Monday, 27 January 2014

If businesses are so great, they don't need state coddling.

The Tories seem to be ceaseless in their coddling of the private sector.

Over the weekend, Ed Balls' bombshell that Labour would bring back the 50p top rate of income tax on earnings over £150k p.a. was greeted with the sort of response that might be deemed reasonable from a wheelchair user being told they'd now be required to do without. Now Cameron is talking about ripping up green regulations which will apparently save businesses £850m a year.

If the private sector is so great at creating jobs and helping our economy, why do they need so much state assistance? 

Green regulations were brought in when much damage to our environment had already been done. Without government controls, profit-hungry companies would have continued to pollute our environment by dumping their waste wherever they like, and throwing money at councils and landowners until they allow them to buy up land, regardless of the effects on the environment, residents and other businesses.

As for re-introducing the 50p tax rate, the uproar is totally out of proportion. So far since 2008/09, the poorest in our country have been paying by far the highest price for the failings of those who dragged our economy into the red. The least that the richest 1.1% (yes, that's how many of us earn that much) can do is take some of the burden. And given that people earning £150k p.a. plus often decide their own salary - or at least, tend to be able to bargain with those who do - they could just make their salary a little higher to make up the 'shortfall'.

I'll again cite Richard Murphy on this: here is his blog from this morning on the 50p tax rate.

Tuesday, 21 January 2014

You can't keep punishing the many forever; eventually, they'll have nothing left to give.

As revealed this week by Oxfam, the 85 wealthiest people on the planet, have a combined wealth equal to that of the combined poorest half of the world's population. It's a shocking fact that needs to be repeated: 85 people have equal combined wealth to 3.5 billion people. Similarly mind-boggling is the fact that the richest 1% have 65 times the wealth of the poorest half of the world.

In countries right across the world, the poorest are paying for this wealth. In our country we are no different, although I do acknowledge that poverty in the UK rarely means as difficult an existence as it does in some parts of the world.

I can sort of see the logic behind wringing as much from the many as possible rather than pursuing large companies and individuals who are avoiding tax, or demanding better pay and working conditions in developing countries. For one thing, you can take a much smaller sum from each of a million people, for example, than from one very rich company who owes it to you. Also, they'll have to pay up because they won't be able to squirrel it into offshore havens or erase profits via pretend debt from subsidiaries.

So many countries prefer this method of balancing the books: either taking more from the regular hard-working people, or giving less to those who need a little help and letting the huge corporations and filthy-rich individuals who are avoiding tax off the hook.

Richard Murphy, Europe-wide renowned economist and tax specialist, has been involved in big discussions about one area, country-by-country reporting, which would shine a light on who is avoiding tax and how. Here is a recent blog where he explains this in a little more detail. Sadly, despite the G8 and the G20 agreeing that this is a necessary move, nothing appears to be happening.

Eventually, something will have to happen. It has to. Because at the current rate the gap between richest and poorest is growing, it won't be long before the poorest have nothing left to pay.

Monday, 20 January 2014

Labour are being controlled by a dead woman.

I'm still of the firm belief that government spending was not to blame for the economic crash and that cutting spending is not the solution. But the last government got complacent and let things carry on as they were for too long, so that when the crash happened and they lost the next election, it was far too easy for the Tories to blame overspending and hack away at vital services. What Labour should have done is ensure the growth we were experiencing was sustainable and that the country was seeing it's fair share of the money.

Large employers got greedy. Despite making millions in profit, they found ways of avoiding paying taxes that not only deprived the country of vital tax income, it also affected hundreds of thousands of employees. Reduced hours means less NI payments for employers but it also means less income for the employee and less income tax for HMRC. The country and the employees lose out; the only winner is the employer. Many employers also reduced their own workforces and replaced staff with contract temps which reduces pay and rights and creates instability but saves the company on recruitment costs and loss of working hours to sick leave. These things were going on whilst our economy was healthy and the economic slowdown had already started in earnest before the government had to find the money to bail out the banks.

The public had also become complacent. In 2006 the company I worked for was bought out by a larger rival (who wanted our clients but not our staff or premises) and I was made redundant. Within a week I'd been offered a better job. People had got used to being able to get work. They were used to being able to buy homes, cars, luxury goods, holidays etc, and get credit and loans without being worried about whether they could pay them off. Then, all of a sudden, redundancies or cuts in hours put mortgage, credit card and loan repayments out of reach and what seemed like manageable debt became uncontrollable. Many people, hopeful they would get a new job soon, got into a lot more debt whilst trying to keep up with payments. Many did get new jobs but for much less pay and found their debts too much to cope with in what quickly became a grey and austere country.

At the moment, Labour seem caught between the right-wing arguments that "it's all Labour's fault/they can't be trusted on the economy", and their roots as a party who invests in the protection of and future prosperity of the working-age population. It's an impossible balancing act: they cannot hit back at the government's treatment of the poorest whilst also talking about cuts. When questioned about borrowing, Labour MPs should say: "YES! We need to borrow money to invest in the sort of projects that will turn our economy around." They need to make the clear point that the last Labour government only borrowed too much when they bailed out the banks; before that point, budget deficit was healthier than the previous Conservative government had left in 1997 (they don't need to admit that they could done better while the going was good by tightening up on tax avoidance etc - after all, their record on this is entirely identical to the Tories: they did nothing).

They need to be bold on spending. The NHS will not be improved by making cuts. Nationalisation programmes will be expensive but will pay back and the "hard working people" the Tories bleat on about would love cheaper rail fares and energy prices. Investment in transport, renewable energy, healthcare, education etc also means more proper jobs. And more proper jobs means a smaller benefits outlay, greater tax revenue and the added boost to the economy of extra spending on non-essentials as a result of more comfortable incomes.

It's not a difficult concept to grasp that if the next government can spend wisely on projects that will improve services and provide jobs, we will see the benefits. Labour could raise what happened after the second world war. Churchill's Conservatives fought against the introduction of the NHS and improving public education. He said that Attlee's Labour party would introduce "...some form of Gestapo..." The result was Churchill's loss. Labour's nationalisation programmes, NHS and social security improvements were accepted by Labour and Conservative governments for thirty years until one Margaret Thatcher, supreme leader of the 'modern' conservatives, began to chip away at it.

Labour are simply not tough or bold enough anymore. They're running scared of the toffs and right-wing stick-in-the-muds who would see workhouses and shanty towns return rather than make sure we all benefit from the wealth we all create. They are being controlled by Thatcherite politics, even now she is gone.

Thursday, 9 January 2014

Remind me again: who caused our economic woes?

This government is STILL using every opportunity they get to take as much as they can from the poor and vulnerable. And every chance the government and anyone from the right gets, they kick the poor with more exaggerated and blown-up generalisations of benefits claimants. This despite a concerted effort from the left (and many centrists too) to point out the inaccuracies: that in-work benefits cost a lot more than out-of-work benefits and that state pension is the biggest outlay of all.

But the argument that seemingly is being lost completely is the unfairness of the government's targeting. The government continue to protect bankers' bonuses and defend the City like deluded guards of an evil dictator. Only they're not deluded; they're complicit.

The poorest are being made to pay for a crisis they did not create. Worse still, the 'recovery' is happening in a way that leaves them even further away from the sort of life most of us want and some of us can take for granted. Wages are not rising, while the cost of everything essential still is. Those with the least pay a far greater proportion of their income on housing, energy and food than those with greater incomes. On top of this, many of the industries who are growing are doing so on the backs of the poorest. It's boom-time for pay-day lenders and bookies with fixed-odds betting terminals.

'Benefits Street' is a disgrace. If you have no hope of work and society has rejected you, what do you do? You watch tv. You might drink, to forget how crap your life is. You might try your luck on gambling machines to try to increase your last few quid to something worth having. You might socialise in the streets because you can't afford to do it at the golf course, or a nice restaurant. Many people steer away from these potential pitfalls but their stories aren't so colourful. In fact, they're often more grey than most people could even imagine - I know, I've been there. The truth that a real 'Benefits Street' would be mostly pensioners, followed by a number of working people on low pay (often with big companies who can afford to pay more) and only a few unemployed people is lost on much of the public.

Why are there so many people on in-work benefits? Because underemployment is high and wages are very low whilst the cost of living is increasingly unaffordable. There are big profits to be made in the private sector (even if Tesco have just announced a drop in profits, they are still the biggest company in the UK) but they don't pay their staff enough to live on. Gone are the days when companies increased staff pay to increase loyalty and morale (often thought of as 'Fordism' when Ford employees became able to buy its cars). These days, they use threats to keep you working.

But again, the idea that the blame lies with bankers who gambled with our economy and go unpunished, and greedy profiteers exploiting workers with low pay, lack of job security and avoiding taxes (for example having two or three people to one job, which is good for the employer because more workers working less hours = less employer NI payments) will be lost on many.

How many of the ill-informed millions vote is hard to say. But you can be sure the government and the right-wing media will be spending a lot of time, money and effort to give voters this impression of lazy, anti-social, ignorant masses gobbling up your taxes for their leisure.