Tag Archives: Richard Murphy

Economist explains why Truss’s early choices have all been bad

Liz Truss: bad choices already mean we have another rotten prime minister.

This Site has a lot of time for Richard Murphy. As an economist, he seems to be on the side of the people, rather than selfish commercial interests, and he also seems to know the right way to run an economy.

That’s why I was very interested to read his thoughts on the early decisions of Liz Truss as Tory leader and prime minister.

He’s horrified:

That’s a prediction, right there: Truss will seek to dismantle the state.

So: Truss intends to bring in more pollution as part of a policy of climate change denial.

So: Truss is determined to worsen your money woes, not ease them.

This is fascism, by the way.

To survive, we have to do better than this. He’s saying that if Truss sees through her agenda, we won’t.

Mr Murphy also had this to say about Truss’s immediate spending plans with regard to the current cost of living crisis:

So now you know.

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Is it Labour’s duty to oppose Article 50 – or to oppose the Tory deal arising from it?


Richard Murphy of Tax Research UK has put forward the following as reasons Labour should not support the invocation of Article 50 of the Lisbon Treaty when the Tory government puts it before Parliament:

Exercising Article 50 now is reckless because we do not know if it is revocable or not… The government has a duty to find out the consequences of exercising Article 50 before acting.

Labour would need to explain that exercising Article 50 must take place on the basis of a viable and costed alternative plan. It cannot be the case that exercising this option on the basis that nothing will change unless to the advantage of the UK, as the government is implying, is realistic when it is glaringly obvious that the EU will extract a price for our departure. Labour has find out what that price is before it can vote for Artcile 50.

Then Labour has to establish how long this process will take. The EU and all international precedents say that two years is quite unrealistic.

And last … the direct cost of leaving has very obviously to be established. We know there is one and that figures of up to £60 billion have been mentioned. Some candour on what that sum might really be, how it will be paid, and when that might be necessary is required from the government and on that there has been no hint of a suggestion to date.

Source: Tax Research UK » It is Labour’s duty to oppose Article 50 given what we know now

I have a lot of respect for Mr Murphy, although I don’t always agree with him. He has clearly thought carefully about this, but I don’t agree with him now.

Like it or not, there has been a referendum on membership of the EU. The UK electorate voted and there was a clear majority in favour of leaving. Claims that only a quarter of the population actually voted for that will be ruled invalid, as half of those who didn’t vote did not have a right to, and the other half chose not to, indicating that they didn’t care about the result. That is not my opinion; it is the argument.

As Jeremy Corbyn says, Labour has a duty to respect the will of the people, as exercised in the referendum. So Labour must support the invocation of Article 50.

However:

Mr Murphy’s arguments have validity, if related to Theresa May’s plan for the way the UK leaves the EU.

She has not told us if our departure is reversible; while she has told us the process will take two years, she has not explained her reasoning; she has not told us the cost of our departure; and she certainly hasn’t given us any reassurance that her alternative plan – for a UK outside the EU – even exists, let alone whether it has been costed and is viable!

Should Mr Corbyn vote against Mrs May’s plans? Almost certainly.

Should he vote against invoking Article 50? Probably not – because that would be against the will of the people.

So what’s the answer? If he calls for a delay, until there is a costed plan, Mrs May will accuse him of failing to respect the referendum verdict.

Well, let’s think about what will happen if he supports Article 50, and the Tories don’t have a workable plan. Whose fault will that be?

It will be Theresa May’s fault, not his. He’ll have supported the will of the people, but Mrs May will have failed them – and proved she is incapable of running the UK – by failing to come up with a viable plan within the budget available.

One more stipulation: Any plan Mrs May puts forward will need to ensure that no UK citizen loses out financially because of Brexit. Nobody voted for that.

So it isn’t Mr Corbyn who is at a disadvantage here; it is Mrs May. He can support Article 50 with no qualms at all.

If she wants to retain the confidence of the British people, she’d better stop sitting on her thumbs and get her act together!

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Welfare is perfectly sustainable, Gideon – it’s the TAX GAP that’s the problem!

George Osborne's most famous performance in Prime Minister's Questions, from November 2014. What was he on?

George Osborne’s most famous performance in Prime Minister’s Questions, from November 2014. What was he on?

George Gideon Osborne. Was there ever a more foolish fellow running the Exchequer?

Probably not. Did you hear him in Prime Minister’s Questions yesterday, trying to tell us that the UK’s social security bill makes up seven per cent of welfare in the whole world, and that this is “unsustainable”? What a berk.

The first question this raises is, can he prove his “seven per cent” claim?

No – he’s wrong. The claim is based on a comment by German Chancellor Angela Merkel about EU social security being 50 per cent of that in the world, making the UK’s share 7.4 per cent of the total. Unfortunately for Thick George, she was using World Bank data that only included 96 countries and excluded large economies like Canada and Mexico, where social security makes up 18 per cent and 17 per cent of each country’s GDP.

The Guardian reckons that, if all countries were taken into account, this would not seriously affect the UK’s share of the total, suggesting that it accounts for the rounding-down to seven per cent from 7.4 – but there’s no proof either way. The article also quibbles about definitions of social security spending.

What this really shows is not that the UK spends too much, but that other countries spend too little.Mr

Nearly half of the world’s population – three billion people – must try to scrape a living on around $2.50US per day – or less. Of those, 1.3 billion are in extreme poverty, having to survive on less than $1.25 per day. That’s around 80p.

The countries in which they live – mostly developing countries – don’t have social security at all; that is the scandal.

If they did, then Gideon could not quote his “seven per cent” figure – it would be much lower.

What’s stopping these developing countries? Well, the organisation most directly responsible is probably the International Monetary Fund, whose ‘Structural Adjustment Programmes’ have put these countries into a continual cycle of debt; they can’t help their populations without breaching the IMF’s rules. This is the same IMF that wants the UK to run a debt economy, by the way.

So much for Osborne’s claim that social security spending in the UK is too large a proportion of the world’s spend. What about his “unsustainable” comment?

He said: “We can either carry on on a completely unsustainable path or we can continue to reform welfare so that work pays and we give a fair deal to those on welfare and indeed a fair deal to the people, the taxpayers of this country, who pay for it.”

Ignoring for the moment the fact that those on social security are in fact taxpayers themselves, let us consider the fact that the UK government does not collect as much tax as it could, and in fact offers extremely lucrative tax avoidance opportunities to the obscenely wealthy.

Did you know that you could fit the owners of half the world’s wealth into a double-decker bus, with space to spare? Less than 80 people own more money than the other seven billion, and you can bet that the majority of those with UK citizenship aren’t paying their full whack of tax!

A report by Tax Research UK has indicated that the amount of tax being avoided is around £122 billion every year. Compare that with the UK’s current budget deficit of £107 billion per year and you will see that – in a perfect world in which it was all collected – we would be running surpluses of at least £15 billion per year.

The Conservative government, of which Osborne is Chancellor, tells us the most effective way of tackling the deficit is by cutting the public services on which many people rely. They say it is the only option without increasing taxes.

But, with more than £100 billion in taxes going uncollected, why is the government slashing funding to the HMRC investigative branch?

Over on Tax Research UK itself, Richard Murphy has taken David Gauke, the financial secretary to the Treasury, to task over his fudged claims about the tax gap.

Gauke said: “The tax gap as a percentage has been lower in every year under us than it was in any year under the Labour Government”.

Mr Murphy replied: “Percentages are the evasive politician’s favourite tool, so I think that claim can be dismissed. What remains baffling is David Gauke’s apparent inability to see just how wrong his data might be. The government claims that the tax gap is £34 billion. And then it claims that HMRC recover £26 billion a year. Or to put it another way, £60 billion of tax abuse is attempted and 40 per cent is recovered.

“Is there anyone who thinks that remotely likely?”

He goes on to completely trash Gauke’s – and the Conservative Government’s – claims, and it is strongly recommended that you read the article for the details.

Mr Murphy says HMRC’s tax gap estimates should be subject to independent economic audit to check their credibility. He says HMRC’s claim of tax recovered should be subject to independent scrutiny to ensure that it is credible. He says a review of HMRC is overdue, with a panel of independent experts including from unions and civil society being included in the task. And he says it is time we had an Office for Tax Responsibility, reporting to the Public Accounts Committee, to ensure that this most critical department of government is held to account.

He states: “A recovery of £26 billion out of more than £100 billion I could possibly accept – except to say it could be so much better. But that rate of recovery out of anything less is absurd right now – as is HMRC’s tax gap estimate.”

So, under analysis, Gideon the Towel Folder’s claims are no more than silly attempts to confuse us.

If he bothered to collect all the taxes owed him, he would be running a budget surplus tomorrow.

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A Conservative victory: Now our suffering begins in earnest

150508NHSgone

If you thought you had it bad under the Coalition then, as someone once said, “You ain’t seen nothing yet!”

The Conservative victory in last night’s election has left many of us reeling – not just because of its disastrous implications for the future of the UK and its citizens, but because nobody saw it coming.

Some have blamed ‘shy’ Tory voters. These are selfish little liars who skew the polls by denying any intention to vote for the Nasty Party. In the case of yesterday’s vote, many will have done so against their own best interests.

So why did they do it? The most likely reason being touted overnight is the success of the Conservative Party’s big scare tactic: The lie that Labour would go into a coalition with the Scottish National Party in the event of a hung Parliament. Cameron made vague claims that this would hit everybody in the wallet and Middle England – already burdened by a £4,000 per year loss of earnings thanks to Tory austerity – turned into a tribe of ‘shy’ Tories.

With the polls duly skewed, there was no way for Ed Miliband and Labour to know that their strategy wasn’t going to work for them, so they carried on. Britain fell into the Tory trap and now David Cameron has a slim majority.

And we are all in deep, deep trouble.

For supporters of the SNP, the disappointment must be the most bitter. Still, they supported a party with the most contradictory message of all – vote SNP in Scotland because Labour is bad, so that the SNP can go into coalition with Labour MPs from everywhere else because Labour is good.

It seems likely the most straightforward reason they voted SNP is because they had been whipped into a frenzy of righteous indignance about the independence referendum, believing the SNP propaganda that Labour was “in cahoots” with the Conservative Party – not just over the referendum but on general policy as well; ‘Red Tories’ was the SNP brand on Labour.

(Of course, others responded by labelling the SNP ‘Tartan Tories’. It is ironic that all this bickering resulted in the real Tories seizing power.)

So Scottish voters believed an SNP lie about Labour, and the knock-on effect was that English (and some Welsh) voters were convinced by a Conservative lie about Labour and the SNP. This created a domino effect which eventually meant that every single Scottish seat could have gone to the SNP, and the UK would still have ended up with a Tory government.

Is Nicola Sturgeon proud of herself? She seems to be. One is led to wonder how her party will respond to Tory legislation, when Parliament resumes.

Interestingly, Jon Craig (of Sky News) tweeted: “Tory at East Renfrewshire count: ‘Nicola Sturgeon has won more votes for the Conservatives in England than she has for the SNP in Scotland.'”

If anything, the election has demonstrated that Conservative/Coalition policy has created an atmosphere of division in the UK, greater than at any time in our history. Nationalism is on the rise, with Scotland keen to secede from the union and the UK as a whole heading for a referendum on whether to stay in the European Union.

The SNP result should also signal the death-knell of the First Past The Post voting system in this country – although its demise is likely to be protracted (the Tories will fight tooth and nail to keep it). Where’s the fairness in a system that can deliver 56 seats to the SNP with 1.5 million votes, and only one seat to UKIP, with nearly four million votes?

(This Writer supports neither party, as previous articles on this blog make all-too-clear. Facts are facts.)

It will also be interesting to see what impact – if any – the Coalition’s ‘individual voter registration’ has had on the number of people who voted. Also, how many people didn’t bother to vote “because it never changes anything”?

Come to that, what about all those people who were forced to move out of affluent areas because they couldn’t pay the Bedroom Tax (which will, of course, continue)? Did they move into Labour constituencies?

We could be looking at interference in the electoral process on an industrial scale.

150508careless

Feel free to disagree with the free pass this image gives to Scottish voters if you like; the claim about voters in England is absolutely on the button.

Overall, the situation is best summed up by ‘Grumpy David’ on Twitter: “Seriously, who’s looked at the last five years and gone yeah, more of that please?”

What of the future?

Richard Murphy of Tax Research UK tweeted that a Tory victory would mean neo-feudalism is on its way in England, the union will be broken (with Scotland seceding), and the UK will leave the EU. He also predicted an economic crisis within a year.

Europe will be a major issue for the Conservatives now. With no Liberal Democrat partners to blame for government decisions, Cameron will be exposed to attack from his own backbenchers – many of whom are raving Europhobes.

Everyone on benefits will suffer, including those in work. Rachel Martin tweeted: “If exit polls are accurate I advise you not to be poor, not to be ill, not to be old and not to be in need of a job.”

The Tory victory means the end of the welfare state as we know it: People who deserve compassion will get none. Instead they will suffer £12 billion of cuts. Many thousands will die for the sake of a few pennies.

And the NHS? Privatised. With the provisions in the Transatlantic Trade and Investment Partnership (TTIP) that will lock that privatisation into international law. Here’s Jacob Richardson: “Imagine seeing rape crisis shelters being closed and children’s palliative care being sold off to Virgin Healthcare, and wanting more of it.”

Workers’ pay will take a hammering – and our ability to protest and get a fair deal will be removed, along with the rest of our rights according to the Human Rights Act. They will be replaced by a ‘Bill of Rights’ telling us more about what we can’t do than what we can.

The Labour Party will need to get its act together quickly. Probably the best thing to do is get right back out to the general public and get confirmation of why the vote went to the Tories. Was Labour policy too close to the party’s arch-rivals, as some have surmised? Did people feel Labour wasn’t offering a genuine alternative? There will be a conflict between the neoliberal Blairites and traditionalists, and it is important that traditional Labour wins. If there’s one thing to learn from the SNP victory, it’s that a genuinely left-wing, anti-austerity platform delivers a massive victory at the moment.

The Liberal Democrats have been destroyed as a Parliamentary political party – and rightly so. The message for others to take away is that any form of compliance with Conservatives is fatal. The Tories will shift blame for anything bad onto their partners and contrive to win more votes.

UKIP is also a spent force. Despite increasing its vote share, its representation in Parliament has been halved. Voters will see this and abandon.

The SNP has taken on the role that the Liberal Democrats enjoyed at the 2010 election. They were the darlings of the voters this year but will lose out when it becomes clear that they cannot deliver a single promise – and, in fact, their victory in Scotland ensured that they would not be able to do so.

Finally, what can we do – the public?

We need to watch the Conservatives – and any of their known collaborators – hawkishly. We need to build up information about them, their policies, and any other interests – including and especially those that are less than legal (and there will be a lot of this). They won because the public believed them. It is important to undermine that trust with the facts.

We need also to ensure that the Liberal Democrats do not stage a comeback. That party betrayed the people and must be consigned to history. Again, we need to monitor the behaviour of its members and work to make sure the public is not gulled into a false sense of trust.

And it would be good to start thinking about the kind of country we would create, if we had the chance – and what steps we could take to build it. This may seem like pie-in-the-sky at such a dark point in our nation’s history, but it is only with careful and clever planning that anybody achieves anything.

We are in a very dark pit at the moment – dug for us by the Conservative Party. At least we can take heart that, from here, the only way is up.

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Labour soars ahead with plan to tackle tax avoidance

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

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

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

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

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

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

The proposed Finance Bill includes plans to:

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

· Close loopholes used by hedge funds to avoid stamp duty

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

· Stop umbrella companies exploiting tax reliefs

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

· Tackle disguised self-employment by introducing strict deeming criteria

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

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

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

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

· Making country-by-country reporting information publicly available

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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Has everything changed in the NHS? – Richard Murphy

People are taking to the streets to fight for their health service, while David Cameron no longer considers it a priority.

People are taking to the streets to fight for their health service, while David Cameron no longer considers it a priority.

There’s an interesting (and lengthy) article on Tax Research UK in which Richard Murphy recounts his own opinions and those of his GP wife on the current situation in the NHS.

It seems she reckons the Royal College of General Practitioners has given up on its dream of providing an ideal service to everyone in the UK, because:

  • Government pressure has made it impossible. It seems rules brought in under Labour meant doctors were paid for preventative appointments and now, if they don’t carry them out, they lose income. Budgets are already being cut so staff are being cut and resources for the ill are being cut dramatically.
  • It is no longer possible to fit people into the ideal GP consultation of 12 minutes – there are too many for that. So they have given up on performing well and are concentrating on performing as well as possible.
  • And GPs in England have been set in opposition to hospitals. Circle Health failed at Hinchingbrooke because the company thought it was going to drag NHS resources away from GPs through the local Clinical Commissioning Group. It didn’t happen because the GPs on the CCG dragged the resources back [be warned: this might not happen in all CCGs, depending on the influence of private healthcare representatives on them].

It is worth quoting what Mr Murphy states in relation to the last point: “All competition is predicated on the idea that failure is not just possible but desirable and failure is what we get as a result. But the cost of failure in this case is real human suffering.”

He takes a different route to the same conclusions, saying:

  • The capacity to manage crisis no longer exists. All systems require back ups and alternatives to ensure that failure can be accommodated but, after years of pressure for cuts those alternatives have been deemed wasteful and eliminated: “It’s about guaranteeing failure to meet peek demand, and that is what is happening now in the NHS because a market language where failure can occur has, again, been applied to a public service where failure to supply is unacceptable.”
  • The public has changed, and the health market has not encouraged choice or judgement. It seems to have created total dependence where people wish to accept no responsibility for themselves.
  • There is a failure to recognise that if this is what people want then they have to be supplied with it – and be charged the tax that pays for it. People are making choices: politicians would be wise to follow their demand, increase spending, increase tax and keep people happy.

The conclusion:  “It is inevitable that health systems need re-design, again.

“The idea of re-organising the NHS seems deeply unpalatable but Lansley’s disastrous legacy, for which he has already been consigned to the wilderness, cannot survive. The NHS has to become national, again. And it has to ensure all current health needs are met as a priority. And service has to be at its core – and that does not leave room for profit.”

The full article is on Tax Research UK. It is long, but rewarding for those who don’t have a right-wing ideological agenda and can therefore process the arguments presented therein.

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Cameron’s economic falsehoods mask a catalogue of missed opportunities – Tax Research UK

150111debt-labourvcoalition

The Coalition has borrowed more than four times more, every year, than what Labour did, on average, according to Richard Murphy at Tax Research UK – writing in opposition to a claim by David Cameron that Britain will be on the “path to ruin” if Labour takes charge of the public finances.

Cameron is clearly trying to steal the “Road to Ruin” label that was applied to a now-infamous Tory campaign poster and throw it back at Labour. His problem is that he has dud ammunition.

Mr Murphy writes: “It’s very hard to see how one man can get as much wrong as David Cameron can in the repeated sentiment he has to offer to the UK.

“But the evidence is clear: every single word of what he has to say is deeply misleading because it is so wrong.

“After five years in office all he has learned is that keeping repeating the misinformation is the only policy he can find that he still thinks worth pursuing. And, unfortunately, some still believe him.”

Mr Murphy points out that:

  • In five years the Coalition has borrowed more than Labour did in 13, by a considerable margin.
  • And there wasn’t an unforeseen banking crisis on the Coalition’s watch.
  • We have no gilt crisis.
  • We have no affordability crisis.
  • And we have a lost opportunity to invest at rates lower than we have almost ever known, which lost opportunity is why we have an economic crisis.

Read his article on Tax Research UK – and throw Cameron’s Guardian comments in the bin.

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Cameron’s global crash warning: He’ll do nothing about it

"Our long-term economic plan is working!" says Cameron - and the debt keeps rising.

“Our long-term economic plan is working!” says Cameron – and the debt keeps rising.

It’s more accurate to say he’ll do nothing right.

David Cameron is warning that another global financial crash is on the way. It’s an accurate warning – others have been forecasting it for a while but, seeing him saying it, didn’t you ask yourself who he’ll be blaming this time?

It can’t be Labour’s fault – Labour has been out of office for a few years and besides, Labour policies were sorting out the fallout left by the last right-wing-precipitated global financial catastrophe until the Tories lied their way into office and then twiddled their thumbs for four long years.

He reckons emerging markets that sustained the recovery (what recovery?) are slowing down but the British economy is growing and needs to be insulated from any crash. He says employment is up massively and new businesses are proliferating – but if you scratch the surface of that claim you’ll see that the number of hours worked is no higher than in 2010 and new businesses are being ‘run’ by people who are claiming tax credits as self-employed because then they won’t be hassled by the DWP while claiming JSA. There are new businesses, of course, but not nearly as many as Cameron wants you to believe.

Cameron’s article in The Guardian, if read properly, is comedy. It certainly isn’t to be taken seriously.

“When we faced similar problems in recent years, too many politicians offered easy answers, thinking we could spend, borrow and tax our way to prosperity,” he writes. Which politicians? Gordon Brown is the only Chancellor in recent history to manage a surplus, rather than a deficit; his policies brought the UK unexpected prosperity (which, unfortunately, led to the EU surcharge that has so badly embarrassed George Osborne); and his successor Alistair Darling introduced policies that knocked £38 billion off the deficit created by the right-wing bankers’ gambling binge.

Cameron must be referring to Conservative politicians in his own government.

Yes, look, here’s a bit where he writes: “It is more important than ever that we send a clear message to the world that Britain is not going to waver on dealing with its debts.” He could have cut that sentence down to read: “Britain is not dealing with its debts.” The national debt has more than doubled since the Conservatives started running the economy – from around £800 billion to £1.8 trillion by 2015, meaning George Osborne’s pitiful attempts to tackle the national deficit by cutting public services and selling off the country’s assets have achieved less than nothing.

“This stability is vital in attracting the business and international investment that delivers growth and jobs, and which keeps long-term interest rates low.” You couldn’t make this up. Interest rates are low because lenders know the UK has its own sovereign currency and will always be able to pay its debts, one way or another, even if it means printing more money (quantitative easing, anyone?) – remember when the UK’s triple-A credit rating went downriver despite all Osborne’s efforts to keep it? He claimed this meant the cost of borrowing would leap, but the effect has gone unnoticed.

There’s a lot more waffle and you can read it on The Guardian‘s site. It’s amazing a paper of its standing bothered to publish it.

For a more informed opinion, let’s go to Richard Murphy of Tax Research UK, pausing for a moment to wish him well in his recovery from recent surgery.

“His focus is instead on highlighting problems in Europe and on signing TTIP – the trade treaty that will require the privatisation of the NHS whatever he says now,” writes Mr Murphy – possibly from the recovery ward.

“This is a man who can see a crisis coming and who must know that his austerity programme can only make it worse (anyone but a fool can see taking money out of a failing economy, as he plans to do,  is bound to make it worse) but who is resolutely refusing to recognise the issues that will cause this next wave of economic collapse.

“The wrong people have the money… The people who spend least of their incomes have had the biggest pay rises and are the only ones to enjoy effective tax decreases over the last few years. These people are the highest income earners in the UK.

“At the same time, cutting benefits for the poorest and increasing VAT (which together with deliberately enforced wage cuts have reduced the net disposable income of most people) and cutting taxes for the wealthiest, this has been the inevitable outcome. And we know this outcome has not happened by chance: this is deliberate.

“When there’s a shortage of spending in the economy to let the wealthiest get wealthier, [it] simply means that the imbalances within it get worse. And it’s imbalances that cause crises.

“Corporation tax cuts and reforms to our corporation tax system that means that multinational corporations based in the UK can, since 2010, find it much easier to make effective use of tax havens to cut their UK tax bills have also made the problem worse. I reckon these cuts are costing at least £10 billion a year. What these cuts do is transfer money that would have belonged to the state to companies in the hope that they will be encouraged to invest it as a result. But they aren’t doing any such thing.

“Companies are taking the tax cuts and banking them. They aren’t even giving them back to their owners. They’re just hoarding it. Like the wealthy (perhaps, unsurprisingly) large companies are simply sitting on their cash.

“The tax gap is another indication of this. What really belongs to the government is in the hands of crooks and cheats, with massive economic consequences.

“What can be done? I’ve always pointed out that there are only four drivers of the economy: consumer spending, investment, net foreign flows and government spending.

  • “Investment is not happening; business will not do it: that’s why they havecash.
  • “Net foreign flows are broadly neutral: the trade deficit is dire but hot money still comes to the UK, although we cannot rely on that.
  • “Consumer spending is poor and may get worse: most people do not have the money.
  • “And that leaves the government to put matters right. It has to generate new economic activity.”

Mr Murphy proposes more quantitative easing – printing money and then investing it in a new, sustainable infrastructive (not the kind that Cameron is pushing); rebalancing tax by increasing taxes for those who can pay; and closing the tax gap.

You won’t see any of those under a Conservative government!

Get ready to batten down the hatches for another round of financial catastrophe, and this time, be prepared to put the blame where it really belongs – on Conservative politicians whose supposed reputation for financial competence is a myth and who should never have been allowed near the national economy.

And remember where the blame lies when you vote next May.

Follow me on Twitter: @MidWalesMike

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This is how the ‘annual tax statement’ SHOULD have appeared!

We all owe a debt of thanks to Richard Murphy, over at Tax Research UK. He has broken down the information in George Osborne’s misleading ‘annual tax statement’ into its component parts and then put a new version together, under categories that more accurately describe the spending concerned.

Then he turned the information into a handy pie chart – similar to Osborne’s but with one major change:

This version is accurate.

Here it is:

141105richardmurphy1

Let’s just compare it with Osborne’s…

141105osbornetaxsummary

Big difference!

The most interesting to Vox Political is the perception gap between Mr Murphy’s calculation of the total proportion of tax spent on unemployment benefits – 0.67 per cent – and Osborne’s ‘Welfare’ heading, which constitutes 24 per cent of spending.

Talk to most people about ‘Welfare’ and they’ll think you mean unemployment benefits – so the Osborne chart will make them think that government spending on the unemployed is no less than 36 times as much as is in fact the case.

When a government minister exaggerates the facts by that much, he might as well come out and admit that he’s lying to the people.

Mr Murphy wrote: “This is the statement George Osborne would not want you to see because it makes clear that subsidies, allowances and reliefs extend right across the UK economy. And they do not, by any means, appear to go to those who necessarily need them most. The view he has presented on this issue has been partial, to say the least, and frankly deeply misleading at best.”

He wrote: “Add together the cost of subsidies to banks, the subsidy to pensions and the subsidy to savings (call them together the subsidy to the City of London) and they cost £103.4bn a year – more than the cost of education in the UK.

“It’s also no wonder house prices are so distorted when the implicit tax subsidy for home ownership is £12.6 billion a year.”

He also pointed out that unemployment benefits cost only half the amount used to subsidise personal savings and investments.

For full details of Mr Murphy’s calculations, visit his article on the Tax Research UK site.

Mr Murphy tweeted yesterday: “Almost every commentator now agrees that Osborne is going to spend a fortune sending out tax statements that are wrong. Why not cancel now?”

He won’t unless he’s forced to; he has a political agenda to follow.

That is why Vox Political launched a petition to achieve just that.

If you haven’t already, please visit the petition on the Change.org website, sign it, and share it with your friends.

While you’re at it, feel free to share the infographic, created to support the petition:

ztaxleaflets

Please also read yesterday’s Vox Political article on Osborne’s ‘annual tax summaries’, if you haven’t already.

Follow me on Twitter: @MidWalesMike

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It’s more likely that George Osborne is the next Doctor Who than he will balance the government’s books – Tax Research UK

I have warned, successively, that the Budget forecasts on tax revenue growth were ludicrously high both for this year and for several to come, writes Richard Murphy.

I also suggested that the OBR was discredited by endorsing them. As the table below shows, I did the maths to show why that had to be the case (it wasn’t hard to do). And now, as the FT reports:

“Britain’s economic recovery has generated far less tax revenue than forecast, raising the prospect of even deeper spending cuts after the general election to balance the budget.

“The latest blow to the public finances was an admission from the Office of Budget Responsibility on Monday that income tax receipts – the biggest single source of government revenue – are likely to fall short of government targets this year, despite record levels of employment.”

Three immediate issues follow from this. The first is that the quality of Treasury forecasting is dire. No one in their right minds could have believed the levels of growth forecast in March 2014 as shown in this table, the data for which is taken straight from the March 2014 budget with my extrapolation of growth rates added:

Screen-Shot-2014-06-10-at-07_50_24

It wasn’t just growth in tax revenues that was forecast, it was growth way beyond any underlying level of economic increase in activity that was suggested was going to happen this year, and that was always utterly implausible.

Second, we have to consider the possibility that the Treasury just lied when putting forward these growth projections. They are so ridiculous, that has to be the best possible explanation for them.

And we have to the consider that the OBR may have been complicit in this – because if it was truly independent it should have been flagging up how unlikely this revenue growth was in March, and not now.

And what does it all mean?

It means all Osborne’s economic claims are bunkum – but you should read Mr Murphy’s analysis at Tax Research UK.

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