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By implication a Nikkei/FT accolade for Jeremy Corbyn?

nikkei2 logoIs the Nikkei paying the tribute of alarm? Via its newly acquired FT, attempts are being made to downgrade Corbyn in its ‘World’ section.

paul2 levineNo doubt reacting to the impact made by the support of 41 economists – several with an international reputation – for Jeremy Corbyn’s economic proposals, Paul Levine (Professor of Economics, Surrey, right) has written a letter to the Financial Times with another long list of less well known signatories from British academia.

They ‘wished to register’ their opinion that the economic policies sketched by Jeremy Corbyn are likely to be’ highly damaging’.

Very true, many influential commercial and political vested interests would see a somewhat reduced income if policies for the common good were to be adopted.

These economists sent their message ‘to counter the impression’ that might have been given by the previous letter from “41 economists” that Mr Corbyn’s policies command widespread support in the mainstream of the discipline. Three points were made:

Deploring damage to ‘the climate for enterprise in the UK’ – aka reducing vested interest income

  1. Renationalising industries is highly unlikely to improve the performance of its targets, and very likely, if history is anything to go by, to make things worse. If compensation is paid, it will be a waste of fiscal space, even unaffordable; in case it is not, it will be extremely damaging to the climate for enterprise in the UK as other companies fear the government would get a taste for it.

Advocating more borrowing instead of resorting to debt-free QE

  1. “People’s QE”would be a highly damaging threat to fiscal credibility, and unnecessary, since at this time of very low interest rates and tolerable debt/GDP public investment — in many areas much needed — can be financed conventionally.

Condemning figures which are actually suggestions for democratically conducted consideration

  1. Figures put on money that could be found from ending “corporate welfare” and combating tax evasion are almost unbelievable.

ft nikkeiNow employed by the Nikkei, a large media/financial group in Japan, which recently bought the UK’s Financial Times, Chris Giles, its economic editor, repeated the gist of this letter. Tucked away for consumption in the World section, it was presumably intended to more widely discredit the disturbingly popular Jeremy Corbyn.

Will the common good prevail over vested interest? Hopefully.

Can we learn from Syriza, despite the jeers of the ‘narrow-minded, unimaginative, and arrogant European bureaucracy’?

Eurozone officials recently had to call off a visit by bailout inspectors to Athens, after Greek authorities objected to a trip similar to previous audits by the “troika” — the trio of creditor institutions (IMF, EC, ECB).

left unity syrizaSeventy people in Birmingham, including a delegation from the Spanish Podemos, came to a Left Unity meeting to hear Marina Prentoulis of Syriza speak about the situation that the new anti-austerity government is facing in Greece.

Even though – as LSE economist, Francesco Caselli writes in the FT – collecting taxes is central to any attempt to rebuild the Greek government’s ability to secure revenues meeting the needs of an industrialised economy, EC uncivil servants were said to have “laughed out loud” and described the Greek proposal to combat value added tax evasion as “quite hilarious, if it were not so tragic”. Caselli comments:

prof francesco caselli”Greece is at the mercy of a narrow-minded, unimaginative, and arrogant European bureaucracy ignorant of local culture and history and incapable of recognising truly creative, promising, innovative ideas that might help Greece out of its horrendous predicament”.

“Anyone with the slightest experience of life in countries where value added tax is routinely flouted (a category that clearly does not include the officials in question) knows that no matter how sternly the government promises fines and punishments for the evaders, nothing will change until the deeply ingrained culture of tacit acquiescence by customers is broken”.

Caselli mentions two successful measures which yielded large tax receipts and, “perhaps more importantly, did much to shatter the culture of passive acquiescence”:

  • In the 1990s Italy fined customers who left a shop without a receipt,
  • and Argentina exchanged receipts for lottery tickets.

He adds: “It is a fair bet that eurozone officials would have laughed out loud if confronted with such ideas. Far better to carry on destroying the economy and living standards with the current litany of cuts in employment, social transfers and social services”.

Tax cheats (£34-120bn) cost far more than benefits cheats (£1+ bn) – yet far fewer are prosecuted

hmrcAnalysis of HMRC data shows that the political culture is sympathetic to tax avoiders

Summary of an article by Prem Sikka, professor of accounting at the University of Essex, which may be read in full here, adding official data confirming the thoughts of John Wight

Social security benefits come in many shapes, including the state pension, pension credits, income support, disability living allowance, employment and support allowance, jobseeker’s allowances and housing benefits.

  • The total cost of all benefits for 2013-14 is about £164 billion.
  • Around £1.2 billion or 0.7 per cent of the total is attributed to fraud. ‘
  • Benefit fraud has continued to average between 0.6 per cent and 0.8 per cent for the period 2005/06 to 20013/14.

The government has set up a benefit fraud hotline and people are encouraged the blow the whistle on their neighbours and anyone else suspected of fraud. The sanctions:

  • a £50 spot fine, without a court order, on individuals who mistakenly provide inaccurate information on their claims forms.
  • Those suspected of fraud may be able to pay fines of between £350 and £2,000 in lieu for prosecution. From April 2015, the upper limit of the fine will be £5,000.
  • Some may lose their benefits altogether for a fixed period.
  • Private debt collection firms, bailiffs and forced house sales are used to collect penalties.
  • Suspects can be charged under the Fraud Act 2006, which carries a maximum prison sentence of up to 10 years.

The data shows that most of the criminal convictions are for frauds of less than £10,000. In 2011, two-thirds of fines imposed were for £200 or less. The largest fine imposed was £5,000. For the period 2008-2012, some 1,306 offenders received a prison sentence.

Benefit fraud is officially estimated to cost £1.2 billion (2013-2014) but HMRC estimates an annual tax gap – that is tax avoidance, tax evasion and monies of £34 billion (2012-13).

HMRC’s model is challenged by others who put the tax gap at around £120 billion.

Even in 2004, a former World Bank adviser was saying that the UK is losing over £100 billion a year to tax avoidance and evasion. HMRC’s 2013-14 report states that during the year 421 individuals were detained after arrest by HMRC officers, but none were charged.

Preliminary conclusions

The amounts attributed by the government to tax avoidance and evasion are much larger than the amounts attributed to benefit fraud. But the number of prosecutions and convictions for benefit fraud are much greater.

The political culture is more sympathetic to tax avoiders. HMRC was made aware of the HSBC tax frauds in 2008, but so far only one person has been charged. An excuse offered by HMRC is that it likes to make financial recoveries and thus does not go for prosecutions.

The revolving door swings and tax avoiders go scot-free

Vodafone cio to HMRCWe add that in 2013, just as the Treasury was under pressure to review rules allowing Vodafone to avoid paying tax on its massive £84bn windfall from selling its stake in the American mobile phone giant Verizon, HMRC appointed Mark Dearnley, CIO at Vodafone, as its new Chief Digital and Information Officer.

Sikka points out that, on a number of occasions, the courts have declared some of the tax avoidance schemes to be unlawful. This has not been followed-up by any investigation or even recovery of the cost of fighting the schemes. Big accountancy firms are often the brains behind the schemes but no firm or partner has ever been fined even after the schemes have been declared unlawful.

  • The same firms are given taxpayer-funded contracts, such as those relating to privatisation and Private Finance Initiative (PFI).
  • Their partners advise HM Treasury and other government departments.
  • The firms fund political parties and also provide jobs for former and potential ministers.

In April 2013, the government introduced rules to ban companies and individuals who took part in failed tax avoidance schemes from being awarded government contracts. So far, no such business has been barred.

Britain’s government: “of the rich, by the rich, for the rich”

A reader sent this link to an article by John Wight – well worth reading in full – which crystallises the writer’s unease at the difference between HMRC’s treatment of poor tax or benefit defaulters and its leniency to the very rich.

As he writes: “The sheer scale of tax evasion on the part of the rich in the UK is staggering . . . in 2014 more than £80billion was lost to the Exchequer as a result of tax evasion in 2014 . . .

“At the other end of the social spectrum benefit fraud costs just over £1billion each year . . .”

Mr Wight refers to a two tier system of justice:

  • Those found guilty of benefit fraud are maligned, shamed, and demonised.
  • The rich found guilty of tax fraud are allowed to avoid the inconvenience of prosecution and court in return for an undisclosed pay off.

benefit-fraud-cartoon

And adds that “more damning evidence of the extent to which the rich are ‘getting away with it’ is provided by the fact that despite the mammoth difference in cost to the UK taxpayer the resources that have been deployed to crack down on benefit fraud are exponentially more than tax evasion”.

His overview:

“We have in Britain a government of the rich, by the rich, and for the rich, the consequences of which are tangible. With the advent of the worst economic crisis since the 1930s, caused by the greed and recklessness of the banks, the government has effected the transference of wealth from the poor to the rich under the rubric of austerity, a process measured in food banks, payday loans, benefit sanctions, the bedroom tax, and zero hours contracts at one end of the social and economic spectrum, alongside an increase in the wealth of the country’s 1000 richest people over the same period”.

‘Cashing in on the Government’s overseas aid spending’: don’t be embarrassed says David Cameron

Politicians and corporate donors from wealthy countries often flaunt their use of donations to accelerate development in impoverished regions.

glasgow business conference

More accurately, at a Glasgow business conference a week ago, David Cameron changed last year’s rhetoric about pride in aid for one of self-interest, saying that British firms should not be “embarrassed” about cashing in on the Government’s overseas aid spending and insisting that the country would gain “commercial benefits” in return for the multi-billion pound handouts to developing nations.

A coalition of UK and African researchers has confirmed this, releasing research findings in the Health Poverty Africa report illustrating how Africa actually loses $192 billion – over six times the $30 billion it receives annually in aid.

Their research published recently indicates that current practices within the continent tend to favour wealthy countries. These include:

  • tax evasion and illicit financial outflows,
  • $21 billion on debt repayments annually – some ‘odious’ debt,
  • illegal fishing and logging,
  • repatriation of multinational companies’ profits,
  • costs incurred from adapting to and mitigating climate change,
  • and the exodus of skilled workers (brain drain).

africa accounts graphic

“The report highlights that Africa is essentially not poor. A combination of inequitable policies, massive disparities in power and criminal activities perpetrated and sustained by wealthy elites both inside and outside the continent are keeping its people in poverty. The UK and other wealthy governments are at the heart of this theft”.

“For example, the continent haemorrhages $35.3 billion annually through the tax evasion and other dodgy financial flows enabled by tax havens. These tax havens are jurisdictionally linked to the G8 and the European Union and account for 70% of global tax haven investment. The UK has 11 tax havens under its jurisdiction!”

Page 16 of the report points out that, “It would be logical to assume that countries rich in resources would have lower levels of poverty and higher well-being but in fact the reverse is true. Of the world’s poorest one billion people, one-third live in resource-rich countries. Resource-rich countries account for nine of the 12 countries at the bottom of the Human Development Index (HDI), a measure of wealth, life expectancy and education”.

The authors of the report attribute this state of affairs to the impact of corruption facilitated through tax havens and secret corporate activities.

Source: Think Africa Press

See the full Health Poverty Africa report here. Health Poverty Africa have a petition addressed to the G20, demanding honest accounts of their relationship with Africa. Click here to sign.

Phase out local hospitals? BBC 1 debate – the paediatrician and the oncologist find common ground

big question nicky campbell

prof terence stephensonToday, The Big Question (BBC1) discussed the phasing out of local hospitals. Professor Terence Stephenson, who was introduced as the new chair of the Academy of Medical Royal Colleges, insisted that they should be replaced by large medical centres of specialised excellence.

Julia Manning, who was merely named – with no reference made to her role in 2020 Healthcare – eloquently supported his proposal.

clive peedellDr Clive Peedell, who had to introduce himself as a cancer specialist and co-founder of the National Health Action Party, expressed the belief that there should be centres of excellence but also a network of local hospitals.

He pointed to the findings of the Organisation for Economic Co-operation and Development: the number of UK hospitals per 1000 of the population is already extremely low:

hospital beds per 1000

Dr Peedell added that many hospital beds had already been cut and that currently there is 90% occupancy – though the safe level is 85%.

Closures of hospitals or just A & E and/or maternity departments mean that emergency cases travel further and are treated later.

A & Es are being closed in many areas, or downgraded as Urgent Care Centres opening only12 hours a day. This happened at Chase Farm in Enfield, leaving what Nick de Bois, Conservative MP for Enfield North, described as a ‘confusing mish-mash’ of emergency services at the site. A child died there after his mother found the UCC closed.

memebr public peterboroughAn active and concerned Peterborough resident (right) spoke several times but was not named.

She wondered if undertakings given could be trusted; the local Peterborough City Hospital had been funded by PFI, which – at the time -residents were assured was a sound decision. Now it is costing £40m a year, has 31 years left to run and the arrangement can only be ended by making a very substantial one-off payment.

She also reminded those present that similar undertakings were made about mental health care when hospitals were closed; adequate care in the community ‘didn’t happen’.

If local hospitals close, Ms Manning said that GPs and district nurses would give medical care in the community. However district nurses’ numbers are down and very few are being trained. The BBC reported that official figures show that the number of district nurses has fallen by 40% in the past decade; ten years ago there were nearly 13,000 NHS district nurses in England but last year there were fewer than 7,500 and many of those are approaching retirement age.

The consultation process was briefly touched on

Nicky Campbell wondered if fast track consultation would be ‘circumventing democracy’.  A search revealed that clause 118 of the Care Bill, which is currently going through Parliament, gives Clinical commissioning groups (Cogs) just 40 days to consult on changes proposed by an administrator. Their views could be overruled by NHS England, so local decision makers would have no real power over proposed changes to their hospital services.

Dr Peedell said that the changes were not being made for clinical reasons, but were financially driven  – the market in healthcare actually drives up costs and there would be an increase in private medicine and health insurance.

Solutions

Both doctors agreed that there was clear evidence that large specialist centres offered a better outcome for some conditions – for instance heart attacks. But Dr Peedell insisted on the need for local hospitals for many other conditions, such as asthma, where a longer journey time could be dangerous.

Monitor, the health sector regulator, reports that by 2021 the NHS will face a £30bn funding gap. Dr Peedell and a member of the audience offered solutions: hospitals are more worthy of the money readily made available to bail out banks, HMRC should also address both tax avoidance and tax evasion.

Other areas might benefit from the example of the Tees, Ask and Wear Valleys trust which paid £18m to get out of the PFI contract 23 years early, but it now owns the hospital outright and expects to save £14m over the course of the deal – once maintenance and inflation is taken into account.

The writer would like to see the taxpayers’ money already being spent on preparation for High Speed Rail 2 and the huge sum for its implementation, used to help debt-ridden hospitals.

The doctors could agree but the healthcare industry stands to lose a great deal if they do

julia manningJulia Manning of 2020 Heathcare spoke eloquently in favour of this reform. Her company’s sponsors, who include Baxter Healthcare, Bosch Healthcare, Lundbeck & Pfizer Pharmaceuticals, Denplan, Gilead biopharmaceuticals, Tunstall Healthcare, Abbvie Pharmaceuticals, MSD (Merck) Pharmaceuticals, Abbott Laboratories, will agree that she is most persuasive.

But vested interest must not determine the future of Britain’s health service.

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