Labour » Tax Research UK

Miliband has no choice: he has to fight the Blairites in the interests of the people of this country

Jan 112012

Seamus Milne has argued in the Guardian this morning that:

For the past fortnight the Labour leader has faced a barrage of open or thinly coded attacks from Blairite zombies and former allies alike: from shadow cabinet ministers such as Jim Murphy to the maverick peer Maurice Glasman and a string of MPs, ex-ministers and long-forgotten New Labour advisers.

The common themes were the need to get serious about cuts, the danger of tax-and-spend, and Miliband’s “anti-business rhetoric”: the fixations of New Labour die-hards.

Seamus is right. I don’t want to make this personal, and a such don’t like Milne’s description of those on the right of Labour as zombies, but clear red water had to be drawn on this issue.

The reality is that those leading this attack on Ed Miliband – for that is what it is – are wedded to the neoliberal culture and all that goes with it. Take my former TUC colleague Adam Lent, who is one of those on this right wing of Labour. He said of Ed Miliband’s speech yesterday:

The examples he gave though – reversing the cut in corporation tax and keeping the 50p tax rate – come straight from Labour’s comfort zone. The reality is if Labour is serious about a major shift in spending priorities to promote jobs, growth and inherent fairness in the economy, then the party will almost certainly have to face up to the need to save money in the big spending areas of welfare, health, and pensions.

This is not the talk of a person from the centre left, as Lent and those like him in the Policy Network and Progress (which calls itself ”the New Labour pressure group which aims to promote a radical and progressive politics for the 21st century”, which really says it all) like to brand themselves. This is the talk of the centre right. And this is the talk of this who believe in “fiscal conservatism” (Lent’s own phrase) which otherwise means “severe cuts in welfare, health and pensions”.

Labour cannot and must not be party to such decisions. Most especially they must not be so when the likes of Lent want to use the cuts to fund job creation in the private sector. If he hadn’t noticed it the private sector is enjoying a massively increased share of GDP right now, has near record rates of return and is sitting in a cash mountain it has no idea what to do with – which is why it’s lending it to the government. Maybe he hasn’t read Martin Wolf persistently pointing out all these facts, but facts they are. The private sector needs no cash to generate jobs; it has all the cash it needs and more besides. What it does not have is the will or the demand for what it might make to persuade it to invest. That’s what’s missing and cutting welfare, pensions and healthcare can only make the creation of that demand so much harder given the propensity of those on welfare, pensions and with ill health to consume.

I’d rather hope Lent and his fiends have also read this, in the Guardian this week by nurse Christie Watson. It was aimed at Cameron, but since these New Labourites are well to the right of Cameron it is as relevant for them. She said:

On the few occasions that I’ve worked on a care of the elderly ward I have not had that time [to care for patients]. There was usually a fairly newly qualified staff nurse in charge, and a health care assistant. And 32 beds. It was impossible. We worked a 13-hour day with no time for breaks. Many of the patients were incontinent. People were left in wet or soiled beds while we prioritised patients who had suddenly deteriorated. There was no chance to think about dignity or nutrition – things that nurses value so highly. It was heartbreaking. I felt so sorry for our patients. The standard of care we were able to give was terrible. These elderly patients deserved the very best of nursing, but it was a miracle that they were simply alive at the end of the shift.

We were forced to make some terrible choices, and to have to make such decisions on a day-to-day basis is beyond my capabilities. I’ve experienced how awful it feels to see a loved one suffer due to poor nursing care. The nurses I worked with wanted to care – there were simply not enough of them to be able to do the job properly. I have so much admiration for the nurses who work in those areas and manage to give good – even adequate care – with such inadequate levels of staffing.

This, I know, is happening. This is why doctors are now prescribing water for their patients. And this is not just happening in hospitals. It is happening in care homes where the amount being paid by local authorities is not now enough to ensure people are looked after with even a because respect for their dignity, needs or right to be treated as a person. As one doctor put it to me recently, they’re now increasingly sure that people are now dying in the UK of thirst simply because no one has time to check they have had a drink.

This is the Tory and New Labour precxription for the elderly of the UK.

Read the Guardian today on welfare reform and you’ll realise that the prescription of New Labour and the Tories is to cast millions of the least able to protect themselves and their children adrift and into deep poverty.

Read Richard Horton of the Lancet today and you’ll see why there is no private sector alternative that can work on these issues: it could only make things much, much worse.

Miliband, if he is to match the mood of the country, has to say no to these cuts. He has to do so for all who are Labour. He has to do more than that. He has to say no for everyone, even if they are misguided enough to believe in these cuts now.

And he has to say no becasue we can afford to look after our elderly.

We can pay benefits. We do not need to leave people starving, homeless, in despair, sick and disabled and without protection.

We’re a society that can afford to emply some of the 2.5 million without work in caring.

And we can redistribute to meet need.

But we have New Labour saying we can’t do that. We have them saying such redistribution to relieve need and poverty would be wrong and that we should support the private sector that already has all the resources it needs to create jobs that will enrich the 1% more than anyone who gets a job.

That’s not social democracy. that’s market orthodoxy. And Labour should be nowhere near it. And it needs to say so. Now. And it needs to say to those who do not agree that Labour’s not on their wavelength. Now.

PS I’ll explain the economics of why I’m right in the next day or so – I’m working on it.

Labour has got places to turn to for the ideas it needs. It has only to go looking.

Labour 13 Responses »

Jan 092012

Jackie Ashley has written this morning on the high pay issue, and has noted that the moment Ed Miliband created a good idea the Tories tried to steal it. As she also noted, this has, however, also happened around Labour:

The centre-left thinktank Compass was agitating about excessive executive pay in the New Labour years but failed to persuade the Brown government to fund a proper investigation. The excellent Rowntree Trust, which has done so much to promote fairness, stepped in, resulting in the independent High Pay Commission. And it is really that agenda that has seized the mood and moment at Westminster.

I should mention I too am funded in largest part by the Joseph Rowntree Charitable Trust. But as Jackie Ashley notes

There is another lesson that may be even more important: to embrace the value of “outrider” thinktanks and independent thinking. Miliband has had a lot of stick for having too few policies. At this stage of the cycle, that’s unfair. What’s been lacking, however, is the bubbling creativity of centre-left thinking more generally. You might have expected more ideas about the future of manufacturing, education, the City and public services being proposed from non-official groups and thinkers, pushing Miliband and his colleagues. There are honourable exceptions, but this is hardly a time of intellectual ferment on the left.

That is odd because, as I argued last week, we are moving into a more defined left-right period as the years of austerity bite. People are remarkably ready to make sacrifices and rethink their expectations if they feel society is basically fair and the pain is being shared. The “New Labour” strategy of using the proceeds of boom to pay for better public services, while winking at the excesses the boom produced, now belongs to a lost age.

She’s right. Look at many so called left of centre think tanks – many of which in my youth would have been considered centre-Tory – and all they put out is tales of ‘fiscal conservatism’ and the need for cuts above all else. That’s not even thinking: that’s acceptance of defeat, the power of the City and subscription to the bankrupt economics of neoliberalism.

But there are honourable exceptions. Of course Compass is one. So is the Tax Justice Network. So is the Green New Deal. Another is Labour Left. And yes, I lob in my penn’orth too.

And it’s here – not in the bastions of now discredited New Labour thinking that Labour will find the ideas it needs. It could even start with the last 75 pages of The Courageous State.

The Labour narrative – a work in progress

Economics, Labour 7 Responses »

Dec 312011

Howard Reed is an economist who I respect a lot so when he writes a lengthy comment in this blog I think it worth giving I publicity. He wrote today of the Policy Network report on Labour’s election strategy published on Thursday:

I’ve just read the McClymont/Jackson Policy Network report and to be fair to them, I think it’s been reported very misleadingly in the Guardian (as happens so often nowadays, sadly!)

While it is true that the report does say that Labour can’t win the next election solely by relying on support from public sector workers (and I’d agree with that, given that only a minority of people work in the public sector, and even less after the ConDem cuts) the main focus of the report’s conclusions is that Labour needs to deliver a positive message about economic renewal and growth to win in 2015 – with well-worked out positives which present a clear alternative to the ConDems (e.g. more activist industrial policy). I think this is right – the ConDem appeal to voters is based on negativity and fear and Labour has won most convincingly in the past with a positive message of economic renewal (1945, 1966, 1997).

It seems to me, given the thrust of the report, that McClymont and Jackson would be highly sympathetic to many of the policy ideas for economic renewal presented in The Courageous State and also Compass’s Plan B, for example. So for me, the report isn’t that bad – certainly a lot better than the last Policy Network publication, In the Black Labour, which basically said Labour should abandon the economic argument to the Tory Party. However, it’s not a perfect report by any means. The main weaknesses in the McClymont/Jackson report, as far as I can see, are:

1) there is no way, realistically, to deliver social democratic outcomes without spending more than the Tories (or the ConDems, if they choose some kind of electoral pact) are going to want to do in 2015-20. Thus there isn’t much alternative to Labour being defined as a party that wants to “tax and spend”, at least to a higher degree than the Tories. But given the immense macro and microeconomic damage being caused to the UK by the cuts, I don’t see this as a problem in itself. Rather, as Richard says, “the only way to stimulate the private sector right now is for govt to spend”. That needs to be the key message on the economy – along with explanation of what the money will be spent on and how it will benefit ordinary people.

2) There is no mention of the environment in the report at all and I think this is a very serious omission. “Growth” will only be possible insofar as it respects environmental constraints and in particular, limits to natural resources and limits to carbon emissions. Without that, our economic model is entirely sunk.

Just my €0.02 on this anyhow!

I agree with Howard that the Guardian’s reporting of this report was not flattering and that it did contain more worthwhile elements than the Guardian suggested, but the most cursory glance at today’s letters page in the Guardian makes clear just how far adrift very many people think Labour is, including I suspect many who simply will not vote at the next general election as a positive way of suggesting no choice offered to them is a credible or acceptable. In particular I think it worth drawing attention to the letter from Chris Guiton, who has clearly read the pamphlet and says:

While McClymont and Jackson’s emphasis on an activist industrial strategy is to be commended, it’s interesting what’s not mentioned in their pamphlet. Where’s the discussion, for example, about genuine steps to curb the power of the City; the development of a fairer, more progressive tax system, tackling inequalities of wealth as well as income; or action to return the utilities to public control. The continued focus on the squeezed middle, and rejection of increased public spending, suggests a political perspective wedded firmly to New Labour managerialism and an austerity-lite economic policy. Labour’s problem is a failure to articulate an electoral argument to benefit the majority, low-income as well as middle-income.

I think that when this pamphlet is read in association with the previous Policy Network publication on ‘fiscal conservatism’ and also in the light of Ed Balls’ too enthusiastic recent defence of the City just how easy it is to misread Labour economic policy documents even when, as Howard notes, there are merits to some of the arguments in this document.

That leads to the inevitable conclusion that the problem is that Labour has still not developed a coherent short narrative of what it dan really deliver for the people of this country, starting with a commitment to create jobs. And let’s also be honest; so far have none of us critics done that convincingly enough, as yet, either.

The Policy Network looks set on ending the Union and putting Labour out of office forever

Labour 30 Responses »

Dec 302011

I’m aware I’m a day late on this one, but so what? The issue is important and won’t go away.

The Guardian reported yesterday that:

Ed Miliband will lose the next election if Labour falls into a trap set by theConservatives and allows itself to be defined solely as the defender of public spending, one of the party’s leading frontbench intellectuals has warned.

Gregg McClymont, the shadow pensions minister who is a former Oxford history don, writes in a new pamphlet that Labour will avoid the Tory trap only if it resists the temptation to appeal to its core supporters in the public services.

I confess I’d never heard of Gregg McClymont, and it’s not a name to forget. And I have to say I doubt his intellect.

Of course Labour can forget its core vote and concentrate solely on playing Westminster neoliberal games for the benefit of the home counties elite as the Policy Network are suggesting. And it will lose Scotland for good if it does. And with the SNP so dominant north of the border that will mean the end of the Union – and with it any prospect of Labour victory ever again.

If that’s what Mandelson and his friends want, so be it. But let’s be unambiguous about the fact that they’re demanding the end of the United Kingdom and the end of the Labour Party as an effective political force. That, of course, may be their agenda. But if it is at least they should either admit it or they should start applying their intellects. Because right now they’re not doing at least one of those things, and maybe both.

Supply side reforms just don’t work when it comes to creating jobs

Economics, Labour 1 Response »

Dec 212011

As my TUC colleague Nicola Smith has noted on the Touchstone blog:

New data on the operation of the Government’s National Insurance Holiday Scheme has now been laid in the House of Commons library. When this scheme was announced, it was estimated that over three years 400,000 new businesses would benefit by having a lower tax bill from employing new staff and that 800,000 new jobs would be created.

Today’s data reveals that over the first year of its operation 3,345 employers have taken advantage of the scheme (1% of the total anticipated number) and that the NICS holiday has been claimed for 12,411 employees (2% of the anticipated number of jobs).

What’s more in the region that currently has the highest unemployment rate (the North East where unemployment is 11.7%) only 587 employers have used the scheme, supporting 571 jobs. To put this in some context over the same period of time the unemployment level in the NE has risen by 24,000 and the employment level has fallen by 23,000.

Far from “ensuring all parts of our country contribute to a more balanced and sustainable economic future” this scheme has created barely no jobs – as we predicted at the time. But with unemployment now at 2.63 million there is no pleasure in saying we told you so.

Supply side reforms like this – where the rules are changed to supposedly encourage work – simply don’t work.

There is only one agency that can create the jobs this country needs now – and that is the government. I know there are those in Labour who oppose such moves – calling for fiscal conservatism and so the inevitable ascendancy of the 1% – but they have to be ignored.

On messaging no is the time for Labour to talk of the Tax Gap.

And on policy now is the time for Labour to prepare for the spending needed to deliver a Green New Deal. Nothing else will do. What is more, nothing else but job creation will reduce the deficit.

What baffles me is why it is so hard to message that point.

LINO – Labour In Name Only

Economics, Labour 17 Responses »

Dec 162011

I find the likes of Martin Kettle extremely annoying. Displaying extraordinary small mindedness, and a willingness to kow-tow to bankers and economists of the sort Simon Jenkins rightly condemns in the Guardian today Kettle argues on another page of the Guardian today that:

So much now depends on Ed Miliband. Only he can tell the Labour party, in the absence of an international boost of demand which shows absolutely no sign of coming, that a Labour Britain would have to cut its coat according to its cloth. Only he has the authority to tell his party that Labour’s general election offer to the voters will involve no net extra current expenditure, and maybe even less. Only he can tell his shadow ministers to focus on radical manifesto ideas that involve no more money. It’s an incredibly tough call for any Labour leader. Nevertheless, these are incredibly tough times. Whether Miliband is up to it is unclear. But the task is urgent and unavoidable and it will define him one way or the other.

This is simply not true. I will give my almost obligatory reference to The Courageous State for those wanting a fuller explanation, let’s deal with the core of this now.

First, there is a £95 billion tax gap to be tackled. How dare he say there’s no money? Of course there’s money. What Kettle’s saying is that he would rather that money be left with the crooks, the cheats and the straightforwardly criminal than be collected top pay for the services we need. That’s a choice by him: a choice to support criminality over public services and a choice that those who are criminal should be rewarded. It’s not just lazy to ignore this. it’s candidl;y and quite literally criminal to do so.

Second, Kettle reveals a remarkably small mind. Money can be printed. We can print as much of it as we need. We let banks do so to fuel a consumer boom. We can do so to meet social need. There is no risk whatsoever of internally generated inflation of we were to do so: you don’t have internally generated inflation when there are falling net wages and 2.64 million unemployed. So he is negligently ignoring a reality here. He is choosing to make people unemployed to avoid a fiction: the risk of inflation. That makes him a friend of the 1%.

Third, Kettle shows he has not the faintest idea about the real economy. People generate wealth, not money. It is labour – the process of people working to exchange with each other, which is the foundation of an economy. It is the job of economics and politics to liberate them to do so. But he’d rather they were forced into unemployment, and demands a Labour government that would do just that, to make sure that the failed edicts of neoliberal economics are supported (edicts that Jenkins has seen right through, to his credit). How dare he suggest that Labour should sacrifice the people of this country to such a failure?

Kettle is the sort of person Labour needs to be rid of. They’re LINO – Labour In Name Only.

What we need is a Labour Party that stands up for people. That says it will collect tax owing. That says it believes it is its job to get people back to work – and as people like Krugman, Stiglitz, Wolf and Sam Brittan argue, should borrow to do just that. And it’s a party that says the bankers and their friends have got it very, very wrong, as the people of this country instinctively know.

Labour won a by-election yesterday. That’s good news, and the swing to them was welcome. But not being the Tories is not enough. Labour has to offer a radical economic agenda to win through for this country. If not we faced decades of despair.

And to start it should be telling people in its ranks like Kettle to go forth and join the Coalition, which is where they belong because candidly the last thing we need is another New Labour regeneration - ever.

The Red Book

Labour, Tax justice 2 Responses »

Nov 242011

Might I recommend The Red Book?

It’s published by Labour Left and is a free download, here.

And yes, I disclose an interest. I wrote the chapter on tax.

Good business – what it really means

Country-by-country, Economics, Ethics, Labour, Uncategorized 38 Responses »

Sep 282011

Ed Miliband has announced himself in favour of good business. I am delighted he has. So am I. It’s astonishing that some are saying that by declaring himself against spivs, chancers, asset strippers, speculators and tax avoiders he is somehow anti-business. Far from it: he’s declared himself very pro-business precisely because it is these people who are any-business.

But being anti-something is not good enough. Being pro-good business is what is required and that requires a clear understanding of just what a good business might be. I’m not seeking to offer a definitive guide here, but take these as examples. A good business:

1) Makes clear who it is so people know who they are dealing with

2) Makes clear who runs it

3) Makes clear who owns it

4) Makes clear the rules by which it is managed

5) Puts its accounts on public record if it enjoys limited liability, and does so wherever it is incorporated whether required to by law or not

6) Seeks to comply with all regulation that applies to it

7) Seeks to pay the right amount of tax due on the profits it makes in the place where they are really earned and at the time they really arise

8 ) Seeks to pay a living wage or more to all who work for it

9) Recognises trade union rights

10) Operates a fair pay policy so that the pay differential between highest and lowest paid in the company cannot exceed an agreed ratio that should never exceed twenty

11) Makes fair pension provision for all employees

12) Does not discriminate between employees on the basis of race, nationality, national origin, gender, sexual orientation, age, disability and similar such issues

13) Does not abuse the environment

14) Has a clear code of ethics that it publishes and is seen to uphold

15) Is transparent in its dealings with customers

16) Seeks at all times to minimise risk to those it deals with and takes all steps to ensure they know what those risks are

17) Accepts responsibility for its failings and remedies them

18) Works in partnership with its suppliers and does not abuse them

19) Advertises responsibly

20) Creates and supplies products meeting real human need

I could readily add to that list, which I do not think I have tried to prepare before. But the gist is obvious.

So what would this look like in practice, meaning how could this status be assessed? This was a question I was asked by a councillor last night who wanted to put good ethics into practice in his council’s procurement policies.

I hope that the assessment criteria for the above should be clear in most cases with the exception perhaps if the fact that this list clearly implies the need for country by country reporting to explain:

- What it is called where it operates meaning it must name each subsidiary and specify where it operates

- Its profit and loss in each country and jurisdiction in which it operates

- How much tax is pays on the profits it earns in each jurisdiction

- What its internal trading is so that its transactions within its internal supply chains can be identified

- How many people it employs in each jurisdiction that operates in and how much it pays them in aggregate plus their pension cost

- How much it has invested in tangible assets and working capital in each jurisdiction on which it works.

Only then is the data to assess whether it is a good corporate citizen available for assessment.

The final part in this equation is suggesting an assessment criteria for what is a good company. In some cases this will, again, be obvious from the suggestions made. For example, it might be expected that a company either recognises a union or it does not. However things are rarely that simple. Different subsidiaries in different countries may or may not recognise unions so composite scores are possible.

Other indicators can be prepared using this data. For example explainable and unexplainable presence in tax havens becomes an issue when the number of subsidiaries in such places are known. The proportion of trade through or assets in such places also becomes significant assessment criteria if country by country accounting data is available. The likelihood of tax compliance can also be assessed properly when country by country reporting data is available.

‘So what?’ might then be the question. What would be the point of all this? Well when things are measured behaviour changes, we know that. But more significantly the government is a major purchaser from many companies. If its procurement policy was based on the requirement that a company meet a minimum standard or no contract could be issued then this becomes a very powerful tool indeed, and those criteria need not be consistent. So, for example, in the case of PFI offshore might simply be a non-starter.

The point though is this: we can identify good companies and the introduction of country by country reporting would make the whole task a lot easier.

What this means is simply this: reform to our currently unacceptable corporate culture is possible. All it takes is political will and we can do it.

Is that will available? That’s the question.

Good business – reflections on Ed Miliband’s speech

Economics, Labour, Uncategorized 6 Responses »

Sep 282011

Before leaving Liverpool there’s time for some thoughts on what Ed Miliband said yesterday.

Like many I thought Ed Miliband proved he’s not a man for the big set speech yesterday. His team are going to have to work on that and find settings in which he can communicate better – and give him the training he needs. So Let’s be clear now, because this was the case I’m expecting now big ‘wow’ factor to come from Labour’s conference. It won’t, and I got the sense here that a lot share that view.

Second, as I’ve said on Twitter there were some disappointments: I did not think the comments on housing were right. I’m sorry he mentioned benefit fraud and not tax fraud; I’m not sure he needed to say that not all Tory cuts will be reversed because it’s simply too early to say that – the state of the economy in time to come may change with the right policies in place.

But those are all the down sides. What was good? There was a lot of that. Fundamentally he’s said he won;t accept things the way they have been – including the way Labour has been. It’s very clear he will have upset the Labour right – and most of the Tory press by criticising many large businesses and their lack of ethics. But keep pushing this line and this resonates with ordinary people. Everywhere I go this belief that business is out of control – and the banks especially – is commonplace. Rightly commonplace too: it’s a fact. He named examples – Murdoch and Southern Cross – but he could have named many more too, starting with Barclays and moving across much of the FTSE.

I note Digby Jones, the former CBI director general and a trade minister under Gordon Brown (but never a member of the Labour party) has described the speech as “divisive and a kick in the teeth” for business. Well I have news for him. He’s wrong. I’ll reflect separately on what good business is, but what we can be sure of is that Digby Jones is the personification of all that is wrong with it: cronyism, self interest, monopoly abuse, employee abuse, environmental abuse, secretive, indifferent to community, indifferent even to shareholders and those like pensioners who depend on business profits for their future well being.

So what did the speech do? It did, when all is said and done mark a break from the past. I do think on reflection it was bold – and as I said when it ended, it is a shift to the left in the sense that Labour’s policy towards business under Blair and Mandelson was utter unquestioning faith in what they saw as the virtue of profit at any cost to society. But that shift will be viewed by many – outside the CBI – as profoundly welcome.

This was a firm statement of belief in the mixed economy, where government makes the rules, where business works within it.

Of course I don’t agree with all of it, and I want more. But in many ways Ed Miliband was arguing for the type of economy I am calling for in my forthcoming book. It’s hard for me to disagree with the direction of travel in that case: indeed, I warmly welcome it.

More than that, whilst Ed Balls’ five point plan on Monday was again not as bold as wished but showed all the right sentiments then maybe this speech does just the same thing. Maybe this is the start of a well crafted shift Labour wants to deliver and it lays the foundation for the real re-establishment of social democracy right outside the neoliberal fold.

I hope so.

But Ed Miliband’s also got to get the presentation right.