There are occasions, I admit, when I wonder just how far apart people can be and still think they have some affinity for the same political ideas. Tonight has been one such occasion. The Fabian Society sent me their publication to celebrate 70 years of Beveridge, and since this is something both well worth celebrating, and which I have been asked to write about I gave it more than a scan.
Having got to the end I came to an article by someone who I admit I had not heard of called Nick Pecorelli. The byline says he is Associate Director of The Campaign Company, but that seems a little confusing as it's clearly a decidedly part-time role, but let's leave that question mark aside and instead look at his argument.
He says that the world fits into two types of people. The first sort, he says, are justice seekers embrace an all encompassing notion of fairness. I think it's fair to say he thinks they populate the left. Then, he says, there are responsibility seekers. These people, I think we can safely surmise, are on the right. They do, he says:
hold a tougher view of human nature. They emphasise that our fate is in our own hands, and that, if we are able-bodied, whatever our circumstances we can and must better ourselves. For responsibility seekers, society is an intangible notion but government welfare is likely to be taken advantage of by ‘shirkers.'
There's an odd fact I hope I am not alone in noticing when reading the article. Having defined justice seekers Pecorelli then proceeds to ignore them. It's as if only responsibility seekers matter, for it is they, their beliefs and their policies to which he gives all his attention. We end up with the perverse fact that the final article in this Fabian paper on how Labour should tackle the welfare debate is dedicated solely to how to locate debate on the issue in terms the Tories will find comfortable. Can I be alone in thinking firstly that Labour's been here before and secondly that this is not now, never has been and never will be the way in which one wins a debate? Conceding all ground to your opponent at the outset is a certain way to lose.
I have to admit Pecorelli appears dedicated to that task of losing. Having devoted almost two thirds of his article to asserting that responsibility seekers both exist, and represent about one third of society (which, because of his dedication of space to them I can only presume he thinks the most important third of society) he then asks how Labour might win the welfare debate and says this:
Quite simply it should focus on the war not the skirmishes, and to do this it must return to first principles and find the common ground between responsibility and justice seekers.
Two principles underpinning Beveridge's case have been lost in the mists of time. The first is the contributory principle. If someone contributes more they should get more out in times of need than those who have not.
A second Beveridge principle is the subsistence principle. Beveridge was very clear that unemployment benefit should be set at a subsistence level. To pay more is not only unaffordable in the current climate, but it prevents governments' shaping a welfare system that makes work pay.
To these principles Labour should add the moral equivalence principle. Tax evasion may involve far greater sums than cheating the benefit system but that does not make it more abhorrent. Labour too often vocalises the case against the former, whilst meekly stating the case against the latter. By simply stating these three principles Labour can begin to re-engage responsibility seekers in a debate about the future of welfare.
I could spend the rest of my Saturday evening gasping at this analysis, its embrace of the merit of subsistence (let's call it poverty for ease) and his willingness to believe that we should only look after those able to look after themselves. I could, but I won't because I will instead turn to his third argument on moral equivalence. Pecorelli uses the term in a way that I think purely analytically unusual, but I'm going to ignore that. I am simply going to look at his suggestion that Labour must embrace the idea that tax evasion is no different to and no more morally repugnant than benefit cheating.
Where on earth did he get the idea that Labour has thought this? Did he look at the facts? I have, in a blog published in 2010 which related solely to the last three years of Labour's time in office. During that period Labour spent £17.5 million on adverts tackling benefit fraud, as it called it. And it spent £633,000 on adverts tackling tax evasion. This was despite the fact that benefit fraud, at most, cost £3.1 billion a year then (and I think that overstates the cost by including error as well as fraud) whilst tax evasion and avoidance was in HMRC's estimate over £40 billion a year during that period, and as is well known, in my opinion dramatically more than that. As I noted in 2010, the effect was that Labour spent 624 more proportionately on adverts tackling benefit cheating than it did tax cheating. If anyone can suggest that means Labour treats these two as moral equivalents then I am, to be polite, flabbergasted. The claim simply does not stack up.
There are, however, good reasons for not treating them as equivalents. As I have also shown, more recently, of the 41,000 cases of deliberately marketed tax avoidance not yet addressed by H M Revenue & Customs have a total cost of £10.2 billion or an average of £248,780 each. On the other hand, the average case of local authority benefit cheating identified in a report, also in November 2012, from the Audit Commission is £2,166. There were 54,000 such cases.
Now, no one says that 54,000 cases of fraud should be ignored. I don't. But let's not for one minute suggest there is equivalence between these supposed activities. Or incidentally between benefit fraud and tax evasion, of which the cost may be, in my estimate, more than twenty times greater. They are simply not in the same league.
Tax avoidance, especially, and to no small degree large scale, high value tax evasion, is highly sophisticated activity that in the case of evasion is criminal. It is undertaken by those who have no need to commit it to ensure that they can meet their reasonable needs. This is a crime committed out of pure avarice. Its aim is to accumulate. Its object is to seek status, power, and no doubt control. It is perpetuated with considerable aforethought. Amazingly there is a whole industry of lawyers, accountants and bankers who are willing to facilitate tax avoidance and tax evasion for their clients (although many will deny evasion, and in some cases that will certainly be true). There are even whole states whose legislature has been effectively captured to facilitate this activity or crime. And the consequence is serious. Not only is the tax loss to the UK, at maybe £95 billion, enough to transform the whole approach to our macro economic management, and indeed our whole approach to the management of social need in this country, it is the dedication of this industry to the perpetuation of wealth inequality that creates the environment in which so much social injustice now exists.
Benefit fraud is, on the other hand, with odd exceptions, petty crime. That's still important. But to pretend that shoplifting has the moral equivalence of pre-meditated murder, which Pecorelli's argument would suggest, is ludicrous. We know that is not true. We rightly dedicate different resources to dealing with each because their impact is very different. We even know their motivation is different. I'm still not excusing crime, but there's not a shadow of doubt that some benefit cheating is motivated by a desire to simply provide the basics of life to a family. I don't excuse the way it is done, but I can understand the motive. I cannot say the same of tax avoidance and tax evasion. Morally they are simply not equivalents, and I am shocked that the Fabians have published an article suggesting that might be the case.
Tax evasion and avoidance demand greater attention than benefit cheating and have not had it.
If tackled tax evasion and avoidance have the power to change the UK's economic narrative by providing, at least in part, an alternative means of tackling the deficit.
And if those facilitating tax evasion and tax avoidance were tackled we would find that inequality would fall, a level playing field for UK business would be created where cheats cannot win over honest business, an environment in which investment could pay rewards which are at present only available to financial manipulation could be created and so prosperity and employment would rise, plus many of the avenues for crime would be closed Again, there is simply no moral or economic equivalnce with benefit cheating.
In that case it ill becomes the Fabians to even publish an article suggesting such equivalence exists. And it ill becomes them to suggest that the only way to tackle these issues is to suggest that benefit cheating is as significant as benefit fraud when that is so obviously untrue.
Yes, benefit cheating has to be tackled, I agree.
But any wise political party knows you tackle priorities that achieve your goals and transform real lives first. Tackling tax avoidance and tax evasion can do that. Labour should be saying so. And it should at the same time be saying in a way it has never done before that of the two tax crime is much the more serious, and the one demanding of most attention. Only then can it shift this debate onto its own territory. And right now that opportunity exists. Labour has to grab that with both hands.
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I’d guess Mr Pecorelli is yet another stealth agent for Unum, his primary concern being doing away with the benefits system and replacing it with the American private insurance model. It explains him, doesn’t it?
The Campaign Company are typical of the barnacilisation weighing down the ship of state.
Barnacles are of economic consequence as they often attach themselves to man-made structures, sometimes to the structure’s detriment. Particularly in the case of ships, they are classified as fouling organisms
Unfair on barnacles, I know
Richard
you are ignoring one simple point. The politician likes to introduce a policy which can quite easily be effected, to use the horrible buzzword “picking low-hanging fruit”.
Benefit fraudsters are ridiculously easy to nick. They tend to just plead guilty. They can’t afford solicitors, &, in any case, they live on estates where almost everyone has been nicked for something so there is really no downside. Everyone knows they’ll never pay any fine for the rather obvious reason that they have nothing to pay it with.
Tax evaders of the sort that don’t declare any, or most, of their earnings & who pay their employees in cash are harder to nick. They tend to afford solicitors of a sort. V often they are being targetted by dozens of agencies, from HMRC to TS to the Home Office for immigration, to Health & Safety. They won’t usually fight a claim to the death, they’ll shut down the Co that ran that restaurant, that building site, that care home & just start up another one.
Tax evaders of the sort that run “avoidance schemes” are virtually impossible to nick. They can afford top solicitors. They will say they got Counsel’s opinion on a scheme.They obviously won’t say how many Counsels gave them a contrary opinion. They will keep, or at least purport to keep, all the documentation in a Channel Island subsidiary/branch so HMRC can’t get its dirty paws on it. Their fraud is almost un-challenged & un-challengeable.
Following on, on point 3. The only reason the “avoidance scheme” marketed by Mssrs Faichney & Perrin was found to be crooked was that they sent the full explanation to a client whose partner was a tax inspector !
But for that slip, I’m sure HMRC would’ve litigated civilly &, at most, the clients would’ve had to pay the tax they saved plus interest. assuming, of course, that HMRC had won, which they might well not have done.
If benefit fraudsters are ridiculously easy to nick how come all the money and effort which has been weariesomely devoted to doing that has NEVER confirmed the estimates and NEVER made the savings anticipated? I think there is something wrong with your analysis…
I would add that anecdotal evidence suggest that a great deal of benefit fraud is perpetrated by people who are above the capital limits for receiving benefit and do not disclose that capital. I cannot provide a break down but people who I know and who work in the field of welfare rights tell me this is a growing problem. People above capital limits of £16,000 are NOT the people who live on the council estates and care not about their reputations, of your fevered imagination
I have heard those who have had to represent these folk speculate that the problem has been created by the promulgation of just such a narrative as yours: Irregular verb: I am prudent; you are a risk taker; he is scum. In short these people are of the tribe that says that criminality is not a matter of what you do: it is a matter of who you are. Coupled with the big lie that benefit fraud is easy (and perhaps their own much more realistic experience that tax fraud is easy) they think they can get away with not disclosing a bank account or 6. Those are your low hanging fruit and they do get nabbed: they are generally not shamed: they are indignant!
Fiona
Erm, because there isn’t much money in it ? Nicking 100 people who’ve claimed an extra £500 in benefits still only gives you half a million. At the other end of the scale the tax evaders/avoiders are knocking off many millions.
As a mate of mine said, “its just shooting fish in a barrel”.
Erm..no. It is certainly true that there is not much money in it: but the people who trumpeted the vast sums they were going to save knew the levels of benefits and presumably took that into account. But the fact remains that a lot of money had been spent to no effect because the level of benefit fraud is not what is claimed. The evidence is pretty conclusive but why would that change a narrative which has nothing at all to do with fairness or proportionality and everything to do with distracting attention away from the far bigger problem of tax?
Fiona we agree a vast amount of effort and money has been spent to demonise benefit claimants of all kinds and as you say any amounts saved are tiny by comparison with the effort put into chasing them. This is not because people are claiming when they shouldn’t be however (though the govt pretends that’s the reason), rather it’s to soften the public up to the removal of the benefit system entirely so opening up a multi-billion pound market for the American insurance company Unum (and others), whose gratitude will be making all the politicians involved multi-millionaires I would imagine. As you say, looked at as a means of saving money it’s entirely disproportionate. From today the sick and disabled are to be mandated to indefinite and unpaid workfare. If they don’t do it (and obviously they can’t do it, being ill), they lose their benefits. See http://wheresthebenefit.blogspot.co.uk/2012/12/disability-workfare-even-worse-than-we.html also this from the Guardian http://www.guardian.co.uk/politics/2012/nov/30/sick-disabled-work-benefits-programme. The government couldn’t even begin to get away with such disgraceful behaviour if they hadn’t spent millions of pounds over decades to portray everyone on sickness benefits as scroungers and malingerers. People will be dying in the streets in droves in this country very soon, and this appears to be all so a tiny group of crooked businessmen and corrupt politicians can get hugely rich..
One of the problems here is that the right-wing press (and increasingly in recent years supposedly “impartial” journalists such as John Humphries of the BBC) have been pushing the line that there are millions of “scroungers” and “layabouts” claiming benefits when they should be in work. This has now become an accepted “fact” among the majority of public opinion (according to polling by YouGov etc) when it is in fact almost a complete fiction. I say “almost” because there are surely a few instances of people defrauding the system – but compared to fraud in pretty much any other sector of the UK economy the sums involved are tiny. (Partly because benefits are so low in the UK anyway). That doesn’t excuse the small amount of fraud that does exist, but it does mean that the govt would be much better served going after fraudsters who cost us much, much more – for example tax evaders and other organised criminals.
The “scrounger” rhetoric has enabled the current govt to roll out a regime for mandatory unpaid work activity for long-term unemployed, sick and disabled people which looks like something out of a fascist state. That’s a strong word to use and I don’t use it lightly, but I can’t think of any other term for “unlimited work placements without pay”.
As a progressive social democrat, Ed Miliband should be denouncing the ConDems’ new benefits regime as something which is unacceptable in a democratic society. Instead he lets Liam Byrne reinforce the “scrounger” rhetoric. On this particular issue I don’t have any confidence in Labour to deliver progressive change – only the Green Party is saying anything sensible. That may change as John Cruddas’s policy review progresses after the failure of the Byrne review – I certainly hope so. It needs to, for all our sakes.
Well said. The only thing that I disagree with in Richard’s otherwise impressive article is his surprise at finding this in the ranks of NuLabour. They have been tories at least since Blair and they conceded all the ground loooong ago. A huge lie oft repeated substitutes for truth very often. This was achieved at the outset by the left’s complete failure to understand the nature of the new plutocracy. There was no more post war consensus: decent people try to find the middle ground: that is a disastrous policy when the opposition always step back when you step forward. That is how the middle became the far right. And here we are again “finding the middle way”: I don’t recognise a middle way between right and wrong or between good and evil
In the ranks of both Labour and the Tories are the Neoliberals. They should be in their own party as they belong in neither of the others. However, keeping things the way they are means whoever is voted in we get a Neoliberal government so I imagine the existing status quo suits them.
It is staggering that these half baked, evidence free musings make it into print, but they do illustrate that the labour party earnestly want to believe the romantic drivel of neo liberal propoganda.
A casual look at the headlines would show that people often rise to evade responsibility, not to assume it.
Limited liability, bankruptcy, onerous contract, ‘tax efficiency’ are all potentially reponsibility shedding conventions and are too often used that way.
I think mr pecorelli vastly over estimates the numbers of responsibility seekers because they all live, unseen or heard by others, at the bottom of his garden.
For responsibility seekers, society is an intangible notion but government welfare is likely to be taken advantage of by ‘shirkers.’
So what an arbitrarily defined and proportioned cohort who cannot relate to society (note to mr p – all notions are intangible, but they can be said to be ‘grasped’. Though not, it seems, by your fantasy demographic) believe that government ‘welfare’, (or rights as they used to be called), is likely to be taken advantage of by ‘shirkers’.
All this says is that mr p thinks a 1/3rd of the population have no understanding of the world around tham.
It is another irregular verb:
I show that I am a responsibilty seeker by shirking all responsibility through limited liability etc and so getting rich
You show you are a responsibility seeker by docilely accepting falling standards of living when my advantage requires it
He is a scrounger
Richard, you say “But to pretend that shoplifting has the moral equivalence of pre-meditated murder, which Pecorelli’s argument would suggest, is ludicrous.”
Agreed. And thank you for skewering the odious Mr Pecorelli. I share your evident anger, for it is righteous anger, directed towards “the money-changers in the Temple”, who were cheating the ordinary people who were seeking to do what was right.
You also say “In that case it ill becomes the Fabians to even publish an article suggesting such equivalence exists. And it ill becomes them to suggest that the only way to tackle these issues is to suggest that benefit cheating is as significant as benefit fraud when that is so obviously untrue.”
Again, I agree. I’m a Fabian, and part of their remit is to put no fetters on a contributor’s right to express ideas, but sometimes – as in their support of “in the black Labour” – this has led to the enunciation of value-free ideas, or even to ideas such as these, which are essentially those of blaming the victim for having been victimized = classic social Darwinism.
Shame on the Fabians.
As ever, we agree Andrew
In the interests of being fair to the Fabians I think it’s important to point out that “In The Black Labour” was not a Fabian Society publication – it was a Policy Network publication, and it was written by members of the neo-Blairite pressure group Progress. Andy Harrop and Natan Doron from the Fabian Society argue strongly against the neo-Blairite approach in “No Right Turn”, published earlier this year – see http://www.fabians.org.uk/publications/no-right-turn/
Indeed
I have never understood the Labour Party’s constant desire since the nineties to chase people who are very unlikely to vote for them at the expense of those who should be their natural voters. Their behaviour has simply lost people like me and any support they got on the right appears to have been very temporary. If Labour wants to win it should come up with a progressive set of policies and persuade people that it will make life better for them and their families. That after all is the true center ground of politics.
The particular argument here is nonsense for the reasons you outline, but what really gets me is not only is it an argument that Labour should appeal to voters who simply aren’t going to vote for them but also an argument that Labour should attempt to take the debate firmly onto the Tories home turf. When has that ever been a sound political strategy?
A very one sided argument.
Is this really evidence that would stand up to proper analysis?
“The 2012 British Values Survey by Cultural Dynamics shows how visceral views
can be. 42.8 per cent of the population agree to various degrees with statement ‘I
believe that people can be divided into two classes — the weak and the strong. I think
that issues of societal disadvantage are spurious.’
If the survey is accurate then 42.8% of the population are in great need of re-education to “various degrees”.
“And 30 per cent agree to various degrees with the statement ‘I feel that people who meet with misfortune have brought it on themselves. I see no reason why rich people should feel obliged to help poor people.’
Again if the survey is to be believed, then the 30% have been lucky enough to escape misfortune, because I’m sure that had they experienced some, then they would not feel that way!
Did they support the “bankster bailouts”? We all know who were the main beneficiaries. Didn’t these beneficiaries bring this misfortune upon themselves? The answer is a categorical yes, but they still received the bailout, surely the biggest act of socialism or welfare in history. Apparently a flock of black swans descended followed by a legion of lame excuses. The “free market” was no where to be seen and went AWOL.
How many public sector workers are amongst their number? I doubt there are any that have lost their jobs as a result of the economic downturn! Perhaps they brought this misfortune on themselves? The answer is a categorical no. They are victims of actions of a very few, who didn’t worry about “unintended consequences” (a familiar excuse bandied around in order to do nothing. Where were the responsibility seekers?
The victims must of course be exposed to the full rigour of the free market. Perhaps they brought this upon themselves because they are shirkers?
The last part is music to the ears of the 0.1%. Basically, it is a license for their libertarian ways.
One word describes the substance of whole article. Appeasement, perhaps this is better stated as “appeasement, appeasement, appeasement”.
When the neo-liberal agenda was foisted upon us at the end of the 1970s and beginning of the 1980s, there wasn’t any walking on eggshells, tip toeing around the back or kowtowing in order to keep the “justice seekers” on side. I seem to recall that there was a full frontal assault to capture the zeitgeist.
“I have heard those who have had to represent these folk speculate that the problem has been created by the promulgation of just such a narrative as yours: Irregular verb: I am prudent; you are a risk taker; he is scum. In short these people are of the tribe that says that criminality is not a matter of what you do: it is a matter of who you are. Coupled with the big lie that benefit fraud is easy (and perhaps their own much more realistic experience that tax fraud is easy) they think they can get away with not disclosing a bank account or 6. Those are your low hanging fruit and they do get nabbed: they are generally not shamed: they are indignant”
Any chance of re-writing that in english ?
What do you not understand?
I learned early in my career that just because you have a national insurance number doesn’t mean you have residency in the UK. The Government would like you to pay tax, even if you are here illegally. I found this totally bizarre when I was younger, but actually this is a neat example of the fact that tax is not a straight forward issue.
In the same way as MPs expenses, there has been a blind eye turned with tax in some cases, because its better than sorting the problem out. Rich unscrupulous types will live in the UK as long as they can get their overall income down with tax loopholes, so they say. If the day comes when all the loopholes close, goes the myth, they will leave. Better to take some tax than nil.
Now that’s the issue at the heart of tackling tax avoidance and tax evasion across the board. Yes there are some plumbers who take cash payments and don’t record their work, but they are not the real problem. The problem is individual setting up companies to take individual work as corporate not income tax. The problem is mulit-nationals shifting profits and losses to and from low tax countries.
The trouble with this issue is how do you resolve it? The way to resolve MPs expenses was, in truth, to have paid MPs more in the first place. How unpopular. The way to resolve people avoiding tax it to lower taxes. How equally unpopular, especially for large “rich” corporate types like Google, Amazon, etc.
Now I dont know enough about the topic to know whether wealthy individuals and businesses will actually leave the UK if they dont get their way on tax, though they will certainly claim to. Maybe France’s experiment will tell us more. But I do know that its a matter to be handled carefully and to assume that this is just free money out there waiting to be collected if only we crack down on it is only half the story.
These people are hardly paying tax anywhere
Your tax rate argument does not stack unless you’re proposing 0% rate
Bish, you said: “The way to resolve MPs expenses was, in truth, to have paid MPs more in the first place.” How on earth do you make that out? Do you imagine they fiddled their expenses because they were poor? Do you imagine that every other employee in the country who is able to claim expenses is paid a premium in order to ensure they do not fiddle them? Not in my experience. What you actually do is submit receipts for the limited range of legitimate expenses you are able to claim: and you get your books if you fiddle. In many instances there is no question of proportionality: it is an automatic sacking offence if discovered. In some fields a certain amount of leeway is allowed because it is not cost effective to prevent a little shading and the level of micromanagement required to eliminate every small discrepancy is detrimental to the working relationship. But just to illustrate the situation in public service, I was challenged on an addition error in a claim for expenses amounting to just over £150: and the error made a difference of just over £2 in my favour.
I think you should stop taking their pathetic excuses at face value. Honest people do not fiddle because they know it is wrong to do that, and also because the consequences are high and the policing is effective.