All posts by Peter Dombi

The Paradise Papers and Tax Avoidance

People will by now have grown well-used to revelations about Tax Avoidance by large corporations and the wealthy elite. However this week’s BBC Panorama programs on the so-called Paradise Papers (available to watch here and here), about the widespread use of offshore Tax Havens, will have shocked many by the sheer scale of the avoidance that is going on – and not just by the usual suspects of large corporates like Apple, or corrupt individuals like ex-Tory Treasurer Lord Ashcroft, but also including much-admired sports stars like Lewis Hamilton, and much-loved celebrities like the cast of Mrs Brown’s Boys.

However the program unfortunately failed to explain just why such Tax Avoidance is so prevalent, and how nothing will change until we make fundamental reforms to our parliamentary system.

Some may think that Tax Avoidance is so devilishly complicated that it is very difficult for governments to come up with an effective way of dealing with it; or alternatively that it has up until now been very well hidden, but once exposed effective action can be taken. Neither of those points is true.

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Tropical paradise Bermuda is one of many British Overseas Territories that facilitates widespread Tax Avoidance. Picture © Mike Oropeza

The reality is that legislation, though complex, is easily within the capability of government experts to deal with. However they don’t, because successive governments have been absolutely complicit in facilitating Tax Avoidance, and will undoubtedly continue to be so, while all the time trying to fool us by making statements to the contrary. The reason is very simple – in a system of government where our political parties are reliant on private funding to run their operations and fight election campaigns, they are completely beholden to the providers of that money as to what legislation they enact. Take for example ex-Tory Treasurer Lord Ashcroft, who is one of the worst individuals for avoiding tax and featured in the recent program. He has donated over £10 million to the Tories over the years, and indeed contributed £500,000 to their recent General Election campaign. ‘He Who Pays the Piper Calls the Tune’, and his involvement in Tory funding therefore represents a massive conflict of interest. What chance is there of the Tories, even if they have a fit of good conscience and want to take action on Tax Avoidance, being actually able to do so, when their ability to win general elections is dependent on the continued financial support of someone who clearly doesn’t want such changes to be made? It obviously isn’t going to happen. And it’s not just Lord Ashcroft – over half of all Tory funding comes from the financial sector*, providing a relentless source of pressure to keep such Tax Avoidance loopholes open. (I’m afraid it’s not just a Tory problem either – the last Labour administration under Tony Blair was similarly reliant on donations from wealthy business people).

So what will actually happen? There will be many outraged speeches in Parliament, closely followed by promises of firm action by the government. There will then be the ritual punishment of some of the more minor players (the cast of Mrs Brown’s Boys better watch out), followed by some relatively insignificant changes to legislation which the government will talk up to make us believe the problem is solved. However behind the scenes the government will be reassuring people like Lord Ashcroft not to worry, be patient, and soon all will be well. Then, in a year or two’s time, when it’s all blown over, the government will quietly make some more changes to tax legislation, with a couple of loopholes deliberately included to help their wealthy friends. And that will be it – back to business as usual.

Don’t forget, whenever the government makes cutbacks on benefits, refuses to pay public sector workers a fair wage, cuts payments to local authorities, or generally does anything in the name of Austerity – justified by saying that state finances are in a mess and the deficit is too high – the real reason there is a shortage of money is because the wealthy elite are being allowed to get away without paying their fair-share of tax (Tax Avoidance is estimated to cost the country £95bn/year) and the rest of us all have to pay for it. And that won’t change until we stop political parties being funded, and therefore controlled, by the wealthy elite.


Private Money Corrupts Democracy

This week it was announced that a major Tory donor, Sir Andrew Cook, was threatening to cut his funding of the party if they pursued a ‘Hard Brexit’ in their upcoming negotiations with the EU*. Now many people may agree with his view as to what sort of deal we should aim for as our membership of the EU comes to an end – however that is not the real issue here. What his announcement demonstrates is the extent to which the very wealthy can use their money to influence democracy, in a way which completely undermines the democratic process.

Sir Andrew Cook has donated well over £1 million to the Tories, a significant sum of money which means his threat to withdraw any future funding will not be ignored. However, wherever you stand on the Brexit debate, it cannot be right that one person has so much influence over government policy, when we’re supposed to live in a one-person one-vote state. The private funding of political parties completely undermines this democratic principle, and this isn’t the first time wealthy people have influenced government policy in this way. Click here for other examples.

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Funding a Political Party costs a lot of money, and He Who Pays the Piper Calls the Tune. Picture © NCVO London

Some people argue that allowing private individuals to fund political parties saves the taxpayer money, but the reality is that the taxpayer loses far more money through corrupted policies than it would cost to provide such funding. For example it only costs about £10m or so to fund a major party for a year, and it is estimated the total bill to the taxpayer of funding all such parties would be in the region of £100m/year. Compare that to the £billions the taxpayer loses every year through tax avoidance, via loopholes which successive governments have failed to close because their wealthy donors don’t want them to.

Many other countries have recognised this problem, and have in place legislation to limit the extent to which the wealthy can influence government policy via their political donations. In France for example it is actually illegal for companies to fund political parties, while no individual can donate more than ‎€7,500 in a given year. In Iceland no-one can donate more than 400,000 ISK (about £3000) a year; and many other countries have similar strong limits and controls on such funding.

In this country there are no such rules, and until there are we will continue to live in a society where ordinary people may vote for political parties, but it is a small handful of wealthy donors who control the legislation they actually enact.



Manipulating a Referendum

This week Hungary had a referendum on whether or not to accept migrant quotas from the rest of the EU. The result of the referendum was strongly in favour of rejection, with a massive 98% of votes cast going that way. However the referendum itself was declared to be invalid, as only 40.4% of the population cast valid votes, short of the 50% legal requirement. Putting aside the actual issue being debated here (migration), this throws up some very interesting political and moral questions, and in particular how best to conduct referendums to stop them being manipulated.

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As Referendums become more commonplace, we need to agree what level of participation is required to make the results legitimate. Picture © Barcelona En Comú

So what was actually going on here? In this vote it was very clear from the outset that the ‘No’ camp would win, particularly as it was vehemently supported by the government. The ‘Yes’ camp’s response, rather  than trying to persuade people to vote the other way, was simply to urge all its supporters to boycott the referendum – not because they thought the vote was fraudulent in any way, but purely to stop it reaching the required threshold of legitimacy. Very clever, and in the end very effective – but is that democracy? In this age of mass popular political engagement, is it acceptable to boycott a vote and subvert it, simply because you don’t think you’re going to like the outcome?

Most people agree that for a referendum to be valid it needs to reach some minimum level of popular agreement, but it would now appear that requiring minimum participation levels is open to abuse. Better therefore would be simply to set an absolute minimum level of support for the proposal, regardless of whether those on the other side express their displeasure by voting the other way or not voting at all.

In most general elections a 60% turnout is usually deemed to be fairly acceptable, though many feel that for a referendum of national significance a 70% turnout would be better. Taking the higher figure as a benchmark, an absolute vote for a particular course of action would therefore require just over 35% of the population voting that way to confer legitimacy.

On that basis, the Hungarian vote would have been legitimate as the winning side secured support from 39.5% of the population. Interestingly, on a similar line of thinking, the Brexit vote (which in fact specified no minimum turnout for validity) would have also passed as 37% of the electorate voted to Leave.

In this new era of participative democracy, and referendums, we need to work out how to make these things work, and we all need to get used to the idea that, no matter how sure we are that we are in the right, being in the minority position means we are on the losing side.


Turmoil in the Labour Party

The Labour Party currently appears to be in the process of tearing itself apart, with the left-wing leader Jeremy Corbyn being challenged by a more right-wing candidate in the form of Owen Smith. This battle is the culmination of a year of conflict in the Labour Party, caused by a huge split between the party’s grass-roots membership (who overwhelmingly voted for Jeremy Corbyn) and the Labour MP’s in parliament (many of whom are veterans of Tony Blair’s days as leader and want to pursue a more right-wing pro-business agenda).

Now, there are genuine concerns about the competence of Jeremy Corbyn’s leadership, and his capability of leading the Labour Party to victory in a General Election. However that is a relatively minor part of the debate, which is essentially about  the future direction of the Labour Party, and whether it should  be a Left Wing (Socialist) Party or some sort of Centrist Party.

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The problem for the Labour Party is what alternative vision does it want to put forward. Picture © Mtaylor848

The problem the Labour Party has is that if it swings right it will continue losing support from its core vote, as ordinary working people become ever-more disillusioned with the pro-business policies from which they see no benefit. (It has already been devastated by the SNP in Scotland, and similar things are likely to happen to it in England from the twin threats of UKIP and the Green Party). However if it goes left, then it will never be able to persuade Tory swing-voters to support it, meaning it will never get enough seats to form a majority in parliament, and we face the prospect of never-ending Tory governments. The Labour Party is undoubtedly in deep trouble.

It is very easy to see this as a Labour Party problem, and its enemies are no doubt enjoying the drama immensely. However the crucial point here is that it’s not the Labour Party’s fault all this is happening, but the fault of our ridiculous First-Past-the-Post system of voting. The current way of running our electoral system means that only two parties can ever win a General Election – Labour or the Tories. But the ever-increasing inequality of our Capitalist system, means that there is now a real need for at least three (and maybe more) political parties to have a chance of getting into power. We need a right-wing pro-business party (obviously the Tories), some sort of centrist Party, and a left-wing Socialist Party. However because the current system means only one party can ever realistically challenge the Tories, the Centrists and the Socialists are fighting over the heart and soul of the only other party which can possibly win power – Labour. This situation simply should not be happening. It should be possible for the Labour Party to split, and for both opposing factions to champion their own policies, fight an honest election, and for both to have a realistic chance of getting into government.

If we look across Europe in recent years, many new parties have appeared, and in a very short space of time have risen to positions of great prominence (eg Syriza in Greece, Five Star in Italy, and Podemos in Spain). However in all those countries they have Proportional Representation, which means that new parties, even if they don’t get majority support, can still get enough votes, and seats, to have influence in parliament. In this country our stupid voting system crushes new parties (look at UKIP, which in the last election got nearly 13% of the vote but only 0.2% of the seats), meaning that the same two old-guard are always the ones left slogging it out. And that is the reason the Centrists and the Leftists are battling within the Labour Party – because they, through no fault of their own, are being forced to co-exist within the same party even though their policies are now poles apart. Our First-Past-the-Post constituency system is causing this, and is a complete travesty which can in no way be called democracy. The problems in the Labour Party are simply the symptom of this much wider problem, which will only be solved when we finally get Proportional Representation. Until that happens we do not have a proper democracy, and the people of this country are being seriously sold short.


The EU Referendum

People are probably by now getting fed-up with all the arguments around the EU Referendum, and maybe don’t need yet another opinion to consider. However there is so much mis-information and scaremongering being put out, by both sides, that I’d like  to try and bring some clarity to the debate.

Whatever happens there are going to be winners and losers both ways,  and even for any individual there will be positives and negatives whatever the result. The decision is complex, and when people state categorically that we’re better off if we stay or if we go, they are guilty of a gross over-simplification. What follows is therefore my attempt at a simple impartial review of all the main arguments put forward so far. Here goes:

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The vote on EU membership is the biggest decision Britain has taken for generations. Picture © Eric Chan

THE ECONOMY:  This has been the main thrust of the Remain campaign. They are predicting that the economy will crash if we leave and we’ll all be worse off, and are using the evidence of numerous economists to support this. It should be remembered though that hardly any economists were able to predict the crash of 2008, and most economists thought we would be worse off not joining the Euro. It’s also worth remembering that when the International Monetary Fund criticised George Osborne’s fiscal policies he said they didn’t know what they were talking about (but now they agree with him on the EU he supports them).

Economics is a very dark art, and because its predictions are dependent on the mood and behaviour of millions of ordinary people, it is almost impossible to get right. If we leave the EU we may lose our Free Trade deal with the EU, damaging our economy; but on the other hand we might cut a deal with them and little damage is done. We might be able to make our own Free Trade Deals with other major countries, boosting our economy; or maybe that will be prove to be very difficult. We may rebuild our trading relationship with the Commonwealth, again boosting our economy; but then again maybe we won’t. If the pound crashes on the exchange markets the effect might be to boost our economy by making our exports cheaper, so increasing trade; or it may damage our economy by making imports more expensive – or maybe the pound won’t crash at all.  On the other hand if we stay in the EU we may be seriously affected by any one of the numerous economic risks coming down the line there, and it might be better for us if we get out while we can – or maybe that won’t happen either.

The truth of the matter is that all the economic forecasts rely on so many assumptions that it is impossible to say anything with any degree of certainty. People will inevitably quote the economists whose predictions they like, but in my view there are so many unknowns here that the issue is almost irrelevant. There is as much chance of an exit from the EU boosting our economy as there is of it damaging it, and the truth is no-one knows. If you want to submit to fear – ‘better the devil you know’ – then fine. But in my view if we always ran our lives by forever ‘playing safe’ we’d never achieve much of any value at all. Overall I think the economic future is too vague to be able to form any reasonable judgments.

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Jean-Claude Juncker is President of the un-elected European Commission. Picture © Factio popularis Europaea

DEMOCRACY: The EU gives us the illusion of Democracy, by allowing us to vote for the European Parliament. However all legislation is actually driven by the European Commission, which is not elected, and is therefore not democratic. The only thing the European Parliament can do is review and amend the legislation, but it cannot introduce or recommend policy. If that’s not clear consider this: in the UK we vote for the House of Commons, based on political parties, candidates, and the manifestos they propose. The House of Lords (which is not elected) can amend, and very occasionally block legislation. However all the main legislative processes take place in the elected House of Commons, as they should do. In the EU the reverse is true. Policy is discussed and put forward by the (unelected) European Commission, and all the European Parliament can do is talk, discuss and amend that. That is why you will never see a manifesto during the European elections – because members of the European Parliament are not in a position to put forward policies. The whole set-up is a complete undermining of democratic principles. Why is it like this? Because the EU elite do not trust the people of Europe to vote for the right policies or make the right decisions. The remain camp say we should stay in the EU and attempt to bring reform, but there has been no progress on this issue for 30 years, and anyway human history doesn’t have a very good track record at getting un-elected bodies to reform themselves.

WORKERS RIGHTS: A lot has been made of the undeniably excellent progress that has been made on workers rights by EU legislation. The argument has been put forward that if we leave the EU, the Tory government will repeal that legislation and all those rights will be lost. What we have to consider therefore is whether the government would actually do that and, more to the point, if they did so what would stop the British public just voting them out at the next election, and replacing them with a government that would reinstate such rights. The UK Parliamentary System is far from perfect, but we don’t yet live in a right-wing dictatorship, and it seems quite likely that any Tory government pursuing such policies would deliver the next election into the hands of Jeremy Corbyn and the Labour party.

ENVIRONMENTAL LEGISLATION: As with workers rights, the EU has done excellent things on the environment, and as with workers rights there is no reason why we should not be able to maintain that legislation within our democracy. On some issues (eg Climate Change) the argument is put forward that we cannot succeed without international co-operation. True. But with huge issues like that, the EU is nowhere near big enough anyway – countries like the USA, China and India must also be included. Therefore as good as the EU may be, effective co-operation has to be at a world level, not EU level, and our membership of it, or otherwise, seems to be pretty much irrelevant.

EU GRANTS: Many areas of the country who are the beneficiaries of EU grants worry their sources of funding will dry up if we leave the EU. However bearing in mind we are a net-contributor to the EU (arguments about the exact figures notwithstanding), there is no reason why such funding cannot be provided by the UK government, and with cash to spare.

WAR AND CONFLICT: The Remain side are constantly putting out the opinion that Europe has only been at peace for the last 70 years because of the EU, and if we leave the EU we are risking another world war. However the EU is an economic union, not a military one, so it seems more likely to have been NATO which has kept the peace not the EU. Similarly there are claims that leaving the EU could spur Russia to threaten Poland and the Baltic States. However, again, all those countries are members of NATO, which, as a military alliance, is surely a better defender against war than the EU, which has no military component. This line of argument seems to be something of a red-herring.

TERRORISM/SECURITY: Remain put forward the argument that by not being in the EU, international co-operation against crime and terrorism will be compromised, and we will all be at greater risk of attack. You have to ask yourself whether you think it is realistic that EU countries would really put us, and themselves, at greater danger of attack by refusing to co-operate on security matters, simply because we refuse to be in an economic union with them. It’s also worth remembering that a large part of our international anti-terrorism work is carried out through the ‘Five Eyes’ (Australia, Canada, New Zealand, the UK and the USA), which has got nothing to do with the EU at all. This argument again seems to be something of a red-herring.

WORLD/EU LEADERS: Apparently lots of world leaders have come out in support of us staying in the EU. Just remember they are supporting what is in THEIR interests, not OURS. Enough said.

Free movement of people is probably the biggest single issue of the Referendum debate. Picture © Opihuck

FREE MOVEMENT/MIGRATION: This of course is the big issue of the whole referendum. Originally the idea of free movement of people in the EU was to facilitate mobility of labour to wherever the work was. Until 2004 this generally worked pretty well, with as many people leaving the UK as arriving. However after the accession of the poorer countries of Eastern Europe, this changed to migration, as millions of people came not looking for work, but simply because they wanted to emigrate to wealthier countries and enjoy a higher standard of living. Nobody can blame them for wanting to do that, but the effects on the UK have been dramatic. Though more people in the country undoubtedly leads to increased overall wealth (as the Remain camp are constantly stating) there are huge discrepancies in the way that wealth benefit is distributed. In general businesses and the upper and middle classes do well, as they benefit from the lower wages that new arrivals are prepared to work for, while the lower classes do badly as they have to compete with people prepared to work for less money, and so see their own salaries pushed down. In addition the housing crisis is made worse by the arrival of a net 184,000 EU citizens every year (enough people to fill a city the size of Colchester) pushing up house prices and rents – good for home owners and landlords, but bad for people not wealthy enough to own their own property. Of course there is also the massive pressure on public services (schools, NHS, transport etc) as it is simply not possible to expand public services at the rate necessary to keep up with the flow of new people. The Remain camp are quick to highlight how many immigrants staff our public services – particularly the NHS – though with 1.6 million people unemployed the root cause of this has been the failure of successive governments to train enough of our own people to do those jobs.

Economic impacts aside, the huge rush of new people has created massive cultural changes to the fabric of our society – changes which not everyone wants but which no-one gets any choice in. And any attempt to address the housing crisis will inevitably lead to more pressure to build on green-belt land, which many environmentally-minded people are vehemently opposed to.

I don’t think anyone, on either side of the argument, disagrees that immigration is a good thing, the question though is whether it should be managed and controlled by the government, or whether it should be uncontrolled and left simply to the desire of whoever decides to turn up and live here. This, in my view is the defining issue of the Referendum, and also the most contentious one, with many people, unfortunately, being unable to distinguish between arguments about numbers and arguments about racism.

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George Osborne’s claim that every family will be £4,300 better off if stay, takes no account of disparities in how the wealth generated by EU membership is distributed. Picture © M. Holland

PERSONAL EXPERIENCE: This ultimately is what will decide the referendum. Many figures and statistics have been bandied around, but they are all ultimately just averages, and mask the vast discrepancies in individual experiences of being in the EU.  George Osborne claimed that every family will be £4,300 better off if we stay, but even if that figure is true (debatable), it is only a statistical average, and hides the fact that while many people will indeed be tens or even hundreds of thousands of pounds better off if we stay, many more others will in fact be thousands of pounds worse off.

In general, the wealthier you are the better the EU is – due to being able to take advantage of all that cheap labour; while the poorer you are the worse it is – due to having to compete with all that cheap labour. (It’s worth pointing out by the way that though being in the EU may indeed guarantee many jobs and low unemployment rates – many of those jobs are on poverty wages, not to mention the 800,000 people on zero-hours contracts). Home owners and landlords will do well – with ever-increasing property prices; while renters find themselves paying an ever-larger percentage of their income in rent. In addition people in very cosmopolitan, urban areas may have little problem with the cultural changes going on around them, and an ever more-crowded society; while people in more provincial, rural, or sparsely populated areas, may consider those changes to be unacceptable. And finally the pressure on public services will be more keenly felt by those who use them the most – whereas those whose children are in private schools, have private health-care, or who rarely use public transport will probably perceive little difference.

The decision about which way to vote in this referendum will be a very personal one, but hopefully people will be able to do so without being misled by all the misinformation coming out from both sides.


The Panama Tax Scandal

This week we have been rocked by the Tax Avoidance scandal coming out of Panama, after a whistle-blower leaked more than 11 million documents from the law-firm Mossack Fonseca. This firm has spent the last 40 years helping their wealthy clients worldwide to hide money and so avoid tax, and the leaked documents revealed the names of many people from the world of business and politics who have benefited. It will come as no surprise that the wealthy business elite do whatever they can to avoid tax, nor will it surprise many people that the leaders of countries like Russia, the Ukraine and Argentina do similar things. However what is shocking is that Western leaders like the Prime Minister of Iceland (who has now resigned) and even our own Prime Minister David Cameron have also been implicated.

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David Cameron has got caught up in the ‘Panama Papers’ scandal. Picture © Willwal

We in the West have come to believe that institutionalised government corruption is essentially a Third World problem, but this leak reveals that not to be the case. Though it may be true that blatant corruption (involving ‘backhanders’, ‘cash in brown envelopes’, ‘family favours’ and the like) is virtually absent from Western politics, it has been replaced by a far cleverer but more insidious form of wrong-doing. Nowadays our wealthy elites employ armies of lawyers to find loopholes in the legislation, which mean they can avoid tax without actually breaking the law, and that often involves taking their money offshore to some tax-haven where rates are artificially low. Added to that many of these tax havens employ high levels of secrecy which mean it can be very difficult for the taxman to get to the bottom of what is really going on, and in such circumstances, with limited resources, the revenue services are often forced to abandon any investigations.

Many people have said that this is even more evidence that the government should change the law and clamp down on these loopholes, but what incentive is there for them to do that if our own leaders are using the loopholes themselves? Even worse, the fact that many Tory (and Labour) donors are also using tax havens and other tax avoidance techniques, creates a massive conflict of interest right at the heart of our democratic system. ‘He who pays the piper calls the tune’, and Party donations would soon dry up if any government made serious efforts to tackle the illicit wealth of their own donors (it’s worth remembering at this point that over 50% of Tory Party funding comes from the financial sector.*)

Consequently though our politicians love to make all sorts of statements about the ‘moral repugnance’ of tax avoidance, the reality is they do the minimum required to keep the public happy, while they and their mates carry on as usual. An example of this is the government’s recent clampdown on tax avoidance by small businesses, while at the same time blocking EU legislation to clamp down on abuse by offshore trusts, which is a much bigger problem*. The nett result? The government trumpets the fact it aims to cut tax avoidance by £12bn, which sounds huge, but neglects to mention that with tax avoidance running at an estimated £95bn/year, that represents only 13% of the total. Until we have sorted out the conflict of interest created by the private funding of our political parties, legislation will continue to be enacted (or not enacted) which puts the needs of the privileged and wealthy over the needs of ordinary people. And this tax avoidance scandal is just one more symptom of that.

* Tory Funding

* Trusts


Crisis in British Steel

This week we have seen the Tory government slowly getting engulfed in the crisis caused by Indian company Tata’s threat to close steel works across the UK. As well as meaning that the UK would no longer have a viable steel industry, if this were to happen there would be the awful human cost of 15,000 direct job losses, and potentially 25,000 more in associated industries (with communities in Port Talbot and Scunthorpe being particularly badly affected). The government is desperately trying to get out of this mess, not because they care about the steel industry, or the lives of steel workers, but simply to avoid the political fallout for their own party. The reality is that their belief in ‘Free Markets‘, and their support for business and profit over the lives of ordinary people makes events such as this inevitable.

Britain’s steel industry was privatised by Margaret Thatcher in 1988, and after a succession of business deals was taken over by Indian conglomerate Tata in 2007. Tata, to be fair, haven’t done a bad job of running the company, and have generally retained the support of their workers. However the business environment has changed over the years, and the UK operations are now losing £1m a day, which is clearly unsustainable. Tata have tried to make it work but have now decided to give up.

After 90 years of operation the Port Talbot steel works are now threatened with closure. Picture © Chris Shaw

There are two main reasons for the losses – Britains very high energy costs (partly as a result of Green levies on fossil fuels), and huge amounts of cheap Chinese steel undercutting the market. And this is where Tory (and Blairite Labour’s) belief in the Free Market falls to pieces. It is undoubtedly a good thing to regulate industry for the common good, and things such as employee rights, health and safety, anti-pollution legislation, and Green levies to tackle climate change should all be applauded. However if any company which is burdened with those extra costs then has to compete with companies which are not so tightly regulated, inevitably they will lose out. China has a dreadful record of employee rights, underpays its workers, doesn’t seem to care about pollution at all, certainly doesn’t use Green levies, and as 70% of its industry is nationalised has a very high level of state subsidy. Therefore it is hardly surprising their steel is cheap. The solution to this, even for those who believe in ‘Free Markets’,  is to exclude their dirty industry from our free market until they clean their act up. This can easily be done through punitive tariffs.

Now the problem has been building for some time and the EU, recognising this, and in a bid to protect its steel manufacturers, has already tried to impose such tariffs on cheap Chinese steel imports. The irony is these tariffs were blocked by, among others, Sajid Javid the Tory business minister! The Tories’ belief in ‘Free Markets’ is so strong that they are prepared to sacrifice an entire industry, and ruin the lives of thousands of ordinary people, just to pursue their economic ideology.  They try and justify it by saying cheap steel is good for other parts of the economy – but that shows, yet again, how they believe that profit for business is far more important than the devastating impact on the lives of 40,000 people. It also demonstrates how Free Market ideology leads to short-term thinking – at some point steel prices will rise, and the British steel industry will become financially viable again; however if in the meantime the industry has been completely destroyed, then it will not be able to return, and Britain will be at the mercy of (possibly very expensive) foreign imports. Tory Free Market policy shows a complete lack of strategic thinking, and as well as being awful for the workers directly affected is, in the longer term, awful for the whole country.

Tories (and other Free Market believers) just don’t get this, which is why they are now desperately trying to appear as if they are doing something, when in reality they are quite happy to do nothing at all and let the steel industry collapse.


Google – Tax Avoider

The news this week has been full of comment about Google, its dreadful tax avoidance, and the way it managed to strike a cosy deal with the Inland Revenue to get away with paying only 10% of the tax that should have been due on its colossal UK profits. It’s certainly been one-in-the-eye for George Osborne, who started the week proclaiming the deal as ‘a major success’, though it became increasingly clear the words ‘abject failure’ would have been more appropriate.

Much has been written about where the fault lies, and it can certainly seem difficult to get to the core of the issue. However, as with many things in our corrupted political and economic system, the criminals at the top like to make a simple issue complicated, in order to hide and so sustain their continuing bad behaviour. So let’s look at what’s actually happening here.

Google are only the latest in a long line of corporates to pay little tax on their vast UK profits.

Firstly, though Google has undoubtedly behaved abysmally, they are not responsible for the well-being of ordinary British people, nor for maintaining our public services, and nor has anyone at Google been ‘elected’ on any such promises. Therefore although it is certainly easy to point the finger at their moral bankruptcy, one can really expect little more from a corporation whose main objective is to maximise profits for its shareholders and staff. The responsibility for ensuring fairness in our society lies with our government and their agents (in this case the Inland Revenue), and if there has been failure (and there undoubtedly has been failure) it is they who are ultimately responsible. However it is here that things get murky.

Our current system of government allows for the private funding of political parties, and that inevitably creates a massive conflict of interest. The Tory party for example gets over half its funding from the financial services sector alone – so to whom do their loyalties lie? The people who fund them or we who elect them? Or to put it another way – if the Tory party were to seriously start clamping down on all the egregious behaviour in the corporate sector, to what extent would that impact their political donations, and consequently their ability to win elections? Such a conflict of interest would be unthinkable in any other area of society, and yet in politics it has become so ingrained that people rarely discuss it.

Make no mistake, clamping down on all the various tax-avoidance measures that companies like Google utilise is actually very easy (and don’t believe for one instance the politicians who say nothing can be done without international co-operation either). Systems have already been devised (for example Unitary Taxation, see link here), which would deal with most of the shifted profits/tax haven nonsense. The fact of the matter is that our leaders don’t want to clamp down on corporate tax avoidance in any meaningful way, because to do so would alienate the very people whose money they need to stay in power. Of course public opinion has to be kept compliant, and so occasional token efforts are made (eg the ‘major success’ of getting Google to pay £130 million tax, when closer examination reveals that £1 billion would have been a more accurate figure), in order to stop the masses getting too restless. However the fact remains that the government, and in particular the Tory Party, are totally hand-in-glove with the corporate sector, and assist them in their continued efforts to rip-off ordinary people.
George Osborne proclaims ‘major success’ against corporates, but is actually helping them rip us all off. Picture © M. Holland

The sheer hypocrisy of all this of course is that when the government continues to make cutbacks and impose Austerity, justifying it with statements about balancing the books, the reality is that the books could just as easily be balanced by simply dealing with the issue of tax avoidance (which runs at about £95 billion per year* – easily enough to sort out the government finances). Or to put it another way, the Tory party would rather make cuts to the NHS, local government, in-work benefits and a whole host of other social services, all the while increasing the misery for millions of ordinary people, rather than do anything to annoy their fat-cat friends.

As long as private money remains in politics, it means that our so-called democratic processes have been completely hijacked by the wealthiest members of society, and legislation will continue to be enacted (or not enacted) that enables the very-rich to get even richer while ordinary people suffer, and see their standard of living steadily diminished.



Labour’s Lurch to the Left

By electing Jeremy Corbyn as its new leader, the Labour Party has finally thrown off the last vestiges of Blair-ism and taken a firm step back towards its Leftist roots. This has led to much shock, both within the party and outside it, with the inevitable virulent attacks from the mainstream media. So what is actually happening here? Has Labour really made itself unelectable by taking on a thoroughly discredited ideology, or is this the start of a fundamental change in our political system?

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Unlike in the 1980’s, society is no longer blighted by militant Trade Unionism. Picture © Nick Efford

The first thing to say is that the frequent comparisons with Labour’s last lurch Left in the 1980’s are completely wide of the mark – because the country and the economy are in vastly different positions now to what they were then. In the early 1980’s the economy was stagnating, largely, many believed, due to the effects of militant Trade Unionism (those old enough to remember will recall the devastating strikes of the 1970’s and early ’80’s, including the dreadful ‘Winter of Discontent’). Under such circumstances it wasn’t very likely the electorate were going to turn to a party espousing hard-Left policies (and don’t forget that at the same time the whole of Eastern Europe was still in the grip of Soviet-style Socialism, again hardly an advert for the benefits of Left Wing economic practices.) So when Margaret Thatcher came along promising to rein-in the unions and let ‘the markets’ provide wealth for all, it was hardly surprising she was able to crush Labour and romp to three consecutive election victories.

However things are now very different. The current economic crisis, and excessive government debt, have been caused not by Trade Union militancy, but by an out-of-control financial system, itself the product of Right Wing free-market economic theory. In other words, in the 1970’s the Left caused the problems, with the Right promising the solution, whereas now the roles are reversed with Right Wing theory causing the problems, and the Left promising to come to the rescue.

Having said that though events aren’t simply a mirror image of each other (history never does quite repeat itself) and we need to be aware of the differences. In the 1980’s inequality wasn’t that severe, so there was a real feeling that ‘we’re all in this mess together’; and in those circumstances Margaret Thatcher was able to mobilise support from all classes of society – both the business community and workers. Now however, after 35 years of ‘Free Markets’, levels of inequality are far, far greater than they were in the 1980’s, and are in fact nearly at levels not seen since before the First World War. So it’s absolutely obvious that we’re not now ‘all in it together’, and while a privileged strata at the top of society enjoy almost unheard-of wealth, those at the bottom are being forced to endure endless cuts to public services and ever-deeper Austerity. In other words society is incredibly divided, and in such circumstances no one party can whip-up widespread popular support. The Tories with their ‘business as usual’ approach can probably rely on the continued support of the top third of the population, who are currently doing very nicely, thank you (that’ll be the third of the population that voted them into power – just – in the May election). Meanwhile, at the other end of society , an extremely large number of people (though quite how many it’s hard to judge) will probably vote for any party which promises an end to their poverty and economic misery. In the middle are all those who are just about getting by, but would probably like to see a change from the usual batch of disingenuous politicians, or have sufficient moral integrity that they don’t just vote out of self-interest. The big question is whether Corbyn and the Labour Party can turn enough of that middle section to vote for them. To do that they need to show pragmatism, maturity and above all, economic competence.

John McDonnell, Labour’s new Shadow Chancellor, is putting forward very different economic ideas. Picture © Kolrobie

The first thing they need to do is show they’ve learnt the lessons of history and aren’t just old-fashioned Socialists, who want to nationalise everything and in so-doing – in most people’s opinion – crush the economy. They need to recognise that the public do, in general, support private enterprise, but it’s the repulsive excesses of unregulated Free-Market Capitalism – out-of-control multinationals, corporate corruption, cronyism, rampant tax-avoidance, all leading to vast inequality – that people want to see the back of. Things on that front are looking good so far where, despite the media’s attempts to portray them as old-style Socialists, Corbyn and his shadow chancellor John McDonnell have actually so far only talked about re-nationalising essential public services (a policy which opinion polls indicate is supported by the majority of the population). Their policies of balancing the books, not by Austerity, but by clamping down on tax-avoidance and increasing taxes on the very wealthy are also sure-fire vote-winners. So, economically they are so far looking very sound indeed.

They will of course also be attacked for relatively trivial things, and just need to make sure they don’t give their enemies any more ammunition than they have to (Jeremy Corbyn would be well-advised to bite his tongue and sing the National Anthem occasionally); and they will need to explain and deal with past ambiguous statements on things like the IRA and Israel, which so far they have done pretty successfully. However there are three issues they do need to be very wary of, issues which are highly contentious but don’t necessarily follow a straightforward Left/Right divide.

The first is nuclear weapons. Jeremy Corbyn may well support nuclear disarmament, but he needs to be aware that though there is plenty of support for cutting-back on the astronomical costs of running Trident, that doesn’t mean that the general public agree with him that nuclear weapons should be got rid of altogether. Ignoring public opinion on that issue would be a massive vote-loser, and could indeed cost him an election victory.

The second issue is migration. Opinion polls show that immigration is for most people now the single biggest election issue. Though there is no doubt that most of the population want to show compassion for refugees and help where they can, that doesn’t necessarily mean they support the sort of open-door policy nowadays being espoused by some politicians. If Labour were to move in that direction, and so increase significantly the already problematic 330,000 per year net inward migration, they would undoubtedly be alienating many of their potential supporters.

And the third issue is the EU referendum, which admittedly is a potential minefield for all political parties. Jeremy Corbyn has already stated he will campaign for Britain to stay in regardless, which is a bit premature and could even go against some of his union backers. He and his team need to think very carefully how they will play this, as again they don’t want to shoot themselves in the foot over such a divisive issue.

In summary though, Jeremy Corbyn and his team are serious contenders indeed, and despite all efforts by the mainstream media to portray them as crazy no-hopers, the skill with which they have (so far) dealt with their detractors has their opponents already realising that defeating them in the next general election will be no easy matter.


The Migration Crisis

The news recently has been full of the migration crisis, with politicians, commentators and the public alike all wringing their hands in anguish at the human tragedy, while at the same time struggling to come up with any comprehensive solutions. Opinions have also been divided between those who think all migrants/refugees should be welcomed with open arms, and those who think Europe is already full and more arrivals represent an existential threat to our future. Sadly as time has gone on the issue has become ever-more emotional, and the fact that a single image of a drowned child can shift public (and thence political) opinion so profoundly, shows how out-of-control and illogical the debate has become.

In my view a lot of highly-significant facts have been completely omitted from the discussion so far, and with this article I am going to try and rectify that, by bringing some very important information back into the debate.

The first thing to say is that it is in my view completely wrong to frame all the arguments around the needs of refugees, without even considering the impact on the native populations of the countries they are fleeing to. To dismiss such concerns as irrelevant or, even worse, racist, is to effectively ignore the needs and desires of vast numbers of ordinary people. Such blinkered thinking can only lead to resentment and, if left to fester, will store up massive and serious problems for the future. It is absolutely obvious that the arrival of large numbers of people from different societies and cultures will potentially lead to massive (and potentially unwanted) changes in the society in which they are arriving. Such changes should be recognised and carefully managed, with due consideration being given to the impact on the local population. That is why in so many countries refugees live in separate camps, because the native populations, while happy to provide a safe space for people to find refuge, nonetheless don’t want to have their own way of life significantly altered. This is a perfectly reasonable position.

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Syrian migrants walk along a Hungarian motorway as they try to reach Germany. Picture © photag_ag

The predominantly Western view of integrating refugees into society completely ignores this issue, and is the reason there is so much resistance to providing refuge to people fleeing for their lives. Additionally it should be noted that the concept of providing a safe-haven for refugees is generally accepted as being a temporary situation, ending as soon as the place the refugees have fled from becomes safe. However it is absolutely obvious that if the policy is to integrate refugees into society, then the odds of them ever going home become almost zero: because as soon as they have made the new country their ‘home’ (particularly if they are fleeing poorer countries for richer ones) why would they ever want to leave? This leads to the vital point that refugees, regardless of how genuine their original claim, are also migrants, because the reality is they are here to stay.

Secondly, it should be strongly noted that refugees are people crossing from an unsafe country into a safe one. If they then choose, of their own free will, to carry on travelling into other safe countries they are then, by definition, economic migrants (even if, according to the UN definition, they are also refugees). This is because they are making the purely economic decision that the country they are in isn’t good enough for them, and they would rather live somewhere else. For example the people in the camps at Calais, trying to cross the English Channel, aren’t fleeing for their lives from Eritrea, Somalia, Syria, Afghanistan, Iraq or any other of those countries. They are all, every single one of them, fleeing France – and as France is not an unsafe country, they are therefore migrants. (This distinction is recognised by the EU ruling that refugees should seek asylum status in the first EU country they arrive in. The EU, riven by indecision and incompetence, seems completely unable to enforce this rule.) It is also worth noting that most of the Syrian migrants in the news at the moment, including the boy who tragically drowned, were coming from Turkey, and Turkey is not an unsafe country either.  In fact Turkey has been building huge refugee camps to house Syrians since the start of the civil war, but thousands of people have decided they don’t want to stay in that country, and so have chosen to make the journey through Greece and into Europe. That is their decision and they are also therefore, by definition, migrants.

The EU has struggled to come up  with a solution to this crisis, and one of the ideas that keeps getting bandied around is the concept of enforced quotas. This has met with much national resistance, with the UK deciding to opt out completely. Hardly surprising, as once again the politicians have chosen to completely ignore public opinion. Also they have come up with the completely unworkable idea that the number of refugees should be proportional to a country’s existing population. One wonders how their thinking could be so stupid, as that will only serve to increase populations in already overpopulated countries. It also takes no account of those countries already struggling with large-scale immigration (like the UK), and how this will make an already difficult situation very much worse. Far better, should such a policy be introduced, would be to base quotas on population densities (more refugees to lower density countries) and also taking account of current migration levels. For example, of the larger European Countries the most densely populated are Holland (at 497 people/sq km) and the UK (at 410 ppl/sq km). Meanwhile France (121 ppl/sq km) and Poland (122 ppl/sq km) have less than a third as many people for their land area*. Surely it would make more sense to house the bulk of the refugees in those countries? This situation is compounded by the fact that the UK is currently seeing net inward migration of 330,000 people per year (equivalent to a city the size of Nottingham), some of the highest in Europe, while many EU countries, particularly the Eastern ones, are seeing net population outflows. Any resettlement policy which ignores these statistics is idiotic.

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Irish Naval forces rescuing migrants coming across the Mediterranean to Italy. Picture © Irish Defence Forces

The EU is undergoing massive internal problems, largely as the result of the unforeseen consequences of policies that initially seemed very sensible. The free movement of peoples is putting huge strains on the infrastructure, housing and public services of countries seeing net population inflows, and this refugee crisis is in danger of making a bad situation worse. The way to deal with this, surely, is to come up with a policy which takes account of our moral responsibility to care for the victims of war, while at the same time minimises the impact on our own populations. So far the British policy has been largely to provide finance and resources for refugee camps in close proximity to the areas of conflict (we are the second biggest donor, after the US, of such finance, and have to date given £1bn*). That has to be the right policy, and if necessary should undergo massive expansion so that a) Refugees have no need to flee to Europe and b) They are in the area ready to return to and rebuild their country when the conflict is resolved.

This leads on to one final point I wish to make. Anyone watching the news can’t help but have been struck by how much most of the migrants have been paying people traffickers to get them to Europe. It is not cheap (in most cases costing thousands of pounds), and so it is clear that those fleeing Syria are not generally the deprived poor, but the relatively affluent and well-educated middle classes. In other words just the people Syria will need when it starts to rebuild its shattered economy. By allowing these people to stay in Europe we may think we are being humanitarian, but in reality we are stealing the cream of their talent, and making it even less likely that Syria, and other similar countries wrecked by conflict, will ever be able to recover themselves.

Addendum: It is worth saying that this debate frequently refers to the 1951 UN Convention on Refugees, a document which unfortunately has become obsolete as the world has moved on so much in the 64 years since it was written. For example it gives one definition of a refugee as someone who:

‘… owing to well- founded fear of being persecuted for reasons of race, religion, nationality, membership of a particular social group or political opinion, is outside the country of his nationality…’

Unfortunately, given that even the world’s most advanced countries still experience quite widespread discrimination (against women, homosexuals, the poor for example) it means that almost everyone walking this planet could justify claiming some sort of refugee status if they so choose. That is ridiculous. Additionally the 1951 convention makes widespread use of the term ‘country of nationality’. It is therefore completely unable to deal with the increasingly common situation whereby individuals claiming refugee status deliberately destroy their documents, and then either refuse to divulge their nationality, or else lie about it, in order to increase their chances of being granted asylum.

* Source Migration Watch

* Source Department for International Development