Tag: public asset stripping

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.

Why is Tory economic dogma seen as mainstream, but Corbynism extreme?

Sixty-six years after the foundation of the welfare state, under the current Conservative government, every aspect of it is under attack. The 2012 Health and Social Care Act, for example, will remove the duty on the Secretary of State for Health to provide a comprehensive health service, while the requirement in the act that up to 49 percent of services can be tendered out to “any qualified provider” will rapidly lead to the privatisation of the NHS in England and Wales. Already between a quarter and a half of all community services are now run by Virgin Care [1].

In social care, a combination of cuts of around 30 percent to local authority budgets since 2010, increasingly restrictive eligibility criteria for services, and inadequate personal budgets will leave millions without the support they need and increasingly dependent on the family, and in particular women family members [2].

And in place of what was once called social security, unprecedented cuts across all areas of benefits, especially disability benefits, the introduction of sanctions regimes which have contributed to 500,000 people being forced to use food banks, and a bedroom tax affecting around 600,000 people will increase the number of children living in poverty by 200,000 [3].

All of this has been underpinned by a brutal ideological offensive against people on benefits which explains the reason for the growing rates of sickness benefit claims are for those who suffer from depression and anxiety [4], as well as the increase in the rate of suicide among those on benefits [5].

The ideological attack on the poor is predicated on the governments’ insistence that those able to defend themselves least, pay the costs for a global economic crisis which began in 2008 but was not of their making [6].

Over the last forty years, successive Labour and Tory governments’ have been committed to rolling back the post-war welfare settlement under the guise of debt reduction premised on neoliberalism which involves a change to the function of the state as less ‘welfare provider’ to more ‘pro-business facilitator’.

Many people believe that the neoliberal assault that embody these changes began with the 1979 Thatcher governments’ limited (by today’s standards) publicly-owned asset stripping. But this is a myth. It was actually under the Callaghan administration that preceded Thatcher that the initial structural changes happened  As Colin Leys (p.41) notes:

From 1976 onwards Labour…. became “monetarist”. It’s leaders accepted that full employment could no longer be achieved by government spending but must be sought through private sector growth. For the necessary private investment to take place, prices must reflect real values, and this in turn required “squeezing” inflation out of the system and permitting the free movement of capital. In 1978 Treasury officials began preparing to abolish capital controls

But it is the assault by the trio of Cameron, Duncan Smith and Osborne on, not just the welfare state, but the entire ethos of the public sector in general, that has taken things to a new level. This is demonstrated, in part, by Osborne’s intention to sell off £31bn of public assets in 2015-16. It is clear that the Tories are using austerity and the neoliberal ideology that underpins it, as an excuse to expand the pro-business facilitator model to areas within the public sector that Thatcher could only in her wildest of dreams imagined.

That said, this approach has limits in terms of maximizing utility to capitalists within a modern state. It is precisely this kind of rationale that explains why the former governor of the Bank of England announced that the current situation is “the worst crisis at least since the 1930s” [7].   

As this writer has pointed out previously, even venture capitalists realize that proper welfare provision for those not working as well as a substantial increase in the the minimum wage for those in work, is necessary to prevent the capitalist system that they benefit from collapsing in on itself [8].

In 1943, the Tory MP Quintin Hogg warned that “If you don’t give the people social reform, they will give you social revolution” [9]. This is as relevant today as it was then.

It’s therefore in nobody’s interest that wages are kept depressed and the unemployed and sick are continually made to suffer. The fact they continue to suffer unnecessarily is the reason why a political space has opened up for the likes of Jeremy Corbyn to move into.

Although much of the mainstream media are characterizing Corbyn’s policies as unworkable, misguided and extreme – and seemingly doing everything in their power to undermine and discredit him -, these are nevertheless policies that are, in truth, mainstream and pragmatic. This explains why an increasing number of economists have publicly come out in support of the kinds of economic policies Corbyn articulates [10].

These policies are economically credible, popular with the public and, for most of the world, regarded as mainstream:

In 2009, most of the world was following mainstream economics of the kind that Corbyn is proposing today in undertaking a fiscal stimulus to combat the impact of the financial crisis. But in the UK a certain politician decided to ignore ‘economic credibility’, and instead proposed doing the opposite: what has subsequently become known as austerity [11].

The imposition of 40 years of neoliberal economic dogma pursued by successive Labour and Tory governments’ has failed the people of Britain who rightly, in my view, see Corbyn as the catalyst for change. As time goes on there will be increasing pressure not just from below, but from the top, for the Tories to change course.

As the open letter to the Guardian by over 40 leading economists illustrates, this is already starting to happen. If the government refuse to acknowledge that austerity and neoliberalism have failed, and thus continue to stick rigidly to their failed ideology of cuts and austerity, the British people will eventually elect a figure like Corbyn into power on a mandate to do something about it. That time is coming closer with every passing day.

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

Greece: Exposing The Media Myths

April 21 is a notorious day in Greek history. It was on this day in 1967 that a US-led authoritarian military coup overthrew socialist democracy in the country. It was US support for this authoritarianism, predicated on the illusion that socialism undermined democracy, that was said to be the cause of rising anti-American sentiment in Greece during and following the junta’s rule (http://www.time.com/time/magazine/article/0,9171,903399,00.html).

April 21, 2010 is also a day now embedded in Greek history. It was on this day that a delegation from the IMF, European Union (EU) and the European Central Bank (ECB) arrived in Athens to implement what they term as planned economic ‘stabilization’ measures, characterized by cuts to public services and reductions in living standards.  The Greeks hatred of this modern form of imperialism that stem from the events of April 21 1967, is manifested on the streets of Athens in the form of mass protests against the austerity measures imposed by the bankers. As one Greek activist contrasting the events of 1967 with the present put it: “We suffered from the military then. We suffer from the bankers now” (http://www.socialistreview.org.uk/article.php?articlenumber=11258).

As I illustrated in my last article, the debt crisis presently sweeping Greece and throughout the globe has its roots in the credit boom period in the US a decade ago, the ideological justifications of which have been legitimized as a result of the capitalist logic that underpins it. But one would be hard pressed to arrive at this conclusion by reading the mainstream media, the vast majority of whom have characterized the crisis essentially as a trajedy that is specific to Greece and where the public response to the crisis is unjustifiably deemed to be negative rather than positive. It is hardly surprising then, that Greece is presented not as a beacon for democracy, but as a “junk country” getting its comeuppance for its alleged “bloated public sector” and “culture of cutting corners” (http://www.guardian.co.uk/world/2010/may/09/greece-debt-crisis-euro-imf). 

The reason why the media are attempting to tarnish Greece in this way is because the Greek people have mobilized on mass against the bankers’ attempts to insist the people pay for the so-called “rescue” of their country by way of massive austerity programmes, without a fight. The memories of 1967 allied to the accompanying acts of popular resistance, remain a feature of the collective Greek consciousness in a way that is for example, absent in a country like Britain. Such resistance is anathema to Europe’s central bankers and regarded as an obstruction to German capital’s need to capture markets in the aftermath of Germany’s troubled reunification. In this sense, the Greece of today is a microcosm of a modern class war that is rarely reported as such and is waged with all the urgency of panic among the imperial rich. Ordinary people are not cowed by the corrupt corporatism that dominates the European Union (http://www.johnpilger.com/page.asp?partid=576).

The right-wing government of Kostas Karamanlis, which preceded the present Pasok (Labour) government of George Papandreou, was described by sociologist Jean Ziegler as “a machine for systematic pillaging the country’s resources” (http://socialistworker.org/2010/05/24/the-modern-class-war).

This “machine” whose functionaries included Goldman Sachs and other US hedge fund operators, are currently being investigated by the US Federal reserve Board for their alleged speculating of public asset stripping by the Greek government and the resulting haemorrhaging of capital by way of capital flight which the ECB facilitates. This has prompted some mainstream commentators to question the apparent hitherto God-given logic which insists upon cuts as a means to appease financial markets as an unaviodable feature of system where such markets, instead of being our servants, are our masters (http://www.guardian.co.uk/commentisfree/2010/may/02/greece-default-debt-choice).

The reason why financial markets are perceived as masters in this way is due to the structural weaknesses of monetary union. All countries have the same access to the money markets, but they do not have the same access to credit, which is obtained at a different price by each country (http://researchonmoneyandfinance.org/media/reports/eurocrisis/fullreport.pdf).

The main problem highlighted by the Greek crisis is that the EU is at most a monetary union not a fiscal union. Fiscal policy—dependent on the power to tax and spend—remains, for reasons of self-interest, firmly in the hands of the nation-states. Governments’ only means of saving the capitalist system from itself was to bail out the financial institutions from which they could then borrow as a means to enact the fiscal measures necessary to rescue the market (Callinicos, Alex, 2010, Bonfire of Illusions, Polity).

Governments’ obsession with appeasing the market means that weaker capitalist states like Greece are not given the luxury of being able to choose the timing of their austerity programmes. Greece has been targeted by the financial markets and their facilitators – the unelected and unaccountable ECB – for reasons of speculative profilagcy to the extent that the country has become threatened with bankruptcy. As a response, the financial markets didn’t just force up the interest rates on the bonds of the weaker eurozone economies, they also pushed down the euro. This made the Greek crisis a problem for the entire eurozone (http://www.allbusiness.com/economy-economic-indicators/economic-conditions-deflation/14489907-1.html).

The dominant continental states, France and Germany, were divided over how to respond: France supporting a coordinated loan to keep Greece afloat, Germany resisting. Greece threatened to humiliate the EU by going to the International Monetary Fund for help, a bluff that was called by Germany. A few weeks ago, European leaders signed up to an unprecedented 750 billion euro ($920 billion) joint rescue package for the euro which has been proven to be inadequate to stabilize it. Instead, the European single currency has continued its dramatic fall, recently hitting a four-year low against the dollar (http://www.spiegel.de/international/europe/0,1518,697098,00.html).

The eventual agreement on the joint IMF-eurozone rescue reflected the fact that a Greek default would not be in the interest of the German banks, which have lent heavily to Greece and the other weaker eurozone economies. But the debate within Angela Merkel’s chronically weak conservative-liberal coalition in Berlin (which was accompanied by ferocious nationalist exchanges between the German and Greek media) tilted towards the hard line taken by Wolfgang Schäuble, the finance minister (http://www.msnbc.msn.com/id/36981501/ns/business/).

He proposed setting up a European Monetary Fund that could come to the rescue of eurozone members in Greece’s plight, in exchange for a tightening up of the Growth and Stability Pact, under which EU states are not supposed to run budget deficits greater than 3 percent of national income. Greece’s budget deficit is currently running at 13 per cent which is close to that of the UK and the US. But ministers want to reduce Greece’s deficit to 3 per cent within the next three years. Moreover, penalty clauses are to be inserted allowing states that broke the rules to be deprived of access to EU cohesion funds or even to have their voting rights temporarily suspended (http://www.ft.com/cms/s/0/c36bf126-2d41-11df-9c5b-00144feabdc0.html).

The message is clear. If Greece fails to implement the required austerity programmes, it will be ditched. The so-called rescue of the country is essentially an effort to rescue the French and German banks. If Greece defaults, it would deal a blow to the banks that are already weakened by the broader crisis (http://www.socialistworker.co.uk/art.php?id=21313).

This explains the nature of the anti-Greek propaganda that is pumped out by the media. This is the same media which claims that the Greek people have artificially high standards of living that must be brought down. But research by investigative journalists expose these lies and distortions. For example, figures show that the cost of living in Greece is one of the highest in Europe with the average shopping basket of food costing 66 per cent more than in Germany. Around 1 in 5 Greeks live on or below the poverty line of 6,648 euros per year. Unemployment stands at around 11 per cent. Public expenditure is equal to 40 per cent of gross domestic product. In Britain it accounts for 45 per cent. There is no “bloated public sector” (http://www.socialistworker.co.uk/art.php?id=21241).

Despite what the media portray, the crisis in Greece is connected to the broader crisis which will lead to increasing pressures on the euro. This will worsen the problems in Portugal, Ireland and Spain – the countries that along with Greece make up the so-called PIGS. According to leading Greek activist Panos Garganos, the intervention of the IMF and EU will not calm this crisis – it will make it worse because the example of Greece shows they have failed there, so they will fail to save Ireland, Portugal and Spain. The markets know this and will move quickly (http://www.socialistreview.org.uk/article.php?articlenumber=11258).

What all this indicates is that the Greek people are clear that it is the system which is responsible for the crisis and are standing up to fight back against the bankers and politicians who insist that they, along with other ordinary folks in countries like the US and UK, repay the debts of the rich and powerful who incurred them. Jobs, pensions and public services are to be slashed and burned, with privateers in charge. For the European Union and the IMF, the opportunity presents to “change the culture” and dismantle the social welfare of Greece, just as the IMF and the World Bank have “structurally adjusted” (impoverished and controlled) countries across the developing world (http://www.johnpilger.com/page.asp?partid=576).

As the illusionary Tweedledee and Tweedledum versions of parliamentary democracy throughout much of the world play to the fiscal tune of ruling class interests, the inspiration for the rest of us are the ordinary folk in Greece.

Copyright: Daniel Margrain