jun/20/taxavoidance.privateequity

There has been a great deal of hand-wringing about the Government’s failure to meet its child poverty reduction target, i.e. to cut child poverty by half by 2010. It is likely to do little better than get halfway there. But that misses the real point.
If you let markets rip, if you give priority to Big Business and the City for whatever tax cuts they want, if you keep the trade unions on a short leash and insist on hire and fire flexible labour markets which stunt trade union power, if redistribution is a No-go area, then of course you’ll get a situation where one-fifth of the population have to subsist on less than £220 a week, while at the same time the top 1% get income of £220,000 a year plus £35,000 in investment income, which means they take home £4,900 a week.
And when Mandelson says “we’re utterly relaxed about people getting filthy rich” and when John Hutton says that we should “celebrate” people being enormously rich at the top, then of course you’ll get the new super-class that New Labour has so enthusiastically cultivated where the top 0.1% (just 30,000 persons) each get an average annual income of £760,000 plus another £150,000 from investments, making it £17,300 a week. And within that group you’ll find the chief executives of the FTSE top 100 companies taking home £71,000 a week, right up to the top of the pile, Bob Diamond of the private equity outfit Barclays Capital trousering £520,000 a week.
But it’s not just unfettered markets which have wreaked this extravaganza of inequality, it’s also New Labour’s supine genuflecting to the corporate interests that control those markets that has equally done the damage – aping the Tories over their huge inheritance tax concessions which benefit only the top 1.4 million, rejecting any proper taxation of the non-dom billionaires, backing down over capital gains tax on private equity extortion, and blocking any EU withholding tax on assets squirreled away into tax havens.
So don’t be surprised. Nothing much is going to happen on the child poverty front until these economic fundamentals are altered. And on that score, not all is lost.
The sub-prime market fiasco, colossal securitisation of assets for short-term greed, and the international credit crunch are transforming the financial and economic markets (as the Japanese Emperor Hirohito said at the end of the war) not necessarily to their advantage. In addition, at home the traction of the New Labour neo-liberal agenda has collapsed, as the polls, the local government and London mayoral elections, and the Crewe by-election clearly attest. Even at Westminster the old factions that held up the Blairite project have frayed and are breaking up. For the first time for 15 years the way is now open to a new politics. In place of the Tory-New Labour one-party-state stranglehold of the past 3 decades, a progressive modern Left now has a historic role to re-enfranchise the half or more of the population who have for so long been disenfranchised.
That new agenda should address poverty with real solutions, not merely offering the crumbs that fall from the rich man’s table. On fuel poverty, why when the oil and gas companies are reaping a colossal uncovenanted gain from growing oil and gas scarcity relative to demand, do we not impose a permanent annual levy on these companies to tap their windfall gain, and use all the proceeds to help the fuel poor and to fast-track the spread of renewables technology?
Why not re-introduce the 10p tax rate band when Alistair Darling’s one-year-only compensation runs out in April 2009, and fund the £6.6bn cost by excluding higher-rate taxpayers from the benefit, taxing undeclared share-dealings on the Stock Exchange, charging capital gains tax on foreign owners (now exempt) when they sell their UK commercial property, and charging income tax on short-term (less than one year) share-trading rather than capital gains tax which is lower?
On the housing collapse, why when private house-builders will build next year only a third of the Government’s target, don’t we allow local authorities to borrow against the collateral of their own housing stock and build houses themselves, since the Council waiting lists now exceed 2 million (12,000 in my constituency alone)?
And to stop the obscenity of gigantic bonuses and rich-to-rich back-scratching, why don’t we set up a Fair Pay Commission to lay down guidelines on what is fair and reasonable remuneration, with the powers where necessary to enforce them?
Then we might see real progress on dealing with poverty.

After three decades of neglect and 1,634,000 households stranded on council waiting lists by 2005 (probably nearer 2 million by now), a house-building programme is finally getting under way. But it is nowhere near enough.
Investment in public housing has plummeted from 6.1% of government spending in 1981 to just 1.6% in 2005. What this means is that in current price terms the government is now spending £22bn less a year on public housing than it was spending at the end of the 1970s. Added to that the rent-setting formula for council housing has now been changed from the formula known as “pooled historic cost” to one that is partly related to the value of owner-occupied housing in the area. Rents have climbed steeply as a result. Those in council housing cannot hope to buy their way out in the private sector when the ratio of mortgage loans to income can be as much 8 or even 10:1.
A small increase in housing output will not necessarily stabilise, let alone bring down, house prices when the flow of house purchase lending, now at the staggering level of nearly £1tn a year, is rising so much faster. If extra house-building increases the stock by 1-2% a year, which the housing and regeneration bill – given its second reading yesterday – aims to achieve, while at the same time the credit available to buy it increases by, say, 5% or more a year, house prices won’t fall.
What is really needed is a return nearer to historic levels of housing investment and a construction drive targeted at decent-quality council housing made available at rents related to the cost of construction and completely decoupled from ballooning prices in the private sector.
The government’s aspirations are not ambitious enough. It proposes 200,000 new homes a year to 2016 (last year’s total was 169,000), then 240,000 a year to 2020 – 3 million in all. But new household formation alone is now running at 220,000 a year, and if the accumulated unmet housing need of the half-million or more households living in overcrowded, bad quality or damp housing is to be dealt with within a 10-year programme, then at least an extra 270,000 homes a year is now required.
More pressing still, the government is proposing to build an extra 15,000 social rented homes a year, nearly all through housing associations. Council housing still remains largely taboo, since the Blair government only built an average 300 council houses a year compared with the 14,000 built even at the end of Thatcher’s reign in 1990. But the latest surveys show that at least a further 20,000 social homes for rent are needed each year over and above the extra 15,000 in order to meet what is called “urgent newly arising” need and to halve, as the government intends, the numbers who are homeless or in temporary accommodation (currently 101,000). To achieve this, local authorities should now be allowed to borrow on the open market, as housing associations can, against the security of their existing housing stock. At present local authorities are forbidden to do so.
Less appealing in the new housing bill is the proposal to create an unaccountable regulator which would transfer key responsibilities away from elected ministers. This new quango will have control over such sensitive issues as the criteria for allocating accommodation, the nature of housing demand to be addressed, the extent to which demand is to supplied, the terms of tenancies, the levels of rent, procedures for addressing tenants’ complaints, and even anti-social behaviour. After stock transfer, RSLs, ALMOs and right to buy have shifted half of council housing away from local government, this latest move could now go a long way to removing all the rest out of local democratic control.
Worse, profitmaking companies are to be allowed for the first time to register as social landlords under a lighter burden of regulation. And for the first time means-testing is to be included in the definition of social housing. This abandons one of fundamental founding principles of council housing which was to provide high-quality housing for all sections of society, not housing of last resort for those who can’t afford anything better. Only 30 years ago, according to Professor John Hills, 20% of the richest tenth lived in social housing. Now, if this bill goes through, council estates will further concentrate deprivation and council housing will be further stigmatised when what the government ought to be doing is to promote council housing as a tenure of choice for those who wish it.
From

Extract from my contribution [scroll down to 3.09pm] to the Queen’s Speech debate, 14 November 2007
I believe the Government urgently needs some commanding themes by which its distinctive vision can be clearly understood. I want to propose three.
The first is democratisation which the PM himself adumbrated in his first statement to Parliament. But it has to stretch a great deal further than simply giving Parliament a vote before the country goes to war. Parliament needs real new powers on a much broader front – electing Select Committee members, ratifying (or not) Cabinet nominations made by the PM, approving (or not) the membership and terms of reference of Committees of Inquiry proposed by the PM, and setting up our own Parliamentary Commissions to investigate matters (like extraordinary rendition) when the Government itself refuses to do so.
But it isn’t just in Parliament where there’s a democratic deficit. A far bigger one now exists outside. Power has become so centralised over the last 30 years and the regulatory authorities so enfeebled that so far from regulating corporate power, the biggest businesses have increasingly co-opted the power of the State for themselves for their own commercial ends. The current loosening of controls over major power station, airport and incinerator developments, the failure to regulate unhealthy food advertising because of objections from the food industry despite the epidemic of obesity, the withdrawal of the SFO investigation into corruption allegations against BAE, and the relaxation of the gaming laws to permit a flood of gambling casinos are just a few recent examples.
Accountability today has all but vanished. Perhaps the most telling case is Northern Rock. It is now costing taxpayers £23bn in loans, plus a £2bn interest charge – almost equal to the entire annual defence budget – yet nobody is held responsible. The Bank of England, the Financial Services Authority and the Treasury are all blaming each other. What action is being taken, and by whom, to face up to the fundamental mistakes made that led up to this crisis, including the reckless lending practices of the chief executive of Northern Rock as well as the flawed structure of regulation put in place a decade ago? Why wasn’t Northern Rock temporarily taken into public ownership, as was done in the case of the secondary banking crisis in 1974, in order to avoid a run on the bank and to retain depositors’ confidence without this colossal haemorrhage of public funds? The answer to that of course is that the neo-liberal agenda of privatisation, de-regulation and unfettered markets is still, unaccountably, being imposed above everything else, even at phenomenal cost to the taxpayer so that public ownership, even temporarily, is ruled out.
And what action is the Government going to take over the mania for securitisation, collateralised debt obligations and all the other opaque and dodgy financial derivatives which have so dramatically and comprehensively destabilised the markets? Despite all its de-regulatory instincts, does the Government now acknowledge that stricter regulation of financial markets is now necessary if the frenzy for newfangled financial instruments, which are actually designed to be deceptive over risk and value, is to be curbed?
Equally, at the other end of society, the checks and balances against the arbitrary use of power have all but evaporated. Civil liberties have been drastically eroded, and the introduction of ID cards and 2-months detention without charge, both of which I deplore, are still being mooted. Workers who have been in their jobs less than two years can still be arbitrarily dismissed without any rights, and temporary and agency workers remain an exploited underclass – mainly at the behest of the CBI which this Government should be much stronger in resisting. Accountability, or indeed any redress, against alleged misdemeanours by the police, judges, banks, private utilities or big corporations is almost non-existent. Today powerlessness is widely felt to be endemic throughout society, and it will require an awful lot more than focus groups or citizens’ juries to put it right.

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Some useful proposals – though the devil may lie in the detail, not yet revealed – but disappointing on the vision and no razzmatazz of new ideas for a new leader, largely because Gordon Brown has already been leading on the domestic policy agenda for the past ten years and now has nothing much new to say.
It’s good that after two decades of neglect of social housing amidst the triumphalist ideology of private ownership, the national scandal of housing need is now at least being noticed. Council waiting lists are now above 1 ½ million and there are over 100,000 homeless, yet only 100 Council homes were built last year (down from 13,000 a year at the end of the Thatcher era). The housing stock is only growing by some 185,000 a year at present, yet the number of new households being formed each year is about 220,000. We are still going backwards. Building an extra 40,000 homes a year, as the Government proposes, is clearly nowhere near enough to meet the yawning gap of housing need. And how many of the 40,000 will be social housing anyway? And why are local authorities still not being allowed to build more Council houses themselves if they wish, borrowing against the security of their own existing housing stock?
Changes to the planning system, as is proposed, might seem sensible when some planning decisions have clearly taken far too long. The 8 years spent on the Heathrow Terminal 5 decision is usually quoted here (though much of that was accounted for by the time spent on Ministers’ desks after the planning report was submitted). But today’s proposals are motivated by very different criteria. National Policy Statements will be drawn up which will enable an array of major developments – nuclear power and nuclear waste facilities, coal-fired power stations, airport expansions, major road schemes, and large waste incinerators – to be put through without the public having a say on whether they are needed or safe, or where they are to be located. This rather conflicts with Brown’s stated wish to bring more democracy into public decisions.
A Climate Change Bill is very welcome, but again its contents leave a lot to be desired. It promises a review of progress in cutting carbon emissions every 5 years which is far too lax when the UK is way off track to meet the Government’s objectives. Clearly annual targets, published and enforceable, are urgently needed. Moreover, air travel and shipping emissions are omitted, even though they are the fastest rising sources of emissions. Nor are mere targets sufficient anyway when other Government policies, notably a tripling of airport capacity by 2030, are diametrically opposed.
Democratisation has also been one of Gordon’s ostensible goals, which is also desperately needed. But it has to stretch a great deal further than simply giving Parliament a vote before the country goes to war – a concession which after the Iraq debacle would probably be inevitable anyway. Parliament needs real new power on a much broader front – electing Select Committee members rather than letting the Whips use the patronage to gain a wider acquiescence, ratifying (or not) Cabinet nominations made by the PM, approving (or not) the membership and terms of reference of Committees of Inquiry proposed by the PM, and setting up their own Parliamentary Commissions to investigate controversial issues (e.g. extraordinary rendition) when the Government refuses to do so. Nor can the idea of greater democracy cut much ice when the Government is still intending to pursue the ID cards folly and, even worse, extend the 28-days detention without charge in defiance of the 800 year old habeas corpus.
And what is not in the Queen’s Speech is perhaps even more important than what is. There’s nothing about redressing the centralisation of power which is such an indictment of the current state of Britain. There’s nothing about redressing the grotesque inequality of income and wealth – nor was there is in the Pre-Budget Report a month ago. And there’s nothing about restoring the ethos of public service which has taken such a battering under Blair – indeed it’s taking a further hit currently with the huge cutbacks in BBC funding which threaten public service broadcasting. Et tu, Gordon?

There’s still time for the Government to turn the tables on the Tories over the inheritance tax debacle, but only if before the Finance Bill is published they take the radical line they should have taken at the outset.
Instead of ignominiously caving in to Osborne’s stunt, they should have used the opportunity to create a newer and fairer inheritance tax, whilst strenuously arguing the case that this is a tax confined to the very rich and that to relax it means that more taxes have to be raised from poorer households. At present only the richest 6% pay it (approx. those with incomes over £70,000 a year) which is less than in most other countries, much less than was paid in Britain even 25 years ago, and (as a matter of interest) much less than was paid in feudal England centuries ago.
A much more attractive alternative than Osborne’s would:

commit the Treasury to raise the threshold regularly so as to ensure that nobody except the richest would ever be liable,

freeze exemption levels above the threshold and close the loopholes, and introduce sharply progressive rates on the most valuable estates,

then hypothecate the proceeds, not to swell the Treasury’s coffers, but to redistribute it to finance long-term care for the elderly.

This would, at one go, resolve a very serious current problem about the funding of long-term care in old age and at the same time achieve a fair and generous redistribution from rich to poor which would prove extremely popular.
If that were then combined with a proper tax on the so-called non-domiciled rich – not Osborne’s footling £25,000 which would be a fleabite to billionaire tycoons like Philip Green – Labour might begin to regain its reputation for social justice and tackling inequality, which has spiralled out of control to grotesque levels in the last ten years and is now the no.1 domestic issue in Britain today.

Payment of £14bn in City bonuses this year, according to Office of National Statistics data just published, exposes just how decadent this country has now become in the huge and growing rift in inequality between rich and poor. The great divide opened up in the 1980s under Thatcher; now New Labour has made it a lot worse – and that’s official.
City bonuses rose 30% in this last year from an already enormous £10.9bn in 2006. Average total pay for FTSE 100 Chief Executives increased last year by 37% to £2,875,000 a year, that is £55,288 a week. That’s 98 times their employees’ pay, 276 times the national minimum wage, and 658 times the basic State pension.
Inequality is now becoming the No.1 top political issue in Britain today. When nurses on low pay are being told they can only have a 1.9% increase this year and when prison officers and other public sector employees are smouldering over pay restraint as well as other issues, Bob Diamond of Barclays took home £23 million last year and Bart Becht of Reckitt Benckiser walked off with £22 million. It is shameful that in New Labour Britain such pay obscenities have been allowed to happen, indeed been encouraged by their let-the-markets-rip philosophy. As Peter Mandelson put it so charmingly: “We are quite relaxed about people becoming filthy rich”. What about the 12 million people in Britain today who are so poor that they have to subsist on Income Support? Since wealth and poverty are two sides of the same coin, where does that leave the poorest under the current neo-liberal economic agenda? Out of sight.
Several policy changes are needed:

The divide between top pay and average and low pay has now become so cast that it cannot be justified under any conceivable rational system of incentives. We need a Pay Commission to be established to set down guidelines (with tax sanctions to back them up) for a reasonable pay range between top and bottom which offers incentives that are consistent and fair throughout the range.

Bonuses, performance payments, so-called fringe benefits, and stock options are now so extensive and so concentrated on the richest in society that for this 1-2% or so at the top there should be a super-tax on these super-rich for their very large extra payments over and above basic salary, perhaps 50% on the first £250,000, 60% over £1 million, rising to 70% over £5 million.

We need an early Parliamentary debate and wide-ranging public discussion on this issue when it is stoking house price inflation, generating deep resentment among badly done by employees in key public sector services, and undermining all sense of any balanced social cohesion throughout the country.

Graphic: ONS

(Photo: Labour Behind The Label)
The news that three major discount clothing retailers – Asda, Tesco and Primark – import clothes from factories in Bangladesh where workers are forced to work up to 80 hours a week for only 4p an hour in some cases has made the supermarket chains launch an investigation into press reports about conditions in these factories. As though they didn’t know!
Bully for the investigative media – what’s left of it – but the point is it shouldn’t have to depend on such freelance initiatives. The big private companies are major players in the UK and international economy, and the way they operate have huge ramifications – for consumers, suppliers, workers, job opportunities and job losses, labour standards and workplace rights, the environment and climate impacts, resource and energy use, waste generation and pollution, as well as for competitiveness and more generally for the country’s social/economic image.
So as in this particular case involving gross exploitation of workers in Bangladesh, the public is entitled to know the facts, the economic realities, and the shameful treatment that lies behind cheap merchandise in our shops. The lesson of this episode is that the scope of the Freedom of Information Act should be extended to, say, the top 1,000 biggest private companies whose influence on our society and way of life equals, if not surpasses, the impact of the public sector. This must be one of our demands on the new Brown Government which has made such a point about strengthening accountability.

I think there are four key challenges now facing the EU. First, Europe’s economic problems cannot be solved with supply side reforms alone. Weak domestic demand in many cases, made worse by the constriction of the Stability and Growth Pact, should be tackled by setting up a counter cyclical European Recovery Fund and by developing ECOFIN as a real political counterpart to the European Central Bank.
Second, the EU’s response to the global economy should be smarter than simply posing a choice between liberalisation and protectionism. It should seek to stabilise exchange rates and prevent speculative capital flows from destabilising healthy economies through a Tobin tax. It should press for an international clearing union to smooth trade imbalances by requiring countries to recycle their surpluses to maintain global demand. And it should take the lead in benchmarking social and environmental standards into world trade rules.
Third, the EU should give its social model a more distinctive European form. To deal with collapsing corporate provision, it should set up a European social fund into which companies should contribute a proportion of their profits to meet at least some of the spending needed to guarantee security in retirement as well as providing at least minimum standards for a European childcare guarantee.
Fourth, it must democratise EU politics so as to enable Europeans to feel involved in a common political debate about their future. Maybe a new Preseident of the European Council should lead on Europe-wide elections so that electors voted more as Europeans.