Monday, April 11, 2016 

There's a word for what our democracy has become: oligarchy.

It's not often I disagree with Chris over at Stumbling and Mumbling.  You can chortle all you like at Charles Moore declaring David Cameron to have been caught in the wealth trap, but it's a useful phrase, he writes.  And of course to a degree he's right, you can be trapped by any number of circumstances of your birth, although it's a hell of a lot easier to dispose of the wealth you inherit than it is to escape being born into poverty.

While Moore may be pleading for understanding of Cameron's position, his not as bright colleagues elsewhere in the media and within the Tories are instead asking for sympathy.  Both the Mail and the Telegraph today ran leaders denouncing the iniquities of inheritance tax, the tax which as Moore himself points out was paid by only 17,917 people who died in 2012-13, out of the 500,000+ whom passed on.  Their real beef was that Cameron had received further criticism for having been given a £200,000 gift from his mother, another of those perfectly legal tax planning moves, described as an "equalisation" by Downing Street.  Joylon Maugham might have declared this to be tax avoidance, but practically no one else in the industry dedicated to just such planning does.  Funny that.

Here, finally, is what a week of coverage of the Panana Papers has been leading up to.  Most of the Tory press was happy to see Dave taking a beating at first as they believe it will damage him vis-a-vis the EU referendum campaign, where Dave effectively is the remain campaign.  Once it gets into the realm of all politicians having to publish their tax returns, which in turn leads to demands that those sneering from the sidelines also get their self assessments out for the lads, it's clear this cannot be allowed to continue.  When the questions move on to lump sums gifted in the expectation of income tax not needing to be paid, then the squealing really starts to begin.  Then we hear the cries about the politics of envy, about the enemies of wealth creation, that this is really about how "they hate anyone who has got a hint of wealth in them", and that if we're not careful, we'll have a parliament full of "low achievers".

Poor little rich people.  All they want is to look after their families.  What could be more natural than that?  Why should both they and their children be punished when bequeathing vast sums, property and all the rest when they go to meet their maker?  Isn't this income being taxed twice over?  Isn't opposing this in fact opposing aspiration?  Don't we all want to make good by our kids?  Why in short, does the left and Labour hate our freedoms?

Once the right was just as indignant about unearned wealth as the left.  Alan Clark might have judged another Tory sneering at Michael Heseltine as the type who had to buy his own furniture as cutting but snobby, yet there was also concern about what the passing on of vast sums and houses encouraged.  Not more hard work, but indolence, idleness.  Now David Cameron declares that there is nothing more natural than wanting to pass on your home to your children.  This only applies obviously to those who own their home, while everyone renting or even more shockingly, in what remains of social housing, should expect at any minute to be turfed out.  Earning more than you once did?  You're going to have to pay to stay.  Have a spare bedroom?  We'll deduct that from your benefits if you don't downsize, even if there isn't anywhere to downsize to.  Want to live near to where your family and friends are?  Tough luck if that'll breach the benefits cap; you'll have to move somewhere cheaper.  Unable to so much as put down a deposit thanks to the paradox of astronomical rents?  I feel your pain, says the prime minister renting out the Kensington home bought with the help of dad and a previous inheritance from an aunt for over 90 grand a year.

Over £90,000 a year just in rent.  Alan Duncan ought to be careful about who he describes as "low achievers", as Dave by many yardsticks would fall into the category.  About only one proper job, and that as PR for Carlton.  Remember that by the standards of Dave's set, he and Osborne are relative paups, George made to describe himself as a "despicable cunt" for having gone to St Paul's rather than Eton.  To most people this a world beyond imagination, where some will be lucky to earn in a decade what Dave pulled in from rent in a year.  This is the world that the Mail, Torygraph and Dave want to defend at all costs, where "aspiration", something the middle classes do, is pulled out to defend the ultra rich forever living in the style to which they have become accustomed.  The inheritance tax threshold might be rising to a million, to the point where practically no one will pay it, yet still at the smallest hint that gifts might come under suspicion the cry goes up.

Without using the word, what Adyita Chakraborty so accurately described in his Graun piece this morning is oligarchy.  Sure, we hear fine words every so often about social mobility, and of course a few of the best and brightest rise to the top while some squander their inheritance, falling down the pecking order, but otherwise when it comes to wealth the Tory party could not be more dedicated to conservatism in its truest sense.  Almost every move on the tax and welfare fronts since the Tories came to power in 2010 has been to screw the poorest, throw the odd bone or two to the middle to give the impression they're on their side, and ensure the top stay at the top.  

In this if nothing else the right-wing media is completely on side.  They too claim to be standing up for the middle while working, literally, for the top.  It was instructive whom the prime minister chose to mention in his statement today in a dig at the media.  It wasn't the weirdo Barclay twins hidden away at their flat pack castle on Brecqhou he dropped, or Jonathan Harmsworth, aka Viscount Rothermere, the non-dom head honco at the Mail.  No, it was the BBC, the Graun and Islington council who were brought up for investing in offshore funds.

The impression this is meant to send is clear.  Everyone's at it.  Nothing to see here.  Except we're not all at it.  Most of us do though dream of having enough spare cash lying around to be able to squirrel it away hidden from HMRC, so for plenty that will be enough.  The belief is those still not sated can be dismissed as simply jealous, envious, as so twisted in their politics that they would rather do right by the state than by their family.  Perhaps it will hold for a while.

Yet a crunch is coming.  A point is going to be reached when it becomes clear just how loaded the system currently is.  It might take another crash, but it's going to come, such are the frustrations that are without question building and every so often find expression in outbreaks of anger like the one seen over the past week.  And when it does, no amount of pleading, appeals to authority or media attempts to push back against it are going to quell the demands for fundamental economic recalibration.  A smarter political class would see what's on the horizon, and act now.  This for the most part is not a smart political class.

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Wednesday, April 06, 2016 

Questions still remaining, and answers not necessary.

According to Dan Hannan, in full Monty Python colonel mode, this is getting silly.  Likewise, Boris Johnson "cannot see what they are blathering about".

Presumably, neither could Downing Street.  On Monday, David Cameron's father's tax arrangements via his offshore investment fund Blairmore Holdings were deemed "a private matter".  Yesterday it became apparent this wasn't going to hold, and so in the present tense, Dave confirmed he was not benefiting from any offshore holdings or shares, nor did he have any.  Further to that, he then made clear neither did Samantha, apart from a few shares in her father's own onshore property holdings.  Come this morning, and still a further clarification was deemed necessary: now Dave is saying that he also won't benefit from Blairmore in the "future".

You don't have to go into a Jess Phillips routine to find this all a bit rum.  Yes, plenty of us to an extent benefit from investments exempt from tax through putting savings in an ISA.  Yes, plenty of us also want to limit our tax liability as much as we can.  No one likes paying tax, but tax in the aphorism is what we pay for a civilised society.  Clearly however there's a difference between begrudgingly paying what we owe, and going out of our way to avoid paying it, as was the aim with Blairmore.

The obvious question for Cameron now is, was his father right to establish an offshore trust for this purpose?  It's not that he needs to answer whether he benefited from Blairmore in the past, as it's apparent he did.  Cameron has after all been highly critical of individuals who have taken part in artificial tax avoidance schemes.  His not being forthcoming will hardly inspire confidence that he means what he says about cracking down on tax havens and those avoiding/evading tax currently, not least when the OBR's projections on reaching a surplus by 2020 are reliant on more tax coming in through the closing of such loopholes.  This is without even beginning to get into how reliant the Tories are now and have been in the past on funding from businessmen who have either been non-domiciled, or have taken part in similar avoidance schemes.

Nor is there really a parallel here between the anger when the Daily Mail attacked Ed Miliband's father for "hating Britain", and the questions now being raised about Ian Cameron's financial dealings.  No one is suggesting that what Cameron's old man did was illegal, and while you can get on your real high horse ala Phillips about it, there's little point.  Cameron has never denied his privilege, and Blairmore if anything looks to be on the mild end of the lengths some went to avoid paying their fair share.  The point now is whether Cameron will act in concert with other world leaders to prevent the rich and global corporations from paying what they owe.  If that means imposing direct rule on places like the British Virgin Islands, instead of pussyfooting around, then so be it.  It should mean that where a light has begun to be shone into the depths of the offshore world, such as with the Private Eye database of properties owned by overseas companies, this should not then be brought to an abrupt end by the privatisation of the Land Registry.  These are hardly radical steps, especially for a prime minister whom according to the spin has been leading the way already.

Something on the other hand that is very much not a scandal is the hubbub around culture secretary John Whittingdale.  According to Nick Mutch on Byline, in a piece unhappily published on April the 1st, Whittingdale was for at least a year in a relationship with a dominatrix by the name of Olivia King.  No documentary evidence is provided by Mutch to prove that the woman photographed with Whittingdale is an escort, let alone a dominatrix, but let's take that on trust.  If the fact Whittingdale might have been paying for sex isn't enough to make it a story, then Mutch has secondary and third angles.

First, King was apparently at the same time as being paid for her services by the culture secretary also making appearances with a "a member of the London underworld, who has a previous firearms conviction", potentially putting him at risk of blackmail.  Second, the press very much knew about all of this, and yet despite in the past running similarly weak exposes, has decided in this case that Whittingdale's apparent lack of luck with women isn't of interest to the public.  Could this possibly be because of Whittingdale's spoken aversion to the BBC, or his refusal to implement the double costs element of the 2013 Crime and Courts Act?

Or is it that the story is just a bit crap?  Are we really in 2016 pursuing the whole blackmail justification, especially on the remarkably spurious grounds that King was also going out with a "member of the London underworld"?  In the Profumo scandal there was at least a Soviet attache involved.  The idea that the press won't expose him because it's not in their interests doesn't really wash either.  The Tories as a whole weren't keen on the double costs recommended by Leveson, nor are they the BBC.  The Independent and Mail on Sunday might conceivably have factored Whittingdale's usefulness to them into their thinking, but at the expense of bringing a minister down, always regarded as a journalistic coup?  Pull the other one.  Not everything is a conspiracy, nor is every unmarried or single politician being seen out with someone a story.  It really isn't any more complicated than that.

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Tuesday, April 05, 2016 

How many journalists does it take to get a story wrong?

The Panama Papers, then.  The biggest leak ever, went up the cry.  A massive team of journalists from around the world, working together on 2.6 terabytes of data, detailing the work of our new friends Mossack Fonseca, based in Panama.  The data goes back decades, with the law firm specialising in the setting up of shell companies for the rich, famous and elite, often based not in Panama itself but in crown dependencies like the British Virgin Islands.  Who then would be the first to be exposed?

PutinOf course.  His name doesn't appear itself, as Vlad isn't that daft, but his cellist pal and two childhood friends do.  Not really telling us anything we didn't already know though, is it?  Nor does it take into account that however much it is Putin has salted away, it will pale in comparison to the hundreds of billions stolen from the Russian taxpayer in the giveaway privatisations of the 90s.  You know, those same oligarchs that have since made London their home, buying up property left and right and fighting battles through the courts.  One name not given as big headlines was Petro Poroshenko, billionaire president of Ukraine, who was setting up an offshore company as the east of the country burned.

Indeed, the coverage as a whole has been stilted and highly fragmented.  To learn of practically any names other than those of the usual 2 minutes hate figures, you need to go to the International Consortium of Investigative Journalism's own site.  There you can learn that apart from bag handlers for Assad and figures linked to FIFA, directly named in the files are the Saudi king, the president of the United Arab Emirates, and the former emir and prime minister of Qatar.  The Graun has now got round to featuring the daughters of Azerbaijan's ruler and their property dealings in London, as well as highlighting other potentially shady transactions, but already it feels as if the moment of maximum publicity has passed, possibly wasted.

We've been here before, after all.  The HSBC files from Switzerland were met with calls for inquiries, prosecutions.  The end result? 1 case ended up being pursued.  1.  Nor is the story about David Cameron's father new, even if some of the details are.  Back in 2012 the Graun revealed that Ian Cameron ran a "network" of investment funds based offshore, including Blairmore Holdings, based in Panama and we now learn administered from the Bahamas.  Blairmore was also explicit about the aim being to avoid paying tax  The fund's prospectus from 2006 said: "The Directors intend that the affairs on the Fund should be managed and conducted so that it does not become resident in the United Kingdom for UK taxation purposes".

You can't hold the son responsible for the sins of the father, of course.  Nor can you when the son is extremely careful in how he responds.  When asked by Faisal Islam if he had benefited from the fund in the past, Cameron said only that he didn't currently.  Nor did he expand on the point in a further statement, which did alert us to how Glam Sam Cam does hold shares connected to her father's land.  The subtext is fairly obvious: of course he benefited from the fund in the past.  That was the point.  That said, there is no suggestion anything illegal has taken place.  Mossack Fonseca may well have helped bust sanctions, hide the ill-gotten gains of dictators and had a hand in laundering the money from the Brinks Mat robbery, but plenty of their business is all about ensuring the rich pay as little tax as they can get away with.  Some of these masters of the universe then fund political parties, who in turn are then strangely resistant to doing much about cracking down on tax avoidance.

Oh sure, the government has been talking a good game for a long time, and there were further changes in the budget aimed at implementing the recommendations of the OECD action plan.  None of this is likely to have much effect though when HMRC remains deliberately understaffed, when the British overseas territories at the centre of so much tax avoidance activity are dragging their feet on disclosing the identities of the beneficiary owners of companies registered there, and when the City of London itself has become the equivalent of an offshore tax haven.  At the same time as he claims to be cracking down on tax avoidance, the chancellor continues to reduce corporation tax, due to drop to 17% by the end of the decade.  Osborne is playing a double game: knowing that companies will go on trying to pay as little as they can, his aim is to make Britain the new Ireland, and to hell with the other nations trying to get businesses based there in all but name to pay their fair share.

Will then the Panama Papers make the slightest difference to anything?  Pull the other one.

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Thursday, February 12, 2015 

Fink for the man.

Poor old Stanley Fink.  When you consider just how much potential there was for endless puns on his name, that not one of the tabloids splashed on Ed Miliband naming him in the Commons in his "dodgy" attack on the prime minister, you couldn't have asked for a better indication of just how quickly his say that again and I'll hit sue you theatrics would be dropped.  Sure enough, Conservative Central Office most likely bothered last night to ask Lord Fink if there was perhaps the possibility he may have indulged in the odd bit of "vanilla" tax avoidance regardless, and so quietly this morning his put your dukes up Ed routine was scaled down in the Evening Standard.  After all, everyone does a bit of tax avoidance now and again, and when the opportunity arises to put down deposits on houses for your kids through a Swiss family trust scheme, to "help them make their way in the wider world", it'd be foolish not to do so.

As much fun as it is see Ed go in for the kill occasionally at PMQs, which if not quite the equivalent of being savaged by a dead sheep isn't that far away from being poked by soft cushions, you fear he got away with his assault on Dave lightly.  The whole Cameron is Flashman with questionable friends attack hasn't worked up to now, and failing something really cataclysmic befalling the Tory leader, isn't about to start to.  For every barb about being BFFs with donors who used HSBC's "gone rogue" Swiss branch, the Tories can point back to all of Tony Blair's irrepressible pals, or as Cameron did, just repeat the ever infuriating line about the unions owning Labour.  It doesn't matter that was in the past, that on Monday the Tories were auctioning off and presumably getting money for such horrors as going shoe-shopping with Theresa May or spending an evening with the Goves over a chicken dinner, presumably not in the basket, or you know, the unions created Labour and their members voted for Ed.  The way the public sees it, everyone who pours money into political parties is either questionable or doesn't have much in the way of sense.

This isn't to say there aren't questions for the government to answer over Stephen Green.  On Tuesday George Osborne's chief fluffer Matthew Hancock was on Newsnight saying it was unthinkable that HMRC would so much as tell ministers what they were up to, as it would be absolutely wrong for them to know the exact details of future prosecutions, only for Lin Homer to say yesterday she believed this was precisely what civil servants had done.  When you consider the ridiculous lengths the Tories went to try and tie "crystal Methodist" Paul Flowers to Labour, to ennoble Green and make him trade minister demands answers over just how much in the way of vetting was performed.  Instead he was seemingly welcomed with open arms, described by the saintly Vince Cable as "one of the few to emerge with credit from the recent financial crisis".  In more ways than one, the reality is hardly anyone has emerged from the crisis with credit.

To solely go after Green or those who made use of the services rendered by HSBC's Swiss branch then is to miss the point.  The real scandal is just how useless, if not outright complicit HMRC has been with those attempting to swindle the taxpayer.  We already knew about the cosy deals reached by Dave Hartnett with Vodafone and Goldman Sachs, where much larger sums in owed tax were bartered down to far smaller payments, and how within months of leaving the civil service he was in the employ of, err, HSBC and then Deloitte, one of the accountancy firms that designs the very tax structures used to dodge paying.  These latest revelations prove how it wasn't the influence of that one individual, the very ethos of HMRC seems to have become to make deals with those caught in the act rather than prosecute.  This wouldn't matter as much if the deals were suitably draconian, but as the amount retrieved so far from those named in the HSBC files shows, in comparison with the French and Spanish tax authorities less has been recouped from a far larger number of accounts.

This friendly relationship with avoiders hasn't developed in a vacuum.  For all the fine words from both Tories and Labour over cracking down, they still rely on the big four accountancy firms behind so many of the loopholes for advice or research.  HMRC itself has suffered cuts that make precisely the kind of investigations as those needed into the HSBC leaks all the more difficult and time consuming.  As with so much of the rest of government, they are expected to do more with less, only in HMRC's case it's difficult not to think it's deliberate.  The coalition has also joined in the race to the bottom on corporation tax, resulting in the need to make up the loss elsewhere, with more people as a result going over the 40p threshold.  When Labour then suggests putting the corporation tax rate back up a couple of pence, the reaction from Cameron is to cry about the opposition "demonising" business.  As opposed as to demanding the middle classes, the supposed people Cameron is meant to represent, stump up more instead.

The relative silence from the likes of the Mail over the HSBC files after it made so much of attacking Labour after the Stefan Pessina interview suggests the vulnerability of the right over the issue.  As the Tories and their friends in the media have belatedly realised, not talking about something is often the best way to try and shut it down, hence why the NHS and immigration don't feature among the Conservatives' key themes for the election campaign.  Expect now the Fink issue to be forgotten, and if Labour doesn't keep up the attacks over Green, side issue as he is, so too will any impact the mini furore will have.  Labour instead should be promising they will be far more proactive in going after the avoiders and prosecuting the evaders, insisting they face the same opprobrium as the "skivers" targeted by the Conservatives.  More likely is as business itself knows, should Labour gain a majority or form a coalition, the story is bound to stay the same.

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Monday, January 27, 2014 

Walking into Osborne's man trap.

It isn't always the case, but generally if you get a whole section of industry spitting tacks and issuing threats when you announce a new policy, it's generally a sign that you're doing something right.  It happened when Ed Miliband announced his intention to cap energy bills, when the big six squealed that preventing them from raising the cost of energy for 20 months would result in blackouts and a collapse in investment, and regardless of the merits of specifically capping bills, it focused attention on a monopoly that needs breaking up.

The fact that the usual suspects have been decrying Ed Balls' announcement he will bring back the 50p top rate of income tax should Labour win the next election, while being exactly what you would expect, also suggests that there's something in it.  It can't be that it'll raise almost no money while driving away business or cause those fabled wealth creators to flee due to having to pay an extra 5p in the pound.  Of course, it might raise hardly anything due to the fact that so many will use various dodges to avoid paying it, but that isn't the same thing.  The Institute for Fiscal Studies, while agreeing with the government that the £10bn Balls quoted isn't associated with the 50p rate, accepts that the evidence for how much it could raise or cost is uncertain.  The best insight is from HMRC itself, and associated with the 50p rate the coalition inherited and quickly binned.  Plenty of those who knew they were about to be affected gave themselves a windfall the year before it was introduced, while Osborne's announced abolition of the rate enabled them to repeat the procedure, only delaying it by a year instead.  The only way to know how much it raises is to give it a few years without messing around with the rate.  As Chris also points out, much of the reaction is just nonsense: top rates of 80p or more up until the 80s didn't affect the overall growth rate.

As much of a break with the past 20 years it will be for Labour to have an election manifesto that promises to put up income tax, it's insignificant compared to Balls' other announcement, that the party would ape the Conservatives and also aim to run a budget surplus come the end of the next parliament.  There was one important caveat, that unlike George Osborne Balls would seek to borrow to invest, and so only day-to-day spending would be capped rather than spending overall.  The Graun suggests it's the other way round, as budget surpluses have only been ran briefly in the past half century and are as it puts it, unnecessary.  Hopi Sen by contrast agrees with me.

The Graun is surely right when it calls Osborne's promise a hollow one.  To achieve the reduction in spending needed for his surplus the cuts would have to go far beyond anything the coalition has attempted so far, and even if the Tories manage to get a majority at the next election, you just can't see the politics being acceptable, even after the shit-kicking the poor and sick have received over the past few years.  When Osborne delays his fiscal consolidation even further, as he almost certainly will, the only people calling him on it will be Labour.  Just as no one has taken any notice of how Osborne has comprehensively failed to achieve even the reduction of the deficit foreseen by Alistair Darling, the same plan denounced by Osborne as being no plan at all and which would lead to us following Greece towards bankruptcy, so will everyone ignore the coming failure.

Should Labour win the next election though, the Tories and the right-wing press will constantly remind Balls of his rash promise.  We all knew there were going to be cuts, but to pledge to follow Osborne's lead, even while leaving himself more wriggle room was to walk straight into Osborne's trap.  Even if Balls were to call an emergency budget immediately after the election and row back completely on his pledge, getting the "bad" news out of the way straight off and setting out how he would really be aiming to reduce the deficit, such as through a more balanced mixture of cuts and tax rises, it's dubious as to how such a strategy would would play out.  The dishonest approach at the moment is to give the indication that you can make these drastic reductions in spending without it hurting when it simply isn't possible.  Better to set out how you would get the deficit down in time, in a realistic fashion.  It's surely a better option than getting involved in a game of who can make the most ridiculous gesture with Osborne when someone is going to lose horribly.  Despite everything, it still remains unlikely to be the chancellor.

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Wednesday, August 29, 2012 

A tax on Clegg opening his mouth?

And so the new term fast approaches. The last minute frenzy to buy equipment that'll never be used commences, as does the spending on clothes that only those forced on pain of punishment would wear in this day and age. A new year brings new faces, and new challenges: just who will be the first to christen the toilet ceiling with wet bog roll? Will there be a repeat of last year's highlight, the interruption of an in progress liaison in the sixth room common room cupboard? Who knows? And who can tell what the kids will get up to as well? Ahh.

But enough poor gags inspired by 90s Sunday lunchtime comedy shows. It's also the beginning of the new political term, resuming as the last one left off. We may have lost one shameless self-publicist, off to New York to spend more time with her bank balance rather than the lovely people of Corby, but Nicholas Clegg it seems will always be with us. Having apparently failed to learn their lesson after advising a vote for the Liberal Democrats two years back, the Graun deigns to give our wonderful deputy prime minister a thoroughly soft "interview", which in practice amounts to Nick giving the best gloss possible to his role in our thoroughly miserable coalition. There had to be something more though, and so drawn up on the back of a fag packet came the wizard wheeze of a wealth tax, necessary apparently to prevent social cohesion from breaking down.

It's tempting to treat the suggestion in the same way as it was produced, and just dismiss it as another example of how the Lib Dems will come up with anything in an attempt to show how they aren't quite as nasty as the Tories, or not quite as committed to pummelling the economy into the ground. We know the Tories will never agree to it, Clegg knows they'll never agree to it, and the Graun knows it'll never happen, but it's a silly season story that fills up the politics pages. It's more than this, though. Ignore Clegg's waffle in the interview about an "economic war" and how "what people once thought" would be a "short, sharp recession" has turned into a "a longer-term process of economic recovery and fiscal restraint", for which read "depression made worse by the policies pursued by the government I'm an integral part of", and instead focus on this part:

"While I am proud of some of the things we have done as a government I actually think we need to really hard-wire fairness into what we do in the next phases of fiscal restraint. If we don't do that I don't think the process will be either socially or politically sustainable or acceptable."

Nick Watt takes this to mean Clegg wants something along the lines of a wealth tax in return for the proposed £10bn extra in welfare cuts. The real point to be made here though is that it's all well and good wanting to hard-wire fairness in now, if such a thing were indeed possible, it's that it would have been rather nice if Clegg and friends had aimed to do so already. After all, we had a perfectly fine levy on the wealthiest already in place, the 50p top rate of tax, as introduced by the last government as a temporary measure. Clegg and Danny Alexander decided to bow to George Osborne's ideological sabotage of the policy in return for a further rise in the personal allowance, a policy that helps the middle rather than the poorest the most. As for the apparent concern for those reliant on benefits now, barely a single Lib Dem has raised more than a whisper against the imposition of workfare, or the continuing assault on the sick and disabled through the work capability assessment. That a further £10bn in cuts will make things much worse is obvious, but the current situation is bad enough.

If there was a point to the Liberal Democrats entering the coalition other than self-aggrandisement, or "saving" the country from the prospect of a second election, then surely it was to temper the Tories' worst excesses while hopefully getting a few of their own policies enshrined in law. What exactly does Clegg have to show for the past two and a bit years other than a worthless "pupil premium", the hardly inspiring rise in the personal tax allowance, and a few praiseworthy steps in the right direction on civil liberties? It isn't, as he claims, that the left will always cry betrayal, it's that he and his party have been played for fools by the Conservatives at every turn. He was suckered into a "miserable little compromise" on electoral reform which failed as a result, followed the same path on the Lords, and has failed to stand up to the Tories on education, the NHS and the economy. From the beginning Clegg should have made clear that his party holds the key to power, and without it, Cameron would have to almost certainly go to the country. The coalition agreement was a disaster; rather than a document which locked the two sides into supporting policies both resent for different reasons, there should have been an "understanding" that could develop and change as the facts have. Everything that has happened since has been as consequence of that mistake.

The end result has been two unpopular parties that increasingly loathe each other, but are trapped together for fear of being dumped out of power ignominiously. The least Clegg could do in the circumstances is spare us is the faux concern that the government he signed up to might be protecting the rich at the expense of the poor. It's what it's been doing ever since the rose garden, and even if by some miracle Clegg does get his wealth tax, it won't alter that fact.

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Tuesday, March 20, 2012 

Classic Mail.

Today's Mail front page is a joy to behold:

Yes, here's finally the truth about a how a THIRD of your tax bill is spent on welfare, but here's why the plan to remove child benefit from those earning over £42,000 a year is "insane" and "betrays families, aspiration and core Tory values". It's the most wonderful example of a newspaper coming right out and saying exactly why they think their readers are more deserving of "handouts" than dole scum and cheating scroungers, even when the welfare bill overall MUST be slashed. We're worth it, and everyone who isn't middle class, or part of a nuclear family or aspirational is not.

To be truthful I have been converted to the "universalist" argument for welfare provision, mainly down to how increasingly it looks as though most people haven't got the slightest idea how much the unemployed get a week. Why else would such large numbers say that those on jobseeker's allowance should get less than the pitiful £67.50 a week (£53.45 for the under 25) they currently get if they weren't completely ignorant of the true figure? At least if everyone receives child benefit regardless of their circumstances it gives them contact with the welfare state that they otherwise might not have, and so less likely to be immediately under the impression that you can live anything like comfortably on less than a quarter of the average wage.

In any case, anyone who actually looks at the proposed tax statements can see that, unsurprisingly, just less than half of overall welfare spending goes on pensions, rather than on the other social security schemes. The statements themselves are meaningless in practice, as all they do is break down the amount someone pays in tax into proportions based on overall government spending. Mr Patel for example obviously doesn't have his £2,438.12 salami sliced in such a way, as that would be ridiculous. In practice his whole £2,438.12 may well have gone towards buying what Del Boy once called a "strident missile", but he and we are never going to know exactly what our tax was spent on. What it does give is an insight, and it does rather bust a few myths: regardless of the overall spend on the EU, overseas aid and welfare other than pensions, broken down it's much harder to argue against. Someone on just about the average wage contributes less than a week's money to someone on JSA (£56.74), and just £28 to the EU. Plenty will still argue that's £28 too much on the latter but as a whole it's hardly going to turn the average person into a member of the Taxpayer's Alliance. Which you suspect was rather what Osborne and friends were hoping for.

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Monday, March 01, 2010 

Patriotic duty and Michael Ashcroft.

Yesterday David Cameron said that it was the party's "patriotic duty" to to win the general election. Strange then that this patriotic duty doesn't actually extend to the party's deputy chairman paying his full dues in this country, despite the Tories' then leader William Hague promising back in 2000 that he would become a "permanent resident" in order to ascend to the Lords. Here's Billy with another pearl:

This decision will cost him (and benefit the Treasury) tens of millions a year in tax, yet he considers it worthwhile.

How much has Lord Ashcroft in reality paid to the Treasury thanks to his non-domiciled status since 2000? One suspects next to nothing.

There is some truly exceptional spin going on here: it turns out that when Ashcroft said he would become a "permanent resident", he actually meant that he was only going to become a "long-term resident". This seems to be somewhat different to the assurances which were given to the Lords' scrutiny committee, which asked Downing Street to ensure that Ashcroft became a resident before he could become a peer, and indeed the statement that Downing Street issued after his ennoblement was confirmed, which said they had been given a "clear and unequivocal assurance" that he would take up "permanent residence". Either Ashcroft at the time had a completely different definition of what "permanent residence" meant, or he had no intention whatsoever of keeping his promises.

Ignore the obsfucatory nonsense being raised by the Tories about donations to Labour or the Liberal Democrat donations from non-domiciles. None of them gave such cast-iron assurances that they would become permanent residents in order to enter the Lords. Neither have they ascended to such positions of personal influence over the parties they've donated to, as Ashcroft has. Ashcroft for a time was essentially keeping the Tories afloat with his donations and loans, the latter of which were almost as large as the total amount he's donated over the years, at one point as high as £3.6m. When he isn't funnelling money to the party, then he's personally transporting the party's nobility around in his private jet, via his Flying Lion company, registered, typically, in Bermuda. Compare and contrast the treatment of Ashcroft with that of Zac Goldsmith, who also admitted recently that he was a non-dom: Goldsmith was quickly slapped down and told to become a UK taxpayer as "rapidly as can be done", while Ashcroft, despite promising almost 10 years ago that he was going to become a permanent resident is only now getting around to it, all while the Tories have been repeatedly saying in response to any questions that Ashcroft's tax status was a private matter between him and HMRC. Did Cameron know that Ashcroft was a non-dom, or did he purposefully ensure that he didn't know until very recently? Sir George Young said a month back on Newsnight that Ashcroft had the same status as some Labour peers, with Tory sources later saying that Young had "misspoke". Misspoke in the sense that he had inadvertently told the truth when he wasn't meant to.

If it hadn't been for the freedom of information request that forced Ashcroft into making today's statement, would Cameron have actually followed through on his sudden conversion to parliamentarians of both varieties being fully domiciled for tax purposes by ensuring that his deputy chairman was resident here? It doesn't seem so, to judge by his strange refusal to accept, even now, that Ashcroft's tax status is a matter for anyone other than himself. All the parties may be guilty in accepting funds from donors who are not full taxpayers, but none have elevated those individuals to such a position of power and authority in the party. It's this kind of cynicism, of double standards, of turning a blind eye, that so angers the public and turns them off politics. And who can blame them when someone like Ashcroft decides "permanent residency" means something entirely different to what everyone else does and essentially lives a lie for almost a whole decade?

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Thursday, March 19, 2009 

A depressing pyrrhic victory.

The only possible way you can describe Barclays' depressing legal victory over the Guardian, Mr Justice Blake ruling that the paper cannot republish the memos detailing the workings of Barclays' Structured Capital Markets team is as a pyrrhic one. The Guardian, in its own editorial, more than sums it up when it states that all that Barclays has achieved is to shut the stable door after the horse has not just bolted, but completely disappeared from view. This is thanks to the documents being immediately mirrored by Wikileaks, where they still reside and where they can be downloaded from a server in this country, in defiance of the injunction. The terms of the injunction mean that the Guardian cannot even point people in the direction of where they can find them or "incite" others to publish; all they will have to do instead is Google for them, where they'll quickly find them.

Part of Justice Blake's justification for ruling against the Guardian was that he didn't believe that the documents had spread far enough for their confidentiality to have completely broken down. This is clearly nonsense: all those that Barclays wanted to hide these documents from have not only got them, they've been poring over them now since Tuesday, whether they be HMRC, Barclays' rivals, or anyone else with the slightest grudge against the bank. The Grauniad refers to the House of Lords ruling on Spycatcher, that you cannot put the melting ice cube back into the freezer. That is more than apt: through the ban the only people who are being denied from being allowed to see what everyone else has is those who are either without the internet or those that have never heard of Wikileaks and can't properly use a search engine.

Equally weak was Blake's second argument. He agreed that the Guardian can report on the contents of the documents, as that is in the public interest; not in the public interest is the unexpurgated publication of the documents in full, containing legally sensitive matters and other confidential information. There are some obvious flaws in this: how is the paper meant to know firstly what is considered legally sensitive and confidential and what isn't? Their lawyers' might come to predictability different conclusions from those of Barclays'. This appears to have the potential to be a slippery slope; how else can a paper know what is sensitive unless they first consult the people they are preparing to expose and give them the opportunity to halt publication in its entirety? Ideally, journalists should do this anyway, but there are certain situations where if they did on an incredibly important story, undoubtedly in the public interest, they could end up not being able to publish anyway. In cases such of that as Max Mosley, there ought to be no question of the person being informed beforehand; when it involves politicians being accused of corruption or corporations being accused of blatant and artifical tax avoidance, there is a good argument for not doing so. Furthermore, why shouldn't the general public be able to view the source material for such exposes and be able to make their own minds up where it is possible for the hacks to provide such a service? Journalists cannot always be relied upon to report accurately what is in things which they either come across, investigate or are handed to them, especially when it comes to such incredibly complex and difficult to understand matters as tax avoidance. The Guardian itself is has an example of this, having misinterpreted how Tesco was operating a tax avoidance scheme and wrongly claiming that they were avoiding corporation tax to the tune of £1bn when they were in fact avoiding stamp duty land tax on a much lesser scale.

Blake also suggested that "if the debate can flourish without the publication of the full documents, that is a highly material factor". But none of the articles in either the Graun or the Sunday Times begins to cover in anything approaching forensic detail just what is discussed and proposed in these documents; they just give a broad summary. Debate can flourish without them being freely available, but that is not truly informed debate. The best summation of what they contain was made by Alan Rusbridger in his statement to the court:

"I considered these documents to be of the highest significance in the debate about tax avoidance.

"They revealed at first hand the processes involved in structuring extremely complex and artificial tax avoidance vehicles; how lawyers and accountants worked together to exploit loopholes in government legislation; and the degree to which they are sanctioned at the highest levels within Barclays."

Only by examining the documents first hand do you fully understand just how Barclays' SCM team operated and operates. Blake's decision has slammed the door on one source of light, but the others remain wide open.

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Tuesday, March 17, 2009 

The smartest guys in the room get hot under the collar.

It would be nice to think that with various tax havens having to promise to be rather more transparent in their operations than they have been previously, threatened with being "named and shamed" by the OECD, that the actual businesses which exploit such havens would be following a similar trajectory. The sad reality is that both will continue to get away with it just as they have in the past: they'll wait for the current mood to slowly wither away, as it will when the economy eventually recovers, and then the same old lawyers and same bean-counters will be back to doing what they do best, letting the rich and powerful get away it while castigating the scum at the bottom who dare to fiddle their benefits.

Barclays however hasn't even bothered with letting it all blow other. Despite being in negotiations with the Treasury, threatened by its toxic assets, which it wants the government to insure, it still succeeded in gaining an injunction against the Guardian, stopping it from hosting documents detailing "Project Knight", a tax avoidance scheme devised in Feburary 2007 which could have seen the bank save between £40m to £60m in a single year. This is despite the fact the scheme is not illegal, and that Barclays even says that it fully informed Her Majesty's Revenue and Customs of what it was doing. Why then is it so desperate for the documents not to enter the public domain? Is it ashamed of what it was doing, legal though it was? Barclays' lawyers Freshfields argued that the documents were property of the bank, and that could only have been acquired by someone who had breached confidentiality agreements.

Sadly for Barclays, either the documents were up long enough for someone to mirror them, or they were also distributed to Wikileaks, increasingly becoming vital against legal threats of all varieties, where they are still fully available. Not just is the proposal for Project Knight included, but also documents detailing the setting up of a "Brazilian Investment Strategy", "Project Brontos", "Project Berry II - Investment in Index Linked Gilts", "Project Faber", "Project Valiha" and a memo detailing the minutes of a meeting of Barclays' Structured Capital Markets team concerning the setting up of an office for SCM in Luxembourg. Most interesting to do with the injunction issued against the Guardian is the involvement of Freshfields with Project Faber. Normally you would imagine that Barclays would have employed a separate legal firm to deal with the media, as Freshfields is ostensibly only involved with business law advice, but in this instance they seem to have decided not to do so. This raises a potential conflict of interest because the document on Project Faber details Freshfields' legal advice on the tax risk which the project would incur, and unlike the other documents where the risks are summarised fairly succinctly, Freshfields goes into quite some detail on five specific UK risks which Faber raises. Again, there's no suggestion here that either Barclays or Freshfields has done anything specifically illegal, but it also certainly seems to be in Freshfields' interest, as well as Barclays', to stop the documents from entering the public domain.

I won't pretend that I understand much of these documents, nor probably would 99% of the other people in the country, unless we had the likes of "Slicker" from Private Eye personally explaining them to us, but Richard Murphy is another man who does and who was asked by the Sunday Times to look at them after they were first passed them but didn't publish them in full. He described Project Valiha thusly:

It is designed so the money goes round in a big circle and comes back to Barclays so that they make £99m in tax savings without taking any risk at all. The whole thing takes three days.

As for the others:

“They work on the basis of exploiting tax regulations and the laws of different countries. They don’t generate any real profit for anyone, but they do save vast amounts of tax that they would otherwise pay.”

The Sunday Times claimed that Barclays might have been saving up to £1bn in tax through the various schemes, something the bank has vigorously denied. Murphy has though commented rather further on the schemes, of which it seems there might be even more which haven't turned up on Wikileaks:

I’ll tell you what I think is going on with Barclays. In my opinion it has constructed a series of wholly almost entirely artificial transactions undertaken through a significant number of separate legal entities, most under the control of Barclays itself, but some, inevitably, owned, or controlled (and in these deals it is always difficult to define what that might mean, deliberately) by the counterparty to the transaction - in most cases banks such as Goldman Sachs, Deutsche Bank, Credit Suisse, Fortis and so on.

Those entities have been in a number of jurisdictions, the UK and the Cayman Islands being the most common, but Luxembourg also being a participant. Some have been limited companies, some limited liability partnerships.

Some of those entities, even when incorporated elsewhere are tax resident in the UK, and some are not.

Some account under International Financial Reporting Standards. Some account under UK accounting standards.

It would seem that Barclays are trying to realise profits that they have ‘manufactured’ in most cases through these immensely complex structures by arbitraging (trading off) international taxation law, company law in various jurisdictions and even accounting standards, to achieve taxation results that mean that profits are realised or sold without taxation liabilities arising for Barclays.

The result has been a deliberate attempt to defraud – by which term I mean seeking to secure a financial advantage by deception, although not (I stress) illegally.

The deception has been on three parties. The first has been tax authorities who despite their brave statements to the contrary did not, I suspect, know the full details of some of these arrangements. It would seem that some may not have been disclosed to them.

Secondly, Barclays have sought to defraud (using the above definition) the taxpayers of the UK and maybe elsewhere who have not received the funds rightfully due to them on profits declared.

Thirdly, I think they have defrauded (using the above definition) their shareholders by declaring profits which were not, in my opinion, sustainable and which were manufactured through preconceived and structured financing deals in which the counterparties played a remarkably small part in exchange for what was, in effect, a fee to allow Barclays to record realised profits by turning the manufactured profits into third-party transactions.

This seems to be the real reason why Barclays is so desperate to keep the documents out of ordinary people's hands. They realise that they are some of the first real hard evidence to emerge of just how specialist teams within the banks sought to avoid tax, and who were subsequently incredibly richly rewarded for their work, with Murphy claiming that the head of Barclays' SCM division may well have been earning an astonishing £40m a year (other sources claim it could be £75m, for which see this revoltingly sycophantic article), about the same amount as that which one of the schemes would have saved the bank. In order to offset such huge remuneration, the profits from the avoidance would have had to have been far higher, and the £1bn a year figure no longer looks as nonsensical as Barclays claim. It somewhat puts Fred Goodwin's pension, even the £3 million lump-sum we now know he received into perspective, hence why Murphy has put up a further four posts on what should be done. At the very least we need to stop apologising for and excusing tax avoidance and demand that companies, in the words of Alistair Darling, don't just adhere to the letter of the law but also the spirit of it. Great public anger over the bailing out of the banks has not yet reached boiling point, but the Barclays revelations may just push the mercury further towards the top.

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Monday, February 02, 2009 

Have we got tax for you.

It is, as the Guardian's leader on the subject suggests, rather easier to target benefit fraudsters and those without access to good lawyers than it is to investigate tax avoidance. The paper knows this from bitter experience: it last year accused Tesco of avoiding corporation tax to the tune of £1bn, only for it to discover after publication that it had mixed up corporation tax with stamp duty land tax, and that the real sum avoided was far less. The paper quickly admitted its mistake, but not before Tesco, running straight into the arms of Carter-Fuck, had issued not just a libel writ but also a claim for malicious falsehood, although Justice Eady, the bête noire of the tabloids, subsequently threw it out.

The other reason for the Guardian to be extra careful when reporting on tax affairs is that it has also publicly admitted to be involved in avoiding tax itself, or rather that its parent company, the Guardian Media Group, has admitted such. This came about through GMG's alliance with Apax Partners, a private equity group, when it purchased the magazine publisher Emap. Quite rightly, some are therefore suggesting hypocrisy on the Guardian's part to be so apparently outraged about tax avoidance when the newspaper itself also does it. In the paper's defence, it's one of the few companies that has openly admitted some of its tax arrangements, although how much of this was in relation to the Tesco affair is unclear, while Richard Murphy, of Tax Research UK, examined all the other large media groups and found that the Guardian paid the largest percentage of corporation tax of the lot. As Richard Brooks also points out, it would be far worse if the paper's own tax arrangements stopped it from investigating "the tax gap", or even worse, if it affected its stance on it. Hypocrisy can be alleged, but it seems doubtful that the News International papers will be investigating tax avoidance any time soon, just as the Sunday Times every year mysteriously excludes Rupert Murdoch from its rich list.

Richard Brooks' involvement is one of the signs of how seriously the paper is taking its investigation, presuming of course that Brooks is the same Brooks that also works for Private Eye and who has been one of the heirs to Paul Foot's throne. That Private Eye subsequently discovered that Tesco was indeed avoiding corporation tax, as the paper had alleged, doubtless helped.

Undoubtedly, as we plunge head first into a recession, the tax receipts, taken for granted during the boom, become ever more important and should become ever more scrutinised. Peter Mandelson's famous quote, that New Labour was relaxed about people becoming filthy rich, often leaves out its second half, that this was fine as long as they paid their taxes. Half the reason why it was left off is not just so it can be used to beat Mandelson and Labour with, but also because the government itself became fabulously relaxed about companies and the individuals behind them not paying their fair share of tax. The Treasury might each year during the budget plug a few of the loopholes which are discovered by the bean-counting firms and mercilessly exploited, but the real tale, as always, was shown in the honours list, which year after year was resplendent with the burghers of industry who saw it as their duty, both to shareholders and themselves, to reduce their tax burden. Probably the most egregious example was the knighthood awarded to Philip Green, the man behind the Arcadia group - this was despite him taking £1bn out of the company to pay himself, which he funnelled to his wife in Monaco, therefore avoiding having to pay any tax whatsoever. The other gob-smacking incident was the selling off of tax offices to the company Mapeley, which is based in the tax haven of Bermuda. According to the National Audit Office's report on the deal (PDF), this saved Mapeley in the region of £55 million that the taxpayer would otherwise have had paid back to into the public purse.

The completely secretive nature of the deals, as well as the highly complex nature of the avoidance schemes exists not only between the companies and those that draw them up, but also between HMRC and the companies. HMRC, possibly out of embarrassment, possibly out of the desire to keep the missing taxes due a secret, refuses to give a figure for how much they're being left out of pocket each year, although estimates range wildly from between £3.7bn to over £20bn. Part of this secrecy is because HMRC deals directly with many of the companies over exactly how much tax they intend to pay - individuals such as Mohamed al-Fayed have long had agreements with HMRC over the exact figures. This is of course in stark contrast to how other taxpayers who get into arrears are treated, and to how the aforementioned benefit fraudsters are subject to the equivalent of a 10 minutes hate every so often. Both rip off the public purse, but only one enters the public eye, while further establishing the idea that most of those claiming to be sick are in fact not.

Some will console themselves with the idea that although undoubtedly avoiding pay your dues is a bad thing, that the money would just be squandered anyway. The argument would be a lot less alluring if this government wasn't so determined to do the equivalent of pouring money straight down the drain, as it continues to do on the various disastrous IT projects, on ID cards and on the Olympics, to name but a few such schemes. At the same time, there are always other things which many of us would like to see extra money going towards, not least at the moment a more generous benefits scheme for those temporarily out of work, or additional funding for retraining. It could be used to pay off the extra debt we're taking on more quickly, so as not to mortgage another generation of ordinary workers. As could be expected, it has been those ordinary workers, such as those protesting outside Lindsey and walking out in solidarity across the country, regardless of the involvement of the far-right and the nature of some of the slogans used, that are now being hit hardest when it was unrestrained global market fundamentalism which created the mess and which has been bailed out. The least those responsible can do is pay their fair share - and closing down the tax havens and the avoidance schemes has to be one of the conditions of the recovery and subsequent re-regulation.

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Thursday, November 20, 2008 

Those Conservative economic travails.

This must be a truly strange time to be a supporter of the Conservative party. To enter cliché for a moment, all the chickens have finally came home to roost. The man who promised an end to Tory boom and bust has succeeded in abolishing boom, while the prospects for the bust look increasingly ominous. The economy which he boasted was among the best placed to deal with the global downturn is in actual fact one of the worst placed to deal with it, according to the IMF and the European Union. Unrelenting, the Labour party believes that the solution is to borrow more to fund the tax cuts to stimulate the economy. As Larry Elliot has pointed out, this is a direct contradiction of what Gordon Brown formerly believed. At the weekend the same man attended a conference which he claimed would back up his solution to the downturn; it did nothing of the sort, and predictably only agreed to more or less meet again. Gordon Brown, by rights, ought to be finished.

Instead, it's the Tories themselves that look as though they're the ones in need of some sort of a stimulus. By contrast to Brown, who seems unaccountably at the moment to be walking on water when he should be sinking like a brick to the bottom, they're the ones looking washed up. Nothing they do at the moment can get a look in, or when it does it's almost immediately knocked down for its flaws. Take their hastily cobbled together policy on tax breaks for employers, which was dismissed almost universally as being the kind of tax con which the Conservatives have so often accused Labour of pulling. This week's panic was, with it looking almost certain that there will be at least £15bn worth of tax cuts in Monday's pre-budget report, the minimum needed for it to be minimally beneficial, to declare that they would, despite everything which they've previously said, not stick to Labour's spending plans for at least the first year should they win the next election. In any event this was always a false promise, but such was the apparent anxiety within the party over the floundering response to Gordon Brown's sudden found decisiveness that red meat had to be tossed to those who have always wanted tax cuts before anything else.

Even this though leaves the party looking contradictory, or at least at first glance it does. On the surface it looks like a standard, fiscally conservative measure: you can't borrow your way out of a crisis, so don't try. Instead, spending cuts will have to be found. Yet the Tories are still committed to spending the same as Labour on the NHS, the police and on education, whilst refusing to say where the cuts would be made. Even abandoning ID cards, as they promise, will not immediately summon up the £20bn that they are forecast to cost once they are fully introduced. The figures simply don't add up. As a consequence, the Conservatives are again being accused of being the do nothing party, and it's an insult that for the moment appears to be sticking.

Some of this is undoubtedly thoroughly unfair on the Conservatives. An element of their plight at least is that the media has become bored of the prospect of the Conservatives sleepwalking towards victory at the next election, and with Brown's sudden self-proclaimed saving of the global economy, they have a new horse to get behind, even if it's the same one they were previously saying was only fit for the glue factory. Also influencing it though is that despite all the plaudits mystifyingly bestowed upon George Osborne, such as politician of the year, they have been absolutely hopeless on the economy ever since the run on Northern Rock. Their immediate tactic was to portray the potential nationalisation as a return to old Labour, which could have worked if they had a realistic alternative policy. Gordon Brown took fright, which is partly why they dithered and dithered and made things worse by not doing it sooner. The problem was that the Tories didn't have an alternative, and that everyone got so fed up with waiting for them to come up with one that Vince the Cable suddenly emerged as the politician who knew what he was talking about, given pride of place as the first man to turn to for analysis which ought to have been coming from the real opposition.

The other reason though is that they like Brown and New Labour truly believed the rhetoric. They honestly thought that the economy was now an area of consensus, that growth was natural and endless, and that it was social policy on which they should concentrate. A nasty and pernicious social policy it is, calling a society broken when is isn't and which their solutions for fixing are the opposite of what is needed, but a policy it was, and one which the conservative press especially were fully behind. They may have made some murmurings on personal debt, but they offered no substantive opposition to the government on its spending and borrowing plans, and as Labour has rightly pointed to, they even proposed loosening the regulation on mortgages. Their belief, like Labour's, was that we didn't need to worry about not actually making anything, it was making London the city in which to do financial business which mattered most. In fairness, many of us became caught up in this fantasy: that neoliberalism, despite all the evidence to the contrary, could deliver, and that through almost indiscernible redistribution, played down at every opportunity, that the proles would not become too upset at being continuously shafted. The latter it seems can still be contained, for now, but it was neoliberalism itself which has come in for the mightiest of shocks.

From being 28 points ahead at one point in the craziest poll, the Conservatives are now down to just 3 points in front, within the margin of error, in the mirror craziest poll. Unlike New Labour prior to 97, whenever things aren't going their way, the Conservative approach seems to be to panic. Last year, during Brown's brief honeymoon, there were murmurings of defenestrating David Cameron, such was the concern that the change in leader would affect their fortunes. Luckily, Brown succeeding at shooting himself in the foot not just once but on numerous occasions, first through a dismal conference speech, then over the election which never was, then the obsession with 42 days, then the 10p tax rate etc etc, coupled with Osborne's moment of supposed genius, the raising of the inheritance tax level to £1m. This time round Osborne himself is the casualty, not helped by his dalliances with yachts and trying to win in an unpleasantness contest with Peter Mandelson.

The really strange thing is that the Conservatives have arrived at the right policy in the circumstances in a completely Byzantine way. Although their claims that we are among the most heavily indebted nations in terms of GDP is bogus, even if you include the nationalisations, PFI and pensions, they are right that we should not be further adding to those figures without explaining fully and comprehensively that this means taxes are going to have to rise significantly, or that spending is going to have to be cut considerably to return at some point to equilibrium. After a crisis that was caused by private-sector debt, the public-sector should not be seeking to emulate it. If we are going to have tax cuts, then we should be funding them appropriately by either cutting the ludicrous number of databases we are planning or which are in use, abandoning ID cards, getting rid of Trident and not replacing it, not "investing" in aircraft carriers, by getting out of Afghanistan and Iraq now and by raising the top rate of tax on the richest considerably. It was our indulgence of them that led to this mess, and while our politicians should more than shame the blame, they should also help to pay for it, by also closing down the loopholes that allow so many to evade tax altogether. The party that again seems to be leading the way is the Liberal Democrats, who are flat-lining in the polls and have more problems it seems than the Conservatives. That, sadly, is modern justice.

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Tuesday, May 27, 2008 

Of bank holidays, churnalism, and tax cuts.

Ah, bank holidays. Carefree days to share with the family while the heavens open outdoors. Or, alternatively, if you're a churnalist, a rather less carefree day struggling to fill up your newspaper. How about a story about a cat that's the only employee left at a Japanese railway station? Purrfect! Another middle class white teenager dies after an atypical drunken argument which happens across the land every weekend tragically gets out of hand? Time to restart the "Broken Britain" campaign in typically hysterical fashion! And, if you're the Grauniad, you can fill up the pages and your Comment is Fatuous blog site with all the news that's fit to flush from the increasingly tedious Hay-on-Wye book festival it just happens to sponsor.

If you're really, really desperate, you can even get an MP to write a comment piece for you. And lo, the Daily Telegraph comment editor saw it, and it was good, for he had managed to get Denis MacShane, from that bunch of socialist money thieves known as the Labour party to write an article calling for a smaller state and a cut in tax. Never mind that MacShane has always been on the right of the party, thought that the Iraq war was a fantastic idea and still thinks so, but this can be presented as a Labour MP speaking the unspeakable.

Or something. As it is, MacShane has produced an article almost as irritating as the Hay festival. In all his glory, MacShane tries to present the opinion that the poor should pay less tax as though no one on the left has ever said it, just as err, everyone realises that the tax credit scheme is hugely wasteful, costing a bomb and even then not working as efficiently as it should be. The answer has been obvious for quite some time: abolish the damn thing, raise the personal allowance significantly so that the poorest up to the middle-earners pay either very little or no tax at all, and fill the gap by raising the top rate of the very richest, taxing the non-doms, by ignoring the demands of the CBI, by not raising the inheritance tax threshold beyond the entirely reasonable £500,000, and imposing windfall taxes when companies such as oil firms make obscene profits because of the current oil bubble.

MacShane isn't finished there however. No, he also wants to target the waste in local councils, of the corpulent spending on press officers and consultants, on the ministers flying off on their jaunts. It doesn't matter that under Blair, who MacShane defended to the hilt time and again, this sort of spending got completely out of hand; he instead shrugs this off by saying that he doesn't know of a single minister "who doesn't privately despair of the waste of money" on the above. Why not publicly instead of privately despair? MacShane hasn't even mentioned the biggest and most egregious of the wastes: the private finance initiative, which has been used by Brown to keep so much of the spending and borrowing off the balance sheet.

If MacShane was hoping for a decent response from Telegraph readers he was wrong, as the Telegraph censors even less than the Grauniad (quite rightly, given some of the comments left for dear old Denis) and they let rip with both barrels, even if most of them are deluding themselves thinking that the new Blairites in the Conservative party are going to offer anything different whatsoever other than piecemeal cuts here and there while Whitehall remains just as bloated, if not more so, as the trend is for ever more spending on consultants and PR experts, not less, especially while the Conservative fightback is being helmed by ex-News of the Screws editor Andy Coulson. You can of course take completely the opposite view to MacShane and not be necessarily wrong either, as Bob Piper and Stan Rosenthal say:

What on earth is an ex-Labour minister doing writing an article for a right-wing newspaper that feeds into right-wing propoganda about the tax system?

Probably because dear old Denis is actually pretty right-wing himself.

Let's not kid ourselves though - this was partly to fill a gap after a slow news day and partly some of the thinkers outside the cabinet being let off the leash to suggest that there might be changes afoot. MacShane's offering is in fact probably more likely to be pursued than the course of action suggested by Compass for example, as to do as they suggest would have the tabloids and Telegraph in even more of a rage, even if it might, just might win back some of the support lost. And again, who knows, considering that the hauliers are throwing their rattles out of their collective pram again, while completely ignoring that even if tax makes up around 70% of the cost of diesel/petrol it's the oil price that has led to it spiralling to nearly £1.30 a litre, which the government seems ever more likely to give in to, tax cuts or the cancelling of rises could yet be back in vogue.

MacShane isn't the only way helping with the churning, as Dave Osler notes, with the Guardian bigging up a piece in Prospect by a former Blair speech writer who thinks that (yes, I realise it's just an example) if asthma patients want to spend their money on double-glazing, then they should allowed to be. It's a quite superb idea, it must be said, and shows where all the new thinking is coming from, and it isn't on the "old" left, that's for sure. Collins rounds it off by saying that the Blairites are increasingly impressed by David Cameron, which couldn't be because he's prepared to go the distance Blair couldn't, and that the real difference is "between the liberal and the authoritarian, not left and right". It doesn't seem to matter that by any scale, the new Blairites are just as authoritarian, if not more so than new Labour, as evidenced by boot camps for the unemployed, promises of zero tolerance and limits on immigration. If elected they'll probably have to stick with abolishing ID cards, although again, considering how much Labour have already spent on them, they (and us) might be stuck with them, but I don't believe for a second that they'll stick with their opposition to extending detention without charge once they don't have to pretend to give a fig about what Liberty thinks.

If the "new" new left is dead, then the new new new left is sure going to take some beating. Especially on bank holidays.

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