I have just been invited to do an interview with Katie Hopkins on benefit fraud at lunchtime on BBC Radio Devon. She comes from Devon.
I refused. I will not share a platform with a person so bigoted.
I have agreed to go on after Katie Hopkins. These are the latest facts on benefit fraud from the DWP:
The tax gap may be £95 billion.
It's running at way above 10%.
Now which do you think more serious?
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“The tax gap may be £95 billion.”
As promulgated by you, not by HMRC or any other organisation.
No other organisation?
Have you noted how widely I am quoted?
Please excuse my ignorance. I am entirely in agreement with you but do not understand what you mean by a tax gap, may be 95 million.II also do not know what is meant by the question ” Which is more serious?” Is it that a huge amount of tax is unpaid and that this is clearly much worse than the small change of benefit fraud? I understand that there are some £35 million in taxes uncollected from the rich in addition to the money kept through various tax dodges.
The figure is £95 billion.
The tax gap is explained here http://www.taxresearch.org.uk/Documents/TheTaxGap.pdf
Estimates are linked here http://www.taxresearch.org.uk/Documents/FAQ1TaxGap.pdf
All will be updated this year
And HMRC’s strong rebuttal to The TJN’s numbers are available here:
http://www.publications.parliament.uk/pa/cm201213/cmselect/cmtreasy/124/12405.htm
And mine here
http://www.taxresearch.org.uk/Documents/TaxGapResponse.pdf
Odd how some only believe HMRC on this issue I always think
I looked at this piece and you don’t actually answer HMRC’s points – you jsut restate your original argument.
I’ll take a few salient ponits from the piece:
You take all “unpaid” tax as part of the tax gap – HMRC states that most of this (90%) eventually gets paid. Therefore it simply cannot be part of the tax gap.
You define the “avoidance” part of tax as the headline rate and the effective rate companies and individuals pay. This makes absolutely no effort to take into acocunt specific exemptions – of which there are many. Essentially, you are defining the tax gap as the difference between the law as it is, decided by parliament, and the law as you think it should be.
For tax evasion, giving you your massive 70bn number, you use a wolrd bank model to determine the size of the hidden economy as a % of GDP. Then you simply multiply by nominal GDP and an effective tax rate to give your 70bn number for evasion. Unfortunately, that model has been widely discredited, and they, along with other well respected global bodies issued this statement:
“As a result of the general concern about the use such models a body consisting of a number of international organisations including OECD, IMF, the World Bank, UN and the European Commission have issued a strongly worded statement advising against use. Part of their statement says:
Unofficial estimates are often based on macroeconomic models. For instance, they may assume a fixed relation between the size of the economy and money in circulation. Such methods may yield grossly exaggerated results, attracting the attention of politicians and newspapers and thereby gaining wide publicity.”
Which lets face it, exactly what you’ve done.
You also try to argue that Tax Research UK is not the same as the Tax Justice Network. Technically you are correct, but given you authored the papers for Tax Research, the TJN as well as the TUC and PCS, when you refer to one of your other papers, it hardly counts as “peer reviewed”.
Your numbers have been looked over by HMRC themselves, and a parliamentary committee. Both found that your numbers are a massive exxaggeration of the problem, and both found significant errors in your method. Despite these obvious and significant errors, you still push this massive number around and treat it as wholly correct – even on the low side.
This is too tedious to respond to again
The EU actually now uses my estimate
And the PAC laughed at HMRC’s claim they were right – when they ignore obvious evidence of avoidance that is the basis for international concern, for example
But if you wish to consider me wrong, that is your right
http://www.hmrc.gov.uk/statistics/tax-gaps/mtg-2013.pdf
here is an HMRC explanation of the tax gap. As you’ll notice, tax avoidance is a small part of the number.
Richard Murphy never really gives details of how he adequately calculates his tax gap – though he does say he uses 38% as an overall tax rate, which is ludicrously high (it’s around 29%) which immediately inflates his estimate.
He also relies a lot on arguments surrounding companies like Amazon and Google etc. The problem with those arguments is that he is basically arguing what the law should be, rather than what it is.
If nothing else, it is easy to sanity check his work.
http://www.taxresearch.org.uk/Blog/2013/10/11/hmrcs-new-tax-gap-report-a-work-of-fiction-and-guess-work/
The “black” or “hidden” economy in the UK is estimated to be around 12.5% of GDP. To get his 95bn number, Murpy simply multiplies GDP but 12.2%, then by his 38% tax rate, then adds back his 25bn avoidance number.
As we know, from HMRC, avoidance *isn’t* costing anywhere near 25bn, and the black economy would be taxed at the average 29%, not at 38%. As such, his numbers are 40bn over already, before even taking into account the real taxable portion of that hidden economy, and the actual cost of collecting that tax directly, and as a drop in GDP.
Ultimantely, Richard Murphy’s work tends to revolve around simplistically multiplying a few numbers together to giv a suitably outrageous number, then passing that off as research. Then ignoring or shouting down any arguments as to why his work is wrong. You’ll notice that none of his work is properly peer reviewed.
Is that why the EU accept my work?
Tyler, suppose we take the view that the HMRC figure for tax evasion is correct, and RM’s is way too high. That would mean that tax evasion,i.e fraud, was still (26/1.2 =) 21.67 times higher than benefit fraud in 2009/10. In fact, as the DWP’s own figures prove, more was lost through claimant error (1.6bn) than fraud!
Suppose we take a figure for tax evasion halfway between RM’s and HMRC’s figures, so we get a figure of = £48bn. In that case, the discrepancy between tax fraud and benefit fraud becomes even higher, with £40 lost to the Exchequer due to tax fraud for every one pound lost due to benefit fraud.
In fact, as other contributors to this blog have pointed out, the amount of unclimed benefits in 2009/10 is much greater than the loss due to fraud, being from £6.9 – £12bn. So why on earth is there so much fuss about benefit cheats from the likes of Katie Hopkins?
I can’t find any reference to the EU accepting your work. I can find work you did for the Progressive Alliance of Socialists and Democrats, where you again self-reference your own previous work, and once again use the hopelessly simplistic calculation of yours for the tax gap (nominal GDP x size of shadow econmy x nominal tax rate).
What is very clear though, from your own work, is that the EU work doesn’t agree with your own – not least because they have released their own report on the VAT gap, which you reference in the aforementioned work.
Unsurprisingly, your numbers are roughly 9 times larger than theirs.
To say the EU accept your work is simply not true.
@ sickoftaxdogers
I wasn’t commenting onthe scale benefits fraud, or unclaimed benefits at all. It stands to reason though, that there is clearly fraud in the benefits system, regadless of scale. Surely if you are angry about tax fraud then you should be equally angry about benefits fraud, as it is still money lost to the taxpayer?
I would also point out that HMRC’s 35bn tax gap is not solely fraud. Remember tax avoidance is legal, evasion is fraud. Of that 35bn HMRC estimate about 12% is direct tax evasion, and another 12% lost through the shadow or hidden economy. 16% is lost through criminal activity. The rest (60%) is through non-fraudulent losses.
What is interesting to note is that Richard Murphy consistently argues that one of the main ways to reduce the tax gap would be to hire more people at HMRC. I suppose this isn’t a surprise, given he does paid work for the PCS Union, who are the main union within HMRC, but HMRCs data doesn’t suport his assertion that reducing headcount has increased the tax gap – their data shows it has slowly decreased over the last 10 years.
It has been referred to by the EU President as the best estimate http://ec.europa.eu/commission_2010-2014/president/news/archives/2013/05/20130521_1_en.htm
And by the parliament http://www.europarl.europa.eu/news/en/news-room/content/20130521IPR08701/html/MEPs-call-for-EU-wide-action-to-collect-tax-lost-to-fraud-and-evasion
No endorsement at all then
And you can’t read:
“The report estimates that the total VAT Gap for the 26 EU countries amounted to approximately Euro
193 billion in 2011”
Since when was 193 x 9 = 1 trillion?
It is very important that the difference between what we spend on welfare and what we lose from tax abuse is transmitted loud and clear at every opportunity!
I’m surprised about Hopkins being involved, though. Is she really regarded as a serious social commentator on such matters? I thought reality TV (which I confess I don’t watch so I might be wrong) was more her area of expertise?
Agreed
All she had to offer this morning in terms of facts was ‘I have long held these views’ and she’d sen someone with Kelloggs Rice Krispies on Benefit Street
Otherwise she was a fact free zone
But high on prejudice
From Owen Jones’ Facebook status:
Right, they’ve booted Kelvin Mackenzie off the show, promised to keep me away from Katie Hopkins, and put good voices like Jack Monroe and Sue Marsh on, so I’ll (cautiously) take part in Channel 5’s benefits programme tonight at 9. Let’s hope it’s an opportunity to challenge the lies rather than a massive circus…
“Let’s hope it’s an opportunity to challenge the lies rather than a massive circus… “
I’ve decided to give it a miss! A shouty circus for bigots to air their smug prejudices against people on benefits is EXACTLY what it sounds like!
I have followed Benefits Street on C4 was bad enough, a programme deliberately made to portray benefit claimants in the worst possible light with a few positive things thrown in in order to show their so-called “objectivity”.
I am keeping well away from this pantomime!
Here’s Owen’s take on it. http://www.independent.co.uk/voices/comment/owen-jones-on-the-big-benefits-row-the-hopkinsisation-of-political-discourse-9106227.html
Trouble is that people are,atrociously misinformed and their own personal beliefs/prejudices that equates not thinking people should receive benefits/allowances into fraud.The cost of combatting the actual low level of fraud out ways,any savings and of course the cost of many people not receiving what they are entitled to ,due to fear or pride leads to more cost later on;sadly people die of cold,hunger through want of such entitlements.It is an awkward dilemma as to how to combat the utterations designed to selfpublicise and based on well worn lies,tropes,distortions and prejudice with no bases in fact as no debate can be had,which is a shame because there is a Right wing argument to be made which,I believe can be skewered easily,not least because benefits/allowances,are cost saving given the alternative particular those related to disability/illness and caring responsibilities,as Carers UK research shows,seeing such things,as cost saving investment,which in reality they are,is the way forward.Regards.
You might want to ask why the definition of what’s counted as a ‘benefit’ is so narrow. Why aren’t the sums given to landowners listed as benefits, together with the billions handed over to corporate interests? Why are the one called benefits and referred to as welfare and handouts while others are dignified by being called grants and subsidies and so don’t ever enter the benefits debate?
Indeed Bill-I think the term for this is now ‘reverse socialism.’
The Labour party ‘should’ be having a field day with all of this but gave up the ghost years ago.
I think 12.7 billion is the figure often used to represent UNCLAIMED benefits -why is this not paraded rather the myths about fraud -we know why:
1.There needs to be a scapegoat when fascism is on the rise.
2. The anger of the populace facing huge housing costs (created by big finance’s bubble) needs to be channeled away from the real cause.
3. people doing 40 hours a week (and above) and getting nowhere need to feel there is someone they can spit on as they are told they are ‘doing the right thing’ by a scurrilous Government.
Richard – it might have been better to have done the interview and wiped the floor with this ‘bogot’ by destroying her foul presuppositions.
Could you please explain what you mean by getting nowhere??
Gerry -having your life turned into a treadmill by having to pay so much of your earnings on housing due to successive banking system created bubbles.
Working huge hours to have your wealth syphoned away by the mortgage scam system.
having less and less money to spend in the real economy because of debt/rent/ mortgage which means money going to those that produce nothing and manipulate the costs.
“I refused. I will not share a platform with a person so bigoted.”
Well so much for defending democracy!…….You keep stating that is what narrowing the tax gap is all about, shame about freedom of speech but that has never really been a strong point of the Courageous State has it!
So now you extend editorial freedom to not only your own website but other media uses as well. What happened to confronting power and standing up for what you believe in?
I took part
I would not debate with her
She was given an interview
So was I
That way OI got facts across
Fine……….but in the future if anybody ever refuses to debate with you on any matter then you lose the right to complain or attack them about it!
If it is OK for you to refuse a debate with someone because you don’t like them then in return it is also fine for others to do the same!
No calling out Osborne for not debating with you etc!
I did debate
We both knew what was happening
I am owed £5 from my friend the big business man. However I have £3 in my pocket. Now I shop for the Telegraph at my local Tesco. I hand over £2 and get change from the price of £1.40 therefore change of 60p. I am not sure when I am going to get my dividend or (tax payment) from the big business man. However I know I have in my pocket £1.60. If through fraud or mugged by someone, I have lost £1.60. Its all very well saying that I am due the £5 from big business man. However I am now broke as I have no money.
All fraud is fraud. Both to tax evasion as well as benefits fraud needs to be investigated and dealt with. Both deserve to go to Prison.
Are there financial estimates on benefits not claimed, where due?
And a wise choice not to be tarnished by a professional bigot. Do not share a platform you have earned!
“Are there financial estimates on benefits not claimed, where due?”
Unclaimed benefits work out at £18 billion a year on average.
No doubt you have also seen this:
http://www.theguardian.com/society/2014/jan/18/benefits-claimants-shortchanged-5bn-housing?CMP=twt_fd
Best wishes
I suspect that understates it
More info on unclaimed benefits.
I accept the estimated figure of £1.2bn for fraudulent claims but can we really have any idea just what the real figure is, by virtue of the fact that we only total up ‘known’ fraudulent claims, those undiscovered are not part of that figure.
We know the total population of claims
we are mot measuring shadows here
http://www.pcs.org.uk/en/campaigns/campaign-resources/there-is-an-alternative-the-case-against-cuts-in-public-spending.cfm
Sadly -no party (except greens)are putting this message across. The labour party lives in fear of a bigoted vox populi, The LIb Dems have surrendered their radical tradition and the Greens just don’t have the resources and hence exposure.
One Party State is the result.
We will never know the financial estimates on benefits not claimed are because no one tells people when they don’t claim benefits. How would we find this information out.
However if the evidence of tax evasion is real, possibly because the company reports state so. Then there is evidence to get people or companies into court.
No, both measure shadows
And there are good ways to do so
Hmm I am not fit for work, due to having significant health problems.
I am in pain nearly every day. I get tired if I do anything for more than 30 minutes.I cant walk to the local shops, because I get chest pains. I have problems eating because I get sick. SOme days the food is fine, the same food a few days later I am sick when eating. I am in pain when I lie down, at least once a week I am sick when I go to bed.
I rely on family to get meals, and I eat with them. If I was alone I wouldn’t eat.
I haven’t claimed any benefits. My Doctor knows I m unwell and I am having treatment. No one has asked me if I am okay.
how is the shadow world picking me up?
You could claim I suspect
Why not?
What is the problem?
Its not worth the bother.
I have seen how they have treated my brother in law. Whilst the PIP were good to him and be very helpful. The council wont rehouse him in a house better equipped for a person in a real chair. They asked the council for financial help as they live in a house which is too big for them, however has council installed disabled bathroom. The council turned them down.
There are more needy people in the UK who need help. I have a warm house and food, just paid for by family. That’s all I need, that’s all that is important.
gerry – get the help YOU need! The M.P’s claim every bent farthing they can and the banks enjoy bailouts and big corporations evade tax whilst putting their money into hedge funds instead of the real economy -what’s wrong with you getting help?
Bill’s point about welfare to corps and fincos is well made. If not welfare, what is it called? And what is its estimated value in £bn for comparison?
If not “welfare”, what is it called? What it was originally meant to be and what it was known as until this wonderful government came into power; social security.
I had of course no idea who this KH is. I do not read the Sun, the Daily Mail or even the Guardian for that matter (with the exception of Ben Goldacre).
The problem here is that KH represents or is going to be followed by a huge amount of people, all deeming themselves to be “middle England”. Daily Mail and Sun readers do not make 80k a year!
They will speak against benefit cheats as well as against tax dodgers, whilst not knowing the difference between tax avoidance and tax fraud. So don’t talk to them about country by country accounting!
Not debating with them, is according to me not right, unless she may be so overbearing that you think you can’t place one in the discussion. Again, I do not know her, but I can imagine her tone and me, as an analytical and slow person would indeed never try to argue in public with a steamroller!
As for the numbers above, I would argue that I struggle to agree with Richard. I have no idea whether his 95b is right or wrong. But you can’t take HMRC numbers when they suit you and disregard them when they don’t… Maybe that lacks a little balance. Is the benefit fraud 1.2b? Possible…. Again, I do not know.
I would argue that the discussion should be broadened on all sides. Both on the 150 plussers and the benefit side of the scale.
For example, I am not making as money anymore as I used to and to an extend, I may even end up in the very lowest tranches of income. I have lost my job in London a few years ago and then helped some French socialist pig to set up his business and got stuffed by a bad taxidermist. Not a penny. I could possibly have pretended to unemployment benefits. I did not. Now, living in London, I have to face the facts that it makes no sense for me to live in the most expensive city in Europe. A sensible thing would be for me to move out instead of trying to find benefits in London.
London needs police, nurses and teachers. I am none of these things and hence do not deserve any support to stay here, even if I could get it. Is housing too expensive in London? Yes. Is the fault exclusively in the hands of the Chinese buying the new flats on the river? No. Tough, but I cannot understand that scarce resources are given to people who do not need to be in London, whilst the last policeman I had to deal with needs to spend 90 minutes on his motor bike to come to work in the morning. It will be very hard, but I accept that side of the argument just as much as the hunting of the offshore accounts of some wealthy non-dom who does not pay his 50k residency fee…
Balanced arguments will bring any discussion much further than being one-sided.
OK, I am now going to look for a place in Devon… (no joking, I may do it)
The benefit fraud is likely to be right: that estimate is on a known population on which an error rate can be calculated
What is not known with benefits is how many are not claimed: figures HMRC et al are much more reluctant to publish as a result
The reverse is true with tax fraud. HMRC calculate this on the basis of a tiny sample of the returns they get. But tax fraud frequently involves no declaration at all. HMRC assume this costs just £2 billion a year which even the FT has found risible, and rightly so.
I have therefore used alternative methods of estimating
I think your logic is in that case not just disingenuous in that it is made without considering facts and only on the basis of who might be in your estimate right or wrong, it is also just wrong as to fact
But in my eyes Bob Crow’s situation is akin to benefit fraud! His place, whatever it is, should be used to house police, nurses or teachers. But I guess that is disingenuous too?
I still disagree with you calling me disingenuous, but I will agree with you on you not having accepted the debate with that woman. She was beyond irrelevant, to the debate in general, and to whatever argument one could have put on the liberal/neo-liberal side…
She is a one-liner person. I don’t think there are 20 “hard-working people in the country” wanting her as their spokes-person.
I will also blame you for the worst waste of an hour in my life. That C5 programme was horrendous.
As I always explain to people, there is only one tax I pay with pleasure, delight and haste and it is my TV-Licence (I know one can argue it is not a tax)… Long live the BBC! They even invite you to express your views on their most elitist programme!
Nick Cohen used a telling phrase in a piece in the Guardian last Saturday: “….in hard times people look to themselves and their families rather than wider notions of the common good”.
Is this not the reason why so much of the population falls for this government’s propaganda and joins in the baiting of this group and that whilst simultaneously failing to understand that they themselves are, or soon will be, under attack?
And might this not be the motivation behind those commenting on this piece that HMRC’s and/or DWP’s statistics are the only reliable sources of information whilst, in common with this odious government, using those statistics only as far as it suits their argument?
And why should anyone be forced to debate live with a bully like Katie Hopkins? Agreeing to respond to her point of view after she had expressed it is, in my opinion, a pretty elegant way of making sure that a different standpoint gets heard. Would any of the commenters on here, unless they were Tony Blair, have been prepared to debate publicly with Hitler or Mussolini?
Keep it up, Richard. Many of us who follow you fear that facism is closer at hand than the majority seem to realise.
Thanks Nick
Appreciated
It’s a nice story, but this fails to address the fact that most (working) people are more concerned with the scale of benefits that people are entitled to, NOT the benefits being claimed illegally.
No they’re not
The owners of the media are
I only know of Hopkins at second hand, since I can no more be bothered to watch the Apprentice than any other ‘reality’ TV, but from what I hear she sounds like a know nothing blabbermouth. I didn’t get to hear the Radio Devon broadcast, but I should imagine that you coming after her should have nicely punctured her balloon to anybody listening with an ounce of sense.
Come to think of it, that nicely sums up the welfare debate; a contrast between those trying to put over a reasoned view based on evidence, and those who prefer to use the tactics of demonisation and scapegoating to further their own agenda.
I’m recording the C5 benefits debate tonight; be interesting to see how Owen Jones and Jack Monroe deal with the nonsense that’ll be spouted by the likes of Hopkins.
Hopkins is a self opinionated bigoted bully of the first order. I have seen her in action and it is a poor reflection on our mainstream media that this female oaf gets air time, whereas many articulate intelligent individuals who put forward arguments based on facts rather than opinion are never heard.
http://flipchartfairytales.wordpress.com/2013/04/03/scroungers-scumbags-and-soaring-welfare-costs/
The real entitlement culture is at the top of society. Since the 1980s the rewards to those that merely steer the ship have become increasingly disproportionate. They now bear no resemblance to the value that these individuals actually add and are a result of their capture of the wealth pipeline. These people are the scroungers that steal from all of us and should be subject to attack and ridicule on a daily basis. However, they reach for a form of “Godwin’s Law” in order to prevent a debate about the true value of their skill set to business as well as society. This “special breed” reaching for the tired old cliche “politics of envy” which they use as a shield to cower behind.
In any system, there are people that cheat, but surely as a matter of economics if nothing else it is the tax cheats rather than benefit cheats that should bear the lion’s share of vilification! That would be so even based on the Revenue’s work of fiction. The one that has its roots in the alternative reality called neo-liberalism, which in turn is underpinned by another great fiction, neo-classical economics.