I wrote the following late last year. Little has changed. I offer it again to those wondering what we must do to bring capitalism back under democratic control as part of the widespread demand that we create social justice in our country and throughout the world.

The pdf version of this document is here.

Overview

The UK is facing the largest round of cuts in government spending ever proposed by a Whitehall administration. At the same time the UK faces:

  1. The biggest ever tax gap in its history[i].
  2. The lowest number of staff ever employed by HM Revenue & Customs[ii].
  3. The lowest headline and effective rates of corporation tax in its history[iii].
  4. Low levels of tax for its banks[iv].
  5. High levels of corporate tax avoidance[v].
  6. Significant errors in tax administration[vi].

There are numerous indications that large sections of the UK population find it unacceptable and want action to be taken to address these issues.

This Briefing sets out a manifesto the tax justice – a demand for changes that would transform the way in British taxation policy and management could be transformed.

Cuts and the Tax Gap

We note

  1. The cuts planned by the ConDem government[vii].
  2. That there is a tax gap in the UK made up of £70 billion of tax evasion, £25 billion of tax avoidance and £25 billion of unpaid tax[viii].
  3. That the government has got rid of 30,000 employees at H M Revenue & Customs and is planning to get rid of 13,000 more over the next four years[ix].
  4. The massive errors in the calculation of people’s tax bills by H M Revenue & Customs[x].

We demand:

  • That the government stop the cuts.
  • That all job cuts at H M Revenue & Customs be cancelled.
  • That 20,000 new staff be recruited at H M Revenue & Customs to tackle the tax gap.
  • That H M Revenue & Customs be told to raise the right amount of tax at the right time from the right person and that it be given the resources necessary to ensure it can do so.
  • That we have a General Anti-avoidance Provision that bans tax avoidance[xi].
  • The tax system is made progressive so that the rich always pay more than the poor[xii].

Business tax and the banks

We note

  1. That big business is not paying the tax expected of it[xiii].
  2. That big business is the only part of the economy expecting a tax cut over the next four years[xiv].
  3. That by 2014 big business will be paying tax at lower rates than any small business and any individual in the UK[xv].
  4. That the banks who created the current financial crisis are paying very little tax as a result of it[xvi].
  5. The new bank levy will raise less than the one off Bankers’ Bonus Tax[xvii].
  6. That the government is opposing a Robin Hood Tax on the riskiest transactions banks undertake that could raise billions of pounds a year[xviii].

We demand:

  • That tax laws applicable to big business be rigorously imposed.
  • That planned tax cuts for big business be cancelled.
  • That banks be denied tax relief on losses already funded by the state.
  • That the bankers’ bonus tax be made permanent.
  • That the government introduce a Robin Hood Tax instead of the bank levy.
  • That country-by-country reporting be required of big business so anyone can monitor where they make their profits and pay their taxes[xix].

Tax havens

We note:

  1. That the UK is responsible for ten tax havens[xx].
  2. The UK is itself a tax haven for rich foreigners because of its domicile rule[xxi].
  3. There has been almost no progress in increasing transparency in tax havens[xxii].
  4. Latest deals with tax havens like Switzerland confirm their right to provide banking secrecy[xxiii].
  5. Tax havens are estimated to cost the UK £18.5 billion a year[xxiv].

We demand:

  • That the UK force its tax havens to reform
  • That the UK domicile rule be abolished
  • That automatic exchange of information between states on income earned by people and companies be established so that no one can hide their income from tax authorities
  • That deals that preserve banking secrecy with Switzerland and other states be scrapped before they are signed
  • That the secrecy surrounding offshore companies and trusts be banned.

Endnotes


 

 

I spoke at #occupylondon this morning outside St Paul’s Cathedral.

I, and my family, had a great time there. It was a relaxed morning. You could not have asked for a nicer autumn morning in London and I had a great audience for what I found to be an exciting exchange of ideas that over-ran its schedule until the BBC asked me to go and do a live broadcast.

Throughout I emphasised what those campaigning can demand. I believe in practical, pragmatic, deliverable politics. And I believe there is a very great deal that those with empathic concern for the people of this country can demand. I’ll come back to some of those issues soon, but I have to touch on an issue that vexed me throughout last week and now utterly perplexes me, and that is the way in which St Paul’s have managed this situation.

For all those saying St Paul’s was not the target of this protest I say you’re quite right: it wasn’t, and it isn’t. The London Stock Exchange was, and rightly so. And the fact that the free right to walk the pavements of London around the Stock Exchange has been suspended is sure sign of how effective that targeting has been. For those in doubt, the camp is 200 metres or so from the LSX: it just so happens that St Paul’s is even closer.

But, once camp was made where it is and not as planned 100 metres away in Paternoster Square St Paul’s came into the frame. I’ve said, and I’ll repeat it: St Paul’s had only one duty in this situation and that was to welcome the protest and to open its doors as a place of sanctuary to all those undertaking it. The Christian teaching is explicit: if the church is to fulfill its duty to the poor then that is what if must do.

But of course, after one rather ambiguous moment on the first day of the protest when Giles Fraser appeared to tell the police to back off the Cathedral has made a PR disaster out of the situation it has created for itself.

Today was perfect example of this. The Cathedral is supposedly closed because of the health and safety concerns they have that supposedly have left them with no choice but close the cathedral on legal grounds.

Well, let’s be clear, the entrances and exits to the Cathedral were wide and clear this morning. Thousands could have gone in, and out, without problem.

And let’s also be clear, every business with premises around the Cathedral likely to have been open on a Sunday morning was open. Not one seemed to be concerned at the health and safety risk. None were turning people away. Finding a loo was easy – if you bought a coffee. And there were plenty of places selling it.

You have to ask the simple question – how come the Cathedral had been advised to close when M&S, Starbucks, Pizza Express and many others were open? What was the difference? All these are trading in close proximity without any apparent concern.

The one thing that can safely be concluded is that Giles Fraser, Canon of the Cathedral, was right yesterday when he said yesterday:

Those who are claiming the decision to close the cathedral has been made for commercial reasons are talking complete nonsense.

Of course that’s nonsense. No one has said they’ve closed for commercial reasons. And candidly they are simply not telling the truth when they say they have shut for health and safety reasons – a claim that lacks any hint of credibility, at all. They’re shut for one reason and one reason only, and that is politics. No other explanation is possible.

The press suggestion tonight that:

Officials from St Paul’s Cathedral and the wider City district are considering legal action to force protesters to remove a camp set up outside the church more than a week ago, following an impasse between the two sides.

There is no impasse: people are exercising their right to protest. That’s fundamental to democracy. When you deny the right to protest, to assemble, to deliver your message then you challenge democracy itself.

Here is nothing at this moment more profoundly political that the Cathedral could do. If they take this action they make clear on whose side they are. Giles Fraser will be shown to be a hypocrite when he said yesterday:

I remain firmly supportive of the right of people peacefully to protest. But given the strong advice that we have received that the camp is making the cathedral and its occupants unsafe then this right has to be balanced against other rights and responsibilities too. The Christian gospel is profoundly committed to the needs of the poor and the dispossessed. Financial justice is a gospel imperative.

And then he sides with the greatest oppressor of the people of this country (the City of London) to suppress that right to protest peacefully in a way that cannot in any way possible be threatening to his Cathedral, and which in no possible way justifies the suspension of Christian worship in his church? It is simply impossible for his comment to have any credibility in that context.

So, the only possible interpretation of the action of the Cathedral is that it is political. This, incidentally, is unsurprising. The Cathedral’s Dean is Graeme Knowles. He was formerly Bishop of Sodor and Man – and yes that does mean the Isle of Man where I can find no record of his opposing its tax haven activity and where he did sit in the Tynwald and is not recorded as opposing the tax abuse that legislature facilitates. No wonder he was an ideal candidate for the post of Dean of St Paul’s – and no wonder he appears to feel so comfortable with the mechanisms of financial exclusion and abuse promoted by so many of his near neighbours, many of whom appear on his list of sponsors.

So yes, let’s be clear: I am suggesting that the only plausible explanation for St Paul’s acting as it is must be that it is acting in association with the City of London to close down this demonstration. Nothing could be more profoundly political. It’s moving onto very dangerous ground. Not least because it is not at all clear that for all the risk that action to suppress democratic freedom by the church will entail that they will actually win.

So let’s look at the hole the church is digging. It’s on the one hand shut on wholly spurious grounds and how it can now reopen is hard to say. When you spin a yarn as big as that one how on earth do you justify reopening, even though all those around you never apparently saw the threat in the first place? It’s almost impossible for the Dean to reopen the cathedral now without looking very stupid so long as the camp stays.

And to get themselves out of this mess of their own making they have to go to court to evict people from land they do not own; whose ownership is unknown, and where there is no sign at all of any breach of the peace occurring.

And there are those who say #occupylondon has no apparent aims? Well it has so far made very clear that St Paul’s and the City are very definitely on the back foot, panicking and out of control in their desire to oppress the ordinary people of this country and their democratic rights.

You’re in trouble Dean.

Stop digging.

 

The first blog reaction to the Courageous State has come in, almost inevitably from Tim Worstall. He said, having read just one highlight that I’ve published:

My word, this book is going to be interesting, isn’t it?

The Courageous State, among other things, will:

Support the broader goals of family, community and society and the achievement of purpose through identity;

It’s not quite Kinde, Kuche und Kirchen but I can’t be the only person to find something vaguely fascist about it can I?

So promoting economic and social policies that support the family, community and society so that people can achieve their own goals is fascist, is it?

I think that’s the first and last time I need to pay attention to what the libertarian right say about this book: Worstall single-handedly reveals just how first of all out of touch they are with normal human objectives and secondly how unable they are to engage in anything approaching meaningful debate.

There is one irony though: when he also wants ( as no doubt he will) to cast it as Marxist he might now have a problem. That would be rationally inconsistent, after all, and  a libertarian could never be that, could they?

 

The Dean of St Pauls has said that:

he had met members of the chapter that governs St Paul’s on Thursday evening. As a result of that meeting, and reports received today from our independent health, safety and fire officers, I have written an open letter to the protestors this afternoon advising them that we have no lawful alternative but to close St Paul’s cathedral until further notice.

Hmmm, let’s see the sort of people who govern St Paul’s. Of course there are the clergy. They’re listed in here.

But the St Paul’s Foundation gives more clue about who really influence things. It’s trustees are:

Chairman
Sir John Stuttard

Trustees
The Right Reverend Graeme Knowles, Dean of St Paul’s
Dame Helen Alexander DBE
Lord Blair of Boughton
Roger Gifford
John Harvey
Joyce Hytner OBE
Gavin Ralston
Carol Sergeant CBE
John Spence OBE

According to the Dean these are the people who will be replying to #occupylondon.

So let’s see what they do:

Chairman
Sir John Stuttard PWC partner, Former Lord Mayor of London.

Trustees
The Right Reverend Graeme Knowles, Dean of St Paul’s
Dame Helen Alexander DBE Deputy chair of the CBI, director of Centrica plc
Lord Blair of Boughton Former Metropolitan Police Commissioner
Roger Gifford Investment banker, big in City of London
John Harvey – Not clearly identified
Joyce Hytner OBE – Theatre director
Gavin Ralston Global Head of Product and leading international asset manager at Schroder Investment Management
Carol Sergeant CBE - Chief Risk Director at Lloyds TSB, formerly Managing Director for Regulatory Process and Risk at the FSA
John Spence OBE – Former Managing Director, Business Banking, LloydsTSB

Now it’s not for me to judge.

But that looks like a very high association rate with the 1% to me.

And the St Paul’s Foundation is going to provide an objective report on the protests in the City? I have my doubts.

 

St Paul’s has clearly given the signal to the police to clear #occupylondon camped on its doorstep this afternoon.

Is that surprising?

Look at the list of sponsors of the Cathedral including:

Lloyds TSB Group plc
An Independent Trust Associated with Barclays
City of London Corporation
City of London Endowment Trust
The Schroder Foundation
Goldman Sachs International
The Worshipful Company of Mercers
UBS Investment Bank
McKinsey & Company
N M Rothschild & Sons Ltd
Skandinaviska Enskilda Bank
Prudential Plc
Slaughter & May
Electra Partners LLP
Land Securities
Standard Chartered Plc
JPMorgan Cazenove
J.P. Morgan
The Freemasons’ Grand Charity
Canary Wharf Group Plc
Man Group Plc Charitable Trust
London Stock Exchange
The Worshipful Company of Grocers
American Express
The Coutts Charitable Trust
The British Land Company Plc
HSBC Holdings Plc
In the face of that what has happened? St Paul’s has asked those seeking to protect the 99% form the 1% to very politely go away.
It’s clear whose side St Paul’s is on.
Each evening St Paul’s sings the Magnificat (it’s part of Evening Prayer) It says:
My soul magnifies the Lord……,
He has shown strength with His arm:
He has scattered the proud in the imagination of their hearts.
He has put down the mighty from their thrones,
and exalted those of low degree.
He has filled the hungry with good things;
and the rich He has sent empty away.
Not at St Paul’s he doesn’t. The rich he welcomes with open arms. It’s the poor he sends empty away.
And  can say unambiguously St Paul’s has got this wrong.
My new book is The Courageous State. It looks like we need a Courageous Church too.

 

The Dean of St Paul’s Cathedral has issued a statement this afternoon saying:

The Right Reverend Graeme Knowles, Dean of St Paul’s Cathedral, issued the following statement today (Friday 21 October):

It seems a very long time since the protestors arrived around the Cathedral last weekend and I want to stress at the outset that we have listened to them and indeed developed a conversation with them.

We are delighted that the London protests have been peaceful and indeed there has been a good atmosphere generally between Cathedral staff and those dwelling in the tents around St Paul’s.

There is something profound about protest being made and heard in front of this most holy place: a gathering together of those concerned about poverty and inequality facing the great Dome of this Cathedral Church.

The Dean is clearly  well practiced at making all the right noises. It’s doing weddings that does that. Then:

But it is about the practical and safety issues which this peaceful protest has raised which I need to address with you today.

Yes that’s what Jesus said at the feeding of the 5,000, of course.

But as the Dean said:

It should be obvious to anyone approaching the Cathedral that the size of the camp and the consequent compliance issues which it inevitably raises, has increasingly put us in a difficult position.

The cash is not flowing as it should, is I think a fair interpretation of that.

As a result of that meeting, and reports received today from our independent Health, Safety and Fire officers, I have written an open letter to the protestors this afternoon advising them that we have no lawful alternative but to close St Paul’s Cathedral until further notice.

Oh, nonsense! You can handle royal weddings but not a few people on your doorstep. You’re kidding no one.

The Health, Safety and Fire officers have pointed out that access to and from the Cathedral is seriously limited.

Open some side doors then – the ones without turnstiles.

With so many stoves and fires and lots of different types of fuel around, there is a clear fire hazard. Then there is the public health aspect which speaks for itself. The dangers relate not just to Cathedral staff and visitors but are a potential hazard to those encamped themselves.

Have there been any issues yet? Let’s stop being patronising shall we? You survived the Blitz. A camping gaz stove is no big deal.

The decision to close St Paul’s Cathedral is unprecedented in modern times and I have asked the Registrar to implement emergency procedures whereby the building remains closed but fit for purpose until such a time that we can open safely. Our 200 staff and 100 volunteers are also being informed of this decision this afternoon.

I want to say two simple things at this point.

1)We have done this with a very heavy heart, but it is simply not possible to fulfil our day to day obligations to worshippers, visitors and pilgrims in current circumstances.

Wrong. Your duty is to the poor. See here.

2)That all of the Chapter are at one on this and recognise the complexities of the issues facing us at this time.

You mean your sponsors aren’t happy? Not surprising, see the list here.

As you can see in the open letter, I am asking the protestors to recognise the huge issues facing us at this time and asking them to leave the vicinity of the building so that the Cathedral can re-open as soon as possible. So many people who visit this great Cathedral come here, of course, because they love the Gospel of justice, peace and reconciliation [which some of the protestors are embracing for a whole host of reasons] , but also because they want to enjoy the peace and tranquillity of a place of prayer and pilgrimage.

They also pay. A lot.

Some will rightly say that the Church should be alongside those seeking equality and financial probity. We are.

Pardon? Throwing them out is working alongside? Pull the other one.

The debate about a more just society is at the heart of much of our work at St Paul’s and indeed we hope to contribute to the wider debate in the very near future through a Report from the St Paul’s Institute.

Almost all the trustees are bankers – clearly an unbiased lot.

But today is about our ability, practically, to carry on our mission with free and open access to this public space and treasured place and I hope that the protestors will understand the issues we are facing, recognise that their voice has been legitimately heard, and withdraw peacefully.

And I suggest quite simply that there job is to stand firm. Now. And tell the Dean what he is.

 

It’s interesting to go back to see what the Tories thought in 2007. In August 2007 they published ‘Freeing Britain to Compete:Equipping the UK for Globalisation’. It was largely the work of John Redwood. This happened at exactly the same time as the world’s financial markets began to collapse. In it they said:

The last ten years in particular have been good years for the world economy as a whole. They have been characterised by two massively favourable trends.

The first is an era of easy money. The main central banks worldwide have opted for low interest rates, the ready creation of credit, and tolerance of innovatory means of financing public and private sector activity through big increases in debt. It has been the era of public/private partnerships, specialised credit-based funds and funds of funds, collateralized debt obligations, collateralized loan obligations, credit default swaps, special purpose vehicles and many other similar ways of raising borrowing throughout the financial system.

The second has been the remorseless downward pressure on prices of both goods and internationally traded services from the migration of business to lower wage countries in the East using newer plant and equipment, and from the application of new web based technology that is revolutionising business models. …

The UK has not performed that well against this very favourable background.

Note the language of August 2007: easy money, the ready creation of credit, financial innovation – all these are things that they said were massively favourable trends.

We need to remind them of that often. And to hold them to account for it.

 

I’m aware that there’s a delicate balance needed over the next month or two as I get into promoting my forthcoming book – The Courageous State.

So I’ve set up a dedicated blog for it, here. I’ll mention entires there, but keep the references within reason here.

This morning I’ve posted an entry that comes pretty much straight from chapter 13 of the book, on recognising the Courageous State. On this occasion I reproduce it:

Courageous States are driven by principles. Of course they’ll also be pragmatic sometimes – politics always is, and has to be an exercise in pragmatism. But principles matter in a Courageous State. This will be a fundamental change that will differentiate them from the neoliberal states they will replace.

Those principles are reflected in the following beliefs:

  • People come first;
  • People must have the opportunity to achieve their potential;
  • Poverty is unacceptable;
  • Sustainability is essential;
  • Balance is best for human well-being;
  • Government has to work well;
  • Real business deserves strong support.

These are joined by concerns about issues that undermine well-being which the Courageous State will have to tackle:

  • Financial speculation is always secondary to real business, the community and society at large and can harm the prospect of society achieving its potential;
  • The payment of interest is the cause of considerable stress within the economy;
  • Advertising seriously distorts behaviour in the economy and reduces the chance of people achieving their potential by encouraging over-consumption.

Concerns not dissimilar to these have, admittedly, been at the forefront of thinking before now: the Beveridge Report settled the five priorities on which in very many ways the post-war consensus was built, saying they were:

  1. Want;
  2. Idleness;
  3. Ignorance;
  4. Squalor;
  5. Disease.

As a result, growth, full employment, education, housing and health became the focus of social policy post-1945, and rightly so. They would also be priorities for the Courageous State. They were, however, the goals from an era when poverty was so widespread that what now seems pejorative language could be used to describe the objectives the state set when seeking to improve the conditions of a great many people. Of course they remain relevant: absolute and relative poverty remain pressing issues in the UK, and yet the Courageous State needs to aim for more than their relief. The Courageous State has to set itself the goal of ensuring people’s potential can be achieved. That can only happen if the following are available:

  1. Rewarding work;
  2. Safe banking;
  3. A sustainable environment;
  4. Affordable homes;
  5. Security in old age;
  6. Nurturing environments;
  7. Communities where we belong;
  8. Healthcare;
  9. A work–life balance;
  10. Opportunity for meaningful leisure.

These are the objectives, but objectives require practical policies if they are to be fulfilled. The result is that the Courageous State needs to have policies to:

  1. Constrain the world of feral finance that has so dominated the economies of the world in the last thirty years;
  2. Rebuild the role of the state in supporting real business activity;
  3. Encouraged a balanced, sustainable economy;
  4. Support the broader goals of family, community and society and the achievement of purpose through identity;
  5. Cooperate internationally to support the rights of Courageous States.

These are the issues that would drive policy in the Courageous State. And they are, of course, all explored in my forthcoming book.

I’d add, I hope this has some relevance for those Occupying London and elsewhere right now.

 

Michelle Perry is a financial journalist who I have spoken to on and off for a decade. I note she’s just taken up a new role as editor of CFO World and in that capacity has written an editorial I want to publicise, because I think it important. Issued in response to Action Aid’s report on tax havens, using methodology I developed, she says:

There were numerous responses to ActionAid’s report earlier this month that 98 of the FTSE 100 companies use tax havens located as far as the Cayman’s to islands closer to home like Jersey. What wasn’t surprising were the polarised views. Tax issues rarely produce indifference.

No public defence was made by the influential, but media-shy, group of 100 finance directors. But the group did respond to me by email (not in person) to say that the Hundred Group are “absolutely committed to acting with integrity and transparency in all tax matters”.

The statement went on to say that the UK’s top companies continue “to make a substantial contribution to the UK public finances”. It quoted the annual study of total tax contribution – a survey set up six years ago to counter criticism of corporate tax avoidance. The survey shows that the Hundred Group member companies contributed £56.8 billion (or 11.9 percent of all government tax receipts) in the year to 31 March 2010.

The response to that is always, I suggest “So what? How do we know that’s the right sum?”. Perry seems to agree. She continued:

It’s true, of course, business does contribute significant sums in taxes to government.  However the taxes cited in this report tend to be a combination of those borne and those collected.

It’s important not to blur the lines here. It’s this very point that many companies dislike. They do not like to feel that they are working as an unpaid, unglorified tax collectors for a government whatever its colour.

But in reaction to ActionAid’s research I do not feel this is a valid response. In fact it does not respond to the research, but redirects attention and shirks the issue.

We can not have a debate about tax or tax havens – their validity or not – until these companies and more to the point these finance chief acknowledge freely and publicly that they use them and why they use them. It may turn out that these reasons are wholly valid but until they state them, we cannot have a grown up debate about this burning issue.

We need to have this debate so that the companies can regain a value in the eyes of society and until we do large corporates will continue to be seen, wrongly, by a large majority of the British public, as a parasite of the taxpayer.

This is the perfect opportunity to speak openly and freely on these matters.

I should apologise for such a lengthy quote. But I think this a really significant argument and I applaud Michelle Perry for making it.

Might I suggest that the next step is to ask for country-by-country reporting?

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