Tag Archives: finance

It’s a Tory total collapse as they are forced to accept every Labour amendment to the Budget

Labour could have moved that the Treasury be re-named “Philip Hammond is a dunce” and the government would probably have agreed to it.

Too harsh? Well, let’s be satisfied with the amendments to the Finance Bill on tax evasion, gaming duty and Fixed Odds Betting Terminals – and with the promise that there is worse to follow for Theresa May and her cronies.

She had to capitulate because, if a vote had been taken and she lost, it would have been considered proof that her government does not have the confidence of the Commons. By convention, any government in such a position should resign and allow the main Opposition party a chance to form an administration.

Instead, Mrs May is now the head of a minority government, critically vulnerable to collapse if the Opposition parties demand a vote of “no confidence”, because the Democratic Unionist Party has withdrawn its support over her disastrous Brexit agreement with the EU.

As Mrs May is determined to have her deal or no deal, and the DUP’s MPs believe neither will support what they consider to be good for Northern Ireland, it seems unlikely that they will restore their support for her government.

I predict that if the current Brexit deal goes to a vote, Mrs May will lose badly. Labour may then demand a vote of “no confidence” in the Conservative Party’s ability to govern – and such a vote seems certain to topple the government.

Shadow Chancellor John McDonnell was quick to capitalise on the situation. He said: “It’s absolutely staggering that the Government has accepted all Labour amendments to the Finance Bill because it couldn’t rely upon the DUP’s support. The Tories are in office but not in power. We’re watching a government falling apart in front of us.”

Mrs May is currently in Brussels, where she is probably begging the Eurocrats for latitude to resolve the impossible situation into which she has put herself – because we should all remember that this is a crisis entirely of the Conservative government’s own making.

Meanwhile Boris Johnson and Philip Hammond are both set to appear at the DUP’s conference over the weekend. If they think they can bully the Irish into backing them again, they’ll be in for a shock.

It has been great fun watching the drama play out on Twitter:

So the current situation can be summed up as follows:

https://twitter.com/MsParaDoxy/status/1064673997974065152

Of course we now know that Mrs May’s strings are being pulled by the Opposition parties – and any opportunity available (to mention the backdrop sign at the Tory conference) will be theirs.

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POLL: Are John McDonnell’s plans to revolutionise the economy feasible?

The shadow chancellor is planning to revolutionise the financial sector.

Take a look at the video in John McDonnell’s tweet, below:

Mr McDonnell rightly states that the finance sector should be the servant of the nation’s economy, not its master – that its responsibility is to generate the wealth we need to pay for the advances we want – and I hope nobody reading this would disagree.

He goes on to make several suggestions about how to make this happen – a financial transactions (“Robin Hood”) tax and tackling tax evasion are top of the list.

But will his ideas work? Let’s have a poll.

I would appreciate your detailed opinions as well – please send them in as comments.

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After Carillion – Interserve. Will it go under – and if it does, who’s next?

It seems Interserve is about to go the same way as Carillion.

If it does, the Conservative government will force the public to pay the costs again, even though they’re the ones who stupidly employed greedy private contractors who put our money in their bank accounts rather than investing it in the public services they are supposed to be providing (at least, that’s the Carillion model).

I hope that Interserve doesn’t go under, but it occurs to me that any private firm with a contract to provide public services will be in breach of that contract if it ends up in receivership due to poor financial management.

So it should be the government’s responsibility to get our money back from these people, rather than charging the public.

It might be easy to force the poor to cough up for the mistakes of the rich, but it isn’t justice.

Let’s have some justice for a change.

It appears the Tory Government could once again be stretching its pan-palms out to catch the overspill from the potential collapse of another favoured private contractor, Interserve.

Interserve’s debt almost doubled from £274m in 2016 to £513m at the end of 2017. An underestimation of the costs involved in a public-private partnership contract to provide waste-to-energy services, which saw the corporation raise its provision on one such project in Glasgow from £70m to £195m, has badly affected it.

And in further deeply worrying news, the corporation’s share price has plummeted from 717p in 2014 to just 63p in December, leading to serious discussions with its lenders over the firm’s remaining financial options.

Although the corporation issued profit warnings in September and October 2017, it has announced that it reportedly expects that its 2017 performance was in line with expectations. This, along with the partial recovery in its share price might be due to the fact that the corporation’s new chief executive announced cost cutting measures: £15m in 2018 to £50m by 2020.

With the corporation employing 80,000 people worldwide – 25,000 in the UK – and when it is responsible for public contracts including cleaning, healthcare, security, probation and construction, one wonders what cost-cutting measures will actually involve and how these might impact the provision of essential public services.

Source: Another major government contractor on the brink after 90% share price collapse and debt doubling | Evolve Politics


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Ashworth: Presumption that government contracts should go to private firms is wrong

[Image: We Own It.]

Carillion’s collapse really has changed political thinking.

Here’s Labour’s Jon Ashworth explaining that outsourcing of government contracts, whether tied to Private Finance Initiative deals or not, leads to firms making their profit by cutting staff wages and conditions – which ultimately leads to a poorer service.

He’s absolutely right. This Writer has been saying for years that poor treatment of workers leads to a poor product.

Therefore it follows that, if private business cuts corners in order to make a profit, the only way to provide a decent service is to eliminate the profit motive and for the government to nationalise its work contracts.

The arguments against this are disproved by the facts. All the privatisation-loving Tories can do with future private contracts is confirm Mr Ashworth’s conclusion.

It will be painful to watch, but necessary – to ensure that everybody gets the message.


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Carillion: Prophetic words from 2004 claimed the UK would be ruined by PFI debt

Allyson Pollock in 2003 [Image from Ian Fraser’s blog site].

Is Allyson Pollock’s prophecy coming true?

Ian Fraser, author of the following words, seems to think so.

He tweeted: “Increasingly obvious was right about PFI/PPP. Even RBS chair Howard Davies admits it’s a fraud. Here’s my interview with her from 2003.”

Of course, Carillion – the engineering firm with no less than 450 government contracts, that went into liquidation last week – is a beneficiary of PFI – that’s what makes these words topical now.

From the Sunday Herald, December 19, 2004:

Widespread use of the private finance initiative (PFI) to fund public sector projects is eroding government accountability and means the UK will lose its status as a first world economy, according to a leading academic.

Allyson Pollock, professor of public health at University College London, believes the funding method leads to the back-door privatisation of state-run services and spells a return to a patchy provision of health and education.

Pollock, due to speak on PFI to the cross-party group on the Scottish economy at the Holyrood parliament this Tuesday, told the Sunday Herald: “As the economy starts to slide, the government and communities will find it increasingly difficult to the pay costs associated with PFI.

“I fear that decay will set in and Britain will struggle to remain a mature economy if private sector asset stripping of public services continues. There is plenty of talk of risk being transferred to the private sector, but when things go wrong the public sector invariably ends up bailing out the private sector.

“The idea that PFI is a partnership between government and business looks a hollow joke, as private finance gets repaid while the public sector carries the extra cost of keeping services going and communities suffer, ” she said.

Read the rest of the article: Dire warning the UK will be ruined by Private Finance Initiative (PFI) debt | Ian Fraser


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Will PFI campaign be derailed by MP’s spat with blogger?

Stella Creasy [Image: Nicola Tree/ Getty Images].

This is all a little silly.

Labour MP Stella Creasy has launched a campaign to stop companies that have signed Private Finance Initiative (PFI) deals with the government from benefiting from falls in the rate of Corporation Tax.

Ms Creasy says it is important because, when these deals are signed, the rate of tax companies will pay is directly part of deciding if they represent value for money.

On her Facebook page, she explained: “If I buy a toaster and then its on offer a week later I don’t get the difference back so why should these companies get such a windfall – either they come to the table to renegotiate these contracts and the cost of them to the public sector or we should be willing to legislate. Help us secure support from more MPs for this.”

She linked to a Guardian article which elaborated:

Companies that built and run NHS hospitals under private finance initiative (PFI) contracts will have made about £190m in unexpected windfall profits by 2020 because of George Osborne and Philip Hammond’s cuts to corporation tax, research suggests.

Analysis by the Centre for Health and the Public Interest found that more than 100 PFI operators in the NHS collectively saved an estimated £84m between 2008 and 2015 and are due to gain another £106m between 2016 and 2020 because of the falling corporate tax rate.

The PFI companies are making bonus profits because the corporation tax rate has fallen from 30% when the majority of their contracts were negotiated to 19% now and is due to drop as low as 17% by 2020. Some companies may be deferring their tax liabilities to later in their contracts when the rates will be lower.

She also discusses the matter in a Twitter thread:

For many of us – especially those who never like the idea of PFI in the first place – this is a worthwhile cause. These companies are already making a fortune at the taxpayer’s long-term expense; why should they receive millions more – apparently in breach of their contracts – because of Tory tax changes?

But there’s a snag.

Ms Creasy’s campaign seems to have been overshadowed by her inability to answer a simple question: Whether she thinks it is acceptable for Labour MPs to be friends with – and socialise with – Conservative MPs.

Our fellow leftie blog, the Skwawkbox, raised this issue a couple of days ago after discovering that Ms Creasy had attended a gig with Tory MP Therese Coffey on December 16.

In light of Ms Creasy’s fellow Labour MP Laura Pidcock’s well-publicised belief that Labour MPs should not “hang out with Tory women” who are “no friends of mine” and “an enemy to lots of women”, Skwawkbox blogger Steve Walker asked for Ms Creasy to comment.

In response, he received a torrent of evasion – and, to be honest, abuse. See for yourself, here and here.

Her bizarre attitude has been bolstered by an article in the Huffington Post that supports her attitude of indignation that a blogger should call her out on this matter.

Isn’t this hypocritical of the HuffPost, which was quite happy to quote the Skwawkbox interview with Ms Pidcock, where she first made her comments about Labour MPs fraternising with the Tories? This Writer thinks so.

It seems the aim is to divert attention. Ms Creasy seems so desperate to avoid telling us whether she thinks it’s okay to hang out with her political enemies, she’ll try to point us at anything else.

So she has claimed Skwawkbox was attacking her taste in music, then that the blog is misogynist, and finally that the blog was trying to undermine her PFI campaign.

I’m sorry, but it seems Ms Creasy has managed that, all by herself.

And it seems she has succeeded in hoodwinking people. Look at the following tweet, from another respected blogger, Tom Pride:

The issue isn’t musical taste, Tom.

It’s whether this particular person on the Left actually has any interest in opposing the Tories.

From my point of view, there is a simple way out, of course.

It is for Ms Creasy to swallow her pride, apologise for making a mountain out of a molehill, answer the question she was askedand clarify exactly whose side she’s on.

Then, perhaps we can all get behind her worthwhile campaign.


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#Brexit means #Brexit – for some. Theresa May exempts her own husband | Pride’s Purge

161207-theresa-may-husband

Theresa May’s government is planning to spend huge amounts of taxpayers’ our money exempting people who work in the city from Brexit.

Coincidentally, Theresa May’s husband works in the city.

So when she says Brexit means Brexit — she means for us, not for them.

Obviously …

Pictures at: Brexit means Brexit – for some. Theresa May exempts her own husband from Brexit. | Pride’s Purge

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Council finance chief to investigate ‘workhouse’ scheme

Workhouse: A former bus depot in Blackburn which is set to become a workhouse for up to 10 inmates.

Workhouse: A former bus depot in Blackburn which is set to become a workhouse for up to 10 inmates.

The finance chief at Blackburn with Darwen Council is to consider more deeply the plan to turn a former bus depot into what could be a 21st-century workhouse, it seems, after a Vox Political commenter raised concerns.

Andy Kay said he did not disagree that, although a few people could be taken off the street by the scheme, it could be setting a precedent for the government to say anyone who claims housing, unemployment or sickness benefit must work in a workhouse or be homeless, in conversation with commenter Helen Pay.

“With what the government is doing already, this idea isn’t far-fetched,” she told This Blog.

“Andy didn’t know if the homeless people were going to be paid wages – but the minimum wage for a young person he looked up and is something crazy like £4. Would many people choose to sort recycling for £4 an hour?

“He also said about accomodation being paid for at housing benefit rates. So when I asked if these homeless people could then be paid the minimum wage and be topped up by the council paying housing benefit – which would be paid to the charity – to live on a recycling site, his attitude completely changed. He hadn’t considered this.”

She told us she had also found it useful, when Mr Kay said the bottom line was to help homeless people, to quote an idea she had submitted to the Royal British Legion: “To supply accommodation to homeless people that involved zero profit being made and was purely about helping people.”

She pointed out: “The ‘charity’ website of Recycling Lives even talks about these homeless people being farmed out to other companies and those companies paying the wages they would have paid – to Recycling Lives.”

Ms Pay added: “I also mentioned personal responsibility for future events – which he seemed to take on board.

“I said I hoped that if he investigated and found Recycling Lives was taking advantage of people that I would read in a newspaper article that Andy Kay had been a whistle blower and put a halt to this scheme.”

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Greece: Varoufakis quits to ease negotiations over debt

yanisvaroufakis

It’s amazing, isn’t it? Immediately after his government won an internationally-important vote against the foreign bankers and financiers who have been terrorising Greece with undemocratic austerity measures in return for loans, finance minister Yanis Varoufakis has resigned.

In his blog, he wrote that he had been “made aware of a certain preference by some Eurogroup participants, and assorted ‘partners’, for my… ‘absence’ from its meetings; an idea that the Prime Minister judged to be potentially helpful to him in reaching an agreement.

“For this reason I am leaving the Ministry of Finance today.”

He wrote: “Like all struggles for democratic rights, so too this historic rejection of the Eurogroup’s 25th June ultimatum comes with a large price tag attached. It is, therefore, essential that the great capital bestowed upon our government by the splendid NO vote be invested immediately into a YES to a proper resolution – to an agreement that involves debt restructuring, less austerity, redistribution in favour of the needy, and real reforms. [Bolding mine]

“We of the Left know how to act collectively with no care for the privileges of office. I shall support fully Prime Minister Tsipras, the new Minister of Finance, and our government.

“And I shall wear the creditors’ loathing with pride.”

Follow me on Twitter: @MidWalesMike

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George Osborne’s financial plans are confused and childish

141204osbornetestfailed

Why do commentators like The Guardian think George Osborne’s plans will make life hard for his political opponents, when they are specifically designed to increase inequality and reduce prosperity across the UK?

You’d have to be an economic imbecile not to understand that his plan for permanent budget surpluses will shrink the national economy, while his tax breaks for the very rich and corporations mean the money that remains will float upwards to the very few people favoured by those changes.

If you don’t understand, think of it this way: Governments create money – they have to, otherwise you wouldn’t have any to spend or pay in taxes. The pound in your pocket had to come from somewhere, and while it may originally have been supported by precious metals or minerals of equivalent value, those days are far behind us.

So, governments create money and invest it in the national economy. If all goes to plan, the money circulates, gaining value on the way through, until it is reclaimed by the government as tax revenue. Even if the amount of tax claimed back was as much as the original value of the money, the economy should still have grown by however much extra value the money has accrued during its journey (the ‘multiplier’ effect).

Osborne wants to take back more money than his government releases. This means somebody will have to lose out – and the system of tax breaks and permitted tax avoidance for the rich (Tory Party donors) means it is going to be the people who do the actual work, who are searching for work, or who are unable to work because of illness, who will be unfairly penalised by this plan.

He can’t claim any of the credit for it, either – it was all worked out back in the 1970s by Margaret Thatcher, Keith Joseph and Nicholas Ridley. Their plan was to create insecurity among those who have to work for a living in order to increase the gap between the amount they earned and the amount their bosses earned. Thatcher lied about this, right up to her very last day as Prime Minister.

The Guardian‘s article on Osborne’s Mansion House speech says that he will challenge the Labour Party “to decide whether it wants to back the proposal that tax revenues should cover spending on both infrastructure and the day-to-day running of government”.

Why? Labour does not have to accept the premise of the question. Important conditions are omitted from it.

For example, if Labour was asked to back the proposal, along with plans to ensure that minimum wages would always be able to cover the cost of living – without the government subsidising employers in tax credits, landlords in housing benefit or lenders in subsidies to the City of London, that would be a far more enticing proposition. But Osborne isn’t offering that.

If Labour was asked to back the proposal on the condition that the extra money necessary to reduce the deficit and debt came from those who could most easily afford it – the corporations and shareholders who are currently reaping the benefits of five years of Conservative economic mismanagement, that would be far more interesting. But Osborne isn’t offering that.

Furthermore, Osborne can only dictate what his government will do. He can’t tell Labour what to do if Labour wins the next election because no government can bind the next. Any claim that he can do otherwise is a lie.

But then, we have already been shown that he has been lying. He will say: “The result of this recent British election – and the comprehensive rejection of those who argued for more borrowing and more spending – gives our nation the chance to entrench a new settlement.”

This is a jab at Labour’s plan to run a surplus on day-to-day spending, but to borrow for investment projects. This is not “more borrowing and more spending”, as Osborne describes it, but investment with a view to see profits in the future. That business principle has been around since commerce began – it’s how most Tory donors operate. Osborne is a hypocrite to scorn it.

But then, Osborne has borrowed more money in five years than every Labour Chancellor put together. That’s hypocrisy on a grand scale!

The Guardian article continues: “During the election, Labour struggled to cope with the accusation that it had spent and borrowed too much in the years leading up to the financial crisis. Some of the contenders to replace Ed Miliband as opposition leader have said subsequently the public finances should have been in a healthy state in the last years of a 15-year period of economic expansion lasting from 1992 to 2007.”

This indicates confusion on the part of the article’s author. Labour did not borrow and spend too much in the run-up to the financial crisis; the nation’s finances were in a much healthier state than at any time under Conservative control in the previous 40 years – and let’s not forget that the Conservatives supported Labour’s spending plans throughout this period.

Furthermore, the crisis was caused by bankers who were too loosely regulated, granting loans irresponsibly to people who could not pay them back. At the time, the Conservative Party was pushing Labour to deregulate banks even further.

So we know that the financial crisis would have been much, much worse if the Conservatives had been in office at the time. Osborne’s criticism of Labour is in extremely poor taste.

Talking of extremely poor taste, here’s more of Osborne’s speech. It seems he wants “a settlement where it is accepted across the political spectrum that without sound public finances, there is no economic security for working people; that the people who suffer when governments run unsustainable deficits are not the richest but the poorest; and that therefore, in normal times, governments of the left as well as the right should run a budget surplus to bear down on debt and prepare for an uncertain future.”

Like all clever lies, this contains a few truths. He’s right that without sound public finances, there’s no security for working people. Osborne’s plan for the public finances is particularly unsound – and targets people who have to work for a living with particular hardship.

But it is not necessarily true that the poorest suffer most when governments run unsustainable deficits. This government has singled out the poorest for suffering because it wants to ensure rich Tory donors can continue enriching the Tory party – we are living in extremely corrupt times.

His final claim – that all governments should cut debt to prepare for “an uncertain future” would have more weight if Conservative governments had not created much of that uncertainty themselves, by dismantling the UK’s industrial base and relying instead on the financial sector that let us all down so badly.

Osborne is full of hot air – but his plan won’t fly.

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