Santander fined £12m for bad advice

Santander staff were not trained properly and didn't grasp customers' circumstances or the level or risk they were prepared to take

by Will Stone

Santander was fined £12.4 million yesterday for giving nearly 300,000 customers bad advice.

The Financial Conduct Authority (FCA) said it had uncovered "serious failings" in the investment advice the bank gave to about 295,000 people - most of them pensioners.

Santander staff were not trained properly and didn't grasp customers' circumstances or the level or risk they were prepared to take, the FCA said.

The bank also failed to make sure information was clear and didn't regularly check the suitability of investments.

The FCA said customers were at "significant risk" of receiving bad advice between January 2010 and December 2012.

Santander signed people up to nearly 350,000 investments worth £7 billion over that period.
The poor advice was exposed by a mystery shopper probe carried out by former regulator FSA at banks in 2012.

It caught Santander staff telling customers that their investments will "likely double" and that "in 10 years it will beat cash by 87 per cent" even though the term was for five years and returns were not guaranteed.

Customers were generally aged 60 or over and the average investment was £24,000.

Left Economics Advisory Panel co-ordinator Andrew Fisher welcomed the fine but said Santander bosses should face charges.

"In the wake of the bank crash and the scandals of PPI and Libor, this is yet another example of the corrupt UK banking culture which has ripped off people and small businesses.

"Scandalously it is clear that Santander encouraged staff to mislead financially naive and vulnerable elderly customers into buying inappropriate products."

Santander said it has since overhauled parts of its business.

It will contact affected customers and compensate those left out of pocket but the FCA said redress was likely to be minimal given that investment returns have been boosted by rising stock markets in recent years.

This article first appeared in the Morning Star

An economy as if people mattered

Andrew Fisher's speech for People's Budget at the Southampton People's Assembly

After a minute's applause for both Tony Benn and Bob Crow, these are the notes from which I made my speech (with a few ad libs!)at the Southampton People's Assembly on 20 March, responding to the Budget and arguing for an economy as if people mattered:

Well I hope you’re grateful.

Two years ago the Chancellor was taxing your pasties – that is what you people eat isn’t it?

And taxing your caravans – that is how you people holiday?

But now look:

You’re getting tax cuts on beer and bingo (or working class culture as the Chancellor calls it). See, tax cuts aren’t just for big business and millionaires, they’re for you – the little people – too!

Budget 2014

So aside from the Tories'  lame efforts to persuade us they're on our side, what were the main things we learned in the Budget?

• No end to austerity: because it’s ideological - by 2018 public spending will be lower than at any time since 1948 - the year in which the NHS was founded. "Rolling back the state", but going further than Thatcher ever managed. And if anything austerity is being ratcheted up. Public spending has risen by less than inflation (so a real terms cut), but his estimate for 2015-18 is for cuts to public spending in absolute terms 
• ISAs – who can save £15,000? Someone working full-time on the minimum wage doesn't even earn £15,000 a year.
• And what's underpinning Osborne's forecast for more growth? The assumption is more household debt - which will rise to the levels that precipitated the crisis. There's also some utterly delusional figures for business investment rising between 8-10% year-on-year for the next three years.
• An array of green taxes were scrapped or capped in the Budget, making more of a mockery of the Coalition's "greenest government ever" rhetoric.

What the Budget didn’t address

• Pay – it did nothing for people's wages and falling living standards. As Bob Crow said: 

• The Housing crisis – nothing in there that will build the homes our country needs, nothing to tackle rising homelessness or the rising costs of paying the rent. We are back to a pre-war situation where more of us are dependent on private landlords, with not enough council housing and fewer able to afford a mortgage.

• Jobs or industrial strategy – far from being a budget for 'doers', following his 'march of the makers' budget, OBR projections show UK exports falling in future years. This is a government - to be fair, like those before them for the last 35 years - without a serious labour market or industrial strategy. The recovery in unemployment is due to low wage, insecure jobs.

• And the energy crisis – nothing to tackle the fuel poverty which disproportionately affects the poorest pensioners; and nothing to address the UK's woeful investment in renewable energy, in which we lag behind the rest  of Europe.

What sort of economy we want

While Osborne rattles on about his modest and delayed economic growth, and the 24 hour news tells us every hour how the FTSE is doing, what would an economy look like as if people mattered?

Five questions, I think would matter to most people:

1. Are we reducing poverty and inequality?
2. Is unemployment falling?
3. Are people's living standards rising?
4. Is the tax gap - the £120bn of avoided, evaded and uncollected tax - reducing?
5. Is the economy stable and environmentally sustainable?

If we want that economy, an economy that acts in our interests, then we need greater economy democracy. Tony Benn said:

And you can see how that happened, we built the NHS, the welfare state, council housing, comprehensive education, and brought the utilities under public control. And sadly we can see how that has been reversed through privatisation - anti-democratically transferring power back from the ballot to the wallet, from the polling station to the marketplace.

For me anything too important to fail should be in public ownership - if we want an economy where people matter. And we need economic rights, individually and collectively. The right to a minimum income, protection from being made redundant - why on Earth are profitable companies allowed to make people redundant - taking away people's jobs to give bigger bonuses to directors or higher dividends to shareholders?

And trade union rights restored, so that we can protect our jobs, pay, pensions and fight for better working conditions.

I hope that's a good basis for discussion. Thank you.

• Andrew Fisher is LEAP Co-ordinator and author of the forthcoming book The Failed Experiment ... and how to build an economy that works

Tony Benn - a tribute

Tony Benn: "Democracy transferred power from the wallet to the ballot"



For all British socialists - and many around the world - Tony Benn was an iconic and inspirational figure. He perhaps developed the political philosophy of 'democratic socialism' more than any other Labour politician. In the video clip above, from the 2008 LEAP conference, Tony explained how democracy challenged capitalism - and how capitalism fought back against democracy.

LEAP Chair John McDonnell MP tweeted: "Tony Benn was the articulate advocate for socialism who inspired my generation and gave people hope of a fair and equal society."

LEAP Co-ordinator Andrew Fisher posted: "Tony Benn - inspired generations of socialists (including me) with his warmth, integrity and ideas"

John Hilary of War on Want tweeted, "RIP Tony Benn: a true internationalist, comrade in the fight for global justice and long-term friend of @WarOnWant"

Tax justice campaigner Richard Murphy, said: "Tony Benn: simply a hero. RIP"

Katy Clark MP posted on Twitter: "Very sad news about Tony Benn. A great socialist thinker who made a massive impact. A huge loss. My thoughts are with all who loved him."

Paul Mason, former Newsnight economicscorrespondent, tweeted, "At Labour conf in 1980 & heard #Benn riveting call for 1) abolish the Lords 2) industrial democracy act 3) repeal EU powers - like detonator"

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

Help to Buy 'will fail if housebuilding slows'

Sharpest house prices increase since June 2002 sparks housing bubble fear

by Luke James

The thatcherite Help-to-Buy scheme will explode into another housing crisis if "soaring" demand is not matched by building, surveyors told the government yesterday.

Home sales are at their highest in over five years, according to monthly research by the the Royal Institution of Chartered Surveyors (RICS).

But its members also reported the sharpest increase in house prices since June 2002 - sparking fears over a new housing bubble.

Help to Buy's first phase offered a 15 per cent mortgage guarantee on new-build homes when it was launched in April.

That was extended to existing housing stock last month and over 2,000 people have since taken advantage.

Some were used as props at a Downing Street press conference yesterday as David Cameron hailed the scheme's success. He boasted: "This is all about helping hardworking people get on the first rung of the property ladder - and helping them get on in life."

But RICS chief economist Simon Rubinsohn called for the government to "urgently" address the imbalance between supply and demand.

"Housebuilding starts have picked up recently but we are still well behind in terms of the amount of properties needed," he reminded Mr Cameron.

Part-nationalised banks RBS and Lloyds, along with HSBC, have signed up to offer 95 per cent mortgages as a result of the scheme.

The Left Economics Advisory Panel pointed out that it was a huge gamble to increase personal debt when wages are stagnant and jobs are at risk.

Co-ordinator Andrew Fisher said: "If the dangers of rising house prices, greater borrowing and suppressed incomes sound familiar, then that is because it was this combination that in large part contributed to the 2008 crash.

"Unless accompanied by a massive programme of housebuilding, Help to Buy will continue inflate house prices - making home ownership even more unaffordable for most families - and lead to another crash."

Mr Fisher added that the scheme could land taxpayers with huge liabilities if people default on loans as a result of austerity.

This article first appeared in the Morning Star

Osborne ‘slays Lloyds goose for quick buck’

Chancellor sells £3.2bn stake in profitable bank 

MINISTERS began reprivatising Lloyds yesterday, flogging off a £3.2 billion stake in the once failing bank.

Chancellor George Osborne hailed the sell-off as evidence that Britain was “turning the corner,” but economists raised concerns that the banking sector was merely returning to the light-touch approach central to the severity of the financial crisis in the first place.

Investors snapped up the stock at 75p a share – just above the 73.6p average the Treasury paid in the £20.5bn bailout the bank at the height of the financial crisis.

The taxpayer’s stake has been reduced from 38.7 per cent to 32.7 per cent, with no further sales for at least 90 days.

Mr Osborne said the sale eased the national debt by £586 million, based on a paper valuation of the shares on government books, though that figure is subject to Office for National Statistics approval.

The Tory Chancellor said: “This is another step in the long journey in putting right what went so badly wrong in the British economy.”

But left economists warned that the fire sale would be bad for Britain in the long term. Left Economics Advisory Panel co-ordinator Andrew Fisher said: “Lloyds was bailed out by the state, and propped up with public money.

“Now Lloyds has returned to profit, rather than maintaining a long-term income stream, it is being sold off for private profit.

“This is slaughtering a goose that lays golden eggs for a one-off fry-up, even leaving aside the government’s criminal failure to use its public stake in the banks to change banking culture or invest in the public interest.”

And the Socialist Economic Bulletin’s Michael Burke warned that the sell-off was “a return to the system we had before.”

“It’s a drive by the government to bail out the most failing aspects of the private sector – that of light-touch regulation in the financial sector, while imposing austerity cuts for the rest of society.

“They’re selling off one of our assets instead of using the profits for regeneration.”

This article first appeared in the Morning Star

 

MP calls for RBS sale 'at all costs'

by Luke James

A privatisation-mad Tory MP today demanded that profitable parts of the publicly owned RBS bank must be flogged at all costs.

Andrew Tyrie (pictured), who chairs Parliament's commission on banking standards, wants to let privateers cherry-pick parts of the bank and make the taxpayer shoulder bad debts.

Splitting RBS into good and bad banks was just one option given in a recent report by the cross-party commission.

But even austerity-obsessed Chancellor George Osborne is believed to be unenthusiastic about the prospect.

Mr Tyrie has now urged the Chancellor to examine the "future structure" of RBS as "a matter of urgency."

In a letter to the Financial Times laced with bankers' jargon, he argued: "Formal accounting conventions should not be allowed to get in the way of what is best for the economy."

Left Economics Advisory Panel co-ordinator Andrew Fisher said the misplaced debate centred on "what is the best way to privatise RBS."

He explained: "Tyrie argues the taxpayer will get more in the sell-off if the public first absorbs the toxic debts as a 'public bank.'

"Osborne worries that the public bad bank would worsen his deficit figures and that the toxic debts aren't too bad anyway."

But Mr Fisher said: "Labour should be calling for a publicly owned bank that can invest in new infrastructure to create jobs, reduce unemployment and operate in the public interest - something neither side of the Osborne-Tyrie pantomime cares about."

This article first appeared in the Morning Star

Lloyds bosses to speed up privatisation with 70% payout

by Luke James

Bosses of bailed-out Lloyds bank revealed today they will hand a massive 70 per cent of profits to shareholders in a bid to speed up privatisation plans.

Chief executive Antonio Horta-Osorio issued the invitation to asset-strip the part-publicly owned bank because private investors have so far only shown modest interest.

The government owns 40 per cent of Lloyds, acquired when it saved the bank from collapse in 2008 with £17 billion of public money.

Ministers are desperate to flog the stake - and so cut the public out of dividend payments - because of their privatisation obsession and have offered Mr Horta-Osorio a £2 million bonus to deliver the sale.

His plans to give away a staggering 70 per cent of profits by 2016 would mean that Lloyds pays higher dividends to shareholders than any other bank.

Leading left-wing economist Andrew Fisher said it was a "slap in the face for the British public, who bailed out banks like Lloyds.

"It makes it clear that what many of us have said all along is true - we nationalised the debts, while the profits are privatised," said the Left Economics Advisory Panel co-ordinator.

"Lloyds's grotesque dividend and executive pay bonanza comes at the expense of its customers, the taxpayer and its own staff - at a time when over 3,000 job cuts have been announced."

This article first appeared in the Morning Star

Nine million more struggle to pay bills

by Luke James

Austerity-Addicted Chancellor George Osborne has left nine million more people in financial difficulty compared with seven years ago, Money Advice Service revealed today.

The independent body found that 26 million people across Britain are now living on the brink of financial ruin - a massive 35 per cent rise since their last survey in 2006.

Failing Tory economic policies have sent hourly income plumetting by 6 per cent and sparked a "live for now" attitude to cash among the population.

For example, more than one in five of the 5,000 people surveyed would rather have £200 immediately than £400 in four months' times.

A Treasury spokesman claimed the government had helped households meet the rising cost of living by raising the personal tax allowance and freezing fuel duty.

He said: "We recognise that times are still tough for families, but Britain is holding its nerve, we are sticking to our plan and the British economy is on the mend."

But Labour shadow Treasury minister Catherine McKinnell said the figures bust George Osborne's "out of touch claims that people are better off."

She said: "This government's failed economic policies mean prices are rising much faster than wages. And their unfair choices have seen hard-working people hit hard while millionaires get a huge tax cut."

Ms McKinnell said Labour would help families "with a lower 10p starting rate of tax, paid for by a mansion tax, and take action to tackle soaring rail fares and energy prices."

TUC general secretary Frances O'Grady added that only "strong growth underpinned by decent jobs and higher pay" would end the "longest real wage squeeze since Victorian Times."

Separate figures showed there had been a 3 per cent rise in the number of people being force to declare themselves bankrupt over the last three months.

And the Left Economic Advisory Panel's Andrew Fisher warned: "As personal debt starts rising again it is clear that the squeeze on living standards also creates a huge economic risk if loan and mortgage defaults rise, threatening the banking sector again."

This article first appeared in the Morning Star

Recovery? What recovery?

by Luke James

Unions reminded backslapping Tory leaders today that Britain is in the grip of the worst economic crisis in a century despite 0.6 per cent growth in the last quarter.

Tiny boosts in construction and manufacturing sector were partly behind the slight respite for the battered economy.

Smug PM David Cameron claimed on Twitter that the figures showed Britain is "on the right track" and insisted his government is "building an economy for hardworking people."

Tory Chancellor George Osborne said Britain's gross domestic product (GDP) was "better than forecast" but failed to mention that it is still 3.3 per cent below pre-recession levels.

TUC leader Frances O'Grady reminded the pair that the economy has grown half as much as they boasted it would when they cobbled together the Con-Dem coalition in 2010.

"It's a measure of how poor the economy is faring that this level of growth is being welcomed," she said.

"With workers in the midst of the longest wage squeeze since the 1870s and unemployment still over 2.5 million, it certainly doesn't feel like a recovery to many people."

Labour shadow chancellor Ed Balls pointed out "this is also the slowest recovery for over 100 years" despite the fractional shift forwards.

He said Britain would need to seal 1.3 per cent growth every quarter for the next two years "simply to catch up all the ground we have lost under David Cameron and George Osborne."

Overall output in construction and manufacturing remains more than 10 per cent below pre-recession levels despite progress in the last quarter.

Manufacturing recovered by 0.4 per cent after slumping consecutively for the last six quarters and the 0.9 per cent rise in construction is eclipsed by the 1.8 per cent fall in the first quarter.

Construction union Ucatt labelled the figures "disappointing" and general secretary Steve Murphy reissued his call for "urgent" investment in infrastructure projects and social housing.

There was also a 0.6 per cent growth in the service sector but concerns were raised that companies are hoarding billions of pounds that could be invested to spark real growth.

Left Economics Advisory Panel co-ordinator Andrew Fisher said privateers have amassed the surplus, equal to 6 or 7 per cent of GDP, thanks to successive cuts to corporation tax and by slashing workers' wages.

"Companies are quite logically refusing to invest substantially in new products, services or jobs at a time when consumer demand is depressed by falling living standards," he said.

This article first appeared in the Morning Star

Tory home loan bribes 'unwise'

 
by Richard Bagley

Tory Chancellor George Osborne revealed his latest desperate "big idea" for housing today that will see more of our cash used to bribe banks into lending to people who can scrape together a mortgage deposit.

He plans to gamble £12 billion on high-risk 95 per cent loans where the state will act as a guarantor.

That means we will pick up the tab for some of the loss in case of a default.

Mr Osborne claimed following talks with construction firms that the extension of the Help to Buy scheme was "about getting behind those who aspire to own a home."

It will cover houses priced up to £600,000 and will only help those wealthy enough to save a 5 per cent deposit.

With average house prices at around £150,000 in Scotland and Wales - rising to a whopping £454,000 in London - people in the two nations would need at least £7,500 in cash to qualify for the mortgages or over £22,000 in the English capital.

The government's obsession with fuelling the housing market even drew criticism from Bank of England chief Paul Tucker.

He described the scheme as "unwise" in the long term because of fears that it will help reinflate a housing bubble that has left hundreds of thousands packed into expensive private rented accommodation.

Construction union Ucatt general secretary Steve Murphy accused Mr Osborne of "fiddling round the edges of the housing crisis.

"If the government wants to begin to solve both issues then they need to be investing and building social housing which will get skilled workers back to work and will also provide homes for the millions of people who are currently in ina
dequate accommodation."

Left Economics Advisory Panel co-ordinator Andrew Fisher ridiculed the Chancellor's announcement.

"After three years of economic failure, Osborne's great new strategy for growth is a house price bubble," said Mr Fisher.

"The Help to Buy Scheme is an admission of political failure and of the continuing fragility of UK banks.

"This is nationalising the risk and privatising the profits again - a bank bailout by stealth."
He added: "The solution is not subsidies for the big construction companies instead of the banks, but for councils to borrow and build to meet local need."

This article appears in today's Morning Star

Price rises pile pain on struggling workers

Will Stone

Workers struggling with wage freezes and below-inflation rises were hit by higher prices for basics last month - and worse is set to come, the Office for National Statistics said.

The consumer prices index rise 0.3 points to 2.7 per cent in May.

Officials predict it will top 3 per cent over the summer.

But average earnings increased just 1.3 per cent in the year to April, meaning millions of workers have had a real-terms pay cut.

The retail price index, which includes housing costs, rose 0.2 points to 3.1 per cent.

A 22 per cent rise in air fares, the fastest increase since records began in 2001, helped push up CPI.
Overall transport prices rose by 0.4 per cent between April and May, and the cost of clothing and footwear also rose 1.2 per cent.

Furniture, carpets and garden tools also became more expensive.

Politicians, unions and economists issued a stark warning that plummeting wages are dragging Britain downwards.

Shadow Treasury minister: Catherine McKinnell MP

TUC general secretary Frances O'Grady warned: "Forty consecutive months of real wage falls means people have less to spend on the high street," leaving the economy stuck in the gutter.

Shadow Treasury minister Catherine McKinnell said that "the cost-of-living crisis is deepening," noting that because of inflation and low pay people's spending power is now £1,300 a year less on average than when the coalition came to power.

Left Economics Advisory Panel co-ordinator Andrew Fisher said: "Today's rise in inflation exacerbates the squeeze on wages being felt by workers - sending ever more into poverty and reliance on food banks.

"To tackle low pay, we need stronger trade union rights, a significant rise in the minimum wage and a credible plan to create jobs."

He urged the Labour Party to ditch support for pay freezes for low-paid public-sector workers.

Soaring inflation is also hitting people with savings hard, with none of Britain's 820 standard accounts paying enough interest to outpace tax and inflation, according to Moneyfacts.co.uk.

This article first appeared in the Morning Star

Osborne's 45% tax rate has already cost us billions

When George Osborne announced he would slash the top rate of tax from 50% to 45% - he made some ridiculous claims about how the 50% tax rate (in effect for only one year) had not raised much money (see point 2 of this post).

It was clear that £16 billion of tax had been brought forward (mostly in high earners' bonuses) to avoid falling under the 50% rate.

Today it became clear that same thing seems to have happened in reverse: to avoid the 50% tax rate the bonuses of the highest earners have been deferred to fall under the 45% rate.

The Morning Star reports:

"Britain has been conned out of billions of pounds by scheming bosses who put off their bumper bonuses until after bankers' mate George Osborne slashed the top rate of tax"

Indeed. The evidence is clear from table in the ONS Labour Market Statistics released today which shows that compared with a year ago finance sector bonuses were up 75%, in construction up 63%, and in the service sector up 52%.

Given any pick up in the economy is only marginal - and in some sectors non-existent - then it is patently obvious that businesses have deferred bonuses (largely the preserve of the top earners) to collectively avoid billions in tax.

As I told the Morning Star:

"Just as bonuses were brought forward to avoid the 50 per cent rate when it came in, so now bonuses from last year were deferred to avoid paying it again."

"At a time when the coalition is failing to reduce the deficit and has jacked up VAT on all of us, this tax cut for the highest 1 per cent of earners is a disgrace.

"These figures show that Labour would be right to restore the 50 per cent rate and to do so without notice to prevent avoidance through income-shifting."

And indeed to his credit, one of the few sensible things that Ed Balls said last week was that Labour favoured "keeping the 50p tax rate" - and let's hope he meant 'restoring' too should Labour get back in office in 2015.

Laughably the Treasury "dodged the evidence", the Morning Star reports - and instead commented that the 50p tax rate was "not effective at raising revenue" - which is a spurious claim given the billions of income shifted forward and then back to avoid it ... something that would not have been possible had the tax been in place for consecutive years, without the announced reduction.

So there we have it, the rich dodge their taxes thanks to Osborne's forewarned tax cut, the Treasury dodges questions and denies the evidence that contradicts Osborne ...

MPs expose tax firms' 'inside track' on loopholes

MPs and unions today fiercely criticised an "unhealthily cosy relationship" between the Treasury and big accountancy firms that enables wealthy people and companies to avoid paying tax.

The public accounts committee said that it was "very concerned" at the way the "big four" accountancy firms - Deloitte, Ernst & Young, KPMG and PwC - were able to exploit loopholes in the tax laws.

It noted that staff were regularly seconded from these accountancy firms to advise the Treasury on technical issues when drafting legislation, only to return to advise clients on how to use those laws to avoid tax.

This "insider knowledge" on changes to Britain's tax laws enables them to identify loopholes in legislation quickly, the committee said.

Committee chairwoman Margaret Hodge said the practice represented a "ridiculous conflict of interest" which should be banned.

"The large accountancy firms are in a powerful position in the tax world and have an unhealthily cosy relationship with government," she said.

She warned that HM Revenue & Customs was engaged in a "battle it cannot win" in seeking to stem the losses to the exchequer from tax avoidance.

It had far fewer resources than the big four firms which employ almost 9,000 staff and earn over £2 billion a year from their tax work in Britain.

Left Economics Advisory Panel co-ordinator Andrew Fisher called for an end to the "revolving door between HM Treasury and the tax avoidance industry.

"At a time when cuts are forcing millions into poverty and thousands into homelessness, the continued existence of the tax avoidance industry should shame any civilised nation.

"Trade unions like PCS and Unite and campaigners like the Tax Justice Network and UK Uncut should feel proud that they have forced this injustice into the public glare."

PCS general secretary Mark Serwotka said: "This cosy network around the Treasury and the big accountancy firms helps wealthy individuals and companies to deprive our exchequer of tens of billions of pounds a year.

"This then helps the government to peddle the myth that there's no money for our public services."

This article first appeared in the Morning Star

Workers' rights under attack again

John Millington

Ministers looked set to unleash yet another assault on workers' rights on Sunday after an influential venture capitalist released a report calling for changes to employment law.

In his "bonfire of regulations" multi-millionaire Adrian Beecroft calls for firms to be given more flexibility to make redundancies, and for the government to rip up equality legislation to supposedly promote "job creation."

According to the Sunday Telegraph, the reforms urged by the Conservative Party donor include:

- An end to a mandatory 90-day consultation period when a company is considering redundancy programmes. Instead he will suggest a 30-day period and an emergency five-day period if a company is in severe distress.
- A cap on loss of earnings compensation for employees who make successful unfair dismissal claims. Payments can often total hundreds of thousands of pounds.
- Major reform of the rights that workers are allowed to "carry" over to new employers when they are the subject of a takeover. The transfer of undertakings rights can currently create major disparities between workers within companies.
- Scrapping provisions in the Equality Act which make employers liable for claims from employees for "third party harassment," sexist comments to staff in a restaurant.
- Shifting responsibility for checking foreign workers' eligibility to work in Britain from employers to the Border Agency or the Home Office.

But the controversial report will meet strong opposition from trade unions and has already prompted criticism from the Tories' coalition partners.

A senior Lib Dem who did not want to be named dismissed the 15-page document as "not methodologically rigorous" and merely the view of "one man."

And Left Economics Advisory Panel co-ordinator Andrew Fisher told the Star: "It is becoming increasingly apparent to more and more people that the coalition government is using the economic crisis as a smokescreen to dismantle and privatise public services, and unpick workers' rights.

"With unemployment at over 2.6million and underemployment at 6 million, it is a heartless government with a failed ideology that believes making it easier to sack people is the priority."

This article first appeared in the Morning Star

Jobless figures 'are only going to get worse'

From the Morning Star, by John Millington

Unemployment will continue to rocket for another five years according to a damning new report out tomorrow.

The Centre for Economics and Business Research predicts that Scotland could see its unemployment rate hit 9.7 per cent by 2016, the highest rate since the recession of the early 1990s, and in Wales unemployment could reach 10.5 per cent, the highest since records began in 1992.

North-east England, which heavily depends on public-sector jobs, is also expected to be badly affected.

The report also found that the south-east and east of England and London are the only regions likely to see unemployment drop.

Report author Rob Harbron forecast "five more years of pain" across Britain "with unemployment continuing to rise in almost every region.

"Family budgets are being squeezed between the pressures of rising unemployment, low earnings growth and stubbornly high inflation."

Left Economics Advisory Panel co-ordinator Andrew Fisher told the Star: "The mounting evidence is now incontrovertible. Austerity is failing all around Europe and voters are rejecting it.

"There is now a huge responsibility and urgency for Labour to start putting forward a clear alternative."

Redistributing ... to the rich

Andrew Fisher, LEAP co-ordinator looks beyond the fluff to discover the real issues in the Budget. (This article first appears in the May 2012 edition of Labour Briefing)

Pasty tax, charity tax, granny tax and even caravan tax – if you live too much of your life on planet Twitter then you’d be forgiven for thinking these were the main issues in the Budget.

I admit, as someone who doesn’t tan I was initially perturbed about #pastytax until I realised it referred to Cornish pastries rather than a lack of cutaneous pigmentation.

But the real stories of the Budget – involving the big billions – were about the more commonly known income and corporation taxes. Osborne gave corporate Britain another cash giveaway: taking corporation tax down from 26% to 24%, and committing in his statement to reduce it further to 22%, with the aspiration of reducing corporation tax even further.

"So that by 2014, Britain will have a 22% rate of corporation tax ... And a rate that puts our country within sight of a 20% rate of business tax that would align basic rate income tax, the small companies rate and the corporation tax rate."

This largesse to big business will cost the Exchequer an extra £3.76bn in the period covered by the spending review. This is on top of the £25bn in tax breaks for business announced in 2010 which included Osborne's commitment to cut corporation tax from 28% to 24% over four years.

Now Osborne will cut taxes for big business to 22% over the same period. It is not as if the previous government had been loading the tax burden on business either. Under the New Labour, corporation tax fell from 33% to 28% – which LEAP estimated cost the exchequer £50bn over 13 years.

So how does Osborne's new corporation tax rate compare with other countries? He was kind enough to tell us in the Budget:

"A headline rate that is not just lower than our competitors, but dramatically lower. 18% lower than the US. 16% lower than Japan. 12% below France and 8% below Germany. An advertisement for investment and jobs in Britain."

 So more like ... Ireland? And by coincidence that is a country that Osborne deeply admires. It was Osborne who said in 2006, "Ireland stands as a shining example of the art of the possible in long-term economic policymaking". The problem isn’t that Osborne said that in 2006, but that he still believes it now!

Ireland has been through an even more adverse austerity shock doctrine than Britain, and has slipped back into recession this year. Slashing corporation tax simply undercuts the tax base and hinders recovery.

But it does something else – it redistributes wealth. Lower corporation tax means larger net profits, so instead these larger profits go to large shareholders in dividends and directors in bonuses.

Those same directors will be laughing all the way home from their banks thanks to Osborne slashing the top rate of tax from 50 to 45 per cent. That will cost £3bn per year, which will stay in the pockets of the richest 1% in the country.

This was the issue that Ed Miliband led on when he rose in the House of Commons to challenge the Chancellor’s Budget. It was an uncharacteristically forceful performance, coruscating Osborne for cutting taxes for his Cabinet mates and their chums, while doling out austerity for the 99%.

Of course, Ed Miliband went from that to photo opps in Greggs, and jumped on every bandwagon (or should that be caravan?) going. Now he leads the charge against cutting tax reliefs for wealthy philanthropists – from class warrior to woolly liberal in two weeks. It is a snapshot of his leadership – vacillating, inconsistent and ultimately inconsequential.

So back to the Budget. The lost corporation and income tax revenue requires other taxes to rise to make up the void and/or public spending is cut.

In a throwaway remark, Osborne casually added that to balance the books “we would need to make savings in welfare of £10 billion by 2016”. This is on top of the £20 billion in welfare cuts already set out and being implemented with much misery and resistance.

What was unique about this comment, was that when you delved into the Budget Red Book (the lengthy tome that accompanies that parliamentary pantomime) there was no detail. In fact all you could find is that the precise figure is £10.5bn and neither Treasury nor social security ministers could say where a penny of these new cuts would fall.

The Budget highlighted that we have an incompetent government waging class war let off the hook by a pallid (some might say pasty) opposition.

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PRESS RELEASE: Questions to answer over Osborne’s dodgy dossier

This press release was issued today, following our post yesterday on the HMRC's publication on the 50p tax rate.

PRESS NOTICE:

FOR IMMEDIATE RELEASE:

Questions need to be answered over Osborne’s Budget Day dodgy dossier

LEAP has raised several serious questions about the dossier used by Chancellor George Osborne to justify cutting the 50% tax rate at the Budget last week. The dossier, published by HM Revenue & Customs (HMRC) ‘The Exchequer effect of the 50 per cent additional rate of income tax’ was published on Budget Day, and makes the case for the 50% tax rate to be scrapped and replaced with the 45% rate.

Today (26 March) is the last day of the post-Budget debate, culminating in a vote on the Budget. LEAP Chair John McDonnell will be raising this issue in Parliament, which has led to a tax cut for the highest 1% of earners at a time of austerity.

LEAP’s analysis raises questions about a numbers of issues, including: political interference in drafting the dossier; the efforts made by HMRC in maximising compliance with the 50% rate; and why HMRC based its assumptions on different Taxable Income Elasticity measures in 2009 when the tax was announced.

John McDonnell MP, LEAP Chair, said:

"There are serious questions to be answered by George Osborne about the political impartiality of this document, in light of the analysis by LEAP – which raises massive doubts about the conclusion that the 50% rate will raise only an additional £100m.

"I will be raising this issue in Parliament because it is of deep significance to the both the justice of our taxation system, and to the integrity of the civil service."

Andrew Fisher, LEAP Director, said:

"This dodgy dossier is deeply flawed in its analysis of the tax avoidance associated with the 50p rate. Its politically convenient and economically dubious conclusions seem more like the work of political placemen than politically neutral civil servants. There are several questions that need to be answered if taxpayers are to have any faith in the tax system.

"Osborne claimed that the 50% tax was bad for Britain’s competitiveness, yet in the Budget debate he justified cutting it by claiming other measures would raise five times as much from the same group. The Chancellor is spinning both ways, but we need to get to the truth."

-Ends-

The LEAP analysis can be read in below on the blog

Cameron: Fighter for big business

So much for the Big Society. David Cameron came out swinging yesterday with uncharacteristic passion for big business, not the big society.


Having flirted with 'moral capitalism' (whatever that means), Cameron said he was "sick" of "the snobbery that says business has no inherent moral worth like the state does".

It's been a bad year for big business - not generally in the bottom line: profit margins are doing reasonably well - but, as I told the Morning Star:

"Big business has been rightly pilloried of late for dodging taxes, paying excessive bonuses, rampant profiteering, and now exploiting the unemployed through workfare.

"Cameron's speech is a reaction to the inevitable public distrust and growing anger with his government handing over our schools, welfare system and the NHS to big business.

"Activists should be proud that we have forced the government on the defensive - and keep up the pressure!"

By contrast, David Cameron called on "those of us who believe in markets, business and enterprise" to "fight this mood with all we've got."

Twitter and Facebook have proved effective at both naming and shaming abuses, and are in organising high street protests. Even the Daily Mail and Telegraph have published articles critical of mandatory forced labour.

Cameron's words mean we can expect a concerted onslaught from the governing parties and the old media - mostly reliant on corporate advertising or donations - to convince us that big corporations are rather benevolent institutions.
In Richard Murphy's The Courageous State there is a riposte to Mr Cameron: a 20-point charter setting out that "a good business":

1. Makes clear who it is so people know who they are dealing with
2. Makes clear who runs it
3. Makes clear who owns it
4. Makes clear the rules by which it is managed
5. Puts its accounts on public record if it enjoys limited liability, and does so wherever it is incorporated whether required to by law or not
6. Seeks to comply with all regulation that applies to it
7. Seeks to pay the right amount of tax due on the profits it makes in the place where they are really earned and at the time they really arise
8. Seeks to pay a living wage or more to all who work for it
9. Recognises trade union rights
10. Operates a fair pay policy so that the pay differential between the highest and lowest paid in the company cannot exceed an agreed ratio that should never exceed twenty
11. Makes fair pension provision for all employees
12. Does not discriminate between employers on the basis of race, nationality, national origin, gender, sexual orientation, age, disability, and similar such issues
13. Does not abuse the environment
14. Has a clear code of ethics that it publishes and is seen to uphold
15. Is transparent in its dealings with customers
16. Seeks at all times to minimise risk to those it deals with and takes all steps to ensure they know what those risks are
17. Accepts responsibility for its failings and remedies them
18. Works in partnership with its suppliers and does not abuse them
19. Advertises responsibly
20. Creates and supplies products meeting real human need

Don't expect Cameron to be writing this charter into corporate law any time soon.

Update: Great Steve Bell cartoon ton today's Guardian

Hester waiver 'won't fix broken system'

From the Morning Star

John Millington

Financial-sector unions and banking experts welcomed today RBS chief executive Stephen Hester's decision to waive his bonus - but pointed out that "systematic theft" was still rife in the banking system.

Mr Hester finally bowed to intense political and public pressure to forfeit his bonus of almost £1 million on Sunday night.

The bank - which is 83 per cent owned by the public - has confirmed that the 3.6-million share package worth £963,000 would not be paid to the millionaire banker.

Unite union national officer David Fleming said Mr Hester's move was "better late than never" but added: "There's a long way for RBS to go in proving its credentials as a responsible organisation to its customers and also to its thousands of staff."

Banking experts pointed out that waiving the bonus would not deal with the structural inequalities in the banking system.

Left Economics Advisory Panel co-ordinator Andrew Fisher said the move would "still leave him on a basic salary 5,000 per cent higher than the average civil servant.

"Last year Hester took home a total package worth £7.7m and it's good that Labour acted to prevent a repeat of this robbery again this year."

University of Wolverhampton professor Roger Seifert said: "The government wants the issue to go away and therefore creates a diversion about one man and his bonus, but we need to focus on the accountability of state-owned enterprises, on the real take-home pay of most workers."

And despite Prime Minister David Cameron's claim to be tough on bankers a government spokeswoman confirmed that Downing Street would not block future RBS bonuses.

"We are not going to micro-manage bonuses," she told the BBC. "They are doing a good job and making good progress."

But Labour leader Ed Miliband, who had planned to force a Commons vote calling for Mr Hester to be stripped of his bonus, said the debate about "executive pay and responsible capitalism is only beginning."

David Hillman of the Robin Hood Tax campaign said: "We cannot rely on the consciences of bankers to relinquish their excessive pay," pointing out that RBS was "just the tip of the iceberg."