IFS is right to back Land Value Tax

Dave Wetzel, President of the Labour Land Campaign congratulates the Institute for Fiscal Studies (IFS) on its conclusion in its Green Budget 2014that a Land Value Tax on all commercial land would be more efficient and better for businesses than the current Business Rates system.

The IFS states that a land value tax “would remove altogether the disincentive to develop and use property that business rates creates”.

The Labour Land Campaign agrees that taxes on buildings act as a disincentive to use commercial sites efficiently but also that taxes on business are not only inefficient but are easily avoided and evaded whereas because land is immobile, an annual tax on the economic rent of each site according to its optimum permitted use cannot be defrauded and acts as an incentive to use valuable land in towns and cities efficiently and discourages the land hoarding and speculation that forces prices up.

Dave Wetzel says "The Institute for Fiscal Studies’ work showing the greater efficiency of Land Value Tax is a huge step forward for the UK to see a fundamental shift in taxation off earned incomes, savings and production and on to land and other natural resource rents. Land is not produced by human endeavour and land wealth is created as a result of public and private investments which we all pay for as tax-payers and consumers and not by the landowners who benefit financially."

The Labour Land Campaign recognises that most current taxes in the UK are unfair and inefficient. Income Tax along with National Insurance Contributions and Corporations Taxes are avoided and evaded by many, leaving the tax bill to be picked up by honest and less devious taxpayers. Everyone pays tax in some form or other directly or indirectly and those taxes pay for our public services that create and add to land value in the UK including transport, health care, good state schools, parks and so on but it is owners of land that reap the unearned income of land wealth through no effort on their part.

By reducing taxes on wages and business and introducing an annual Land Value Tax, land will be used more efficiently, demand for building on green land will greatly reduce and speculation in land prices increasing will disappear. Employment will grow as investors are encouraged to expand current businesses and start up new ones all over the UK and the land wealth which is created by all of us will be collected and used for the public good.

Barclays and the sack race 2

Last year Barclays bank made a large profit and celebrated by sacking thousands of staff (see Barclays and the sack race).

This year Barclays made even more profit - and so to celebrate will sack even more staff. Barclays adjusted pre-tax profits were £5.2 billion for 2013, that's £165 every second in profit. In a month that's £430 million.

The sack race

Barclays also announced that it will be sacking up to 12,000 people (including 7,000 in the UK). So assuming every employee to be sacked is on the average UK full-time wage of £26,500, Barclays could afford to keep every single one of them on for a year (including NI and pension contributions) from less than one month's profits.

As we said last year, no company should be able to make redundancies as long as it was profitable. After all, why should a company making profits be allowed to sack the workforce that produced those profits - simply to try to make higher profits for shareholders and to give ever larger bonuses to casino bankers?

Bonuses

But take a look at where the money is going. Before profits are calculated, Barclays will £2.38 billion in bonuses to its investment bankers - the socially useless parasites of late capitalism - a 10% increase on last year.

Instead of paying those bonuses (on top of above average wages) that £2.38 billion could pay for a golden goodbye of £200,000 to each of the 12,000 staff being sacked.

The Barclays model

But it won't. Barclays' the epitome of a nihilistic cannibal capitalism, that strips jobs, pay and dignity away from the many to give riches to the few. This is the gratuitous redistribution of wealth from poor to rich.

It also means customers will get worse service - those sacked staff will translate into few cashiers, fewer staff in call centres and possibly the closing of some high street branches.

• See also Ripped-Off UK looks for radical solutions

Winning the Living Wage at the Royal Opera House

The Independent Workers Union (IWGB) confirmed today that porters and cleaners working for MITIE at the Royal Opera House have secured a landmark victory in their fight for workplace justice that will lift them out of the poverty trap. 

Workers at the Royal Opera House have overwhelmingly accepted an agreement with the facilities company MITIE which guarantees all porters and cleaners receive the London Living Wage of £8.80 per-hour.

The workers voted by a 100% margin to strike during the BAFTA awards on 16 February. Their campaign has won widespread support. Award winning director Ken Loach issued an appeal for support demanding “No-one should cross your picket lines”. The actors' union Equity and the Musicians Union wrote to the Royal Opera in support of the IWGB members. Glenda Jackson MP joined 25 other MPs signing Early Day Motion 919 tabled by John McDonnell MP in support of the workers.

LEAP chair John McDonnell MP said: 

“This is a tremendous victory for the IWGB workers and it sends out a message to all low pay employers that we are not willing to tolerate poverty pay and we're coming for you."

The Royal Opera saw a series of mass protests by trade unionists and students who invaded the premises demanding justice. Following failed talks at ACAS, the Royal Opera offered to pay the current Living Wage in April 2015. The IWGB made a counter offer for:1 February 2014 the pay rate of £8.00 will apply; and from 1 April 2014 the pay rate of £8.80 will apply.  

The pay rise from 1 April represents a 25% increase from the cleaners' current pay of £7 per hour, but this increase (including employer national insurances costs) represents just 0.15% of the Royal Opera House's annual income. That's the equivalent of adding just 24p a ticket to every performance.  

With the union campaign escalating MITIE and Royal Opera House finally agreed to the settlement. Chris Ford IWGB General Secretary said: 

“IWGB pays tribute to the courage and determination of our members. Combined with the solidarity of the labour movement, of students and youth, we have secured this fantastic victory. In five months we have gone from arrogant disdain by the employers to win the first pay rise in three years for these cleaners and porters. It is an example to all workers struggling to live at present.”

Corporate justice?

This blog has not shied away from taking a sideways approach to economics at times, and neither has it hesistated from looking at how economic power influences other spheres of life. One of those areas has been criminal justice - from comparative approaches to fraud to the relative crimes of Barclays and naked ramblers.

Today, the Guardian reported 'Metropolitan police accused of acting on behalf of big business' - helping make arrests for Virgin to bring a private prosecution for fraud, for which Virgin paid the Met. Many people, including Green London Assembly member Jenny Jones have highlighted the apparent ability of corporations to buy justice:

We have a form of private policing by @metpoliceuk which I think is plain wrong: http://t.co/opg5xfQxAP Better justice for rich?
— Jenny Jones (@GreenJennyJones) January 30, 2014

Labour MP Tom Watson said: "This sounds like emerging two-tier policing where corporate interests can buy the time of the police, leaving those who can't offer remuneration losing out. This is creeping privatisation with big business hiring police powers."

Of course the law is far from equal, especially since the massive cuts to legal aid which will undermine the ability of the less well-off to seek justice.

But another aspect of this story caught my eye, and that was the sentencing of those who supplied imported set-top boxes to allow people to watch cable TV without subscription.

"Munaf Zinga received eight years' imprisonment, and two other men were also convicted. They had sold 400,000 boxes over more than three and a half years."

Eight years imprisonment: there is no suggestion violence was involved, no one was killed, and there is no suggestion that any of those prosecuted posed a threat to the public. They supplied set-up boxes to people who wanted them, made some money, but Virgin estimated the equivalent income would have been £144 million a year. For reference Virgin Media still managed to scrape a profit last year of £1,030 million.

So why then was a man sentenced to eight years in prison. For reference eight years imprisonment is the average sentence for rape. Is selling illegally imported set-top boxes (even in large quantity) as bad as raping someone? And is it worth 8 years in prison?

Review: The Poverty of Capitalism ... but a wealth of insight

Andrew Fisher, LEAP Co-ordinator, reviews John Hilary's 'The Poverty of Capitalism: Economic Meltdown and the Struggle for What Comes Next'. Published by Pluto Press.

War on Want's Executive Director John Hilary has been an outspoken and radical advocate of the global movement for social justice. Unafraid to speak plainly, to step outside and even condemn the cosy coalitions and tame agendas of some other NGOs. As such, it was with much anticipation that I started to read The Poverty of Capitalism.

The book not only draws upon Hilary's encyclopaedic knowledge of the global players and the struggles they provoke around the world for social justice, but also develops new theoretical underpinnings and useful concepts to better understand the global struggle against the power of almighty capital.

Hilary's fearless analysis not only takes on the known evils of globalisation - including the big corporations, the far from objective global economic institutions and the bought and paid for politicians. But it also takes aim at the wolves in sheep's clothing: the philanthropists, aid agencies and NGOs providing a humanitarian facade for a corporate agenda (reminiscent of the role of missionaries for the British Empire).

Like any well-researched book, it contains a number of great tidbits to develop the main thesis, including the quotes from Pentagon's 2012 paper on the 'Joint Operational Access Concept' which make it clear the US will go to war for resources - as it did in Afghanistan and Iraq - stating:

"the United States must maintain the credible capability to project military force into any region of the world in support of those interests. Thus includes the ability to force both into the global commons to ensure their use and into foreign territory as required."

Another also relates to the US, as we learn that 60% of personal bankruptcies in that country are caused by medical bills.

But the most important point in the book is to detail the corrupt power structures that keep the poor poor and the rich rich. In doing so, concepts like 'popular sovereignty', 'common ownership' and 'social production' are introduced and explained in developing the case for a democratic and ecologically sustainable transition in the global economy.

This is not an abstract vision, but rooted in social movements from across many of the most developed and successful of which are from Latin America, Africa and Asia. And it is this that perhaps gives the book its power - as the reader is transported along a compelling narrative from technical analysis of the realities of global realpolitik and economic institutaions, to an conceptual outlining of alternatives to the discontented struggling and often succeeding to make those alternatives a reality.

Those realities could take us, as Hilary labels the final chapter, 'Beyond Capitalism'. I'm in.

Andrew Fisher edited 'Building the new common sense: social ownership for the 21st century'.

The two faces of Ed Balls

During the Labour leadership election, many people were impressed by Ed Balls' apparent conversion to a social democratic economic settlement as espoused in his Bloomberg speech.

But since then Balls has committed a Labour government in 2015 to sticking with Tory spending plans for at least the first year. He has also said that Labour will not promise to reverse Tory cuts, and that Labour would have to make more in office. He has supported the public sector pay freeze, while Ed Miliband somewhat contradictorily waxes on about the cost of living crisis.

This morning the media was filled with similar tough messages, briefing ahead of Balls' speech at the Fabian Society, including the parliamentary garbage that "Balls will promise to legislate for new fiscal rules within 12 months of the general election, including a commitment to a budget surplus by the end of the parliament". Legislate for it? Really? Will the chancellor be surcharged if the target is not met? Or will a technocrat be installed to make cuts? It really is nonsense. On the upside, it should be noted that Balls is committing to a current account surplus, which allows for borrowing for capital investment - see 'Borrowing for Growth - some advice for Ed'.

Nevertheless, like any wannabe chancellor, Balls knows how to pull a rabbit out of a hat. And so the tough, 'we'll enforce austerity too' message will be overshadowed by a debate about a modestly higher rate of income tax on a few high earners. It is very welcome that Balls has committed to restoring the 50% tax rate on those earning over £150,000. It was probably the most popular policy in Gordon Brown's premiership.

What is also welcome, and will hopefully be widely reported, is that Balls also said:

"The latest figures show that those earning over £150,000 paid almost £10 billion more in tax in the three years when the 50p top rate of tax was in place than when the government conducted its assessment of the tax back in 2012"

This corrects the crap put out by the Treasury in its dodgy dossier of the 2012 Budget. Both the move to pledge to restore the 50% rate and the analysis is welcome, and hints at a return to '
Bloomberg Balls'.

However, before Labour activists start getting weak at the knees about a return to some form of modest social democracy, Balls also told the Fabian conference that Labour supported the benefit cap, the public sector pay freeze, thought public utilities belonged in the open market, and that universal winter fuel payments for pensioners should be means-tested.

We've seen the two faces of Ed Balls today in one day. Capitulating to Osborne, the financial markets and the Murdoch media this morning, while throwing a modest redistributive morsel to the left at lunchtime. Bon appetit!

House prices go further beyond reach

Prices set to continue to rise as help-to-buy scheme drive's inflation housing market

by Ryan Fletcher

House prices surged further beyond the average person's reach in 2013 with a full-year 7.5 per cent rise to December the biggest in six years, Halifax bank revealed yesterday.

Prices are likely to shoot up even further this year as a lack of new homes and the government's controversial help-to-buy scheme combine to drive inflation in the market.

Taxpayer-backed help-to-buy sees our money used to underwrite high-risk 95 per cent mortgages that banks had stopped handing out to avoid bad debt.

But Left Economic Advisory Panel co-ordinator Andrew Fisher said: "With house prices rising at nearly 10 times the rate of wages, more mortgage funding is not the solution.

"If interest rates rise, as many predict in the next 18 months, many people could end up being burned by this scheme."

He said that an urgent mass council house-building programme was needed instead.
"This would help those in most housing need, for whom help-to-buy does nothing and be a far better economic stimulus than inflating another debt bubble."

In the Commons yesterday shadow communities secretary Hilary Benn (right)called for an end to speculation where greedy investors buy land, gain planning permission and sit on it, sometimes for years, until prices rise so that they can cash in the profits.

Mr Benn said local authorities should be able to tell companies to "get on and build the houses you said you would" and slap them with a levy if they don't comply.

But he stopped short of committing a Labour government to a centrally funded building scheme.

However Tory MP Alec Shelbrooke accused Labour of planning "Stalinist tactics of land seizure" if they win the 2015 election.

This article first appeared in the Morning Star on 9 January