Tag: george osborne

A victory for Brexit is unlikely to change anything in the near future

By Daniel Margrain

 

For all those who thought that a Brexit vote in Thursday’s (June 23) highly anticipated and drawn -out referendum campaign will result in closure, might need to think again. In legal terms, the referendum is advisory rather than mandatory. What happens next is a matter of politics, not law – a determination that’s dependent upon whether the government decides to invoke Article 50 of the Lisbon Treaty.

To put it another way, the government doesn’t necessarily have to pay attention to what the British public says. What will happen on Thursday is that we, the British electorate, will effectively be advising and giving our opinion which doesn’t make the decision to leave, if that is indeed the outcome, necessarily legal. If we vote in a way that Osborne and Cameron disagree with, the government will almost certainly reconsider the result, particularly if the outcome is close.

Say, hypothetically, the turnout is 50 per cent and 51 per cent of that 50 per cent voted to leave, it would mean that 25.5 per cent of the electorate would have made the decision to leave which would adversely impact on the remaining 74.5 per cent. In other words, if something similar to this hypothetical situation did arise it would not, the government could argue, be indicative of a mandate to leave. Given how close the result is predicted to be, the vote tomorrow is unlikely to be the end of the matter, but merely the beginning of a long and drawn out process that will likely continue until the electorate arrives at a decision that Cameron and Osborne regard as acceptable.

As the Financial Times puts it:

What happens next in the event of a vote to leave…. will come down to what is politically expedient and practicable. The UK government could seek to ignore such a vote; to explain it away and characterise it in terms that it has no credibility or binding effect (low turnout may be such an excuse). Or they could say it is now a matter for parliament, and then endeavour to win the parliamentary vote. Or ministers could try to re-negotiate another deal and put that to another referendum. There is, after all, a tradition of EU member states repeating referendums on EU-related matters until voters eventually vote the “right” way.

What matters in law is when and whether the government invokes Article 50 of the Lisbon Treaty. This is the significant “red button”. Once the Article 50 process is commenced then Brexit does become a matter of law, and quite an urgent one. It would appear this process is (and is intended to be) irreversible and irrevocable once it starts. But invoking Article 50 is a legally distinct step from the referendum result — it is not an obligation.

There are three points of interest here in respect of any withdrawal from the EU by the UK.

First, it is a matter for a member state’s “own constitutional requirements” as to how it decides to withdraw. The manner is not prescribed: so it can be a referendum, or a parliamentary vote, or some other means. In the UK, it would seem that some form of parliamentary approval would be required — perhaps a motion or resolution rather than a statute. The position, however, is not clear and the UK government has so far been coy about being specific.

Second, the crucial act is the notification by the member state under Article 50(2). That is the event which commences the formal process, which is then intended to be effected by negotiation and agreement. There is no (express) provision for a member state to withdraw from the process or revoke the notification. Once the notification is given, the member state and the EU are stuck with it.

And third, there is a hard deadline of two years. This is what gives real force to Article 50. The alternative would be the prospect of a never ending story of rounds of discussions and negotiations. Once notification is given, then the member state is out in two years, unless this period is extended by unanimous agreement. It is possible that such unanimity may be forthcoming – but this would be outside of the power of the member state. Once the button is pushed, the countdown cannot just be switched off by a member state saying it has changed its mind, or by claiming that the Article 50 notification was just a negotiation tactic all along. That will not wash.

This said, what is created by international agreement can be undone by international agreement. Practical politicians in Brussels may come up with some muddling fudge which holds off the two year deadline. Or there could be some new treaty amendment. These conveniences cannot, however, be counted on. The assumption must be that once the Article 50 notification is given, the UK will be out of the EU in two years or less.

What happens between a Leave vote and any Article 50 notification will be driven by politics. The conventional wisdom is that, of course, a vote for Brexit would have to be respected. (This is the same conventional wisdom which told us that, of course, Jeremy Corbyn would not be elected Labour leader and that, of course, Donald Trump would not be the Republican nominee.) To not do so would be “unthinkable” and “political suicide” and so on.

And if there is a parliamentary vote before any Article 50 notification then there is the potential irony of those seeking to defend parliamentary sovereignty demanding that an extra-parliamentary referendum be treated as binding. But it must be right that the final decision is made by parliament, regardless of what the supposed defenders of parliamentary sovereignty say.

What is certain is that if there is an Article 50 notification then there will be immense legal work to be done. Over 40 years of law-making — tens of thousands of legal instruments — will have to be unpicked and either placed on some fresh basis or discarded with thought as to the consequences. The UK government has depended since 1972 — indeed it has over-depended — on it being easy to implement law derived from the EU. The task of repeal and replacement will take years to complete, if it is ever completed. Even if the key legislation — especially the European Communities Act 1972 — is repealed there will have to be holding and saving legislation for at least a political generation.

A vote for Brexit will not be determinative of whether the UK will leave the EU. That potential outcome comes down to the political decisions which then follow before the Article 50 notification. The policy of the government (if not of all of its ministers) is to remain in the EU. The UK government may thereby seek to put off the Article 50 notification, regardless of political pressure and conventional wisdom.

There may already be plans in place to slow things down and to put off any substantive decision until after summer. In turn, those supporting Brexit cannot simply celebrate a vote for leave as a job done — for them the real political work begins in getting the government to make the Article 50 notification as soon as possible with no further preconditions.

On the day after a vote for Brexit, the UK will still be a member state of the EU. All the legislation which gives effect to EU law will still be in place. Nothing as a matter of law changes in any way just because of a vote to Leave. What will make all the legal difference is not a decision to leave by UK voters in a non-binding advisory vote, but the decision of the prime minister on making any Article 50 notification.

And what the prime minister will do politically after a referendum vote for Brexit is, at the moment, as unknown as the result of the referendum itself.

Victorian Holocausts & the Tory killing machine

By Daniel Margrain

Author Milan Kundera’s aphorism that “the struggle of man against power is the struggle of memory against forgetting” might well have been written for Britain’s poor, mentally ill and disabled who lately have slipped from the media headlines and hence the consciousness of the wider public. To their credit, shortly before the last General Election, the Mirror newspaper reminded their readers how many ordinary mentally-ill and disabled people who had nothing to do with causing the financial crisis had committed suicide which the Tory government had attempted to cover-up.

Although initially the opposition from the Department for Work and Pensions (DWP) to releasing figures highlighting the number of Incapacity Benefit and ESA claimants who had died between November 2011 and May 2014 was solid, increasing political pressure from below meant that they were eventually forced into releasing the information by the Information Commissioner (IC). The DWP Secretary at that time, Iain Duncan Smith, who admitted that his department has a “duty of care” to benefit claimants, disingenuously insisted that there was no evidence of a ‘causal link’ between the governments work capability assessment (WCA) and the subsequent 590 recorded deaths from suicide, despite the fact that the coroners findings stated that all of the deaths “certainly aren’t linked to any other cause”.

It’s clear that the DWP under Iain Duncan Smith practiced ‘chequebook euthanasia’  in which “WCA assessors used psychological ‘nudge’ techniques to push the mentally-ill towards suicide in order to reduce the ‘burden’ on society caused by these “useless eaters”.  A year down the line, and with Duncan Smith gone, many people hoped that there would be a change in policy direction. But this has been to no avail. After announcing that the government had “no further plans” for benefit cuts in March of this year, Duncan Smith’s replacement, Stephen Crabb has recently said to have gone back on his word.

Crabb has implied that six years of “welfare reforms” (euphemism for £12 billion of cuts) look set to continue for the sick and disabled which will almost certainly result in yet more unnecessary deaths among some of the most vulnerable people in the country. Mike Sivier has correctly, in my view, described this Tory policy as a “war of attrition” that “may clearly be seen as a genocide”. This form of ‘chequebook euthanasia’ would not be possible without the intervention of Chancellor, Gideon Osborne, who oversees the writing of the cheques.

The attempts by the Tories to humiliate and inflict immense suffering on the weakest in society, in what film-maker Ken Loach described as the British governments “conscious cruelty” towards them, would not have come as any surprise to Osborne’s Victorian counterparts. These Victorian politicians would have shared with the Tory Chancellor an ideological commitment towards ending ‘welfare dependency’ which then, as now, lofty sounding morals were regularly evoked.

One of Osborne’s prominent 19th century counterparts was ‘India’s Nero’, Lord Lytton. Queen Victoria’s ‘favourite opium-smoking poet’, vehemently opposed efforts to interfere with ‘market forces’. In 1877-78 he rubber-stamped the export of a record amount of wheat grain to Europe rather than relieve starvation in India. During the late 19th century, India, under Lytton, had effectively become a Utilitarian laboratory where millions of lives were wagered against dogmatic faith in omnipotent markets overcoming the “inconvenience of dearth”.

A similar Utilitarian laboratory had been established by Britain in Ireland during this late Victorian period. Under the tutelage of free market zealot, Chancellor Lord Charles Trevelyan, the Irish famine ‘relief effort’ was put into place that resulted in a politically-induced genocide no different in principle to the ‘chequebook euthanasia’ policy of the modern day Tories. The tragedy of the famine is commemorated by people from all over the world who, next Saturday (May 21), will descend on the beautiful County Mayo coastline in the west of Ireland to take part in the annual ten mile Famine Walk from Doo Lough to Louisburgh – the town where on the night of March 30, 1849, hundreds of starving people arrived seeking relief and workhouse shelter.

They were met at the shelter by the local Poor Law guardians whose role was to ‘inspect’them as certification for their ‘official pauper’ status. This would then supposedly entitle them to a ration of food to be eaten the following morning at a fishing establishment called Delphi Lodge owned by the Marquess of Sligo, ten miles away. Many didn’t arrive at their destination having died from exposure to the harsh elements or through starvation. The few that did make it were refused the relief they were told they were entitled to and they died on their homeward journey, with the bodies remaining where they fell.

Such tragedies were common in Ireland in the mid-19th century. By 1871 the population of Ireland had halved, with at least 1.5 million dead. Two million fled to America, many of them dying during the voyage or on arrival. The historian and critic, Terry Eagleton, describes the famine as “the greatest social disaster of 19th century Europe, an event with something of the characteristics of a low-level nuclear attack.”  In echoing the kind of detached but scornful class-based attitude the contemporary ruling elite have towards their working class minions Trevelyan, in a rather casually racist manner, said of the Irish:

“The great evil with which we have to contend, is not the physical evil of the famine, but the moral evil of the selfish, perverse and turbulent character of the people.”

Lord Clarendon, an establishment Anthony Wedgewood (Tony) Benn, of his day, pleaded with the Liberal PM, Lord Russell to intervene, stating:

“Surely this is a state of things to justify you asking the House of Commons for an advance. For I don’t think there is another legislature in Europe that would disregard such suffering as now exists in the west of Ireland, or coldly persist in such a policy of extermination.”

Clarendon’s call for Russell to intervene wasn’t heeded and neither were similar calls to prevent famines in other nations during the Victorian colonial era – China, India, Egypt, Korea, Brazil, Russia, Ethiopia and Sudan. In the latter two countries alone, an estimated one-third of the populations died. The European empires, together with Japan and the United States, rapaciously exploited the opportunity to wrest new colonies, expropriate communal lands, and tap novel sources of plantation and mine labour. As Mike Davis points out:

“What seemed from a metropolitan perspective the nineteenth century’s final blaze of imperial glory was, from an Asian or African viewpoint, only the hideous light of a giant funeral pyre. The total human toll…could not of been less than 30 million victims. Fifty million dead might not be unrealistic.”

The famines of the Victorian era continue to resonate today. Then, as now, they are a symptom of social and economic policies that result in unnecessary deaths. Even in the 19th century this was well understood. The radical journalist and humanitarian, William Digby, principal chronicler of the 1876 Madras famine, as well as famed naturalist, Alfred Russel Wallace, for example, both viewed mass starvation as an avoidable political tragedy not ‘natural’ disaster. Published in 1898, Wallace characterized the famines in India and China, together with the slum poverty of the industrial cities, as “the most terrible failures of the century.”

Millions died, not outside the capitalist system but in the very process of being forcibly incorporated into its economic and political structures. Indeed, they were murdered by the theological application of the sacred principles of Smith, Locke, Hobbes, Bentham, Malthus and Mill in much the same way as hundreds, or perhaps even thousands, of today’s poor, mentally ill and disabled have, under the Tories, died as a result of the neoclassical economic Chicago School’s application of the sacred principles of Friedman and Stigler. The consensus view among the ruling class of the Victorian era was that famine was deemed to be morally justifiable as a “salutary cure for over-population.”

Today, over 3 million of the world’s children die (needlessly) from hunger. Indebted countries are forced to export food as a ‘free-market’ commodity while the producers are denied their own produce and many of them go hungry, and their children starve. That is what happened in Ireland and India. In Trevelyan and Lytton’s day it was known as Liberalism. Today it is known as ‘neoliberalism’. “England made the famine”, wrote the Irish socialist, James Connolly, “by a rigid application of the economic principles that lie at the base of capitalist society.” In essence, nothing has changed. The ruling class attitude towards the poor and sick who suffer as a result of the political consequences and actions of those who rule over them, is as embedded today as it was a century and a half ago.

Osborne’s Budget of Irresponsibility

By Daniel Margrain

Chancellor Gideon Osborne’s budget last week that represented a culmination of six years of government failures and which slipped the UK into a deeper recession, amounted to another massive transfer of wealth from the poorest to the wealthiest in society. This was reiterated by both the Institute for Fiscal Studies (see chart below) and the Office for Budget Responsibility (OBR). The Economist projects that by the end of this parliament, levels of investment – which are already one of the lowest in Europe – will fall to just 1.4 per cent of GDP, under half of what it was when the coalition government came to power. It is also half of what the OECD said is necessary just for the UK economy to stand still. But despite these facts, an alternative narrative has emerged in many of the editorials of the corporate controlled media which bare no resemblance to reality for the vast majority of the British people. As Shadow Chancellor, John McDonnell put it on LBC last week, “If press releases built things, Cameron would have rebuilt our country.”

 

The main thrust of the budget was Osborne’s cut in funding to the disabled by £4.2 billion in order to pay for three separate tax cuts to the rich against a backdrop in which the national debt is rising by £45 per second or £2,700 per minute. Paul Mason summed up the mood in the House:

“Osborne’s glum face during Jeremy Corbyn’s speech — an uncharacteristically angry barnstormer — was matched by the glum faces of Blairites as they realised their own party was actually going to inflict moral and political damage on the government.”

Osborne’s inhumane and fiscally irresponsible budget was preceded by the fiscally responsible alternative version outlined by his opposite number, John McDonnell who, in a speech on March 11 (as well as in various interviews to the media and public meetings), laid out his parties fiscal credibility rules. The shadow Chancellor stated that he will eliminate the deficit and tackle the national debt within a five year period on the basis of the implementation of a progressive and ambitious investment programme that he said will provide the stimulus for growth and demand in the economy.

McDonnell insisted that a future Labour government would invest in skills, infrastructure and above all, technology. The speech was subsequently praised by a wide range of economists and some media outlets in addition to business organizations that included the CBI and the Chamber of Commerce. As a committed socialist, McDonnell is aware of the importance planning is to the economy and the ruthlessness that is required to properly monitor how governments’ spend and, more importantly, earn money. The whole debate is how the country earns its future which McDonnell has said ought to be focused on investment.

The difference between McDonnell’s approach and that of one of his often cited predecessor, Gordon Brown, is that the latter never went for an investment-growth strategy and relied too much on unregulated finance sector growth and the revenues generated, as the catalyst for the subsidizing of public services. This policy strategy proved to be an abject failure. Similarly, the approach under McDonnell’s immediate predecessor in opposition, Ed Balls, was firstly to underplay the drive toward investment and, secondly, was marked by his failure to recognize that governments’ have to borrow to invest in the long-term in order to grow the economy.

But equally as important, was Balls’ inability to grasp the important role organizations like the IMF and OECD play in diagnosing economic problems and how best to solve them. Specifically, Balls appeared to have underplayed the scope the combination of fiscal and monetary policy plays in combating low or negative interest rates. In contrast to the incompetence of Balls and Brown, McDonnell has expressed awareness that when government’s reach the limits of monetary policy in terms of low or negative interest rates, they have to combine the monetary with the fiscal. What McDonnell acknowledges, is the importance the building of a balanced economy plays to the modern democratic nation state.

The problem under previous government’s – both Conservative and Labour – has been that the investment in the manufacturing base, predicated on new technology, has been largely sidelined at the expense of the finance sector. On LBC, McDonnell used the analogy of a small company to outline his case. “An owner of a new company will need to invest in new machinery in order to compete against his rivals otherwise he or she will go out of business”, he said. He continued: “Government’s, like businesses, need to invest in the future otherwise their economies will fall behind.” The lack of investment is precisely what has beset the UK economy over recent decades, particularly under the latest Tory government which has overseen a widening productivity gap between the UK and its major European rivals.

McDonnell, correctly in my view, has made it clear that the Office for Budget Responsibility (OBR) should be given the power to monitor the UK’s own application of its fiscal credibility. The OBR, according to McDonnell, should not report to the Chancellor as is currently the case, but instead it should go directly to parliament. The aim is not merely to raise the economic credibility of Labour among the public but to raise it among the political class too. It’s ironical that despite the public perception that Labour governments’ have been more economically incompetent in the 37 years since Thatcher was elected than their Tory counterparts, the reality is there have been only two years – under Nigel Lawson during the boom period of the 1980s – in which the Tories produced a balanced budget. Conversely, Labour produced three years of balanced budgets under Gordon Brown.

 McDonnell has been aided in his approach to countering Tory and media propaganda by some of the world’s renowned and leading economists who have not only openly backed the oppositions anti-austerity economic model but have played an active part in advising the Shadow Chancellor as part of Labour’s Economic Advisory Committee. A central plank of the fiscal responsibility rules that McDonnell and his team set out on March 11, relates to Labour’s intention to reduce debt as a proportion of GDP over the lifetime of the government. This will entail growing the economy over the requisite five year period, allied to a fiscally disciplined and controlled approach to spending. The alternative budget that McDonnell proposed emphasized the application of a process of rigorous budgeting so as to restrict the likelihood of public expenditure spiraling out of control. To this end, the Shadow Chancellor stressed the need for the treasury to return to its former role of managing public finances as opposed to signalling to government departments that they have a license to spend public money in a prodigious manner.

An example of the latter happened two years ago following the Tory government’s much criticised selling off and closing down of the Forensic Science Service (FSS) against the advice of all the relevant parties concerned. The treasury ignored the advice because they envisaged the closing of the service as being financially prudent in the short-term. Two years down the line, they decided to set it up again. It’s this kind of short-term based decision-making predicated on the top down authoritarian micro-managed approach of their principal overseer in number 11 Downing Street that inhibits not only the long term financial credibility of government, but undermines democracy and the well-being of society as a whole.

Then there are the secret and highly wasteful and expensive P F I funded projects that typified the Blair and Brown era that McDonnell says he wants to put an end to. A third example of how short-term policy approaches are counterproductive to the long-term financial well-being of the nation, is within the realm of housing. The most labour intensive form of public spending is affordable council house building which, year on year, since the era of the Thatcher government, has failed to meet the demand for them. Labour’s Housing Minister, John Healey, has stated that he intends, as a starting point, to use savings on housing benefit (which is beneficial mainly to the rich), to build 100,000 affordable homes.

Government investment in housing is not only beneficial to those in need of a home, but it also reduces the housing benefit bill. In addition, the cost of buying a house is reduced due to increasing availability more widely. Although on the surface the intention to bring greater scrutiny and accountability to bare within the public sphere sounds overly bureaucratic, the kinds of attempts to rein in government and treasury short-term excesses are nevertheless fundamental to the successful running of governments’ in the eyes of the electorate. It is this electorate that is increasingly aware of just how callous Gideon Osborne has been in the lead up to the decision to cut disability welfare benefits which allegedly prompted Iain Duncan Smith’s resignation letter.

The letter basically outlined every suspicion that voters, and indeed Tory MPs, have about Gideon Osborne in relation to his obsessive attempts to micro-manage government departments as the prerequisite to his cynical positioning as next in line to succeed David Cameron as Tory leader. In relation to Duncan Smith’s resignation, one theory espoused by former UK diplomat Craig Murray is that his conscience got the better of him and as such Osborne’s budget attack on the disabled was regarded by Duncan Smith as one attack too many. Personally, I don’t buy it.

I’m more inclined to believe John McDonnell’s interpretation as expressed on LBC yesterday (March 19). McDonnell claims that the former Work and Pensions Secretary went through a long consultation exercise which specified the new proposal for the qualification criteria for the Personal Independence Payment (PIP). As a result of pressure from Osborne, McDonnell claims that Duncan Smith had no option other than to tear the agreement up.

In other words, a deal was allegedly done but Osborne is said to have reneged on it. This put pressure on Duncan Smith who, in turn, McDonnell claims, had taken the flack for something that was not ultimately his doing. Osborne had invented a fiscal rule that has been unable to withstand political scrutiny and the public, judging by the latest opinion polls, are wise to it. Let’s hope they will continue to be wise to the government’s various shenanigans prior to the forthcoming local elections and vote accordingly.

The Austerity Con-Trick

Cash machines targeted by Occupy protesters

Cash machines targeted by Occupy protesters (Pic: Guy Smallman)

The UK government mantra that it’s imperative to reduce the deficit (the difference between the money coming in and going out) is one of the greatest confidence tricks to have ever been fostered on the British people. In reality, the deficit could be wiped out at a stroke. In his documentary film The Spirit of ’45, Ken Loach highlighted that in the decade after the war, the UK government built 300,000 affordable homes a year and brought the NHS into being.

The chart below shows at that time UK national debt – the accumulation of deficits – stood at about 180% of GDP. At present it’s about a third of that.

UK National Debt since 1900.

uk-national-debt
Source: Reinhart, Camen M. and Kenneth S. Rogoff, “From Financial Crash to Debt Crisis,” NBER Working Paper 15795, March 2010. and OBR from 2010.

So why in 2015 are we apparently unable to afford to prevent the most vulnerable in society from committing suicide as a result of cuts to their benefits, yet after the war we were able to build hundreds of thousands of affordable homes for people to live in as well as bring our NHS into being? Why the insistence on getting the deficit down especially since there is no law forcing the government to repay the debt?

The answer to those questions is that since the crisis hit in 2008, there’s been an iron clad consensus between both the Labour Party hierarchy and the Tory right, predicated on neoliberal ideology which is used as a weapon with which to beat the poor with by way of the former’s support for, and the latter’s implementation of, a sustained programme of austerity and cuts. It’s this iron clad consensus that Jeremy Corbyn wants to break.

The notion that it’s imperative the British government “balances the budget” in order to reduce government debt is nonsense, as is the analogy that national budgets need to be treated just like household budgets. The bailiffs won’t be entering the House of Commons or the Bank Of England any time soon. The truth is, unlike personal debt, the deficits and debts of governments’ are not of primary importance.

When he became chancellor in 2010, Gideon Osborne boasted that he would eliminate the deficit by April 2015. But that plan is in tatters. He has now put back the promise to 2018/19. The government had to borrow £3.7 billion more in the first seven months of last year. This was partly because North Sea oil and gas revenues plummeted to a four year low.

The UK is a relatively low wage economy compared to it’s major rivals and its productivity gap with these nations’ is at the widest it’s been for 20 years. Moreover, because many of the new jobs created in Britain are mainly part time (against a backdrop of the longest drop in real wages since records began), means that tax revenues are low.

In order to make up the shortfall between real and expected revenues, the government borrows money by selling bonds which are essentially IOUs with the promise of future repayment. In the meantime, the government pays interest on these bonds which are sold to banks, insurance firms and even pension funds. The total of bonds that have been sold is called “public debt”.

In a crisis like the one we’ve had since 2008, bond buyers can demand higher interest payments which they have done. This explains why the cost to the government in terms of the interest on the national debt has risen since the beginning of the crisis as illustrated in the table below.

uk-debt-interest-payments-total

To appease the bond buyers, the government has imposed austerity on the people. We constantly read in the gutter press about the rail workers allegedly holding the government to ransom, but never the bankers – funny that!

During the peak of the swinging sixties, government debt was greater than it is in 2015 and yet, unlike those golden days, we are told that both the government and the citizens of today have to tighten their belts as though we were living the austere days of the Great Depression in the 1930s.

The truth is the post war Keynesian boom resulted in a steadily declining debt from it’s peak in the 1950s. This is because higher wages and high employment means greater spending power, which in turn means greater economic activity and higher government tax revenues.

This is precisely the kind of argument progressive capitalists like Nick Hanauer point to. The reason billionaires like him argue for a doubling in the national minimum wage is not because they are altruistic but because they understand that it’s in their best interests’ and that of the capitalist system as a whole. That message needs to be relayed to Cameron and Osborne.

Housing Benefits The Rich

Figures shared with the Guardian by Generation Rent suggest landlords could be gaining as much as £2
Figures shared with the Guardian by Generation Rent suggest landlords could be gaining as much as £26.7bn a year from the taxpayer. Photograph: Christopher Thomond/Guardian

It’s been clear for a very long time that the main purpose of the tax system is to provide benefits to the wealthy. The minister responsible for cutting income support for the poor, Iain Duncan Smith, lives on an estate owned by his wife’s family. During the last decade it has received €1.5m in income support by way of farm subsidies from taxpayers.

In what has been dubbed the “Great British Sell-Off” and the “Sale of the Century”, the chancellor, George Osborne, intends to sell off public owned stakes in Royal Mail, RBS, the Met Office, Ordnance Survey and air traffic controller, Nats, which will rake in a one-off windfall of around £31.7 billion in 2016/17 – an amount which surpasses all privatisations since 1993, breaking even Thatcher’s record. To put this into a wider context, the money raised which will benefit the minority of Osborne’s elite friends in the city, will be the largest amount of money raised through the disposal of public assets in any 12-month period in modern history.

The ideology underpinning this public asset stripping is part of a strategy to reduce the role of the state that will do nothing to stimulate growth. On the one hand, Osborne announced £12 billion of cuts – the pain of which will be felt by the most vulnerable. On the other, he rushed through the sale of £2 billion worth of the 79 per cent stake the government has in RBS and as a result it was the taxpayers who lost out on a potential £14 billion return. It should also be noted that the Tory aristocrat, who seems set to be next in line to take the reins of PM from his friend David Cameron, had promised action on tax avoidance in spite of the fact that his family business routinely avoids tax.

Meanwhile, the UK version of a Kardashian, the royal parasite Princess Beatrice, who has been spotted taking to the water on Roman Abramovich’s £1 billion super yacht, Eclipse, has racked up seventeen holidays in eight months at our expense.

The real benefit spongers, then, are not those who feature on low brow documentary programmes, but rather they are the elites who occupy the corridors of power. If the richest 1,000 people in Britain that have seen their wealth increase by a massive £155bn since the current economic crisis began in 2008, were to actually pay their fair share of tax, the deficit the government assures us needs reducing, would be wiped out at a stroke.

But there is no priority within government to insist they cough up. Asda, Google, Apple, eBay, Ikea, Starbucks, Vodafone: all pay minimal tax on massive UK revenues, mostly by diverting profits earned in Britain to their parent companies, or lower tax jurisdictions via royalty and service payments or transfer pricing. The £1 billion that Gideon gave away to his pals in the city on August 4 in the RBS share giveaway would have gone a long way to fund the deficit in the NHS, whose trusts’ claim are “unaffordable”.

However, the redistribution of wealth from the poor to the rich doesn’t end there. After dissecting yesterday’s Guardian piece on welfare spending, Craig Murray highlights how housing Benefit represents another form of massive subsidy and wealth transfer, particularly in London and the South East of England where, in the absence of housing benefit or inheritance, it’s impossible for anyone on the average income to live.

As Murray says, the distortion in house prices in this part of the UK has nothing to do with very wealthy foreign buyers concentrated at the top end of the market, but rather, it’s to do with:

the conjunction of buy to let and state housing benefit. The state pays out 18 billion pounds a year in housing benefit, and the vast majority of that goes straight into the pockets of private landlords in the South East of England. State housing benefit underpins the entire system.”

Now the brilliance of the trick is that, as it is labeled a benefit, the left fight to keep housing benefit as though it benefited poor people. In fact this is a great illusion. It does nothing of the sort. What would truly benefit poor people is lower rent or affordable homes. Housing benefit goes straight into the pockets of the landlord class.

The landlord class of course encompasses the political class, many of whom (including Cherie Blair, famously) are also landlords. As housing benefit is paid for from general taxation, the entire system is a massive transfer of wealth from the poor to the rich, and above all from the North and West to the South and East.

The landlord class benefit not only from the taxpayer giving them enormous rents, but from the possession of artificially inflated property on which they can raise further money for more speculation…. The reason that IDS has not made a serious assault on housing benefit is that it puts money straight into the pockets of most of his Tory chums.

The largest benefit recipients in the UK are the great landlords….[P]umping in 18 billion pounds of state money a year to rents adds 288 billion pounds to property values.That explains how you reach the apparently impossible situation of median property at twelve times median income.

Bankers bankrolled by the taxpayer, as well as local authorities that administer housing benefit – both of whom owe their continuing existence to public funds – should be acting in the public interest not frittering away public money into the pockets of the rich.

Heart Out To Tender

George Osborne is set to sell off more public assets than every privatisation of the past two decades combined.

In what has been dubbed the “Great British Sell-Off”, the chancellor is set to flog off public owned stakes in Royal Mail, RBS and other organisations – raking in a one-off windfall of around £31.7 billion in 2016/17.

This is more than the total of £31.7 billion raised by all privatisations since 1993. It would also be the largest amount of money raised through the disposal of public assets in any 12-month period in modern history.

Unite general secretary Len McCluskey described the findings as “the sale of the century” and accused Mr Osborne of “rewarding the Tory party’s friends in the city in a spectacularly lavish style”.

He said: “These are public assets belonging to the taxpayer, held in trust for the future for the benefit of the many, not for the financial gain of a rich city elite.

“George Osborne is being utterly irresponsible and inconsistent. On the one hand he announces £12 billion of cuts, the pain of which will be felt by the most vulnerable, on the other he rushes through the RBS sale and in the process loses out on a £14 billion return to taxpayers.

“This is money that could have been spent on infrastructure investment, education and health for the benefit of all.”

TaxPayers’ Alliance chief executive Jonathan Isaby called the statistics “striking”, and stressed the Treasury should not use sell-offs as a substitute for planned spending cuts.

“It is welcome that the Treasury is looking to maximise revenues to fill Britain’s financial black hole, but sell-offs can’t be allowed to replace the spending reductions that Britain needs over the long-term.

“Every deal must deliver the best possible value for money for taxpayers, but it is good to see that an active chancellor is pushing ahead with selling off assets that can sit very happily – and typically operate more efficiently – in the private sector.

“He should look at every bit of government and, where sales of organisations, assets or land are appropriate, push on. People often say we should keep these assets for a rainy day – a £1.5 trillion and growing debt burden counts as a downpour.”

Mr Osborne began his programme of sell-offs this week when he authorised the disposal of £2.1 billion of shares in RBS.

Further sales are planned for the next few months, including the Government’s remaining 30% stake in Royal Mail, estimated to raise £1.5 billion, and shares in Lloyds totalling around £12.9 billion. The privatisation of £2.3 billion of student loans, along with assets from the former bank Northern Rock and other sales, would bring the total for 2015/16 to £31.8 billion.

The Press Association’s analysis also reveals that:

  • The figure of £31.8 billion for 2015/16 is roughly one fifth of the total amount raised by all privatisations from 1979 to 2014 (£151 billion).
  • The previous 12-month record was set in 1991, when proceeds from the sale of government stakes in BT, National Power, PowerGen and regional electricity companies in Scotland raised £22.5 billion.
  • The sale of the Government’s remaining shares in Lloyds, estimated to bring in £12.9 billion this year, would be the single biggest privatisation since the sale of British Gas in 1986, which raised £20.3 billion.
  • Nigel Lawson is the chancellor who raised the most money through privatisations, selling off around £73 billion of public assets between 1983 and 1989. Other chancellors to have presided over a large number of sell-offs include Norman Lamont (around £24 billion) and Ken Clarke (£23 billion).
  • During the Labour governments of 1997–2010, only £6.4 billion of public assets were sold, including National Air Traffic Services in 2001 and British Nuclear Fuels Limited from 2006–9. Note: all figures are today’s prices, calculated using RPI.

http://www.mirror.co.uk/news/uk-news/george-osborne-flog-more-public-6200948

Banking Racketeers Set For Another Windfall

A sign is displayed outside of a branch of The Royal Bank of Scotland in central London, Britain May 20, 2015. REUTERS/Neil Hall

The UK Chancellor’s announcement that he plans to sell-off £2 billion worth of the 79 per cent stake the government has in RBS over the coming fortnight is, according to Unite national officer for finance Rob MacGregor, “recklessly irresponsible”(1). RBS shares that stood at £6.88 in 2007, are now valued at £3.30 (2). It should be noted that the shares have not been offered to the people who bailed out RBS, that is us, the taxpayers but to the Tories’ city friends.

The decision by Aristocrat Gideon Osborne, who seems set to be next in line to take the reins of PM from his friend David Cameron (3), and who promised action on tax avoidance (4), despite the fact that his family business has avoided tax (5), is defended by Treasury minister, Harriet Baldwin. Why would she defend the sell-off which will result in a £1bn loss to taxpayers, you may ask?

Well, it could have something to do with her connections within in the banking racket. Having joined investment bank JP Morgan Chase in 1986, she then became managing director and Head of Currency Management at their London office in 1998. She left the bank in 2008, after more than two decades with the bank (6). Maybe she has advised Cameron to get shot of the RBS millstone before his transition to PM.

The chief architects of the RBS collapse, Fred Goodwin and Sir Tom McKillop seemed to have disappeared into the ether.

To sell these shares when business is slow, many are on holiday and the stock market depressed, means its the opportune time for these scoundrels to defraud us for the second time round, which of course is really what this latest scandal is all about.

If, after this latest act by the page boy to his dads banker friends in order to further the interests of the banking racketeers, won’t have awaken the masses from their slumber, then I fear nothing will. There is no clearer illustration we are being taken for a ride than the governments collusion with the bankers as highlighted by this sell-off.  Austerity amounts to the raiding of the public coffers to bolster the pockets of the super-rich (7).

As economist Andrew Fisher alludes, this is clearly an ideological and dogmatic move by Osborne, not a financially pragmatic one:

“Banks that owe their continuing existence to public funds should be acting in the public interest — investing in the productive economy, reducing the margins between their lending rates and savers’ rates, and ending the fat-cat bonus culture at the top, while underpaying and laying off cashiers at the other end.”(8).

The Financial Times reported yesterday (August 3) that Osborne wants to flog off £32bn worth of public assets by the end of the financial year, as part of a strategy to reduce the role of the state that will do nothing to stimulate growth (9). The £32bn worth of public asset stripping that is to include the Met Office, Ordnance Survey and air traffic controller Nats, breaks even Thatcher’s record (10).

We are not in this mess because politicians are stupid but because of the cozy relationship that exists between them and the bankers who the latter lobby on behalf of (11). The Guardian outlines how it all works. A commentator on Craig Murray’s blog argued that:

“The entire RBS saga is a scam from start to finish:

• All banks make huge profits by lending prodigiously.
• Concentrate bad debts in a few banks.
• Instill ‘too big to fail’ meme.
• Order politicians to ‘nationalise’ compromised banks at huge cost to tax-payers.
• Continue injecting billions until ‘nationalised’ banks have paid off the lion’s share of bad debt.
• Sell bank back to bankers at knock-down price” (12).

Another commentator from the same blog makes another apt point:

“Note the bastards didn’t buy voting shares in RBS: the taxpaying sucker didn’t even have the opportunity to reform the bank. Lovely little restructure: the retail arm goes to another retail bank for a knockdown price (W&G may not have been too wise buying it even then), while the crooked division ends up divvied up between hedge funds. And lives to cheat another day” (13).

Don’t forget dear readers, we are all in it with the aim of getting the deficit down.

SPeye Joe (Welfarewrites)

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