Caught out again: Grant Shapps is yet again having to justify his own shady behaviour.
Here’s a story to get you irritated and annoyed on a hot summer’s day: Your Prime Minister, his Chancellor and the chairman of their political party have all found novel property-based cheats.
According to the Daily Mirror, David Cameron and George Osborne have done a secret deal with the taxman to cut thousands of pounds off the tax they pay while they are living in their famous grace-and-favour homes on Downing Street.
Under the change, which HM Revenue and Customs has buried deep in the small print of its accounts, Cameron is saving a minimum of £1,228 a year, while Osborne’s bill has more than halved, saving him £1,560 a year.
The Mirror points out that this means Osborne is paying just £23 a week and Cameron no more than £35 to live at Britain’s most exclusive address, while the average rent in the UK is £195.
The paper quotes Alex Hilton, director of pressure group Generation Rent, who mocked the top Tories with their election slogan from 2010: “We’re blatantly not all in it together if the residents of Downing Street can wangle themselves a nice bonus while ordinary families are seeing their rent go up by more than wages.”
Conservative Club (Hatfield) Ltd has been fined £3,000 by the Financial Conduct Authority for its failure to produce accounts or name its officers. Despite these issues, it seems the club has been entirely able to provide £140,000 to fund Shapps as a candidate in his Welwyn Hatfield constituency.
Shapps has claimed the club is not connected to his local Conservative Association, which is odd – because not only is it based in the same building, paying rent to the association, but its members are all counted as members of the Conservative Party as well.
Was Shapps among the Conservatives who justified last year’s Gagging Act by claiming it was vital that the public had transparency from their MPs?
And didn’t Cameron say his government would be the most transparent ever, in its affairs?
Liars. Pigs with their snouts in the trough, all of them.
That’s frustration for the Coalition government, not the public (for a change).
If you’ve ever had to telephone a government department, you probably know that it is about as hard as the private company operating the service can make it. This is to enable that company to screw as much money as possible out of you before you have said a single word to a government employee.
The system is set so that there is only a small number of rings before a machine picks up – this is when they start charging you – and a recorded voice lists a series of options, from which you may choose. Then you wait.
They provide music for you to… enjoy, but this is interrupted at 20- or 30-second intervals by another recorded voice telling you that all operators are busy but your call is important.
After a non-specific length of time, a human being comes on the line and tells you that they can’t deal with your problem but will put you through to someone who can. Then its back to the music, interrupted by the recorded voice.
I have no idea what happens after that. I do not have the disposable cash to pay through the nose for the privilege of listening to ‘The Four Seasons’ being ruined. If I want to hear classical music, I’ll get Spotify or – Luddite that I am – spin a CD.
Currently, whenever I receive correspondence saying I should telephone a government department, I respond with a letter. Now that Royal Mail is privatised, I suppose I shall have to find another alternative when prices start to rocket.
Fortunately, it seems Margaret Hodge and the Commons Public Accounts Committee have taken note of the problem and action is being proposed, after it was revealed that people have been paying around £56 million to speak to government departments on premium rate phone lines.
How did they find out? Was it brought to their attention because of the high volume of ‘abusive’ messages from clients who had been told their calls were being recorded, but who still ended up screaming that they had been waiting forever, the call had already cost them the national debt of a small developing country and their spouse and family had given up and left them – most probably for a telephone company executive?
Sadly, this isn’t even news. It was reported in December 2012 that calls to HM Revenue and Customs had left customers paying £33 million a year. Somebody calling from a mobile would have spend £1.92 if they waited the average length of time on hold – and that is before anyone dealt with their query.
According to the BBC, the committee found that one-third of Whitehall numbers used by the public were higher-rate – including those for benefit, victim support and tax inquiries.
This higher rate means calls can cost 10.5p per minute. With the average call costing 56p, this means calls from landlines can last around five minutes and 20 seconds and we can deduce from our own experiences that most people are unlikely to have actually spoken to anybody human at all.
It seems possible, therefore, that the government telephone system – certainly that used by the DWP – is designed, not as a service to “customers” (their word), but as a means of keeping them away. Not only that, but it also seems designed to fleece them of as much money as possible while doing so.
“Customers of government services should be able to contact those services easily and cheaply,” the BBC article quotes Mrs Hodge. “Charging customers higher rates… is not acceptable, especially when the customers are often vulnerable people.”
There was also criticism that calls took too long to answer.
In response, the Department for Work and Pensions has said it will offer a choice between 0845 and 0345 numbers, allowing callers to choose the cheapest line. I’m willing to bet it won’t tell callers which line that is. Also, it will be massively over-used, leading to longer queues, so people will end up paying just as much.
You’ll have noted that nothing was said about cutting down waiting times.
Consumer group Which? wants public bodies and companies to provide either freephone or local rate numbers for customer service and complaints lines, saying it is “ridiculous” to force a huge bill on people, especially when they have to wait on hold.
It isn’t ridiculous if the phone service has been contracted out to a private company, though – as seems to be the case with the DWP, at the very least.
In that circumstance, it’s a money-spinner – one that is about to peter out, if Mrs Hodge gets her way. That’s why this is frustrating for the government.
How many Conservative MPs have financial interests in the Telecoms industry?
Several months ago this blog accused Iain Duncan Smith of being a liar and a coward because, not only had he fabricated statistics on the number of people leaving benefits because of his new benefit cap, but he had also weaseled his way out of an appearance before the Commons Work and Pensions Committee to account for this behaviour.
The very next day, we had to apologise (to readers) and publish a correction saying that the man we call ‘Returned To Unit’ would be attending a follow-up meeting in September, at which the 100,000-signature petition calling him to account for the benefit cap lies, organised by Jayne Linney and Debbie Sayers, would also be presented to MPs.
Apparently the meeting was being timed to coincide with publication of the DWP’s annual report for 2012-13.
Now it is November, and we have still had no meeting with RTU. Nor have we seen the annual report, which is now almost eight months late. Meanwhile the calamities at the DWP have been mounting up.
The latest appears in a Guardian report published yesterday, about the ongoing disaster that is Universal Credit. You may remember, Dear Reader, that the Department for Work and Pensions has admitted it had to write off £34 million that had been spent on the scheme; it subsequently emerged that the total amount to be written off might actually be as high as £161 million.
The Guardian article appears to confirm this, adding £120 million to the £34 already written off if the DWP follows one of two possible plans to take the nightmarish scheme forward.
The other plan would attempt to salvage the existing system, and is understood to be favoured by the Secretary-in-a-State. The drawback is that it could lead to an even greater waste of taxpayers’ money (not that this has ever been a consideration for Mr… Smith in the past. He’ll waste millions like water while depriving people of the pennies they need to survive).
Universal Credit aims to merge six major benefits and tax credits into one, restricting eligibility for the new benefit in order to cut down on payouts. It relies on the government creating a computer programme that can synchronise systems run by HM Revenue and Customs, the DWP itself, and employers. So far, this has proved impossible and a planned rollout in April was restricted to just one Job Centre, where staff handled only the simplest claims and worked them out on paper. Later revelations showed that the system as currently devised has no way of weeding out fraudulent claims.
A leaked risk assessment says the web-based scheme is “unproven… at this scale”, and that it would not be possible to roll out the new system “within the preferred timescale”. Smith has continually maintained that it will be delivered on time and on budget but, as concerns continue to be raised by senior civil servants that systems are not working as expected and there are too many design flaws, it seems likely this is a career-ending claim.
Is this why he hasn’t deigned to account for himself before the Work and Pensions Committee?
Is this why he hasn’t deigned to account for himself before the committee?
We have yet to learn why this man felt justified in claiming 8,000 – and then 12,000 – people had left benefits because of the £26,000 cap he introduced in April (he claimed it is equal to average family income but in fact it is £5,000 and change short of that amount as he failed to consider benefits that such families could draw). Information from polling company Ipsos Mori showed that the real number of people who had dropped their claims after hearing of the scheme was more likely to be 450 – just nine per cent of the figure he originally quoted.
Is this why he hasn’t put a meeting with the committee in his diary?
Perhaps we should not be surprised, though – it seems that RTU has never had a decent grip on the way his department works. For example, he allowed George Osborne to cancel Disability Living Allowance for one-fifth of claimants in 2010, claiming that the benefit had been “spiralling” out of control because it had 3.1 million claimants – triple the number since it was introduced in 1992. Smith said the rise was “inexplicable” but in fact the explanation is simplicity itself, as The Guardian‘s Polly Toynbee pointed out just two days ago:
“DLA is only paid to those of working age, but when they retire they keep it, so as more people since 1992 move into retirement, numbers rise fast. There has been no change in numbers with physical conditions, despite a larger population; back injuries have declined with the decline of heavy industry. There has been a real growth in numbers with learning disabilities: more premature babies survive but with disabilities, while those with Down’s syndrome no longer die young. More people with mental illness claim DLA now, following changes in case law: there has been no increase in mental illness, with 7% of the population seriously ill enough to be receiving treatment, yet only 1% claim DLA. Psychosis is the commonest DLA diagnosis, hardly a trivial condition. This pattern of disability mirrors the rest of the Organisation for Economic Co-operation and Development countries, with nothing exceptional here.”
In other words, from the moment he took over this hugely important government department, with its huge – and controversial – budget, Iain Duncan Smith had about as much understanding of its workings as a child.
It seems Sir John Major was exactly right when he expressed fears about the DWP Secretary’s ability last week, claiming his genius “has not been proven”.
Is this why we’ve seen neither hide nor … head of the Secretary of State?
Finally, Dear Reader, you will be aware that Vox Political submitted a Freedom of Information request to the DWP, asking for up-to-date statistics on the number of Employment and Support Allowance claimants who have died during a claim or while appealing against a decision about a claim – and that the request was dismissed on the indefensible grounds that it was “vexatious”. This was not good enough so the matter went to the Information Commissioner’s office and, according to an email received this week, will soon be brought to a conclusion.
Is this why Iain Duncan Smith is hiding?
Perhaps it’s time to drag him out of his bolt-hole and force some answers out of him.
Jayne (Linney), in her blog, has called on people who use Twitter to start tweeting demands for Smith to come forward, using the hashtags #whereisIDS and #DWPLateReview. This is good, and those of you who do so are welcome to use any of the information in this article as ammunition in such a campaign.
There is nothing to stop anyone writing to the press – local or national – to ask what is going on and why benefit claimants are being left in suspense about the future of their claims. People have to work out how they will pay their bills, and the continued uncertainty caused by Mr… Smith’s catalogue of calamities is causing problems up and down the country.
A short message to your MP might help stir the Secretary of State out of his slumber, also.
In it, she tells us (wrongly), “We are not in an environment where there is more money around,” and says that Labour will be tougher than the Tories when it comes to slashing the benefits bill. She stressed that she wanted to explode the “myth” that Labour is soft on benefit costs.
There are a few myths feeding into these statements. Firstly, the myth that millions upon millions of British citizens are living a life of luxury on benefits, which is, quite frankly, infantile nonsense. Benefits do not pay the ordinary claimant enough to afford huge luxuries and never did. They were always intended to cover the cost of survival while the recipient looked for something better. Anything else is a lie concocted by unscrupulous politicians, that you would be a fool to believe.
Then there’s the myth that the British taxpayer is being defrauded out of a fortune by benefit cheats who are (again) living a life of luxury at our expense. One look at the figures dispels that idea! The fact is that only seven people in every thousand commit benefit fraud – at a consequently small cost to the overall budget – and the amount they receive simply would not support the lifestyle our politicians are suggesting for them.
Let’s move up to a bigger myth – that people prefer to live on benefits than get a job. We’ve now moved from infantile nonsense to dangerous nonsense. The current situation, engineered by the conservatives in both Coalition parties, means there are very few jobs available – around 500,000 at any one time, with 2.5 million people chasing them.
And what kind of jobs are they? How many are zero-hours contracts? How many are part-time? These jobs do not pay more than benefits (“Making Work Pay” – another Tory lie) so anyone taking them will be out-of-pocket.
Meanwhile, the Tories in power have rigged the system so that anyone who does not spend the entire working week pestering local businesses for jobs that they aren’t offering will be sanctioned and will lose their benefit for a period of up to three years! It is entirely disproportionate, considering the state of the economy, and may cost jobseekers a lot more than a few quid a week in the long run.
But this is how the benefits bill will be slashed – by the Conservatives and by Labour, if Rachel Reeves is to be believed. Ministers of any party, living in the la-la land of made-up statistics, will sanction people for failing to work hard enough at securing jobs that don’t exist!
Ms Reeves says Labour’s jobs guarantee will ensure that those jobs do exist but we don’t know that for sure. We do know that she intends to continue Tory policy on sanctions – blindly.
That’s seven times more than the national bill for JSA, and more than 29 times the estimated cost of all benefit fraud. But wait – it gets better! This is only an estimate and it has long been believed that the true cost of the so-called “tax gap” is £120 billion – equal to each year’s national deficit, 24 times the cost of JSA or 100 times the cost of benefit fraud.
Why isn’t our government going after these criminals? Why hasn’t Labour promised to go after them if the Tories won’t?
Simple: Both main parties have been re-writing tax law to make it easier for rich individuals and large corporations to avoid paying tax, and ignoring flaws in tax laws that make avoidance possible.
So for example: In the late 1990s, the then-Labour government removed the tax on dividends that meant companies had to pay tax on profits if they wanted to pay them out to the owners. So for example Arcadia boss Philip Green’s wife Tina, who is technically the owner of the company and lives in Monaco, received a tax-free £1.2 billion dividend in 2005; if this tax had been in place, £300 million of that would have gone to the UK Treasury.
Gordon Brown slashed Capital Gains Tax from 40 per cent to 10 per cent in 2000, meaning income that his friends in private equity managed to engineer into capital gains would be taxed at a lower rate than was paid by their cleaners. Not the finest hour for the Party of the Worker!
And towards the end of its term, New Labour started dismantling the rules that guarded against industrial-scale tax avoidance by British multinationals, meaning profits returned to the UK from overseas subsidiaries would be exempt from tax. This created a substantial incentive for firms to send their income offshore.
Before the 2010 election, our old friend David Gauke made a lot of noise about stopping the limitless tax deductibility of interest payments, that had been used by Boots (the chemist) to slash its tax bill. Six months after the election, when he was in a position to do something about it, he was telling everybody the rules would not be altered because business considered them a competitive advantage.
The Coalition brought in tax exemptions for companies’ tax haven branches and for profits parked in tax haven subsidiary companies. Meanwhile, tax breaks for the cost of funding these offshore set-ups, from the UK, are also provided.
Corporation Tax will drop to 21 per cent by 2014, even though there is no evidence that cutting the rate will make the UK any more competitive in world business.
The Treasury’s mission is now to adjust the framework of tax laws to suit big business. The ‘Big Four’ accountancy firms are now well-entrenched in writing our tax laws for us – and they run the most popular tax avoidance schemes. Consultations have descended into a process of agreeing laws demanded by big businesses.
There are clear and irrefutable arguments that reversing these legislative idiocies and closing every other tax avoidance loophole will do far more for the economy than flogging the unemployed to death, looking for jobs that don’t exist.
But I don’t think former Bank of England economist Rachel Reeves will be interested in that. In 1975, an appalled taxpayer wrote to then-Chancellor Denis Healey, complaining that an employee of the Bank (which is supposed to work on preventing tax avoidance) had been giving advice on how to avoid tax. “I wonder if this is really part of the Bank of England’s duties,” the correspondent wrote.
The behaviour of Ms Reeves, the former Shadow Chief Secretary to the Treasury, suggests that she believes it is.
Not such a sweetheart: Dave Hartnett, formerly of HMRC, now of Deloitte’s. There’s a line by Herbert Morris – “something in the lad’s upturned face appealed to him. He hurled a brick at it”. Would THIS man’s upturned face appeal to you in the same way?
Dave Hartnett, the former tax executive responsible for the hugely controversial “sweetheart deals” that allowed multinational corporations including Vodafone and Starbucks to avoid paying billions of pounds in taxes to the UK treasury, has started work with Deloitte, the accountancy firm and auditor of – guess who? – Vodafone and Starbucks.
Hartnett quit as Permanent Secretary for Tax at HM Revenue and Customs and then took on the one-day-a-week role (according to, among others, The Independent). Deloitte – one of the so-called ‘Big Four’ accountancy firms at the heart of every major scheme for tax avoidance – continues in its role at the UK Treasury, helping (if you can call it that) to write the law on – guess what? – tax avoidance.
Considering all of the above, does anybody seriously expect us to believe that Hartnett was working for the public when he was at HMRC?
Getting a bit rough, is it? Iain Duncan Smith knows his flagship Universal Credit scheme won’t work – he just doesn’t care.
Earlier this week, a Job Centre somewhere in Mid Wales was graced by the presence of Yr Obdt Srvt, the author of this column. It’s true; I’m a real human being and I receive certain state benefits.
Having said that, it transpired during the conversation with my advisor that I was on one less benefit than expected; the DWP had, in its wisdom, cut me off from Income Support, with “No contact”. That was the on-screen comment. They stopped it but couldn’t be bothered to tell me.
But that’s by-the-way. The discussion ranged through the paid work that I do, my plans to expand my earnings, and my aim to get off-benefit as soon as possible -certainly “before Universal Credit comes into effect, in October”.
I said it, looked my advisor – who is, I should point out, a very nice person indeed, and therefore breaks all the rules of the DWP just by being there – in the eye, and we both had a little giggle about that one.
“That’s still right, isn’t it? In October?”
The conversation moved on.
Imagine my delight on Thursday evening, when I refreshed the BBC website and saw: “UNIVERSAL CREDIT PILOTS SCALED BACK”!
“The government is to scale back some of its plans to test a radical new reform to the welfare system,” the story stated. It was by James Landale, about whom I have previously complained to the BBC with regard to Tory bias, so it should be no surprise that the reason for the scaleback was buried 11 paragraphs down: “But Labour said this showed the scheme was in crisis and that the information technology needed for it was not ready.”
I turned to the newspapers for corroboration, and found it in the Independent, which put the issues right at the front of the story: “Ministers tonight significantly scaled back plans to begin piloting their controversial universal credit programme next month amid fears that the scheme is behind schedule and facing major problems.”
UC – I pronounce it “Uck” – was due to be tried out in four areas from late next month, but will now run only from a single Job Centre in Ashton-under-Lyme at that time. The three other pilot areas, in Wigan, Warrington and Oldham, won’t get started until “at least July” (it says here).
The plan is to merge around 30 benefits and tax credits into a single payment, on a tapering scale depending on a claimant’s earnings. It requires communication between computer systems belonging to the Department for Work and Pensions, HM Revenue and Customs, and employers who have to provide PAYE details (if I’ve got this right).
The scaleback is already being seen as an admission that the communications software – required for UC to succeed – doesn’t work.
There are also fears that the government doesn’t have anyone with the training or experience necessary to manage the scheme without messing it up completely and making the government look like a bunch of irresponsible fools. Again.
Needless to say, the government has denied that there is any problem. Apparently it is “sensible” to start in one area before rolling the system out elsewhere. Oh really? No attempt was made to explain why the original plan had been changed. Because the answer is too embarrassing?
This plan is a total disaster.
There can be only two reasons the government is pushing forward with it. Firstly, Iain Duncan Smith has said it will happen so it will happen, no matter how badly past-deadline and over-budget it turns out to be.
Secondly, if it doesn’t work, the only people who’ll be inconvenienced are poor people who are on benefits – and they won’t be able to take legal action over it because Legal Aid will have been cut for civil cases.
That’s why I want to be out of the blast zone when this one hits.
I fear for my future – and that of everyone else who will be caught up in this debacle – if I’m not.
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