David Cameron’s investment in the Cayman Islands-based Vietnam Enterprise Fund emerged after the Panama Papers [Image: Hannah McKay/PA].
This Blog was one of many social media sites, organisations and individuals that called for David Cameron’s resignation when the ‘Panama Papers’ scandal broke earlier this year.
Now, his former director of communications has revealed that he was close to resigning and the revelation that he had another tax-avoiding foreign holding could have forced his hand.
But Craig Oliver said it never came to that because he simply did not release the information.
Nothing in the Guardian article quoted below shows that Cameron was accurate in the statement he eventually released, that “the prime minister, his wife and their children do not benefit from any offshore funds”.
And public opinion is likely to have swung against him in a big way if the Vietnamese holding had become public knowledge.
So get angry. Politicians are supposed to declare all their assets and interests to the Independent Parliamentary Standards Authority but the then prime minister had clearly flouted this rule.
It makes no sense to say he had an investment that did not benefit him or his family. Why have it, then?
But our watchdogs appear to have let us down.
I think this deserves greater investigation. How many more MPs are fabricating their entry in the register of members’ interests?
Downing Street officials were alarmed to discover that David Cameron had a holding in a Vietnamese investment fund registered in the Cayman Islands at the height of the Panama Papers revelations, according to a book by his former director of communications.
Sir Craig Oliver became aware that the then prime minister had previously invested “in something called the Vietnamese Enterprise Fund” following the Guardian’s investigation into the Panamanian law firm Mossack Fonseca. The information was not released to the media at the time, after Oliver and his team decided: “We think it’s fine, but what if it’s not?”
The Vietnam Enterprise Fund is run by Dragon Capital in Vietnam, but registered in the Cayman Islands. Dominic Scriven, the chief executive of Dragon Capital, confirmed that Cameron had previously invested in the fund, and believed his father, Ian Cameron, had decided to invest the money.
In an attempt to control the story in April, Downing Street brought in a series of experts to try to make sense of Blairmore’s tax affairs, Oliver’s book said. They also carried out an analysis of Cameron’s personal tax arrangements and it was during this that the Vietnam Enterprise Fund investment emerged.
At the time, Cameron was facing one of the worst crises of his premiership, with Oliver acknowledging that at one point, he thought the then prime minister might have to resign over the Panama Papers.
Oliver wrote that Cameron and his wife, Samantha, had “an unhappy couple of hours in calls” with their accountant, before putting out a statement saying that the “prime minister, his wife and their children do not benefit from any offshore funds”.
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Remember back in school, when you were taught that we have laws in place to ensure justice for everybody?
Isn’t it a shame you weren’t taught the facts?
It seems every clearer that laws are written by whoever is rich enough to buy the politicians who enact them – especially in a Conservative, or Conservative-led, government.
So – for example – if you are one of the elite super-rich who, between them, have an alleged £20+ trillion stowed in offshore tax haven bank accounts, you could happily bung a few thousand – or indeed a few hundred thousand – to the Tories to stop their Chancellor from increasing the powers of HM Revenue & Customs to track them down and make them pay their fair share.
That could explain the discrepancy between what Tory Chancellor George Osborne said in April and what he’s saying now.
Back in April, he told us he was consulting on a new criminal offence carrying a possible prison sentence that will ensnare people with undeclared foreign income – even if they did not intend to evade taxes.
Osborne said: “We are changing the balance of the law so the burden of proof falls on those who are hiding their money offshore and we don’t have to prove that they intended to do so.”
“It is totally unacceptable for people not to pay the tax that is due and the message will be clear now with this new criminal offence that if you’re evading tax offshore, there is no safe haven and we will find you.”
What is he saying about it now?
Absolutely nothing.
Instead, the plan to make offshore tax evasion a criminal offence has been quietly dropped from a draft Financial Bill that was published last week.
According to Citywire, Ray McCann, partner at Pinsent Masons, told the Financial Times: “I think that the proposal is now likely to quietly disappear. There is no substance to it [italics mine].”
Perhaps we should be checking for more substantial donations to the Conservative Party, between April and today’s date, instead.
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Of course, he didn’t say so in quite as many words, but that’s what he meant.
Perhaps you need to be convinced?
Okay. According to the BBC, he said in his conference speech today (Monday) that a future Conservative government would freeze benefits paid to people of working age for two years, in order to “save” £3 billion.
This is important because he reckons “an extra £25bn of permanent savings would be needed to eliminate the UK’s deficit”.
“The £3 billion saving is part of £12 billion in welfare reductions previously floated by the chancellor. He also said there would be £13 billion of Whitehall savings, which will include public sector pay restraint.”
How wrong-in-the-head can one man be?
In the same speech as he announced a huge pensions payout to 320,000 people lucky enough to have a relative rich enough to create a large pension pot and unfortunate enough to have died before spending it all, he said he would be continuing to victimise no less than 10 million households, more than half of which are working (the report said half the households affected by the benefit freeze are working, and those affected by public sector pay restraint are, by definition, working).
These are the people who should be building up the economy, and instead, this monumental ignoramus is crushing them down.
The giveaway is the language being used: Osborne reckons the Treasury has to make “savings”.
What he really means is that he thinks the Treasury needs an extra £25 billion per year in order to clear the deficit. Let’s not debate whether his calculations are wrong. They probably are – after all, he has been wrong every year since he took over as Chancellor, why should things be any different now?
Even if he is right about the sum of money involved, he’s looking at the situation the wrong way. If the Treasury needs an extra £25 billion, then why not build up the economy to provide that money?
This would mean telling businesses that working people should be paid a Living – instead of starvation – Wage, providing them with enough money to buy the things they need, rather than depending on benefits. This money would build up the businesses it is paid into, meaning they would require more employees, boosting the taxpaying workforce and the tax take.
We know that the money is available to do this because our business leaders are banking an estimated £120 billion offshore every year, so arguments that they can’t make ends meet just won’t work.
Alas, it seems this plan is nothing but a forlorn hope. Osborne won’t try to build the economy. He’s been too busy shrinking it over the last four and a half long years.
And he’ll never clamp down on tax avoidance schemes for the very rich.
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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?
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The problem in a nutshell – and this cartoon was drawn in 1972! [Image: Alan Hardman]
It’s terrific when an article makes you think.
Why Capitalism needs unemployment, by Cheltenham & Gloucester Against Cuts, tells us that unemployment is used as a weapon against the workers – with the threat of it used to force pay cuts on employees, while we are told to fear inflation if unemployment falls.
So fatcat company bosses win either way, it seems.
The article commented on Margaret Thatcher’s ideological mentor, Milton Friedman, who “understood that low levels of unemployment give confidence to workers, who can fight for better pay and conditions. When they’re successful, the profit margins of capitalists are reduced, causing them to put their prices up in response“.
We know this happens; we have seen it many times. Some may argue that it is different from cases in which shortages of particular commodities push up their prices and the prices of products that are made from them – but, with fuel prices as the only notable exception, have you ever seen prices drop after these shortages end?
The system is rigged to ensure that working people stay poor, either through pay cuts during high unemployment or inflation in low unemployment; meanwhile the employers and shareholders ensure that they stay rich, by sharing out extra profits gained by keeping pay low or by putting up prices.
What do they do with this money?
The answer, it seems, is nothing. They bank it in offshore tax havens and leave it there. This is why, we are told, Britain’s richest citizens have more than £20 trillion banked offshore at the moment.
That’s more than £20,000,000,000,000! Enough to pay off this country’s national debt 18,000 times over and still have plenty to spare. Enough to solve the problems of the world, forever. It is, in fact, more money than we can comfortably imagine.
It is doing nothing.
Faced with this knowledge, there can only be one logical question: Why?
Why rig the system so that ever-larger sums of money pour into these offshore accounts, if nothing is to be done with it? Where is the sense in that?
The only logical answer appears to relate to its effect on workers: Keeping the profits of their work away from the workforce means they are kept in misery and servitude to the ruling classes – the parasitical board members and shareholders.
There are knock-on effects. Taxpayers are hit twice – not only are they forced to grapple with ever-more-hostile pay offers, but their taxes pay for in-work benefits that subsidise corporate-imposed pay levels; they support people who have been forced into unemployment unnecessarily and the silly make-work schemes that are forced on those people by the Department for Work and Pensions, under threat of sanction.
It’s a protection racket. There should be a law against it. And this begs the next question: Why isn’t there a law against it? How can this corrupt system be dismantled and what should replace it?
That’s a very good question, because the other cosh being held over our collective heads is the possibility that firms will move abroad if new laws in this country threaten their massive profits. This is where an international agreement between nations or groups of nations would be very useful, if it was carried out in the right way – a Transatlantic, or Trans-pacific, Trade and Investment Partnership, perhaps.
And what do we see? Plans for such agreements have been put together and they do the exact opposite of what they should – tying the workers into ever-worsening conditions. This is why the TTIP, currently being pushed on the European Union, must be rejected – and why bosses will do anything to ensure it succeeds.
This is the situation. It seems clear that nothing will change it for the better until somebody has the courage to stand up to these manipulators (who were probably schoolyard bullies back in the day) and say enough is enough; change is coming – do what you will.
Tax evasion and avoidance is already a huge issue here in the UK; perhaps we need to make a criminal offence of manipulating the economy – with prison sentences for bosses who put their prices up purely to retain high profit margins when their salaries are already dozens of times higher than those of their workers.
But what else is needed? How can such a mechanism be brought in without scaring off business? Or should we let them go, and put something fairer in their place? Ban them from trading in the UK unless they conform to the new model?
These are ideas that need exploration – by many people, not just a few.
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Ms Leadsom is now responsible for the government’s Help to Buy property scheme, making this even more embarrassing as the allegations against her refer to shares in a property company.
The allegation is that she took advantage of offshare banking arrangements for her buy-to-let property company, placing her shares into controversial trusts in order to reduce her inheritance tax bill, for the benefit of her children.
The property firm Bandal, created by Ms Leadsom and her husband, another ex-banker – also created charges over two of its buy-to-let properties in favour of the offshore branch of an investment bank. Apparently this indicates that she obtained loans from the Jersey-based bank that were secured against the buy-to-let properties.
While none of the above is actually unlawful, it does mean there is at least one alleged tax avoider – not only in the Conservative Party but in the Treasury. The self-styled ‘Party of Financial Competence’ has become, once again, the Party of Financial Fiddles.
According to The Independent, “Since becoming an MP, Ms Leadsom has campaigned vigorously against bankers’ bonus caps and a financial transaction ‘Tobin’ tax.
“It is not the first time millionaire Tory ministers have been caught up in tax avoidance claims.
“The Defence Secretary Philip Hammond, former Chief Whip Andrew Mitchell and Mr Osborne were all accused of legal tax avoidance in 2010 by Channel 4’s Dispatches programme. All three men denied any wrongdoing.”
This is a serious embarrassment for George Osborne, who told the nation, “If you’re hiding your money offshore, we are coming to get you,” in a speech last week.
In the case of Ms Leadsom, it seems, he doesn’t have far to go.
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Diddled into debt: A corporate tax avoidance scam is conning workers out of decent pay and the government out of tax and NI money, after causing the financial crisis.
“A bank in the UK could lend, say, $1bn to a US bank… generating tax-free income in the UK but a tax deduction in the US – and then simply borrow it back. For the second leg a different instrument could be used that generated tax-free income in the US and a tax deduction in the UK. The banks had simply swapped $1bn, to no economic effect beyond two tax breaks, while quite possibly keeping any mention of the debts off either’s balance sheet. Such tricks – the creation of debt more for tax advantages than any real business need – undoubtedly contributed to huge levels of inter-bank indebtedness that triggered the financial crisis.” – Richard Brooks, The Great Tax Robbery, p86.
If you are not deeply disturbed by the implications of the above quotation, read it again until you are. Richard Brooks is saying that the major banks of the UK, the USA, and who knows how many other countries colluded to hide massive amounts of money from the tax man by claiming – falsely – that it was debt.
The financial crisis happened because the banks could not service the debt they had created – they could not even pay back the interest on it, let alone the debt itself – and so the government was forced to step in and bail them out. So now the government had not only lost the tax it was due from the bank profits that had been hidden by the dodge Mr Brooks mentions, but it had now taken on the fake debt that had been created. The taxpayer was doubly the loser.
Who pays back the debt? Not the banks. Not the large corporations that are also avoiding tax. Not the rich businessmen and women who dreamed up the tax dodges. Thanks to changes in the law and already-existing legal loopholes that have not been closed by the Coalition government, they have been able to park their ill-gotten gains in offshore tax havens, depriving the nation of the wherewithal it needs to fix the problem they created.
Now it seems the government is also being deprived of badly-needed tax money because of the way large firms are structuring their pay packets – to the disadvantage of low-paid workers. The details were in Channel 4’s Dispatches documentary, Secrets of Your Pay Packet, broadcast on October 21.
With more people in work than ever before, the UK should be getting massive amounts more in tax and National Insurance, allowing it to provide the services we expect and pay down the national deficit. But the deficit hasn’t budged. Why?
Because the new jobs are part-time, self-employed or temporary.
Self-employed contracting means you can end up working for less than the minimum wage (you’re paid a fixed daily rate for the job, not the hours it takes to do it, so if it takes a long time to get it done, your pay-per-hour diminishes proportionately – and, as you are self-employed, you’re not entitled to the minimum wage).
Conversely, if you are employed part-time, you can end up working too few hours to qualify for tax or National Insurance (so you don’t get enough credits to pay for your pension later in life and the Treasury doesn’t get the tax money it needs to pay for services and clear debts) and on a personal level you don’t work enough hours to qualify for decent holidays. The company doesn’t pay for employees going on annual leave, potentially saving tens of millions of pounds.
If you work overtime, this doesn’t count towards annual leave, of course. So you can be employed on a part-time contract for, say, three days a week, be asked to work two more days overtime (a full five-day week) and lose out on all the benefits a full-time worker would expect.
The threshold is 20 hours per week. If you work less than that, employers do not have to pay NI contributions which would cost them nearly 14 per cent of pay. So people may work all their lives but never qualify for the state pension.
This is why more people are now in work than before the recession – it’s a cheat by bosses. They’re the ones who pay your tax and NI contributions. If you’re on pay that’s below the new tax threshold, you don’t pay tax. We have the Liberal Democrats to thank for that. It seems like a good deal but in fact it isn’t.
Meanwhile the companies say that cutting down working hours has saved jobs in a hard business environment, while the number of full-time jobs is down and wages have now fallen by 12 per cent in real terms (up from nine per cent, only a few months ago).
It is cheaper for companies to employ more people on shorter hours because they pay less to the government in tax and NI. And they say the “flexible” labour market has been a boost for the country, that having a job is better than having no job, and that it will help people progress.
That is not what we see.
We see a workforce ground down by the pressure of making ends meet on part-time or zero-hours jobs, making no NI contributions, getting very few holidays, and afraid to challenge the situation because their employers can simply let them go and hire someone else from the huge 2.5-million-strong pool of the unemployed (who are desperate for jobs because the DWP fills their entire lives will bullying and threats about losing their benefits).
We see the government completely unable to cover its costs because its own tax system – written by the ‘Big 4’ accountancy firms that have been responsible for more tax avoidance schemes than any other organisations in the country – actively promotes corporate tax avoidance; and Conservative ministers are totally indifferent to the huge losses they are piling up, because it means they can cut public services, or sell them off to (again) big corporations who will then avoid paying tax on them.
And we see the rich corporates laughing all the way to the (offshore) bank yet again.
The Coalition government has tried to tell us that it must squeeze benefits for the extremely poor, and low-paid working people must work much harder, in order to pay off the debt that – no matter what ministers tell us – neither they, nor the last Labour government, created.
In fact, this has been a story of tax avoidance by the very rich. A huge scam, running for decades, and hidden from the British people.
Off-message: If Rachel Reeves had promised to get as tough on tax avoidance in her previous job as she is promising to be on benefits now, Labour might have had more credibility.
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.
Face of evil: Because of creatures like Lord Freud, Parliament should legislate against a new crime – abuse of power. (Picture by Black Triangle)
Lord David Fraud – sorry, Freud. That was a Freudian slip – the man who said “People who are poorer should be prepared to take the biggest risks; they’ve got least to lose”, has been at it again.
According to Inside Housing this man, whose principles allowed him to take Labour’s money and provide that government with his duff advice before running off to join the Tories as soon as it looked as though they would be in office after the 2010 election, wants to bully councils out of an entirely legal way to help their tenants avoid paying the punitive and unfair bedroom tax.
The tax, as we all should know by now, affects people living in social rented accommodation with more bedrooms – as defined by the rent agreement (if I recall correctly) – than the government last year arbitarily decided they need. The options are to give up 14 per cent of your housing benefit if you have one ‘extra’ bedroom, 25 per cent if you’ve got two – or move to smaller accommodation which does not, in the vast majority of cases, exist.
Out of 600,000 affected families, 582,000 have nowhere else to go. So this is a thinly-veiled robbery, from people who can do nothing to prevent it.
It is a tax that has offended many councillors in local authorities across the UK, and some came up with the novel idea that rooms within the properties they own may be reclassified as offices or ‘non-designated’ rooms, thereby avoiding the need to pay the tax. After all, a room is just an enclosed space within a building, right? If it doesn’t have a bed in it, why should it be classified as a bedroom?
Lord Fraud – sorry! Freud – doesn’t see it that way. He wants that cash and couldn’t care less that people in social housing need it to keep a roof over their heads. He has been spending the last month or so (since the councils started re-classifying) trying to put a stop to it and now, it seems, he thinks he has found a way.
In a letter to council chief executives yesterday (Thursday), he has said redesignating properties without reducing their rent to reflect the loss of a bedroom creates an inconsistency for housing benefit and rent purposes.
“Blanket redesignations without a clear and justifiable reason and without reductions in rent, are inappropriate and do not fall within the spirit of the policy,” his letter states [italics mine].
“If it is shown properties are being redesignated inappropriately this will be viewed very seriously.” Meaning: The DWP will commission an independent audit to “ascertain whether correct and appropriate procedures have been followed”. Redesignation without reducing rent would lead to incorrect housing benefit subsidy claims being submitted to the DWP, he stated, adding, “Where it is found that a local authority has redesignated properties without reasonable grounds and without reducing rents, my department would consider either restricting or not paying their housing benefit subsidy.”
The flaw, of course, is this: The size of these properties will have remained the same, therefore so should the rent. But a room without a bed in it is not a bedroom.
Let’s move on to another tax avoidance issue. Since we’re discussing actions that are “inappropriate and do not fall within the spirit of the policy“, what about tax avoidance schemes that are used by very rich individuals, in order to avoid paying the full amount they owe to the UK Treasury?
This has been going on for more years than any of us can remember and the total currently parked offshore, where the tax inspector can’t get at it, is estimated at £21 trillion (it might actually be dollars, but either way it’s a heckuva lot of money).
If the turncoat Lord Freud’s new Conservative friends had been quick off the mark in dealing with this aspect of tax avoidance, he might have been justified in his own hasty behaviour, but they haven’t. Even now, there is no guarantee that the Treasury will get anything back from the tax havens, despite all its posturing and sabre-rattling. There’s just no interest. And by the time anyone gets around to actually taking action, the offenders will have had plenty of opportunity to move their capital elsewhere.
But the actions of the individual taxpayers who have chosen to put their money out of HMRC’s reach is no closer to the spirit of UK tax policy than the actions of the councils who have chosen to protect their tenants.
The difference is that one set of individuals is acting in selfish self-interest, while the other is taking action to help others.
Freud, by his own actions, has shown us all exactly where his loyalties lie. He’s not against tax avoidance, as long as it’s his kind of people doing it. And he loves to bully the little people. He really gets a kick out of threatening them, and he’s not above bending – or changing – the law to do it.
That’s why I say any new government coming into office after 2015 needs to enact a law that criminalises abuse of power – being any legislation or act by a government member that unfairly punishes any named individual or group within British society.
So for example here, it could be applied because Freud wants to penalise hundreds of thousands of people with a tax they can’t pay, when there is no alternative because they have nowhere else to go (except to be thrown out onto the streets, and then the question to be asked is, who takes over the properties after they have gone?) – and is now threatening to punish any attempt legally to avoid paying that unfair tax with another unfair punishment, because others who also legally avoid paying a – fair – tax are being allowed to do so.
As a criminal offence it should involve the sternest penalties possible – stripping the guilty of any titles and privileges, and all property, alongside a lengthy prison sentence involving the hardest labour to which prisoners may be put. Anyone who is willing to deprive the defenceless of everything they own should be made to lose everything as well.
So Lord Freud, for example, would have to kiss goodbye to his luxury mansion in Kent, and everything in it. When he finally came out of clink, he’d be living in council accommodation – and if nowhere could be found that didn’t have more bedrooms than he needed, he’d have to pay his own bedroom tax which would be poetic justice.
I know. It will never happen. Politicians look after their own.
The pen is mightier: It is the war of words between Coalition distortion of the facts and those of us who value accuracy that will determine the outcome of the next UK general election.
It is most vexing when people refuse to believe facts that are presented to them.
Readers may recall an article on this blog nearly two months ago, in which the claims of Powys county councillor and Conservative general election candidate Chris Davies were thoroughly repudiated, using verifiable factual information. It was entitled ‘Does anybody believe this Conservative claptrap dressed up as information?’
You may be astounded to learn that, despite the veritable mountain of information in my 700-word missive, some people still did believe it!
Admittedly, they waited a while before breaking cover, but sure enough, in the letters page of the Brecon and Radnor Express dated June 6, a Mrs Lloyd of Brecon wrote the following:
“I must write to convey my disappointment at the handful of people who have written to your paper recently opposing welfare reforms. I assume from the tone of these letters that they are probably Labour Party supporters.
“Like lemmings blindly following each other off the cliff, these people have decided to oppose one of the most popular government policies in recent memory.
“I am no great fan of the Lib Dem/Conservative coalition but this handful of socialist Labourites must be the only people left in the UK who don’t think the welfare system needs urgent reform.
“I say I am disappointed because I have always voted Labour and it saddens me to see Labour so out of touch with public opinion.
“Our benefit system is far too soft and state handouts simply must be cut. Why can’t Labour see this?
“I am also ashamed that the local Labour Party… has decided to adopt a policy of scaremongering by trying to label one reform as a ‘bedroom tax’.
“It is not a tax and Labour knows that full well.
“A tax is a levy on something you own, earn or purchase: state provided housing benefit is none of these.
“Is it any wonder that people do not trust politicians when an established and legitimate political party like Labour resorts to such trickery?
“Having spare rooms wasting at the taxpayer’s expense is simply inexcusable and unaffordable.
“Why do Labour want the taxpayer paying for people to be in large flats or houses with unused bedrooms, when there are larger families who need this space?
“If people receiving housing benefit refuse to move to smaller housing and insist on staying in excessively large accommodation, then they should be prepared to pay for it just like every other family.
“To be fair to the Conservatives and the Lib Dems, they have decided to tackle an issue that Labour feels it cannot.
“The cynical amongst us would say Labour’s refusal to support benefit reform is because of their historic reliance on the votes of the unemployed and those receiving benefits.
“A turkey doesn’t vote for Christmas.”
You’re probably shaking your head in disbelief but in fact this is quite a cleverly-constructed letter. Look at the way she tries to establish that right-thinking people must approve of the way Iain… Smith and his mates are hacking apart our social security and that anyone who doesn’t – “probably Labour Party supporters” are a “disappointment”. She later attempts a feat of mind-reading when she tells Labour members that they feel they cannot tackle an issue that the Coalition parties have – and her final comment attempts to tar Labour with dishonest, or at least covert, intent by claiming that the party relies on the unemployed and benefit-receiving vote. One might hope that Labour’s recent adoption of a harder attitude to benefits will have persuaded Mrs Lloyd that this is not true, but this is by no means certain. It wouldn’t suit her purposes.
I particularly enjoy the next line because it conflates two gross misapprehensions: Lemmings do not fling themselves over cliffs suicidally. The makers of a Disney (!) documentary created that myth for reasons of their own, and it seems likely that Mrs Lloyd had reasons of her own for running it together with the myth that the Coalition cuts are “one of the most popular government policies in recent memory”. They’re not, and never have been.
Labour does not oppose welfare reform. It opposes the Coalition’s attack on the poorest and most vulnerable in society, carried out under the pretence of reform. The only Coalition welfare policy that has won any popular support – the benefit cap – is also supported by Labour. But the average family income is not £26,000 per year, as the Coalition states – that is a lie. That family would receive state benefits, bringing its income up to £31,500, or slightly more than £600 per week. This was glossed over because the Coalition would not be able to penalise enough poor people if the cap was set at that – realistic – level.
The other cuts to social security benefits have provoked a storm of protest – particularly the genocidal pogrom against the sick and disabled, and also the bedroom tax, which Mrs Lloyd singles out, and to which she applies her own quaint definition of ‘tax’.
So let’s put her straight. It is a tax, as it is a compulsory contribution to state revenue, levied by the government against a citizen’s property, to support government policies. Mrs Lloyd seems unaware that 97 per cent of the 600,000 families it affects – that’s 582,000 families – simply have nowhere else to go. The smaller accommodation into which she expects them to move does not exist. And the definition of ‘bedroom’ has been applied to small box rooms that would not accommodate a bed, let alone the person who would be expected to sleep in it! The tax is therefore exposed as a scheme to screw money out of the very poor, put them into arrears with their landlord, and sling them onto the streets.
This is why I support the redefinition of these ‘spare’ bedrooms, as taken up by some councils, into ‘offices’ or ‘non-designated rooms’. This is legal tax avoidance – putting the tenants of such homes into the same category as the billionaires who are sitting on £21 trillion of untaxed earnings in offshore tax haven bank accounts. If the government kicks up a fuss about ‘bedroom tax’ avoidance, it can damn well go and get those trillions back first.
As for the taxpayer being made to pay for unused bedrooms, that decision was made by the Coalition government, not the Labour Party, when it decided to cut Landlord Subsidy (that’s Housing Benefit to you, Mrs Lloyd) rather than cap rents at a reasonable level.
The remark that people are refusing to move to smaller accommodation is so far removed from reality that it defies belief, as is the implication that they do not pay anything towards their rent. For Mrs Lloyd’s information, the vast majority of Housing Benefit claims are made by people in work, who do pay the majority of their rent; the amount of Housing Benefit they receive is a top-up because the wages they receive are too low. I don’t see you blaming employers who have increased their own pay eightfold over the last 30 years, while employees’ pay rises total just 27 per cent – far less than cumulative inflation, Mrs Lloyd.
The opinions expressed by this correspondent are based on nothing but myth and should be fought tooth and nail. If her distorted views are accepted as fact by the majority of the voting population, then the Conservative Party will win the 2015 election, and those of us who value facts and honesty will only have ourselves to blame if we have not done all we can to rectify matters.
By the way, the Brecon and Radnor Express‘s editorial email address is [email protected]
I was going to write about a more recent letter to the same newspaper, which prompted me to contact the UK Statistics Authority with a complaint. But that will have to wait for another day.
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