Tag Archives: evade

Terrified Tories are running from media scrutiny

If the people of Peterborough return a Conservative to Parliament after this display, I would be very surprised.

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Chancellor of the Exchequer says tax is ‘not my job’

Doesn't he look shifty?

Doesn’t he look shifty?

Slippery as an eel, the submarine Chancellor has surfaced from whatever hiding-place he has been using for the last week or so, insisted that the pursuit of people who evaded tax on advice from the HSBC Bank is nothing to do with him, and re-submerged before anybody could point out that this isn’t entirely true.

As Chancellor of the Exchequer, George Osborne doesn’t have a hand in individual prosecutions – but he does set the conditions under which such investigations are undertaken.

Alex Little is therefore correct in pointing out that Osborne is notably not saying that HMRC will have all the resources it needs to carry out a full and exhaustive investigation into the HSBC scandal, and that he needs to appoint financial regulators who actually want to stamp out abuses, rather than those who live in sublime ignorance (such as the gentleman mentioned in Mr Little’s article).

None of the government’s actions have satisfied Labour. Chris Leslie, shadow chief secretary to the Treasury, said: “George Osborne has finally emerged, but he still hasn’t answered any of the key questions over the HSBC scandal. He cannot continue to duck responsibility for HMRC’s failure to act or the decision to make Lord Green a Conservative Minister.

“Why has there only been one prosecution out of 1,100 names? Why did George Osborne and David Cameron appoint Lord Green as a Minister months after the government received these files? Did they discuss tax evasion at HSBC with Lord Green, or did they turn a blind eye?

“And why did the Treasury sign a deal with the Swiss authorities in 2012 which prevents the UK from actively obtaining similar information in the future?”

According to The Guardian, a YouGov survey for the Times Red Box found 62% of people want the chancellor to answer these questions.

The longer he leaves it, the less electable his Conservative Party becomes…

… and the more like a gang of crooks covering their friends’ backs.

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A message for rich tax-avoiders from The Last Leg

After Wossy said his piece about tax dodgers, Alex Brooker asked, "Are we not going to talk about that jacket?"

After Wossy said his piece about tax dodgers, Alex Brooker asked, “Are we not going to talk about that jacket?”

This is preaching to the converted (obviously) because Vox Political readers all pay their taxes, even those few of you who are actually rich, as currently defined in our society. Right?

It is therefore with a sense of sharing that VP is posting the “Rich people – pay your tax!” rant by Adam Hills (with Alex Brooker, Josh Widdicombe and Jonathan Ross) from last night’s Last Leg.

Please – if you know a rich person and suspect they are avoiding paying their full whack of tax – share this article with them. Ask if they or their family use any of the tax-supported services mentioned in the piece.

Ask them if they want to be followed around by the phrase “Do your bit – don’t be a d*ck!” for the rest of their natural lives.

Here’s the clip:

Sadly it seems the team at The Last Leg has not uploaded the equally excellent comments by David Mitchell (he said that legal loopholes allowing tax avoidance meant the government was “taxing conscience” – the more of a conscience you have, the more you pay – and that isn’t right: “We’re discouraging people from having a conscience by taxing it, & that is f***ing bonkers!”) but it is to be hoped that someone else has recorded them and will share them.

The full episode is (of course) well worth watching and may be seen here.

The message is clear for tax dodgers of any kind: We won’t pay for you any more.

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It’s time to stand up for the whistleblowers

Hervé Falciani, the HSBC whistleblower - currently on the run from the Swiss authorities.

Hervé Falciani, the HSBC whistleblower – currently on the run from the Swiss authorities.

We owe a great debt to the whistleblowers – people who alert us to the misdeeds of the major corporations and public organisations whose decisions affect our everday lives.

Acting entirely altruistically – with no thought for personal gain – these people warn us about the cheats who squat at the top of the economic food chain, doing everything they can to screw the system.

The whistleblowers deserve congratulation and promotion, while the cheats should be removed from their positions, prosecuted, and ordered to pay substantial sums of money as penalty for their actions.

And what do we do? The exact opposite. We prosecute the whistleblowers and elevate the cheats.

Look at Hervé Falciani, the former HSBC systems engineer who revealed that the bank was helping clients avoid paying tax. According to Tax Research UK, he has been on the run from Swiss authorities because he broke Swiss bank secrecy laws to reveal the information, and is living under protection.

Antoine Deltour, who blew the whistle PricewaterhouseCoopers’ lucrative tax avoidance sideline, is now being prosecuted in Luxembourg at the behest of that firm.

Meanwhile, Stephen Green, who chaired HSBC at the time of its offences, was ennobled and made a Conservative minister, while PwC continues to advice the Tory government on its policies to tackle – yes – tax avoidance.

It’s a backwards culture that can only benefit the criminals, and it’s time for legislation to reverse the situation.

Is any political party brave enough to do the honourable thing?

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Labour soars ahead with plan to tackle tax avoidance

Labour's proposals follow the revelations of tax avoidance on a massive scale at HSBC Bank while it was run by Stephen Green - who later became a Conservative lord and minister.

Labour’s proposals follow the revelations of tax avoidance on a massive scale at HSBC Bank while it was run by Stephen Green – who later became a Conservative lord and minister [Image: Daily Mirror].

In a clear response to the HSBC tax avoidance revelations, Labour is setting out its plans to tackle the issue if elected into office after May’s general election.

With campaigners and non-government organisations calling for a “Tax Dodging Bill”, Labour has announced that its first Finance Bill will act to tackle tax avoidance – and was due to set out the measures in an Opposition Day Debate today (Wednesday, February 11).

Labour’s motion notes that just one out of 1,100 people who have avoided or evaded tax have been prosecuted following the revelations of malpractice at HSBC bank, which were first given to the government in May 2010, after the Conservative and Liberal Democrat government had taken office.

It also calls upon Lord Green and David Cameron to make a full statement about his role at HSBC and his appointment as a minister in 2011.

The proposed Finance Bill includes plans to:

· Introduce penalties for those who are caught by the General Anti-Abuse Rule

· Close loopholes used by hedge funds to avoid stamp duty

· Close loopholes like the Eurobonds loophole which allow some large companies to move profits out of the UK and avoid Corporation Tax

· Stop umbrella companies exploiting tax reliefs

· Scrap the “Shares for Rights” scheme, which the OBR has warned could enable avoidance and cost £1bn and is administered by HMRC, and so ensure HMRC can better focus on tackling tax avoidance

· Tackle disguised self-employment by introducing strict deeming criteria

· Tackle the use of dormant companies to avoid tax by requiring them to report more frequently

Labour’s measures to tackle tax avoidance will also include:

· Ensuring stronger independent scrutiny of the tax system, including reliefs, and the government’s efforts to tackle tax avoidance

· Forcing the UK’s Overseas Territories and Crown Dependencies to produce publicly available registries of beneficial ownership

· Making country-by-country reporting information publicly available

· Ensuring developing countries are properly engaged in the drawing up of global tax rules

Shadow Chancellor Ed Balls said: “David Cameron and George Osborne have totally failed to tackle tax avoidance in the last five years. They have failed to close the loopholes we have highlighted, and the amount of uncollected tax has risen under this government.

“I am determined that the next Labour Government will act where the Tories have failed. We will close loopholes that cost the exchequer billions of pounds a year, increase transparency and toughen up penalties – and we will act in our first Finance Bill.”

Shabana Mahmood MP, Labour’s Shadow Exchequer Secretary, said: “The Tories and Lib Dems should back our motion to show that they are serious about tackling tax avoidance and evasion. We have a clear plan for our first Finance Bill after the election – they need to back that or explain why they don’t.”

This is a terrific move by the Labour Party. It seems clear that Labour was planning to tackle tax avoidance in any case – and should gain recognition for that alone, after the Coalition Government spent the last five years blowing hot air at us and doing nothing.

But it’s not perfect. Richard Murphy, of Tax Research UK, wrote yesterday evening: “There is no commitment to extra funding at HMRC. Nothing will happen without that.

“There is no direct reference to the tax gap and making explicit that these issues are meant to close it. Whilst HMRC works with the current deficient version of the tax gap this problem cannot, again, be resolved.

“I want a general anti-avoidance principle, not a revised General Anti-Abuse Rule, but penalties sure as heck help.

“There is no mention of the extra resources needed to make sure Companies House works properly, which is as important as the changes in dormant company reporting.

“There is no mention of BEPS implementation or action on things like permanent establishment and controlled foreign companies.

“And there’s no Office for Tax Responsibility as yet (although the hint of one has, I note appeared, so I am hopeful).”

All these criticisms are valid and it is to be hoped that Labour will adapt its bill to accommodate them. Even if this does not happen, Mr Murphy himself adds: “Let me stop complaining for a moment because I will probably never be completely satisfied.

“This is a package that indicates commitment to listen and commitment to change. It is a package that looks across the board at the issues of concern. And it addresses a fair range of items into debate. I welcome that, of course. The devil is always in the detail but there is room for manoeuvre in here and many statements are moves in the right direction when those are sorely needed.

“That is what is needed for now, and I’ll take it at that level.”

Do any of the other parties have anything at all to say?

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HSBC – the tax-dodging bank with a Tory chairman

Another Tory crook?

Another Tory crook?

What can we say about the HSBC bank’s activities, in advance of the BBC’s Panorama documentary this evening (BBC One, 8.30pm GMT)?

One: HSBC Bank has been helping thousands of wealthy clients to evade hundreds of millions of pounds worth of tax. A nice dodge for the clients – and a nice earner for the bank!

Two: This is old news. HM Revenue and Customs was made aware of HSBC’s tax-avoiding practices in 2010 but from more than 7,000 British clients, the UK government has prosecuted just one person, despite having identified 1,100 tax avoiders. Didn’t George Osborne say there would be “no safe haven” for these people?

Three: HSBC did not just turn a blind eye to tax evaders – in some cases it broke the law by actively helping its clients. The example on the BBC News website is of a wealthy family who were given a foreign credit card in order to withdraw their undeclared cash overseas. The bank that likes to say “Oui”?

Four: The man in charge of HSBC at the time was Stephen Green. He gave up being chairman of the bank in December 2010, in order to become a Conservative peer and minister of state for trade and investment in January 2011. Who says crime doesn’t pay?

Four: Lord Green told Panorama: “As a matter of principle I will not comment on the business of HSBC past or present.” Honour amongst thieves?

Five: Add it all together and we can see that the Coalition government has not only allowed rich HSBC clients to steal money from the UK economy, but has actually colluded in it and rewarded the man in charge of the operation with a peerage and a cushy government job! All in it together, eh?

How unfortunate for the Tories that this has come out just 12 weeks before a general election!

Of course the Labour Party is all over this like a rash. Shadow Financial Secretary to the Treasury Cathy Jamieson said: “Tax avoidance and evasion harms every taxpayer in Britain, and undermines public services like the NHS.”

She said George Osborne needs to explain why just one person out of more than 1,000 has been prosecuted in five years, and how the then-chairman of HSBC, Stephen Green, could have been appointed a Conservative peer and a Minister by David Cameron just eight months after the Government was made aware of these activities taking place on his watch at HSBC.

“Once again the Tories have been exposed as unable and unwilling to take real action on tax avoidance – little wonder that under them the tax gap has risen, year on year,” was her judgement.

Richard Brooks, author of The Great Tax Robbery (Oneworld, 2013), knows a thing or two about tax avoidance and evasion. He summed up the Coalition government’s collusion on BBC Radio 4’s Today programme, referring to an agreement between the UK and Swiss governments, signed in 2007, to bring in “billions of pounds” in unpaid tax.

He said: “David Gauke, Tax Minister, and David Hartnett the senior tax official, started negotiating it straight after they’d received this data from the French authorities, so they knew that there was a mass of evidence of tax evasion at the heart of HSBC.

“They set about negotiating agreement with the Swiss Government which says… that ‘it is highly unlikely to be in the public interest of the United Kingdom that professional advisors, Swiss paying agents and their employees – in other words bankers – will be subject to a criminal investigation by HMRC.’

“So, knowing they’re sitting on all this evidence, they’ve simply washed their hands of it and said ‘we’re not going to prosecute’. And that’s why no-one has come before the courts in five years.”

And yet the Conservative Party is still considered best-able to run the economy.

Admittedly, with only 33 per cent support, more than two-thirds of the country don’t consider the Tories able to run anything at all, but it’s still more support than the other parties are getting.

Why?

They are letting rich people walk off with money that belongs in the Treasury and should be spent on public services.

It all goes to show that you should never – never – allow the Conservative Party to handle public money.

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Tax avoidance – the latest from Twitter

141102taxavoidancememe

This infographic appeared on Twitter yesterday. At a time when it has been revealed that the richest people in the UK doubled their income between 2009 and 2014, proving that the Coalition government lied about sharing the burden equally, it seems appropriate to share it.

Supporting information on the £120 billion figure can be found here and here.

The HMRC figure is harder to pin down but a claim that it amounted to £32 billion can be found here.

The claim that £16 billion in benefits goes unclaimed every year seems to date from 2010 and may be lower than the actual amount.

Benefit fraud and error is enumerated in this DWP report which shows that the infographic is mistaken about overpayments due to error – these stand at £2.4 billion, not £1.4 billion.

Information showing that the 1,000 richest people in the UK doubled their incomes between 2009 and 2014 can be found here.

David Cameron has vowed (yet again) to crack down on tax avoidance. A report is here

But you can safely leave any words he has to say on the subject here:

dustbin

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History is made as Vox Political agrees with David Cameron

 

Jean-Claude Juncker, tax avoidance mastermind and now President of the European Commission.

Jean-Claude Juncker, tax avoidance mastermind and now President of the European Commission.

Believe it or not, David Cameron was right to oppose the appointment of Jean-Claude Juncker as President of the European Commission.

If Private Eye is to be believed, Juncker has a record of wreaking fiscal havoc across the continent, thanks to his behaviour embracing corporate tax dodgers as finance minister and prime minister of Luxembourg.

Anti-EU readers will be interested to note that he was chair of the EU’s council of economic and financial affairs, in which role he played a key part in shaping the economic and monetary aspects of the 1992 Maastricht Treaty.

Eye 1368 (June 13-26) states that Luxembourg has turned itself into a tax haven, “but, crucially, one at the heart of Europe entitled to tax-free flows of money in and out of its borders in a way traditional sunny island havens… could only dream of.

“The Grand Duchy became the member of the economic club that pilfered from the club’s funds.”

Let’s look at examples: “An especially fruitful line has been multi-billion-pound corporate tax avoidance at its neighbours’ expense. In the most infamous case, Vodafone still routes more than £50bn worth of loans through Luxembourg for no purpose other than taking advantage of tax laws and administrative rulings carefully tailored by Juncker’s governments to facilitate large-scale tax avoidance… The company is sitting on a £17.4 billion “tax asset”, ie reduction in future tax bills around the world, courtesy of [Mr] Juncker.

“Hundreds of other multinationals, including the UK’s Glaxo, Tesco and Financial Times publisher Pearson, use Luxembourg in similar ways at enormous cost to Europe’s economies.”

And the buck doesn’t stop rolling with tax, either: “Juncker pursued an aggressive regime of financial deregulation, especially in the area of investment fund administration. So it was no surprise that when Bernard Madoff’s ponzi scheme collapsed in 2008, a large chunk of the money had come through loosely-regulated Luxembourg funds set up by Swiss banks.”

The man responsible for the above is now in charge of the European Union. David Cameron was right to oppose his appointment.

Be afraid.

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Tax credit debt collection is a double-edged attack on the poor

140126facts

There’s more than a little of the piscine about the fact that our Conservative-led has set debt collection agencies onto poor families who have been overpaid tax credit due to errors made by HM Revenue and Customs.

Firstly, the move undermines the principle behind the tax credit system – that it is there to ensure that poorly-paid families may still enjoy a reasonable living standard. Tax credits are paid on an estimate of a person’s – or family’s – income over a tax year and the last Labour government, knowing that small variances could cause problems for Britain’s poorest, set a wide buffer of £25,000 before households had to pay anything back.

By cutting this buffer back to £5,000, the Conservatives have turned this safety net into a trap. Suddenly the tiniest overpayment can push households into a debt spiral, because their low incomes mean it is impossible to pay back what the government has arbitrarily decided they now owe.

And the sharks are circling. Instead of collecting the debt on its own behalf, HMRC has sold it on to around a dozen debt collection agencies who are harassing the families involved with constant telephone calls, mobile phone messages and letters to their homes.

In total, HMRC made 215,144 referrals to debt collectors in 2013-14. Of the working families involved, 118,000 earned less than £5,000 per year.

This takes us to our second area of concern. Remember how the Department for Work and Pensions has been encouraging people – particularly the disabled – to declare themselves as self-employed in order to avoid the hassle and harassment that now go hand in hand with any benefit claim? You know – the refusal of benefits based on arbitrary ‘descriptors’ that were originally devised by a criminal insurance company as a means to minimise payouts, and the constant threat of sanctions that would cut off access to benefits for up to three years unless claimants manage to clear increasingly difficult obstacles.

And do you remember how the DWP reported earlier this year that more than 3,000 people who were subjected to the government’s benefit cap have now found work? This blog suggested at the time that many of them may have been encouraged to declare themselves self-employed in order to escape the hardship that the cap would cause them.

Both of these circumstances are likely to lead to a verdict of overpayment by HMRC, as the self-employment reported by these people is likely to be fictional, or to provide less than required by the rules – either in terms of hours worked or income earned.

Suddenly their debt is sold to a collection agency and they are suffering government-sponsored harassment, alarm and distress (which is in fact illegal) far beyond anything they received from the DWP; debt collection agencies are not part of the government and, as Dame Anne Begg pointed out in the Independent article on this subject, “The tactics they use to collect the debt are not tactics a government should use.”

Maybe not. So why employ such tactics?

Let’s move on to our third, and final, worry. By setting sharks on the hundreds of thousands of minnows caught in the government’s trawler-net (that was formerly a safety net – and I apologise for the mixed metaphor), the Tory-led administration is creating a handy distraction from the huge, bloated, offshore-banking whales who donate heavily into Conservative Party funds and who are therefore never likely to be pursued for the billions of pounds in unpaid taxes that they owe.

The government has promised to clamp down on tax evasion and avoidance, but ministers would have to be out of their minds to attack the bankers and businesspeople who pay for their bread and butter.

George Osborne suffered huge – and entirely justified – derision last year when HMRC published a list of its top 10 tax dodgers, which revealed that public enemy number one was a hairdresser from Liverpool who had failed to pay a total of £17,000.

It seems likely that the Conservatives have decided that future announcements will involve the reclamation of far larger amounts, and from far more people…

Innocent people who were either cheated by Tory-instigated changes to the system or by Tory-instigated misleading benefit advice.

Meanwhile the guilty parties continue to go unhindered. Their only payouts will continue to be made to – who was it again?

Oh yes…

To the Conservative Party.

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Divisions in Coalition as MPs demand independent inquiry on poverty

130617childpoverty

Calls for a ‘commission of inquiry’ into the impact of the government’s changes to social security entitlements on poverty have won overwhelming support from Parliament.

The motion by Labour’s Michael Meacher was passed with a massive majority of 123 votes; only two people – David Nuttall and Jacob Rees-Mogg – voted against it.

The debate enjoyed cross-party support, having been secured by Mr Meacher with Sir Peter Bottomley (Conservative) and John Hemming (Liberal Democrat).

Introducing the motion, Mr Meacher said: “It is clear that something terrible is happening across the face of Britain. We are seeing the return of absolute poverty, which has not existed in this country since the Victorian age more than a century ago. Absolute poverty is when people do not have the money to pay for even their most basic needs.”

He said the evidence was all around:

  • There are at least 345 food banks and, according to the Trussell Trust, emergency food aid was given to 350,000 households for at least three days in the last year.
  • The Red Cross is setting up centres to help the destitute, just as it does in developing countries.
  • Even in prosperous areas like London, more than a quarter of the population is living in poverty.
  • According to the Joseph Rowntree Foundation, for the first time, the number of people in working families who are living in poverty, at 6.7 million, is greater than the number of people in workless and retired families who are living in poverty, at 6.3 million.
  • Child poverty will rise from 2.5 million to 3.2 million during this Parliament, around 24 per cent of children in the UK. By 2020, if the rise is not stopped, it will increase to four million – around 30 per cent of children in the UK.
  • The use of sanctions depriving people of all their benefits for several weeks at a time, had increased by 126 per cent since 2010 and 120 disabled people who had been receiving jobseeker’s allowance had been given a three-year fixed duration sanction in the previous year.
  • There are now more than 2,000 families who have been placed in emergency bed-and-breakfast accommodation after losing their homes.
  • The per cent rise in the overall homelessness figures last year included nearly 9,000 families with children, which is the equivalent of one family losing their home every 15 minutes.
  • A third of families spent less than £20 a week on food and that the average spend on food per person per day was precisely £2.10. That is a third less than those families were able to afford three months before that.
  • The proportion of households that had to make debt repayments of more than £40 a week had doubled and the average level of debt was £2,250.
  • A third of families had council tax debt.
  • 2.7 million people had lost out through the Government’s changes to council tax benefit – many of them disabled people, veterans and some of the most vulnerable in our communities.
  • Households were having to spend 16 per cent more on gas and electricity.
  • There are 2.5 million people who have been unemployed for the best part of two years, and there were 562,000 vacancies when the debate took place (Monday), so four out of five of those who are unemployed simply cannot get a job whatever they do.
  • Cuts to local authorities mean many home care visits are limited to 15 minutes.
  • The 10 per cent of local authorities that are the most deprived in the country face cuts six times higher than those faced by the 10 per cent that are the most affluent.
  • 60 per cent of benefit cuts fall on those who are in work.

Mr Meacher said the biggest cause of absolute poverty was the huge rise in sanctioning, often for trivial reasons such as turning up five minutes late for a job interview or the Work Programme:

  • A dyslexic person lost his Jobseekers Allowance because his condition meant that in one fortnightly period he applied for nine jobs, not 10. He was trying to pay his way and already had work, but it provided only an extremely low income.
  • The jobcentre didn’t record that a claimant had informed them that he was in hospital when he was due to attend an appointment and he was sanctioned.
  • A claimant went to a job interview instead of signing on at the jobcentre because the appointments clashed – and was sanctioned.
  • A claimant had to look after their mother who was severely disabled and very ill – and was sanctioned.
  • A Job Centre sent the letter informing a claimant of an interview to their previous address, despite having been told about the move. The claimant was sanctioned.
  • A claimant was refused a job because she was in a women’s refuge, fleeing domestic violence and in the process of relocating, but I was still sanctioned.

Mr Meacher also quoted what he called a classic: “I didn’t do enough to find work in between finding work and starting the job.”

The latest DWP figures suggest that more than one million people have been sanctioned in the past 15 months and deprived of all benefit and all income. “Given that the penalties are out of all proportion to the triviality of many of the infringements, and given that, as I have said, four out of five people cannot get a job whatever they do, the use of sanctioning on this scale, with the result of utter destitution, is — one struggles for words — brutalising and profoundly unjust,” said Mr Meacher.

Other reasons for the rise in absolute poverty included:

  • Delays in benefit payments.
  • The fact that it is impossible for many poor and vulnerable people to comply with new rules – for example a jobseeker who asked to downsize to a smaller flat who was told he must pay two weeks’ full rent upfront before getting housing benefit. He does not have the funds to do so and is stuck in a situation where his benefits will not cover his outgoings due to the Bedroom Tax.
  • The Bedroom Tax, which applies to around 667,000 households, and two-thirds of those affected are disabled. More than 90 per cent of those affected do not have smaller social housing to move into.
  • The Benefit Cap, imposed on a further 33,000 households.
  • Mistakes by the authorities; up to 40,000 working-age tenants in social housing may have been improperly subjected to the Bedroom Tax because of DWP error (although Iain Duncan Smith claims a maximum of 5,000).

Mr Meacher said: “The Chancellor’s policy of keeping 2.5 million people unemployed makes it impossible for them to find work, even if there were employers who would be willing to take them, and the 40 per cent success rate of appeals shows how unfair the whole process is.”

Responding to a comment from David TC Davies (Conservative) that those who are not looking for work must realise there will be consequences, particularly when a million people have been able to come to the UK from eastern Europe and find work, Mr Meacher said, “Those who come to this country are more likely to be employed and take out less in benefits than many of the indigenous population.”

He asked: “Is all this brutality towards the poor really necessary? Is there any justification in intensifying the misery, as the Chancellor clearly intends, by winding up the social fund and, particularly, by imposing another £25 billion of cuts in the next Parliament, half of that from working-age benefits?

“After £80 billion of public spending cuts, with about £23 billion of cuts in this Parliament so far, the deficit has been reduced only at a glacial pace, from £118 billion in 2011 to £115 billion in 2012 and £111 billion in 2013. Frankly, the Chancellor is like one of those first world war generals who urged his men forward, over the top, in order to recover 300 yards of bombed-out ground, but lost 20,000 men in the process. How can it be justified to carry on imposing abject and unnecessary destitution on such a huge scale when the benefits in terms of deficit reduction are so small as to be almost derisory?”

Suggested alternatives to the punitive austerity programme of cuts came thick and fast during the debate. Challenged to explain what Labour’s Front Bench meant by saying they would be tougher on welfare than the Tories, Mr Meacher said: “As the shadow Chancellor has made clear on many occasions, is that we need public investment. We need to get jobs and growth. That is the alternative way: public investment in jobs, industry, infrastructure and exports to grow the real economy, not the financial froth, because that would cut the deficit far faster than the Chancellor’s beloved austerity.”

He asked: “How about the ultra-rich — Britain’s 1,000 richest citizens — contributing just a bit? Their current remuneration — I am talking about a fraction of the top 1 per cent — is £86,000 a week, which is 185 times the average wage. They received a windfall of more than £2,000 a week from the five per cent cut in the higher rate of income tax, and their wealth was recently estimated by The Sunday Times at nearly half a trillion pounds. Let us remember that we are talking about 1,000 people. Their asset gains since the 2009 crash have been calculated by the same source at about £190 billion.

“These persons, loaded with the riches of Midas, might perhaps be prevailed upon to contribute a minute fraction of their wealth in an acute national emergency, when one-sixth of the workforce earns less than the living wage and when one million people who cannot get a job are being deprived of all income by sanctioning and thereby being left utterly destitute.

“Charging the ultra-rich’s asset gains since 2009 to capital gains tax would raise more than the £25 billion that the Chancellor purports to need. I submit that it would introduce some semblance of democracy and social justice in this country if the Chancellor paid attention to this debate and thought deeply about what he is doing to our country and its people.”

Ronnie Campbell (Blyth Valley, Lab) suggested that the Government might save a lot more if its members “showed the same energy and enthusiasm for getting those who evade their taxes and run to tax havens as they do for going after the poor, the sick and people on the dole”.

Against this, David TC Davies offered insults and distortions of the facts, quoting the Daily Mail as though it provided an accurate account of current events: “Members of the shadow Cabinet might need a boxing referee to sort out their disputes at the moment, as we read today in the Daily Mail.”

He said: “We took office with a deficit of £160 billion and a debt that was rising rapidly to £1 trillion. That was after years of overspending in good times, as well as in bad, by Labour, a cheap money supply and lax banking regulation under the former Government.” Labour’s spending, up until the financial crisis, was always less than that of the previous Conservative administration; Gordon Brown and Tony Blair both ran a lower deficit than John Major and Margaret Thatcher, and at one point actually achieved a surplus, which is something that the Conservatives had not managed in the previous 18 years. While Mr Davies here complained about the “lax banking regulation”, Conservatives supported it at the time and in fact demanded more DE-regulation, which would have made the financial crisis worse when it happened.

“We had disastrous economic decisions, such as that to sell gold at a fraction of its real rate,” said Mr Davies. Yes – the UK lost around £9 billion. But compare that with the disastrous economic decision by George Osborne to impose more than £80 billion worth of cuts to achieve a £7 billion cut in the national deficit. The UK has lost £73 billion there, over a three-year period.

And Mr Davies said: “Worst of all and most seriously, we had a welfare system that allowed people to get into a trap of welfare dependency, leaving them on the dole for many years, but at the same time filling the consequent gap in employment by allowing mass and uncontrolled immigration into this country, which completely undercut British workers.” The first assertion is simply untrue; the second is a legacy of previous Conservative administrations that agreed to the free movement of EU member citizens, meaning that, when the eastern European countries joined in 2004, citizens migrated to the UK in the hope of a better life. Labour has admitted it should have negotiated for a delay in free movement until the economies of those countries had improved, making such migration less likely, but the situation was created before Labour took office.

Challenged on the Coalition’s record, Mr Davies fell back on the Tories’ current trick question, which is to counter any criticism by asking: “Is he suggesting that we are not doing enough to pay down the national debt? Is he suggesting that we should cut further and faster? If so, and if we had the support of other Opposition Members, that is exactly what the Government could do and, indeed, possibly should do. I look forward to seeing that support for getting the deficit down.” This disingenuous nonsense was batted away by Labour’s Hugh Bayley, who said “investing in the economy, creating jobs and thereby getting people off welfare and into work” was the way forward.

Mr Davies’ Conservative colleague Jeremy Lefroy took a different view, agreeing that increasing numbers of people are finding it impossible to make ends meet, and that job creation and apprenticeships were a better way out of poverty than changing the social security system alone. He agreed that sanctions were applied to his constituents “in a rather arbitrary manner”. He spoke against George Osborne’s suggested plan to remove housing benefits from people aged under 25, saying this “would have a drastic impact on young people who need to live away from home and who have no support from their families”. He spoke in favour of councils increasing their housing stock. And he admitted that disabled people faced severe problems when unfairly transferred from ESA to JSA: “A lady in my constituency says, ‘I am simply not fit for work, but by signing on for JSA I have to say that I am available and fit for work.’ She does not want to tell a lie.”

Steve Rotheram (Liverpool Walton, Labour) spoke powerfully about the effect of being on benefits: “Lots of people in my city are on benefits for the very first time. Far from being in clover — it beggars belief what we read in the right-wing press — they are struggling to make ends meet, and the problem that thousands of Liverpudlians are facing is new to them. For many, the idea that they might miss a rent payment is totally alien. They have not done that in the past 20 years, but since May 2010, their individual household incomes have been on such a downward trajectory that they now find themselves in rent arrears, seeking advice on debt management and unable to afford the daily cost of travel, food and energy. Figures suggest that 40 per cent of the adult population in Liverpool are struggling with serious debt problems.”

And he said poverty had health implications, too: “David Taylor-Robinson of the University of Liverpool and his fellow academics have highlighted the doubling of malnutrition-related hospital admissions nationally since 2008.”

John Hemming (Birmingham Yardley, LD) raised concerns about “the interrelationship between the welfare cap and victims of domestic violence, and whether there are situations that need more attention. I believe that people can get discretionary housing payment to leave a violent home, but it is important that we ensure that there is a route out of domestic violence for women. I am worried about that issue, just as I am about some wrongful sanctioning that I have seen. That does not help at all, because it undermines the whole process.” He also called for “a substantial increase in the minimum wage, because as the economy is improving the Government should look at that, rather than maintain things as they are”.

The vote gave huge endorsement to the call for an independent inquiry into poverty under the Coalition.

But with an election just 15 months away, how long will we have to wait for it to report?

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