Tag: privatisation

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.

Taken For A Ride By The Fat Cats

uk rail fares

The recent lambasting of private rail company SouthWest Trains by the populist left-wing revolutionary rag, the Daily Mail, for exploiting VJ veterans by ramping up the fares during the VJ day commemorations [1], highlights more than ever the fact that Britain needs a modern, safe, cheap and efficient railway.

The way to get that is not to have a jigsaw puzzle in every railway station of different private companies, particularly when we have to subsidize them at a rate five times greater in real terms compared to when they were nationalized [2]. What is the logic of giving privateers like the private rail companies this massive increase in subsidy?

Not only is Jeremy Corbyn promising to bring the railways back into public ownership, but his ‘flip-flopper’ rival for the leadership, Andy Burnham, has promised the same. Cynical appropriations of the public mood by the latter in this way, is of course, not new among the Labour Party establishment. In the New Labour manifesto of 1997, for example, Tony Blair promised that the railways would be put into public ownership only to do a massive u turn after becoming elected [3].

Nationalization of the railways was a major platform (pun not intended) upon which he gained power, thus reinforcing the ‘left-wing policies are electoral suicide myth’ meme propagated by his critics.

So Blair was elected in 1997 on a left-wing ticket of nationalization of the kind the right-wing warmonger is criticising Jeremy Corbyn for now. In other words, for Blair, nationalization was regarded as being electable. But Corbyn who is proposing the same is regarded by the New Labour hierarchy as being unelectable despite the fact that a majority of British people of all political persuasions believe that the railways should be in public hands [4].

It’s worth mentioning that although the rail stock and the running of the rail system has been privatized, much of the infrastructure including the rails upon which the trains run, have not. This begs the question: Why should we be allowing people to print money by obtaining franchises to run on publicly owned track that we’ve paid for?

Although the rail companies are getting massive subsidies, are the trains five times less overcrowded than on the old British Rail? There are now less train carriages than there were under British Rail and the platforms are shorter despite the fact that capacity throughout the network is increasing exponentially. This is reflected in public opinion polls that conclude a high dissatisfaction with the railways since they became privatized [5].

Clearly then, the rail companies are not five times as sensitive to public needs. Are they cheaper in real terms? Again, that’s a negative: Since privatization, rail fares have trebled while earnings have remained largely stagnant [6]. We are paying three times more to stand in overcrowded trains compared with our counterparts in Germany and France [7].

It’s also.difficult to sustain the argument that a privatized system is likely to be safer given the ‘passing the buck,’ culture that the patchwork quilt and largely unaccountable private railway system implies.

At, present the railways are too expensive and fragmented and don’t serve the public interest, despite the fact that we, the British people, are paying exorbitantly for it in order to boost the profits of the fat cats who run it. Why should profits be privatized and losses nationalized in this way?

It makes no economic and rational sense unless, of course, you happen to be somebody like Richard Branson whose concept of market forces is very different from yours or mine. For too long passengers have been taken for a ride on this issue. It’s encouraging that Corbyn has put the nationalization of the railways back on the political agenda.

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