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Accountancy professor’s summary: “The government change of policy is welcome, but it is full of contradictions, weak gestures and does little to address poverty, inequalities or increase purchasing power of the masses”.
Baroness Camilla Cavendish, former Director of Policy for Prime Minister David Cameron, enthuses in the FT: snapshot from her article
Similar enthusiasm was expressed by Lauren Davidson, head of personal finance at the Telegraph: “In our Budget “winners and losers” list, we struggled to come up with many that fell into the latter category. The former, however, was bursting:
- anyone who pays National Insurance,
- workers who claim sick pay,
- low earners on the minimum wage, (most) high earners affected by the pensions taper,
- women who use sanitary products,
- families who save into ISAs,
- readers who prefer e-books and digital journalism
- and, of course, drinkers.
Ingram Pinn of the FT reminds us of the warning from the OBR of the economic cost of Brexit. It said that Britain had lost 2% of potential output since the 2016 Leave vote, with a further 3.2% to come, and that higher trade barriers would cause imports and exports to be about 15% lower after 10 years.
IFS director Paul Johnson has been widely quoted. In Civil Service World, he says: “Average annual increases of 2.8% sound substantial; take account of the need to replace EU funding and factor in planned increases for health, schools, defence and overseas aid and there is relatively little here for other departments. If this spending envelope is stuck to, there are plenty of public services which will not be enjoying much in the way of spending increases over the next few years.”
The IFS statement added that the economic forecasts on which the Budget was based predated any significant effect of the coronavirus being taken into account, so were “therefore out of date at the moment of publication.” Overall spending per person for many public services will therefore be ‘well below’ 2010/11 levels by the middle of the next decade”.
A Moseley reader draws attention to an article by Simon Jenkins; his overview: “Local government’s share of the welfare state, social care and social services got nothing extra. There was no mention of old people or family support or youth clubs chief victims of the 30% cut in local council spending since 2010. Downward pressure will continue on libraries, day centres, sports fields, drug rehabilitation and facilities for young people”.
The strongest and most fact-filled critique comes from Professor Prem Sikka, who opens “The government has announced £30bn of spending, but it is far short of the £54bn annual expenditure needed to roll-back the damage inflicted since 2010”. Read more here. This follows a pre-Budget article in which he gives an alarming summary of the damage done by a decade of austerity, which he sees as being borne out of political dogma rather than any economic necessity.
Increasing public debt
“The chancellor did not make any mention of the need to reduce public debt, a favourite mantra of previous Conservative governments even though they borrowed to fund tax cuts for corporations and the rich. In April 2010, public debt was £960bn. The government expects it to hit £1,799bn for 2019/20 and rise to £2,031bn by 2024/25.
Sikka comments that little has been done for those on lowest incomes. Some examples given:
- The increase in the minimum wage to £10.50 an hour by 2024 is too little to make much difference to inequalities, in-work poverty or queues for foodbanks.
- The failure to increase personal allowances and tax thresholds in line with inflation will mean that many low-paid and middle earners will end up paying higher amount of income tax. Small print in the government announcement says that various measures in the budget will increase taxes by £1.4bn in 2020/21, rising to £12.5bn by 2024/2
- The extension of statutory sick pay (SSP) is welcome, but the rate of £94.25 per week is far short of even the minimum wage rate. Many employers won’t pay more and vulnerable employees will suffer.
- SSP would be available from the first day for up to 14 days for all those advised to self-isolate. Employers with fewer than 250 employees will have the full cost refunded. However, the SSP extension won’t help self-employed or people caught-up in the gig economy.
- The government spin is that it has not increased income taxes but that isn’t so because of the removal of existing tax breaks and stealth taxes (more here) built into the prices of products. The government collects these at the point of sale and they do not depend on a taxpayer’s income level.
But the government is still showering gifts on those with high incomes
The entrepreneur’s relief costing about £2.6bn a year has been abused and a former head of HMRC called for it to be scrapped. Nearly three-quarters of it went to just 5,000 individuals. It enabled them to pay capital gains tax at the rate of 10%, compared to standard rate of 20%, on gains of up to £10m from the sale of their business.
The government has committed to spending £27bn on English strategic roads between 2020 and 2025. It will also freeze fuel duty and there is no reference to the new green deal or government led investment in new high-tech industries
Sikka points out that this omission sits uneasily with the government’s claims of reducing carbon emissions. A broader national infrastructure strategy with focus on integrated affordable public transport is needed but was not put forward by the chancellor.
Media 104: pro-Corbyn text from major Israeli newspaper suppressed by BBC & MSM, ‘as it does not fit their agenda’
Prem Sikka sent the Haaretz link with the comment: “I doubt that BBC or any of the UK press would refer to it as it does not fit their agenda”.
In Haaretz, a major Israeli newspaper, two days ago: ‘The Jews and Israel’s true friends should hope that Corbyn is elected . . . Corbyn is not an anti-Semite. His real sin is to fight against injustice in the world, including the version Israel perpetrates’ – the words of Gideon Levy (right), award-winning journalist, in Haaretz. His article follows.
Opinion: The Contract on Corbyn
The Jewish establishment in Britain and the Israeli propaganda machine have taken out a contract on the leader of the British Labour Party, Jeremy Corbyn. The contract was taken out a long time ago, and it was clear that the closer Corbyn came to being elected prime minister, the harsher the conflict would get.
On Tuesday it reached its climax in an article by the chief rabbi of Britain, Ephraim Mirvis, in an article in The Times. Mirvis has decided that the anxiety of British Jews over Corbyn is justified and he is not fit to be prime minister. He called on Jews not to vote for Labour in the election on December 12.
Born in South Africa and a graduate of Har Etzion Yeshiva in the settlement of Alon Shvut, Mirvis is the voice of British Jewry. In Capetown, Johannesburg and Har Etzion, he should have learned what apartheid was and why one should fight it. His parents did so, but one doubts that he learned the moral lesson from the regions of disenfranchisement in which he lived in South Africa and the West Bank.
As opposed to the horrid Corbyn, Mirvis (below left) sees nothing wrong with the continued occupation; he does not identify with the struggle for Palestinian freedom, and he doesn’t sense the similarity between the South Africa of his childhood, Har Etzion of his youth and Israel of 2019. That is the real reason that he rejects Corbyn. The Jews of Britain also want a prime minister who supports Israel – that is, supports the occupation. A prime minister who is critical of Israel is to them an exemplar of the new anti-Semitism.
Corbyn’s real sin is his staunch position against injustice in the world, including the version Israel perpetrates.
Corbyn is not an anti-Semite. He never was. His real sin is his staunch position against injustice in the world, including the version Israel perpetrates. Today this is anti-Semitism. The Hungarian Viktor Orban, the Austrian Freedom Party and the extreme right in Europe are not the danger to Jews. Corbyn is the enemy. The new and efficient strategy of Israel and the Zionist establishment brands every seeker of justice as an anti-Semite, and any criticism of Israel as hatred of Jews. Corbyn is a victim of this strategy, which threatens to paralyze and silence Europe with regard to Israel.
British Jewry might not be faking its anxiety, but it is certainly magnifying the danger. There is anti-Semitism, though less that what is presented, certainly on the left. About half of British Jews are considering fleeing if Corbyn is elected. Let them flee. The survey that showed this could actually encourage anti-Semitism: Are the Jews of Britain conditionally British? To whom is their loyalty?
The future of all British Jews is much more secure than the future of any Palestinian living under the occupation
The future of all British Jews is much more secure than the future of any Palestinian living under the occupation, and even more secure than that of any Arab living in Israel. Jews are persecuted and are victims of discrimination and racism less so than the Palestinians in the Israel they hold dear.
Moreover, Islamophobia in Europe is more common than anti-Semitism, but people talk about it less.
Mirvis presents no evidence of Corbyn’s anti-Semitism. It sufficed for him to note the fact that Corbyn described as “friends” those who “endorse the murder of Jews” – a reference to Corbyn’s comments on Hezbollah and Hamas. Corbyn (left) is indeed a very harsh critic of the occupation, supports the boycott and compares the closure of Gaza with the siege of Stalingrad and Leningrad. These are anti-Israeli positions, but not necessarily anti-Semitic. The Jews of Britain are blurring this difference as are many Jews throughout the world, intentionally. One can (and should) be a harsh critic of Israel without being anti-Semitic.
If the Jews of Britain and their chief rabbi were more honest and courageous, they would ask themselves: Isn’t Israel’s brutal occupation policy the strongest motive for anti-Semitism today? There is anti-Semitism, it must be fought, but it must also be recognized that Israel supplies it with an abundance of excuses and motives.
The Jews and Israel’s true friends should hope that Corbyn is elected. He is a statesman who can change international discourse about the occupation and the struggle against it. He is a ray of hope for a different world and a different Israel – and what more could we want.
Shining a spotlight on four government agencies: an educational psychologist, a cook, a farmer and an accountant
The relatively powerless are harassed: corporates survive censure unscathed
OFSTED had not inspected more than 1,600 schools that were judged “outstanding” by it for at least six years – and of those, almost 300 had not seen an Ofsted inspector for at least 10 years, according to a report by the National Audit Office – see chart on page 27 of the report.
The case of Waltham Holy Cross is ongoing. Last year the government decreed that Waltham Holy Cross would be handed over to Net, a chain of academy schools in May. As the NAO records, this has already happened to over 7,000 other state schools in England since 2010: public assets built and maintained by generations of taxpayers are being given away. Waltham Holy Cross parents made almost 100 freedom of information requests which revealed errors in the draft Ofsted report and that Net was being sounded out on “their appetite to take on this school” in January, over a month before the Ofsted verdict was published. News of teachers and parents there – and in other parts of the country taking action to prevent this ‘forced academisation’ may be read here.
In an article in the Times Educational Supplement (TES), head teacher Geoff Barton, the general secretary of the Association of School and College Leaders, said “Ofsted and the government are the source of much of the stress and anxiety on staff through an extremely high-pressure accountability system and concluded ‘the accounts above reveal an inspection system that appears in too many cases to be doing great damage. My sense is that it’s time to stop quietly accepting that the way Ofsted is, is the way Ofsted should be”.
This month. four years later, TES readers discussed overhauling Ofsted, a ‘toxic’ system. One letter, whose signatories included Dr Richard House, chartered psychologist, former senior lecturer in education studies, Dr Rowan Williams, former Archbishop of Canterbury and Sir Tim Brighouse, former schools commissioner for London, was provoked by a recommendation by Ofsted head Amanda Spielman to shut down what she labelled as “failing Steiner schools”. The signatories are founding a campaign to bring about the replacement of Ofsted with a new inspectorate that is ‘empowering, collaborative, and understanding and respectful of pedagogical difference’.
Unthinking adherence to FOOD STANDARDS AGENCY bureaucracy led to the unjust downgrading of a new small business, damagingly reported in local paper
As the public perception is that businesses with a one rating will give customers food poisoning, a cook-manager has criticised the food hygiene inspection system after her business was given a one rating out of five – though hygiene and food storage was rated highly.
At a (requested) pre-opening inspection by the council in March 2018, no reference had been made to the need for a staff manual and staff training procedures but this ‘one-person’ operation was ‘put on a warning’ for not having a staff training manual – though no staff was employed – and was told that a tick paper exercise (officially a ‘documented food safety management system’) is required for all aspects of work.
The work required to maintain cleanliness and produce wholesome food appeared to be discounted and a paper exercise – easily forged – was prioritised. The District Council inspectors were unhelpfully applying the rules of The Food Standards Agency, a non-ministerial government department, to the letter and not the spirit of those regulations.
Solution found and accepted: a whiteboard was put up in the workplace, a photo taken once a week and an online manual was printed.
On several farms which had passed inspections by the ASSURED FOODS STANDARD (Red Tractor) agency in July 2018 serious cases of animal abuses were reported in the media.
A farmer recently wrote an article in the Western Daily Press foreseeing the advent of similar tick-box regulations:
“What I have been pulled up on is the fact that I do not keep written mobility and condition records. These are not yet enforceable under the scheme – but I have reason to suspect they soon may be.
“The only thing that will be achieved by keeping written records will be the creation of more work for the assessor; more forms for him to sit down and read through and check; one more task to help fill his required nine-to-five working day.
“And let’s suppose I decided to cook up a completely bogus set of records. How would he even know?
“When the Red Tractor scheme was launched the president of the NFU (under whose wing it actually operates) was Ben Gill who told us all how vital it was going to be in supplying the nation with safe, wholesome food which consumers could buy with confidence while, equally, bringing more prosperous times for farmers.
“What I see now is an organisation riddled with pointless bureaucracy (I understand another tier of inspectors is in place to check on the assessors).
“I see, equally, an organisation which appears to operate dual standards: one for the soft-target, small producers like me and another for the industrial giants such as Moy Park, over whose portals the Red Tractor flag proudly flies but where recent footage captured undercover at Moy Park showed stinking, squalid poultry houses where chickens will be lucky to survive their miserably short allotted span”. He ended with two pertinent questions:
- if Assured Foods was aware of conditions at this plant why did it not intervene?
- And if it wasn’t aware, why not?
The FINANCIAL REPORTING COUNCIL, the UK’s accounting and auditing regulator, is regrettably funded by the audit profession and its board of directors is appointed by the Secretary of State for Business, Energy and Industrial Strategy.
Its monitoring of out-sourcing firms such as Capita and G4s in several sectors, including health, social, military and prison services has not led to effective disciplinary procedures – in fact they continue to receive lucrative government. The Financial Times reported yesterday that though its auditing of Carillion since 1999 is under investigation by the Financial Reporting Council, the value of new UK public sector contracts awarded to KPMG increased more than fourfold last year. In 2013 seven senior members of the FRC scheduled to investigate KPMG’s role in the collapse of lender HBOS, were current or former employees of KPMG itself.
Prem Sikka, professor of accounting at the University of Sheffield, has posted almost 400 FRC entries on the AABA website (now well hidden by search engines). A recent article adds news of another appointment: Revolving Doors: FRC appoint new member to the Audit and Assurance Council – former PwC and Royal Bank of Scotland exec .
Professor Sikka has said he is worried that the government is rewarding these firms with valuable contracts when they have been undermining the public purse through their involvement in several tax avoidance scandals (FT: 29.7.19).
The ‘soft targets’ are harassed: corporates survive censure unscathed
George Monbiot recently pointed out that the Commons report on the Carillion fiasco is one of the most damning assessments of corporate behaviour parliament has ever published. It trounces the company’s executives and board and laments the weakness of the regulators.
But, as Prem Sikka said in his April article, it scarcely touches the structural causes that make gluttony a perennial feature of corporate life.
Both agree that the problem begins with an issue the report does not once mention: the extreme nature of limited liability. Sikka points out that this system, under which executives are only financially accountable for the value of their investment, has also benefited frauds and led to the self-enrichment of executives at the expense of workers, consumers, creditors, pensioners and citizens.
Monbiot adds that the current model of limited liability allowed the directors and executives of Carillion to rack up a pension deficit of £2.6 billion, leaving the 27,000 members of its schemes to be rescued by the state fund (which is financed by a levy on your pension – if you have one). The owners of the company were permitted to walk away from the £2 billion owed to its suppliers and subcontractors. (Left: the former Carillion chief executive Keith Cochrane in Westminster after appearing before the Commons work and pensions select committee)
Monbiot continues: “There is no way that fossil fuel companies could pay for the climate breakdown they cause. There is no way that car companies could meet the health costs of air pollution. Their business models rely on dumping their costs on other people. Were they not protected by the extreme form of limited liability that prevails today, they would be obliged to switch to clean technologies”.
So what is to be done?
Prem Sikka (right) proposes that the bearers of unlimited risks and liabilities should be given rights to control the day-to-day governance and direction of companies.
He advocates including employees and citizen/consumers on company boards – because both ultimately have to bear the financial, health, social and psychological costs associated with environmental damage, pollution, poor products, industrial accidents, loss of jobs, pensions and savings. Through seats on company boards, they could secure a fairer distribution of income, challenge discrimination, curb asset-stripping and influence investment, training and innovation.
Across the 28 European Union countries (plus Norway), most have a statutory requirement for employee representation on company boards – unlike the UK, Belgium, Bulgaria, Cyprus, Estonia, Italy, Latvia, Malta and Romania.
George Monbiot proposes a radical reassessment of limited liability.
He points out that a recent paper by the US law professor Michael Simkovic proposes that companies should pay a fee for this indemnity, calibrated to the level of risk they impose on society. He adds, significantly, that as numerous leaks show, companies tend to be far more aware of the risks they inflict than either governments or the rest of society. Various estimates put the cost that businesses dump on society at somewhere between 4% and 20% of GDP
His own ‘tentative’ and ingenious proposal is that any manager earning more than a certain amount – say £200,000 – would have half their total remuneration placed in an escrow account, which is controlled not by the company but by an external agency. The deferred half of their income would not become payable until the agency judged that the company had met the targets it set on pension provision, workers’ pay, the treatment of suppliers and contractors and wider social and environmental performance. This judgement should draw on mandatory social and environmental reporting, assessed by independent auditors.
If they miss their targets, the executives would lose part or all of the deferred sum. In other words, they would pay for any disasters they impose on others. To ensure it isn’t captured by corporate interests, the agency would be funded by the income it confiscates.
Monbiot then says “I know that, at best, they address only part of the problem” and asks, “Are these the right solutions?
- support them,
- oppose them
- or suggest better ideas.
He ends: “Should corporations in their current form exist at all? Is capitalism compatible with life on earth?”
Professor Prem Sikka points out that shareholders are traders and speculators rather than owners:
“They barely hold shares for more than three months and do not have a long-term interest in the business. They have been utterly ineffective at curbing corrupt practices at banks, as evidenced by the tide of scandals.”
An appalling account of ‘serial offences’ in the banking sector follows.
Professor Sikka continues:
“If the government is serious about changing the predatory culture of banks then it needs to change the whole system of corporate governance. The market pressures for higher returns should be checked by turning all banks into mutuals and co-operatives. Employees, customers and borrowers have a long-term interest in the business of banks and should be empowered to elect and remunerate directors. Directors need to be made personally liable for the cost of criminal practices. At the moment banks are fined, but executives walk away with a stash of profit-related pay, with virtually no penalties. All major banking contracts should be publicly available so that we can all see the shady dealings.
“The banking regulators have frequently come from the finance industry and are too close to banks. They act only after the stench of scandal has become too strong, and frequently they have been part of what a US senate report described as a “cover-up”. This inertia should be checked through annual hearings by the Treasury committee.
“All policy meetings of the banking regulators should be held in the open, and information in the regulator’s possession – including background papers – should be made publicly available.”
Could his beneficial proposals incorporate those of James Robertson?
(1) transfer to nationalised central banks the responsibility for creating, not just banknotes as now, but also the major part of the supply of public money consisting of bank-account money held and transmitted in electronic form . . . make an agency of the government responsible for directly creating and maintaining the public money supply in the public interest.
(2) prohibit anyone else from creating money out of thin air as profit-making, interest-bearing loans to their customers – leading to a more competitive market for facilitating loans between lenders and borrowers than today. That will bring commercial banks into line with ordinary businesses which don’t get given their main materials for free.
Professor Prem Sikka: http://www.aabaglobal.org<http://www.aabaglobal.org/
James Robertson: http://www.jamesrobertson.com