Country-by-country reporting is a victory for citizens over companies

Prem Sikka

The Twitter age is about to chalk up its first success in the grey world of corporate accounting. It has been reported that the European Union will seek to make large companies disclose the taxes they pay and profits they make on a country-by-country basis.

This is part of the crackdown on corporations avoiding their obligations. The concerns are driven by tax avoidance, as companies have sales, employees and assets in one place, but end up booking them in jurisdictions with comparatively few employees, sales and assets. The idea behind country by country (CbC) reporting is to enable citizens to scrutinise corporate practices and ask critical questions.

The EU proposals mark the beginning, but CbC is a much broader idea. It supplements the traditional model of publishing profit and loss account, balance sheet and a cash flow statement. These statements relate to the company as a single economic entity and do not provide any disaggregated information. So these statements do not reveal the taxes a company may have paid in each country, or the profits and losses made there.

The traditional approach in accounting circles has been to require companies to publish “segmental reports”, in which company directors offer a commentary on major operating segments, products and services, the geographical areas in which they operate and their major customers. Such reports are too general and do not focus on each country.

In contrast, CbC requires companies to publish a table showing sales, costs, profits, losses, taxes, loans, subsidies and employees for each country of its operations. It could even be used to demand information about carbon emissions and other corporate footprints in each country. Such a table would show that a location has relatively few employees but is reporting very high profits, or that a country has a high proportion of a company’s sales and employees, but pays little or no tax. Armed with this information, citizens may be able to construct shadow accounts and question conventional accounts offered by corporations – the ones that say, “we are good citizens, we pay taxes and really care for the community”.

CbC is the culmination of a decade-long campaign by civil society organisations. When fully enacted, it will be the first accounting standard formulated and developed by civil society rather than the traditional accounting standard setters. It represents the first time activists have demanded and secured an accounting standard that the establishment was not keen on in the social media age.


In 2003, in my capacity as director of the Association for Accountancy and Business Affairs (AABA), I encouraged Richard Murphy, a chartered accountant, to draft a proposal that could highlight flight of capital, profits and the mismatch between profits, employees, assets and tax.

The first draft was published in 2003 and has continued to be refined. Initially, meetings were sought with the more traditional accounting standard setters, such as the International Accounting Standards Board (IASB) and the Financial Reporting Council (FRC), but they showed no interest.

There was considerable opposition from the professional accountancy bodies. For example, the Institute of Chartered Accountants in England and Wales was vehemently opposed to it. Major accounting firms and corporations were also opposed to CbC.

For example, Deloitte said “we do not believe that imposing incremental country by country disclosure in financial statements prepared under IFRSs is warranted”. A survey in 2010 did not show much enthusiasm for CbC among FTSE 100 directors. The usual arguments were that disclosure would be costly, even though companies should already have the information about the performance of their subsidiaries in each country of their operation. The cost of publishing this internally held information is negligible.

The main turning point was the support given by NGOs, such as Christian-Aid, Publish What You Pay (PWYP), War on Want, Tax Justice Network, Oxfam and many others, not only in the UK and the EU, but also in developing countries and the US. The credit for this must go to Richard Murphy. This campaign was joined by some Members of the European Parliament (MEPs) and also Labour MPs.

Much to the dismay of the accounting establishment, their pressure persuaded the EU to launch a consultation exercise in 2010 and has now resulted in partial implementation of CbC. No doubt, there is more to come.

The story of the country by country reporting is that in the digital era, it may well be possible to mobilise alternative centres of power, at least in crafting new accounting disclosure rules. This announcement has been a victory for those of us who campaign for greater transparency on tax. Let’s hope it’s the first of many.

Prem Sikka is senior adviser to Tax Justice Network.

This article first appeared on The Conversation website

The consequences of the EU bank rescue

Hugo Radice outlines the implications of the European Central Banks' recent actions to support the European Union's banking sector.

Through the second half of 2011 there were persistent signs of financial stress in many banks right across Europe – not only in Greece, Ireland, Portugal, Spain and Italy, but in France and even Germany too. The banks were already struggling to meet the higher capital and reserve requirements that have been emanating from the Basel III international regulatory proposals, as well as to meet public expectations of a resumption in lending to help the economic recovery. But in addition, the continuing uncertainties about Eurozone sovereign debt led to a seizing-up of the interbank loan market, and the supply of term deposits and medium-term lending to banks, on a scale not seen since the 2007-8 credit crunch.

However, the unexpected and massive loan interventions by the European Central Bank in December and February appear to have completely transformed the picture. The new head of the ECB, Mario Draghi, invited all Eurozone banks to apply for unlimited loans at 1% interest and up to 3 years’ duration, and has thereby pumped over €1 trillion of liquidity into the banking system. The loans under the Long-Term Refinancing Operation (LTRO) were made available to all banks operating within the Eurozone, not just those owned and headquartered in the zone, so even UK banks have been able to borrow, albeit only within their Eurozone subsidiaries. The total amount lent was €489 billion in December, and a further €530 billion on February 29th.

This move by the ECB took most commentators by surprise. Their attention was focused firmly on the sovereign debt problems, and when Draghi took office he made it quite clear that he was not about to take up the proposals by Keynesian critics of austerity for the ECB to directly support the sovereign debt market by large-scale bond purchases, or to consider the pooling of risk by means of exchanging national sovereign debt for ‘Eurobonds’. Given the continuing failure of Europe’s political leaders to resolve the marathon Greek crisis and reassure the bond markets over the risk of contagion, it was politically impossible for Draghi to openly challenge the dominant views of Eurozone creditor countries, who were adamantly opposed to such a resolution.

So what is the significance of this new ECB policy? First, the ECB has provided significant breathing space for European banks, given their need to refinance their loan books, build up their reserves and increase net lending to help the recovery. Second, the banks have used some of their new borrowing from the ECB to buy Eurozone sovereign debt, easing the pressure on national governments. Thirdly, it has brought a political breathing space while the Eurozone’s national governments try to reach agreement on the long-term objectives of a de facto fiscal compact and a new European Stability Mechanism.

With regard to the banks themselves, in the run-up to the December loans it was increasingly clear that a major source of worry for Eurobanks was the drying-up of lending from US money-market funds – a major component in the so-called ‘shadow banking system’ in the USA. Such lending had funded a large proportion of Eurobank purchases of US asset-backed securities during the run-up to the 2007-8 credit crunch, and many of those loans were due for repayment in 2011-12. As the Eurozone debt crisis dragged on through 2011, the US funds cut back their exposure to both sovereign debt and European banks, reducing such lending from 30% of their assets to around 10%. But since December, they have begun once again to lend to European banks: this indicated their need to find profitable use for their mountains of cash, their increasing confidence that the US and global economies would avoid a double-dip recession, and their view that the Eurozone would at least muddle through the sovereign debt crisis. Nevertheless, this return to borrowing from US money market funds carries significant risks, in the view of Eurozone financial authorities, precisely because they don’t want the banks to rely on short-term borrowing. Instead, they hope that the general easing of what was shaping up to be a severe credit crunch will allow banks to raise much longer-term finance to enable them to meet the Basel III capital requirements and go on to finance a European recovery.

In relation to the sovereign debt crisis, while the cost of borrowing has fallen significantly, it is not clear how far this has been directly the result of the LTRO. Historians of the crisis will recall that in 2009, when the US Federal Reserve and the Bank of England embarked on their policies of quantitative easing (QE), the ECB instead, as The Economist put it, “offered unlimited loans to commercial banks for up to a year against a broad range of collateral”. The result was much the same as that of QE in the USA and UK: “Banks used much of the cash to buy government bonds, which drove down long-term interest rates”. What is more, the ECB has discreetly helped to manage the sovereign debt crisis in another fashion: through its role as a clearing-house for the settlement of intra-Eurozone foreign trade, a system known as Target2. By December 2011, the German Bundesbank was in credit with Target2 to the tune of €495 billion, which in practice means that Germany has lent this sum to the Eurozone trade deficit countries, especially Greece, Ireland and Portugal. By giving help in this discreet way, the ECB has in effect protected Chancellor Merkel and the Bundesbank from the wrath of German public opinion.

In any case, since December 2011, Italian and Spanish banks have bought their own governments’ debt, but it is hard to separate out this factor from the generalised support that the bond markets have shown following the accession to power of first Mario Monti and his ‘government of technocrats’ in Italy, and more recently the Partido Popular under Mariano Rajoy in Spain. Whether the bond markets will remain supportive will depend on their economic and political expectations through the rest of this year. The announcement on March 8th that Greece’s private creditors have accepted their ‘haircut’ may turn out to be another flash in the pan, if the Greek economy continues its precipitous decline under the weight of austerity.

And this brings us to the broader question of the future of the Eurozone, and indeed the EU as a whole. At present it looks as though the trumpeted December agreement on a fiscal compact will be ratified by those national governments that signed up to it, although the process could be delayed or even derailed, if the Irish government finds itself obliged to hold a referendum. At the same time, businesses, households and investment institutions are sitting on huge mountains of cash, which are not going to be spent unless and until ‘confidence’ is substantially restored. Right now, while there are continuing signs of some economic recovery in North America, Europe as a whole is at best stagnating, while China and other so-called emerging economies are experiencing a slowdown. The prospect of accelerating public spending cuts, especially across nearly all of Europe, is increasingly troubling not just Keynesian converts like Martin Wolf of the Financial Times, but also those bastions of neoliberalism, the International Monetary Fund and the Organisation for Economic Cooperation and Development.

However, we should not forget the old maxim “never waste a good crisis”. The media debate over the Eurozone has viewed the political drama of summits and compacts very largely in terms of the issue of national sovereignty and EU governance, which has dogged the entire European ‘project’ ever since 1958. But the underlying story which needs to be brought into the spotlight is the way this sovereign debt crisis is being used to accelerate the implementation of neoliberalism across the EU and beyond.

In this respect, market liberalisation and deregulation may be just as important as fiscal and monetary policy. To a considerable degree, Germany’s relative economic success since 2000 is not because of superior management, high technology and ‘patient’ bank finance, but the Hartz series of labour market reforms. These have had two particularly important consequences: first, they led to the creation of several million mostly part-time and ‘flexible’ jobs, which has reduced the headline rate of unemployment; and second, taken together with the relentless campaign of the mainstream parties (especially the SPD) and the media, the penetration of the ideology of competitiveness into the more privileged full-time workforce. This was reinforced in 2008-10 by government initiatives to support the adoption of shorter working hours, as an alternative to layoffs that would disperse job skills and demotivate the workforce.

The German ‘success story’ has now become the European equivalent of the Washington Consensus, through which neoliberalism was imposed across the less developed world in the 1980s and 1990s. In the Euro-periphery, flexible labour markets, deregulation of the professions and the privatisation of the public sector have formed the core of the ‘reform’ programmes in Spain, Italy and Portugal, as well as most notoriously Greece. Ireland already had an exemplary neoliberal political economy before the crisis, although this does not appear to have spared them any of the rigours of austerity. These programmes are presented as absolutely necessary to restore national competitiveness through reducing costs of production; it appears to have escaped most liberal commentators that if all countries pursue this strategy, they will end up on a downward spiral of reduced incomes and lower consumption, together with a system-wide redistribution of income from wages to profits.

Although having no direct role in its implementation, the ECB has nevertheless played a vital role in disseminating the ideology of market liberalisation and national competitiveness, revealed recently in Le Monde Diplomatique. Presenting itself as ‘apolitical and run by technicians’, the ECB is now busy transferring this mantra to the new governments under its de facto control in Greece and Italy. Governments elsewhere in Europe, regardless of their supposed political colour, are using the Bank as cover for their uniform policies of austerity and liberalisation. Furthermore, the resumption of neoliberal ‘business as usual’ has the support of the great majority of ‘mainstream’ economists, many of whom have now been ‘outed’ as the paid servants of private finance and big business.

But in addition, the ECB’s LTRO provides a loan period of three years, not the one year period offered in 2009. Unless the Eurozone’s plans for a fiscal compact and a larger stability fund come seriously unstuck in the meantime, this has the important consequence of providing a breathing space to implement the revamped neoliberal model more fully. Twenty years ago, the European centre-left actively pursued the alternative ‘social Europe’ model, but signally failed to convince the European public sufficiently to head off the neoliberal juggernaut. This time round, we somehow have to do better; otherwise we face not just years of austerity, but the final dissolution of the postwar welfare state in Europe.

This article first appeared in Red Pepper

EU dominos - who's next?

The chart below (from the Bank of England's Charles Bean) shows the 10-year government bond spreads for selected EU nations: Portugal, Ireland, Italy and Spain, as well as France and the UK.



Where is Greece in this 'who's next for disaster' chart? You might ask. Well, Greece is off the chart with its 10 year bond spreads currently attracting interest at somewhere north of 26%, according to Bloomberg.

Off the chart and out of the game. It's debt is unrepayable. The question is if Greece defaults will that have a domino effect? The potential domino effect is twofold:

1. German and French banks are most exposed (see Dexia already), but some debt is held by Spanish, Italian and Portuguese banks. A default or severe 'haircut' (partial write-off) of say 80% would have an impact. These nations would then be faced with a choice: a) let a bank fail; or b) bail-out the bank with more government debt, further worsening the sovereign debt crisis
2. The second domino effect is on the bond markets, which would be spooked by a default and hike interest rates on riskier debtors - in the same way that high street banks have jacked up margins and became more cautious lenderdfollowing the credit crunch, restricting lending to businesses and damaging the economy. This could mean Portugal, Spain, Ireland and Italy paying more for their debt - exacerbating their debt crisis, and potentially sending them into a Greek-style death spiral.

It's worth bearing in mind that if Italy, as the third largest eurozone economy, got in trouble the whole eurozone would be at risk. It currently has 2 trillion euros of debt.

Since the Bank of England produced the above chart, Italy's bond interest rates have risen from around 4% to 6%. If that gets up to Portuguese levels, let alone Greek, then Italy is in serious risk of default. Even a 20 or 30% haircut would be deeply traumatic - crashing banks around the world, with serious domino effects.

That's why the G20 meeting in Cannes is obsessed with this issue: finance capitalism is at risk!

Greece - the people vs global capitalism

Events in Greece over the last 24 hours have resembled the plot from a political thriller – A Very British Coup perhaps. Under fire Greek Prime Minister Papendreou announced a referendum on whether to accept the bailout terms agreed at the recent EU summit. He apparently did so without consulting his Cabinet, and by lunchtime his finance minister was in hospital with a suspected heart attack, and a backbench MP resigned.

He also took the surprising step of replacing all of the military top brass – the heads of the defence staff, army, navy, and air force – all replaced and apparently without any warning to Cabinet or military. Obviously the Greek military has history – a CIA-backed junta ruled Greece from 1967-74 – but did Papendreou believe a coup was on the cards?

Certainly there are the siren calls for a government of national unity from opposition MPs (and the PASOK MP who resigned yesterday). The major opposition party is right wing, and the security establishment will have been rocked by the massive and occasionally violent protests and strikes in Greece which have intensified and grown in recent weeks.

Plus by calling for a referendum, he will have infuriated the EU and IMF – and therefore NATO (of which Greece is a member) – and so the Greek military and political right (supportive of the bailout terms) would have potentially had international support.

Twenty four hours after issuing the referendum call, the Cabinet has unanimously backed it, and it will take place in December according to rumours. With no further resignations, Papendreou seems likely to survive a confidence vote on Friday too.

While all this clandestine backroom activity may have been necessary to get the referendum (and avert a coup?) it was the very public protests that have won it. The marches, rallies, strikes, direct action and street-fighting against the government, banks and police have been a demonstration of the commitment of the Greek people to resist austerity.

Now the people have the final say in a referendum, which as Papendreou has said will effectively be on membership of the euro.

So what would a yes or no vote mean?

A yes vote would mean misery heaped upon misery for the Greek people. With a stagnant and contracting economy, high and rising unemployment (16% nationally, but 40% for young people – double the respective UK rates), jobs and services already slashed, taxes increased and wages cut or frozen.

The bailout demands an intensification of austerity to satisfy creditor nations and banks.

A no vote is more complex. It would mean defaulting on debts, an exit from the euro (so as not to further weaken the currency). It would mean reinstating a national currency (drachma mk2).

As Greece would still be an economic mess, this is no silver bullet. The Greek economy is heavily flawed and needs urgent investment. Tax evasion is rife and needs to be immediately addressed, but so does investment – in order to create jobs and bring unemployment down.

Greece would need a friendly nation to support it – to lend to it on a comparatively favourable long-term basis. Which nation could do this? That would depend on the nature of the government in place at the time. A possibility would be one of the BRICs least affected by Greek default, or by going to the Latin America via Mercosur or even ALBA for an extraordinary loan.

To avoid the money markets playing havoc with the new currency, and a descent into Weimar hyperinflation, there would have to be firm capital and export controls – which would in turn necessitate breach EU rules, and presumably necessitate exit from the union entirely. Bilateral arrangements, such as those achieved by other non-EU states should be possible but will take time.

Much of the above is necessarily speculative – we are entering unchartered waters – but one thing is clear the people of Greece have forced this referendum through considerable struggle. They now need to realise their power and create a vision that can unite what they are for too.

Their victory (albeit partial)* should also inspire anti-austerity struggles across Europe, particularly in Spain, Italy and Portugal.

*It is a victory to have forced their right to have a say, when the EU and IMF though they had done a deal to salvage banks and creditor nations at the Greek people’s expense. But the victory is partial because – without winning a no vote in the referendum and then, crucially, having a unifying vision that their movement can force into the political arena – it may only be kicking the can down the road. But for now, it is the Greek people doing the kicking.

Socialism or barbarism for eurozone

Andrew Fisher, LEAP co-ordinator, analyses the eurozone crisis

The eurozone crisis is complex, and the cause of the crisis varies from country to country. One could glibly (albeit accurately) argue that the crisis is capitalism, but that would not give an understanding of the different processes that have led us to where we are now.

There are however several common themes for many of the key crisis countries: the failure to collect tax revenues, deregulation of the finance sector, the bursting of the construction bubble, and the dismantling of social infrastructure as a solution (more palatably referred to as ‘austerity’). The latter of course is imposed to solve the crisis, but in fact exacerbates it.

In Ireland tax revenues were deliberately slashed by government policy to cut corporation tax, in Greece and Spain tax collection infrastructure is woeful. In Spain and Ireland a construction boom eventually outstripped demand – as it did in the US – with housing prices now up to 50% on average below their peak in many cities.

However, an overarching problem that played a part in causing the crisis and has hindered any solution is the structure of the eurozone: in which fiscal policy has been made in the interests of the larger economies to the detriment of those in the periphery, and by an unaccountable (or ‘independent’ as Gordon Brown would describe it) central bank.

The same dynamic is playing out now. Greece will inevitably have to default, and should have been allowed to immediately, to save its people from wave after wave of austerity measures.

The opposition to Greek default came from the creditor nations, who fear having to bail out their banks which loaned massive sums to Greece. The French-Belgian bank Dexia has already required assistance due to the ‘haircuts’ to its Greek debts.

The fear stalking the meeting of European Finance Ministers in mid-October was a domino effect across European banks. If Greece or Ireland or Spain or Portugal, or even Italy start defaulting on their debts, then banks could fail throughout the eurozone. Those banks in turn have debts with other banks, and we could be back to 2008/09 when much of the global banking system needed assistance.

There are two things that are clear. The first is that austerity is making the situation worse. By raising unemployment, suppressing wages and slashing benefits the risk of default on personal loans and mortgages increases – further destabilising banks. Likewise suppressed consumer demand is making life difficult for retail businesses, which in turn affects manufacturing –and because of the increased risk of personal and business debt defaults, banks are far more cautious about extending credit.

The Greek trade unions – taking strike action in mid-October – were absolutely right to describe their nation’s plight as a “death spiral”. There simply is no way out.

The second clear conclusion on EU policy is that a second round of mass bailouts will be necessary. This can either be in a controlled and co-ordinated way of managed debt default that writes off bad debts through public ownership or it will be an each country for itself panic in which nations like France and Germany go for a UK style bailout while the peripheral nations – unable to borrow on the international markets – watch their financial institutions fold. This will in turn create a tide that even the larger economies of Germany and France are unable to stem.

The reality encroaching on eurozone finance ministers is that their European Financial Stability Fund has nowhere near enough funds to actually cope with the scale of the bad debts. The markets know this, hence the downgrades of eurozone nations and banks.

The promises to make good on these debts cannot be paid, so defaults will be necessary. By acting swiftly this crisis could have been contained. Instead the situation has been aggravated by austerity and mounting interest rates, especially for nations and financial institutions deemed riskier.

The economic crisis of the 1930s was only resolved through rearmament, militarisation and horrific war. This crisis requires that we take into public ownership and control the finance and credit system. Without that we face each nation scrapping for its own skin and mass social upheaval as depression bites.

The irony of this is that the eurozone was allegedly designed to prevent such beggar-thy-neighbour behaviour. In fact the inherent instability of the eurozone, with a single interest rate and restricted deficit spending combined with neoliberal deregulatory policies, has actually caused precisely that.

In the words of a truly great European leader: it’s socialism or barbarism.

• This article first appeared in the November 2011 issue of Labour Briefing and was written before the European summit concluded in the early hours of 27 October

GDP figures expose Osborne's economic ineptitude

GDP figures today show the economy grew by a pitiful 0.2% in Q2 of 2011, throwing the OBR's growth estimate way off course - meaning Osborne must now focus on growth (but more likely will announce more cuts to deal with an expanding deficit).

In advance of the formal announcement, commentators had been expecting GDP growth to be within -0.5% to 0.5%. This in itself tells a story. Low expectations reflect the failure of George Osborne's economic strategy - his cuts have suppressed growth, as well as causing the inevitable misery: pain without the gain.

All of this has been entirely foreseeable and predicted. Those on the left have rightly argued that unemployment is the main issue Osborne should be addressing, rather than his deficit obsession. Like my Nan used to tell me 'take care of the pennies and the pounds will look after themselves', a new maxim should be 'take care of unemployment and the deficit will take care of itself'.

Osborne's failure to create jobs and growth domestically is being compounded by the failures elsewhere in the world. The eurozone (always unviable IMO) is floundering as the reality of one monetary policy for such clearly different and divergent economies is made clear. Nevertheless there are some common truths for those countries most in crisis: the first being routine and endemic tax evasion and avoidance; the second being the deregulation of the finance sector; and the third, and least commented on, being an absence of manufacturing base in the economy.

This latter point is now being exacerbated by the growth of the BRIC countries (Brazil, Russia, India and China) particularly the latter. The effect on Europe and North America to the new reality of China as a major manufacturing economy (and the other three also catching up) is huge - and has the effect has been exacerbated in the US due to NAFTA, which had already decimated US manufacturing industry. In the UK, manufacturing has dropped by 9% since 2008 Q1.

With none of the three issues: tax justice, financial regulation and manufacturing policy at the heart of any western government's programme, the future economic prospects look bleak however today's GDP figures are spun.

Download the full ONS data and analysis


* Royal Wedding - a final word on the frippery ... in November 2010, the Telegraph reported that the Royal Wedding would boost the UK economy by as much as £620 million. When retail sales figures were published previously, and GDP figures today, the consensus switched to blaming the extra bank holiday for hitting the economy. The ONS today said "There were a number of special factors which may have affected economic activity in the second quarter, including the additional bank holiday for the royal wedding", but later says: "Sales in April may have been boosted by the royal wedding, before falling back in May". So the royal wedding as a special factor may have been a boost to the economy. Regardless, it's effect was minimal and Osborne's strategy is failing.


Update: and back to a serious point, good analysis of the GDP figures and reasons for UK's economic malaise by Unite General Secretary Len McCluskey on the Guardian website, "there is no plan for growth beyond an entirely dogmatic trust in the private sector. The possibilities of, for example, using the state's stake in major banks to drive investment are simply ignored."

Greece is the word, democracy isn't

Ancient Greece was the birthplace of democracy - the word coming from two Greek words demos (meaning 'the people') and kratos (meaning 'to rule').

It was very clear this week that in modern Greece the people certainly don't rule, though they are fighting back.

By joining the Eurozone, Greece is subject to the Growth and Stability Pact (meaning its deficit cannot exceed 3% of GDP) and its currency is run by the European Central Bank (ECB). As a relatively minor economic force what hope have the people of Greece got of the ECB taking decisions in its favour?

The EU approved austerity plan was reported on the BBC as being:

• Cut budget deficit below EU ceiling of 3% of GDP by 2012, from 12.7% in 2009
• Freeze public sector salaries and cut bonuses
• Replace only one in five of people leaving civil service
• Raise average retirement age by two years to 63, by 2015
• Raise taxes on fuel, tobacco, alcohol and property

In short, freeze public sector pay, cut public sector jobs , make people work longer, raise regressive taxes. Yes, the EU's solution to the crisis of neoliberalism is more neoliberalism.

There are lessons for the UK here too - our deficit is about the same as that of Greece (12.5% to 13%). If the UK was in the Eurozone we might be having austerity packages imposed on us. As ever with the UK though we don't wait to have economic stupidity imposed upon us - we have three political parties fighting a general election on so far mystery austerity packages (cuts: bold, swingeing or savage - the choice is yours!).

Ten Days That Shook New Labour

Large numbers of workers taking spontaneous direct action have not only shocked this New Labour Government but have also disoriented some sections of the Left.

I have been off the scene largely because of the 3rd Runway announcement two weeks ago. When the Government announces that 10,000 members of your community are about to lose their homes and you are their MP you have a responsibility to focus your attention on their deep felt cares and concerns. So in the last couple of weeks I have thrown myself into organising meeting after meeting in my constituency, speaking to over 1500 people and contacting by various means nearly 20,000. Their response has been feelings of fear, insecurity, anxiety, anger and sheer determination to fight back.

It is these same feelings of insecurity, turning to anger and determination to resist that has motivated the workers involved in the strikes at the energy companies around the country. No worker can feel safe in their jobs as the recession slips into a depression. People are inevitably fearful for their futures.

They also have no confidence in the existing political structures and process being able or willing to do anything to protect them. The party that they voted into power has turned out to be the very Government that has promoted the privatisation, contracting out, outsourcing, and off-shoring, which have stripped away their basic protections at work, undermined their employment security, intensified their exploitation, cut their wages and forced them into debt dependency.

People have also learnt that working through the official structures of their trade union has been rendered largely ineffective by the persistence of Thatcher’s anti trade union laws under this Government. Increasingly they have also come t know that they cannot rely upon many of their trade union leaderships who have delivered up their unions in support of New Labour and who less than 2 years ago installed Brown as Labour leader, the evangelist for globalisation, free markets and flexible labour.

Without political representation and with limited potential to mobilise through official union channels there is no other route but to take but direct action when fear for jobs turns to anger.

Every member of the Labour and trade union movement should welcome the energy workers getting off their knees, standing up and fighting back. It's called solidarity.

In any dispute or struggle this doesn’t mean blindly accepting either the analysis or demands of those directly engaged in the dispute. It certainly doesn’t mean accepting without question the media’s representation of their demands. Disputes are at times chaotic with goals sometimes ill defined and often quickly evolving.

This latest round of disputes, like many more to come, has been about the right to work. As this latest crisis of capitalism unfolds many more workers will be demanding the right to work and we must support them.

If we are provide effective support we can learn from some of the lessons of this dispute so far.

First, as the Government has refused to abolish the anti trade union laws the lesson is that if workers are sufficiently determined they can just ignore them. Using unofficial structures has been successful in mobilising this time but by their nature they are difficult to maintain. If the TUC and the general secretaries of major unions showed the same determination and solidarity of the workers in this dispute and stood together to challenge the legal restrictions on trade union rights in Britain we could destroy them once and for all. Future disputes should be made official to bring this issue to a head.

Second, if cheap labour is being used by employers to undermine wages and conditions, its country of origin is irrelevant. Similarly, "British jobs for British workers" was designed to divide us to compete for increasingly scarce jobs, forcing down wages and eroding job security. Just as many of the stewards in this dispute have made clear, we should never allow the bosses or the media to divide us on grounds of nationality or race. Our demand is the right to work for all.

Third, because the EU legislation and court rulings associated with the open market are being used to divide worker from worker the onus is upon us to build urgently the links of solidarity with European unions to enable joint action to protect jobs, wages and conditions. Where the TUC has failed the newly formed TUCG of radical unions could succeed by launching a series of talks and measures to construct these international alliances.

Fourth, as the depression forces more workers onto the dole queue industrial action alone will not be enough to protect jobs and living standards. The question of who will pay for this crisis will be determined by the answer to the question who controls our economy. The battle for control of our economy needs to be fought out politically as well as industrially, and nationally as well as at the level of the firm and industrial sector. Our demand is for a national economic strategy aimed at protecting and creating jobs, investing in public services, ending privatisation and promoting public ownership, tackling poverty and inequality and creating a sustainable environment. The launch of the People's Charter campaign presents us with an opportunity to mobilise for this change.

Fifth, the depression is likely to present the Left with ever new situations and challenge us to respond swiftly and effectively. Very quickly we need to decide the best mechanisms for the faster flow of information and for the co-ordination of solidarity action. The TUCG, the LRC, the Convention of the Left, union broad lefts and the emerging People's Charter network of activists, all have a critical role to play. Putting this together quickly over the coming period will be a central task for us all.

Wildcat strikes, the EU and UK labour law

The news is full of allegations of strikes against foreign workers. This is a misrepresentation of the facts, if not some of the sentiment expressed on placards that have quoted Gordon Brown's words in his 2007 speech to Labour Party conference, his first conference as Labour leader, where he uttered the phrase "British jobs for British workers".

EU law allows for the "free movement of labour". Many Britons of course work in the EU and have benefited from this provision. Likewise many skills shortages have been filled in the UK by EU workers. While many conceive of this on an individual basis of European workers able to seek work without discrimination across the continent, in fact there is the power for EU firms to export entire workforces across the continent.

Is this a socially progressive statute? I would argue not. A legal verdict in 2007 sanctioned the right of a company using foreign labour for work in another EU country without observing local pay rates. The right to free movement of labour in the EU is increasingly therefore a right for companies to freely move labour around the continent.

While companies have always relocated across the world to cut labour costs, now they also have the right to move labour across the world to reduce labour costs. This is a right for big business not people. The 2007 EU Court's decision in the Laval case allowed a Latvian company renovating schools in Sweden to bring in workers from Latvia and pay them at Latvian rates.

Of course no one has actually seen the terms and conditions of the Italian workers at the Total oil refinery in Lincolnshire, as the figures are "commercially confidential". But the suspicion is they are being paid less, which is probably why the Italian company won the contract.

While there is nothing progressive about sloganising "British jobs for British workers", there is nothing progressive either about the EU law in this matter.

As the left, we have to come up with a progressive solution that protects workers of the world. Neither the Gordon Brown parroting the BNP (from whom he stole the phrase) nor the EU offer us a solution.

Co-ops under threat by Big Business EU

The European Commission, prompted by private enterprises, is considering changing tax laws for all co-ops. This is a serious threat to the co-operative movement across Europe.

Co-operatives Europe states that private business has complained that laws recognising co-operatives in individual nation states give co-ops "privileged tax status" and "preferential tax regimes" and "are disguises for State Aid". Twenty-five of the EU's 27 member states have legislation recognising co-ops.

Please support the petition to defend the co-operative model.

Private companies in France, Italy, and Spain, want the European Commission to change the national tax rules for co-operatives. With these changes, they could reduce competition and steal the co-ops' business.

A co-operative's tax liabilities are calculated after the payment of dividend to its members. Currently the law recognises that co-op dividends are entirely different to company dividends. The spirit of their distribution is one of thanks, and recognition of its members' efforts; returning money that they have spent on the society.

If this were found to be uncompetitive, more than 250,000 co-op enterprises, employing 2.3 million people across Europe would be placed under heavy financial strain.

European co-operatives have bonded together to fight these accusations, and ask for your help. They do not want special privileges, only the right to exist, under a model that recognises their distinct and important role in the social economy.

As the Vivian Woodell, Chief Executive of the Phone Co-op states "Let's do all we can to prevent the attempts of private share-holding companies to reduce consumer choice, and end the ethical challenge of the co-operative market.

"Let's force them to realise the unique relationship of co-operatives with their members will ensure that their claims are dismissed!"