Businesses pocket £93bn in subsidies, grants and tax breaks to “create jobs”

KJ, Fee and Chris learn not to be surprised...

SOURCE GUARDIAN: Businesses pocket £93bn in subsidies and tax breaks
Taxpayers are handing businesses £93bn a year – a transfer of more than £3,500 from each household in the UK. The total emerges from the first comprehensive account of what Britons give away to companies in grants, subsidies and tax breaks. Many of the figures, especially on direct payments, are hard to unearth, as they are scattered between various arms of the state. The government admits: “There is no definitive source of data about spending on subsidies to businesses in the UK.” Many of the companies receiving the largest public grants over the past few years previously paid little or zero corporation tax, the analysis shows. They include some of the best-known names in Britain, such as Amazon, Ford and Nissan. For example, in 2012, Amazon was attacked by MPs on parliament’s public accounts committee for avoiding UK tax. Yet in the same period, the online retailer was awarded £16.5m in grants by the administrations of Scotland and Wales to help build distribution centres. To link the Wales plant to the transport network, the Welsh assembly built the mile-long “Ffordd Amazon road” at an additional cost of £3m. The main subsidies include: £14.5bn in subsidies and grants (rail, defence, etc); £44bn in Corporate tax exemptions (mainly write-off expenses, and investment incentives); £15bn in hidden transport subsidies (rail, airline); £3.8bn to energy firms.

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Rip-off News round-up. Our pick of the last week's media (Thu 30th July)

Tax havens: Super-rich 'hiding' at least $21 trillion (£13tn)

A global super-rich elite had at least $21 trillion hidden in secret tax havens by the end of 2010, according to a major study. The figure is equivalent to the size of the US and Japanese economies combined. The Price of Offshore Revisited was written by James Henry, a former chief economist at the consultancy McKinsey, for the Tax Justice Network. The report comes amid growing public and political concern about tax avoidance and evasion. Some authorities, including in Germany, have even paid for information on alleged tax evaders stolen from banks. Mr Henry said that the super-rich move money around the globe through an "industrious bevy of professional enablers in private banking, legal, accounting and investment industries”. He added: "From another angle, this study is really good news. The world has just located a huge pile of financial wealth that might be called upon to contribute to the solution of our most pressing global problems." The three private banks handling the most assets offshore are UBS, Credit Suisse and Goldman Sachs. Less than 100,000 people worldwide own about $9.8tn of the wealth held offshore. BBC NEWS

New York's $15 minimum wage would be the highest in the world

Fast-food workers in New York City will be paid a minimum wage of $15 an hour by 2018 with the rate rolling out to the rest of the state by 2021. The move follows more than a year of campaigning on the issue. San Francisco, Los Angeles and Seattle have all approved a $15 minimum wage for all employees in the three cities. Internationally, Australia comes closest with a $12.50 base hourly wage. Major European economies such as France and Germany (which introduced a minimum wage after the last general election) hover around the $10 and $9 mark respectively. The rate is below $5 an hour in Greece and Spain, which is similar to Japan ($6), and even lower in Brazil where it’s $1.25 - though of course the cost of living varies between states and countries. An hourly wage of $15 is of course still the exception in the US and many jobs are exempt from the rate. The minimum wage at a federal level is $7.25. The UK chancellor George Osborne’s recent introduction of a “national living wage” will take the base rate to $11.15 (£7.20), rising to $13.93 (£9) by 2020. GUARDIAN

Barclays profits rise to £3.1bn despite increasing compensation payouts for mis-selling

Profits jumped by 25% to more than £3.1billion in the first half of 2015. The star performance was Barclays' casino banking arm, with profits from the investment division up 36% to £1.4billion, helped by market instability caused by the Greek debt debacle and Eurozone crisis. But the firm set aside another £850m for ripping off UK customers. The bulk of that was a £600m bill for payment protection insurance in the three months to June alone, taking its total PPI cost to date to an eye watering £6billion. It also set aside £250m for compensating customers missold packaged bank accounts. Yet that didn't stop Barclays estimating it would pay nearly £1billion of bonuses in the first half of the year, broadly in line with last year. The bumper results come weeks after Barclays chief executive Antony Jenkins was fired for apparently not boosting the bank's fortunes fast enough. It came shortly after industry veteran John McFarlane joined as chairman. Mr McFarlane, who has temporarily replaced Mr Jenkins, has set out plans to turbo charge the firm, focusing on its investment bank in its core markets, and its retail arm, including its booming Barclaycard business. David Hillman, spokesperson for the Robin Hood Tax campaign, said: “Barclays' results rarely come without massive provisions for ripping off its customers, and today is no exception... If banks can afford to pay out these colossal fines and still turn a profit, they can afford to make a greater contribution to the public purse." MIRROR

Banks and financial companies to be banned from forcing customers to call premium rate numbers

Currently, customers looking for help or to complain face charges of up to 50p a minute from a mobile when calling numbers beginning 084 or 087. But from October 26, these calls will be charged at the same level as dialling a standard rate number — typically no more than a few pence per minute. The new rules, which were announced by City watchdog the Financial Conduct Authority (FCA), will also bar banks and insurers from profiting from customers by taking a share of the cost of calls to premium rate lines. At present, many banks and building societies print premium rate contact numbers on the back of their customers’ credit and debit cards. The City watchdog said that, in future, customers who call these numbers will have to be redirected by banks on to cheaper lines. And in a further boost for consumers, the FCA also announced that financial firms will be forced to publish numbers of all customer complaints made to them — no matter how minor they appear to be. As things stand, companies are obliged to include in their official complaint statistics only those gripes that take more than one business day to sort out. But from September 2016, they will have to list every single complaint they receive — even the ones that have been resolved quickly. However, companies will be given three days to deal with these minor complaints, instead of the one day they are allowed at the moment. DAILY MAIL

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Should Labour shift right? Or speak for the "left behind", and the 20m+ who, again, didn’t vote at all

The Tory majority hides what happened when you count individual votes. The Tory rise of 0.8% was less (apart from the LibDems, of course!) than any of the other major parties. UKIP were up by 9.5%, followed by the SNP at 3.1% and the Greens at 2.8%. Even the Labour vote rose by 1.5%. The Big Question is how many of UKIP's votes were for its rightist policies and how many for its leftist, given a lot of their support came from the "left behind", on low incomes, who had previously voted Labour.

Election 2015 results for the UK: BBC NEWS

The Labour vote rose by 1.5% across the UK, despite losing so many votes to the SNP in Scotland. But looking at England alone, Labour's vote rose by 3.6%, the Tory's by 1.4%.

Election 2015 results for England: BBC NEWS

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Labour leadership contest: left is left and right is right and never the twain should meet. If it does, Britain will be the loser!

The state is the most powerful player in a democracy. Why? Because the state makes the rules. The question is not whether the state is the most powerful, but whether it has the will to exercise its power. And that depends on who controls it.

Britain can be seen as comprising two main constituencies:
a) the minority who control the nation's wealth and revenue
b) the majority, who depend on the minority to deliver their fair share

Traditionally the first is represented by the Tory party, and the second by the Labour and Liberal Democrat parties. Traditions break, and party names change, but the two main constituencies have endured for centuries across the World.

When in control of the State the Tories tend to restrain it, leaving the private minority with more freedom. Labour tends to strengthen it. People vote depending on whether they trust the Tories and the benevolence of the powerful few or whether they need the power of the state wielded by Labour to get their fair share.

Although in this blog we take pot-shots at politicians, we understand that they are no more appalling than anyone else. A child in a peddle car is just as foolish as a child steering a motor car. The difference is not in the child's foolishness but in the consequences. Far more damage results from a crash in a cortina than a gong in a go-cart. Politicians are no more foolish than any other group, but the consequences of their foolishness tend to be greater. When one government party's foolishness is fully exposed, usually after two or three terms, the other party can return to power and bring back some balance. Until the other party's own foolishness becomes apparent, and they in their turn are booted out in an election. The inevitable arrogance of power, whether from left or right, needs a check and a balance.

Tony Blair, undoubtedly a successful politician measured by his personal attainments, removed that check and balance by converting Labour to New Labour. Blair should have been a Tory politician. But being an exquisite strategician in pursuit of his own interests he knew he would be just one of the herd in the Tory party. There would be no easy route to ultimate power for himself, scrabbling with his political siblings. However in the Labour party he could differentiate himself, just as a fox can differentiate itself in a hen house. Blair stole the Tory clothes by dressing New Labour in them. New Labour allowed the private sector to do as well, civil liberties as badly, the rich to get as filthy rich, and the financial services to plunder as rapaciously as under a Tory administration.

Was this a good thing? Electorally for senior individuals in the Labour Party it was, bringing them many years of power with all the ministries and patronage that come with it. But for national politics, the country was left with a "Tory" Labour government with a "Tory" Tory opposition. The Tories had moved to the right leaving space for Blair to move Labour away from the left. Leaving nothing of substance on the left other than a few individuals crying in the political wilderness.

Blair was a very effective CEO. Had he been a Tory PM he would have been a great asset to the country. As a Labour PM, he left the country without an effective opposition. 

Tribal antipathy required the Tories to "oppose" Labour through the Blair/Brown years. But the Tories were bewildered, throwing punches at policies they wished they had thought of. If the Tories had been deeper thinkers, they could have undermined New Labour far more effectively by praising them instead of trying to bury them. Had the Tories voted with New Labour in 1997-2010 for what were de-facto Tory policies they would have shattered New Labour as effectively as the Liberal Democrats were broken by voting with the Tories in the 2010-15 coalition.

There are those who say Labour won't win power unless it moves to the centre. Britons seem to prefer to trust benevolent rich people over an obstinate state. So Labour's chances of power, ministries, patronage and perquisites would be greater if they were Tories.

But even if Labour may be less likely to win power from the left, Labour will certainly not win power if it becomes Tory. By becoming Tory, the Labour Party would extinguish itself in all but name.

Britain needs a Tory Party and a Labour Party. The Tories should promote private enterprise, and Labour should protect the welfare state. 

The rich will tend to be benevolent so long as that is the best way for them to stay rich. Labour achieves its purpose not only by being in power, but by the threat of being voted into power. When the rich forget their benevolence, Labour is the stick the voters can pick up to remind them.

Career politicians want to be in government, which is a good thing. But when their careers become their primary objective, they will become whatever they need to to improve their personal prospects. 

Tory (no typo here) Blair showed how well this worked by becoming the Labour leader. One can't blame people for pursuing their careers. But their careers don't mean anything to the rest of us. Did anyone, apart from their mums and their business connections, vote for Andrew This or Angela That so they could have a ministry?

In this respect credit is perhaps due to poor Ed Miliband and Nick Clegg. Intentionally or not, Miliband sacrificed his career by not being Tory enough, while Clegg sacrificed his career by being too Tory. 

Cameron may see himself as Wellington triumphing against the odds at Waterloo. Which is more true than you might think. Wellington's victory depended on other parties who have been brushed out of the British version of that battle. Cameron's victory owed much to:
a) the Scots voting against the English (who happened to be Labour)
b) the Liberal Democrats having entered coalition to provide political stability after the banking crash proving Oscar Wilde's proverb "No good deed goes unpunished".

Of the candidates on offer in the 2015 Labour leadership race Jeremy Corbyn seems the best choice. Not because he improves Labour's chance of being elected. But because he is more likely to keep Labour as a counterbalance to the Tories, which is good for Britain.

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Rip-off News round-up. Our pick of the last week's media (Thu 23rd July)

Osborne ousts regulator boss who imposed record fines on the banks

Chancellor of the Exchequer George Osborne ousted the U.K. finance industry’s top watchdog a month after saying the era of “ever-larger” fines for bank misconduct was over. Under Martin Wheatley, the Financial Conduct Authority (FCA) issued a record 1.47 billion pounds in fines last year. In a speech last month, Osborne said that “simply ratcheting up ever-larger fines that just penalize shareholders, erode capital reserves and diminish the lending potential of the economy is not, in the end, a long-term answer.” The government is keen to harness the financial system to drive growth. Wheatley has transformed the FCA’s reputation during his tenure from a light-touch regulator to a tough enforcer. The agency has taken action against banks over multiple scandals including interest-rate and currency benchmark manipulation. Last year, five banks were sanctioned more than 1 billion pounds for foreign-exchange rate manipulation. Labour MP John Mann said Osborne’s move has the effect of “rewarding wrongdoing in the financial services industry as it undermines the regulator.” BLOOMBERG

HS2 chief hits out at ‘unjust’ division of rail assets between north and south

High-speed rail project’s chairman Sir David Higgins says north of England is often shortchanged and given ‘crappy’ hand-me-down trains. “I believe the north has been shortchanged. I look at expenditure per head, the pass-me-down process – the offcuts from rolling stock always end up in the north. Two hours from Birmingham to Leeds on a chugger, old crappy trains on poor railway lines. We would not accept that from London to Swindon, and we don’t: we insist on a huge amount of money going into commuter services,” he said. Events of recent weeks have made many dubious that things will soon change. The chancellor’s northern powerhouse was dubbed the northern powercut after the government announced that rail upgrades, including the electrification of the Midland mainline and the Transpennine railway, were to be “paused”, citing cost overruns at Network Rail – despite manifesto pledges made just weeks earlier. But Higgins insists that HS2 will attempt to address this divide, with a first leg that runs from London to Birmingham, then a second phase linking to Manchester and Leeds. Despite the criticism, Higgins compared Britain’s attitude towards rebuilding its railways favourably to his native Australia and elsewhere. He added: “It’s really encouraging that this country has the courage to face up to these issues. I look at some of the infrastructure issues in America and think, good God.” GUARDIAN

Student debt to rise: poorest graduates 'will owe £53,000' after grants cut

Students from the poorest backgrounds in England will graduate owing up to £53,000 after maintenance grants are replaced by loans, says the Institute for Fiscal Studies (IFS). Changes to student finance announced in the Budget will mean an initial £2bn annual saving for the government. But the IFS estimates only a quarter of these loans will be repaid and the long-term annual saving will only be £270m. More than half a million students from poorer backgrounds currently receive a maintenance grant, at a cost to the taxpayer of about £1.57bn a year. From 2016, these will be replaced with loans, which they will be expected to repay in addition to loans for their tuition fees. The IFS says the new loans will mean up to £550 more "cash in pocket" per year for those students, but they will graduate owing up to £53,000 in total, compared with £40,500 before maintenance grants were scrapped. A Department of Business, Innovation and Skills spokesman said the extra £550 helped those from poor backgrounds: "The changes announced in the Budget provide students with more money in their pockets to help with living costs while studying... "Lifting the cap on student numbers also means that more people will be able to benefit from higher education than ever before." BBC NEWS

Ikea adopts the living wage for UK staff in 'massive breakthrough'

The announcement that the home furnishing retailer will pay its staff a minimum of £9.15 an hour in London and £7.85 across the rest of the UK from April next year was described as a “massive breakthrough” by the living wage campaign. It will mean a pay rise for more than 4,500 staff. In recent weeks, pressure groups and individuals have been turning up at the annual shareholder meetings of retailers such as Tesco, Next and Ocado to demand better pay for workers. The foundation has accredited more than 1,600 businesses, including nearly a quarter of the FTSE 100 and well-known companies such as Nestle, Nationwide and British Gas – but until now, the only household name retailer that had signed up was Burberry. Ikea’s move comes less than a fortnight after George Osborne used his post-election budget to announce that the £6.50-an-hour minimum wage would be recast as the “national living wage” and rise next April to £7.20 for people aged over 25, with further increases to “over £9” by 2020. Last month, Tesco boss Dave Lewis told campaigners that the retailer was in detailed talks with the trade union Usdaw about restructuring pay packages to increase basic salary. GUARDIAN

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6,000 die because doctors don’t work weekends? There’s not enough funding to keep the NHS open five days a week, let alone seven

Fee and Chris work out the obvious way to saves lives...

SOURCE TELEGRAPH: Consultants must work weekends to save lives, says health secretary Jeremy Hunt

Hospital consultants will have to work at weekends under a seven day NHS, said the Health Secretary as he suggested that their refusal to do so is contributing to 6,000 deaths a year. Prime minister David Cameron has repeatedly raised concerns that patients are up to 15 per cent more likely to die if they are admitted to hospital on a Sunday compared to a Wednesday because of the poorer service at weekends. "I will not allow the BMA to be a road block to reforms that will save lives," said Hunt. Consultants are the only health service workers still entitled to opt out of working at the weekend. Under their present system, a consultant with average earnings of £118,000 can boost their basic pay by a third by waiving their opt out and choosing to work at weekends. Some earn more than £200 an hour. The plans triggered a furious response from the British Medical Association (BMA), which accused Mr Hunt of a "wholesale attack" on doctors. The BMA said: “Doctors support more seven-day hospital services [but] have repeatedly called on the government to outline how they will fund and staff them”.

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Rip-off News round-up. Our pick of the last week's media (Thu 16th July)

Fired Barclays CEO to walk away with £28m despite not turning around the troubled bank

Sacked Barclays chief executive Antony Jenkins was fired by chairman John McFarlane – a gruff Scottish banker nicknamed Mac the Knife for his take-no-prisoners attitude – after losing the confidence of the bank’s board. But the ousted boss' payout includes a £2.4million 'golden goodbye', £15million in shares and nearly £11million in bonuses, it was reported. And the total could increase by another £10.8m depending on the bank's performance in the short and long-term. Mr Jenkins is said to have been fired because he failed to make enough headway cutting down the forest of bureaucracy engulfing Barclays. He also failed to cut costs quickly enough and has struggled to improve the performance at the investment bank, it was claimed. DAILY MAIL

Planning shake-up to get more homes built

Developers could get automatic planning permission to build on disused industrial sites in England. Ministers would also get powers to seize disused land, while major housing projects could be fast-tracked, and rules on extensions in London relaxed. Business Secretary Sajid Javid unveiled the plans as part of a broader push to boost Britain's productivity. Treasury sources say workers are more productive when they live closer to their jobs. It came as official figures showed new house building fell by 5.8% in May, the sharpest decline in nearly four years. Mr Javid said the 141,000 new homes built last year were a fraction of those needed to meet demand. Analysts have questioned whether there is enough brownfield land - a term which refers to land that has previously been developed but is vacant or derelict - available to meet the UK's housing needs over the next 15 years. There would also be new sanctions for councils that do not deal with planning applications quickly enough, and the government would be able to intervene in councils' local development plans. But the Local Government Association said councils were not holding up new homes and that developers were not prioritising brownfield sites. It called for stronger compulsory purchase order powers to allow councils to buy up sites "stuck in the system". BBC NEWS

British banks could face new legal action over foreign exchange rigging

A lawsuit is being prepared that could see RBS and Barclays embroiled in a multi-million pound legal battle with US lawyers. Now US law firm Scott and Scott is contacting businesses, pension funds and even central banks across Europe to join a lawsuit. The law firm has already led successful cases in the US, and wants to replicate its success in the UK. Last November six banks, including HSBC and RBS as well as JP Morgan, Citi and Bank of America, were fined £2.6bn in the UK for manipulating the foreign exchange markets. US regulator have also fined banks £3.6bn over the wrongdoings. DAILY MAIL

Trade Union Bill: Ministers deny 'attack on workers' rights'

Ministers have defended plans to tighten the rules on strike ballots after unions said they would make legal strikes "almost impossible". Under current rules all that is needed for a strike is a simple majority of those that take part in a ballot. But the Trade Union Bill would impose a minimum 50% turnout - and public sector strikes would need the backing of at least 40% of those eligible to vote. The bill represents the biggest shake-up in the rules on industrial action in 30 years. The new laws would force unions to give employers 14 days notice of strike action and allow them to bring in agency staff to cover for striking workers. The legislation could also cut the amount of money unions have to mount campaigns - or donate to parties such as Labour - with members actively having to "opt in" to pay the so-called political levy, which is currently automatic unless members opt-out. But proposals to ban picket lines of more than six people appear to have been dropped. The legislation also includes efforts to tackle "intimidation" of non-striking workers. A number of unions involved with the last major day of nationwide strike action in July 2014 would have fallen foul of the proposed 50% turnout rule. The PCS Union, which represents civil service workers, has never achieved such a turnout on a national ballot. NHS strikes in October 2014 would also have fallen short, with turnouts below 50% from unions including Unison and the GMB. Strikes are at historically low levels. 2011 saw large protests over public sector pensions, leading to 1.4m working days lost through labour disputes - the highest number since 1990. BBC NEWS

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Pro-striver tax-cutting Osborne? He's hiked taxes by £47bn and cut tax credits for the working poor

SOURCE FINANCIAL TIMES: Osborne’s tax-cutting rhetoric masks £47bn increase in taxes overall
When you heard George Osborne say six times in his Budget speech that he had moved Britain towards a “lower tax society”, he made a small but important mistake. He really meant “higher tax”. The independent Office for Budget Responsibility was crystal clear on the issue. Robert Chote, its chairman, said that the whole Budget contained “a package of tax increases that will raise £47bn”. There were some cuts to corporation tax, inheritance tax and a rise in the tax-free personal allowance, which the chancellor dwelt upon in his speech. But Mr Chote pointed out that: “the tax increases are roughly twice the size of the tax cuts in aggregate”. The big revenue raisers are the new dividend tax regime, the 3.5 percentage point rise in insurance premium tax, higher rates of vehicle excise duty, restrictions in income tax relief for pension contributions for those earning over £150,000 and a huge one-off boost in corporation tax revenues as companies are forced to pay their bills earlier, helping revenues in 2017-18 and 2018-19. Meanwhile, the “tax avoidance, evasion and aggressive tax planning” clampdown that Mr Osborne highlighted in his speech has not been going to plan. Instead of raising £5bn a year from such measures from 2017-18 as promised in the Tory manifesto, the chancellor has found only £1.3bn.

SOURCE BBC NEWS: Budget 2015: Benefit freeze to hit 13m families, costing some thousands, claims IFS
Thirteen million UK families will lose an average of £260 a year due to the freeze in working-age benefits, says the Institute for Fiscal Studies (IFS). Tax credit changes could hit three million families, which are likely to lose an average of £1,000, it said. George Osborne said anyone working full-time on the National Minimum Wage - taking into account taxation changes - would be better off. Under his new National Living Wage, all workers over the age of 25 will earn a minimum of £9 an hour by 2020. But even taking into account higher wages, people receiving tax credits would be "significantly worse off," said Paul Johnson, director of the IFS. The biggest impact on families will come from the freeze in working-age benefits and the changes to tax credits, said Mr Johnson. "It will reduce the incentive for the first earner in a family to enter work," he said. The number of families affected under the IFS analysis includes those who claim Child Benefit - which will be frozen from April 2016. The majority of families claim the benefit. The Resolution Foundation - a think tank that campaigns for low and middle-income families - said some families moving on to Universal Credit, or applying for tax credits after April 2017 could face much bigger losses. For example, a low-earning couple with with three children making a new claim would be £3,450 worse off, following the tax and welfare changes set out in the budget.

SOURCE TELEGRAPH: Budget 2015: Shops to trade for longer on Sundays under radical new plans

The Chancellor used his first Budget as Chancellor in a majority Tory Government to begin a massive shakeup of Sunday trading laws that currently prevent businesses opening for more than six hours. He said that “there is still a growing appetite for shopping on a Sunday” and that businesses need the change to ensure that they can compete with online retailers. All shops other than the smallest premises are currently only allowed to open their tills for no more than six hours on a Sunday, a law which came into force in 1994 after a long struggle by the business community. Only shops with less than 3,000 square feet – essentially convenience stores and small independent shops - can open for more than six hours. Under the plans to be announced in the Budget, Sunday trading hours will become a devolved issue, meaning that mayors and local councils will be able to decide how long shops can open for. The Treasury believes that extending Sunday trading could create thousands of jobs and generate hundreds of millions of pounds a year in extra income for shops around the country. The new measures will be taken forward in the Government’s new Enterprise Bill in the autumn, the Treasury said.

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Graphs at a glance : Osborne renames the National Minimum Wage to the National Living Wage? The minimum wage is a matter of legislation. The living wage is a matter of opinion.

How much is a "Living Wage"? MPs salivating at their 2015 pay increase bleat that they can't live on £67k a year.  Few (if any) MPs say they do the job for the money, public service being their declared incentive. But apparently they need an extra 10%, lifting their basic salary to £74k in 2015, to 'live on'.


MPs need £74k per year, but George Osborne has decided for the rest of the nation the "National Living Wage" is about £15k per year (£7.20 an hour).

At least with the 'national minimum wage' no-one pretends that you can actually live on it. The Joseph Rowntree Foundation's (JRF) annual Minimum Income Standard (MIS) report for 2015 says:

"In 2008, families with children came close to MIS if they worked full-time on the NMW, but are now 15 per cent short. For single people, the shortfall has grown from 15 to 30 per cent, or by £27 per week (2015 prices)."

 
The JRF report includes 'in work benefits' such as Tax Credits as part of the incomes. Tax Credits are worth a substantial amount, particularly to those working for low pay. According to the Citizen's Advice Bureau:

Rates of Working Tax Credit

Element of Working Tax Credit	Maximum annual amount from 6 April 2014	Maximum annual amount from 6 April 2015
Basic element	£1,940	£1,960
Second adult element	£1,990	£2,010
Lone parent element	£1,990	£2,010
30 hour element	£800	£810
Disability element	£2,935	£2,970
Severe disability element	£1,255	£1,275
Childcare element (up to 70% of the maximum):	Maximum weekly amount from 6 April 2014	Maximum weekly amount from 6 April 2015
Maximum weekly eligible cost for one child	£175 (maximum payable £122)	£175 (maximum payable £122)
Maximum weekly eligible cost for two or more children	£300 (maximum payable £210)	£300 (maximum payable £210)

George Osborne introduced the pretence in his 2015 Summer Budget when he renamed the National Minimum Wage for over 25 year olds the "National Living Wage". Though he ignored the existing "Living Wage" calculated by the Living Wage Foundation to be, for 2014, £9.15 per hour in London and £7.85 per hour in the rest of the UK.

Osborne did provide a large percentage rise in the minimum wage for over 25s, from £6.50 to £7.20. But he polluted this good deed with his fatuous name-change in order to provide a smokescreen for the Tax Credit cuts.

"Why", Osborne could assert, "would someone on a Living Wage need Tax Credits? After all" he could continue, "they can live on a Living Wage, the clue is in the name!". George may have messianic aspirations, but feeding thousands with five loaves and two fish is out of his league.

To quote another tousled writer of fiction, William Shakespeare:
"What’s in a name? that which we call a rose   
By any other name would smell as sweet". The minimum wage by any other name still stinks.

What is very positive is a Tory chancellor explicitly acknowledging that a large chunk of 'benefits' in the form of Tax Credits has actually been a subsidy to low paying businesses. The real question, is there anything wrong with this subsidy?

According to a report by the CIPD (Chartered Institute of Personnel and Development) for half the firms in the Private Sector the most important driver setting wages is what they can afford, "Ability to pay". The other half pay the "Market Rate", i.e. what they can get away with.

A report by the Low Pay Commission shows in 2014 nearly half (47.7%) of all Minimum Wage jobs are with Large firms (though they make up less than 4% of all large firms' jobs). While 12.2% of jobs with Micro firms were on Minimum Wage. [Micro Firms have fewer than 10 employees; Small Firms have 10-49 employees; Medium Firms have 50-249 employees; Large Firms have more than 250 employees].

For many reasons, social and economic, it is better for people to be in a low paid job topped up with "in-work benefits" than for them to be unemployed and completely reliant on unemployment benefits.

Is government subsidising business a bad thing? Actually governemt already does provide "corporate welfare" on a magnificent scale. According to a report by the Guardian newspaper, businesses already enjoy £93 billion a year in UK government subsidies and tax breaks:

Those billions go straight to the companies. Tax Credits, though a subsidy to companies, goes straight to the low paid.

It's difficult to know which firms pay low because that's the best they can manage, and which choose to pocket profits rightly due to their low paid staff because they can get away with it. 

Did Osborne take away Tax Credits to shame low paying firms into paying better? (Is the reason he cut the number of police to shame crooks into not mugging people?). This will have no effect on the firms with no shame, and will drive the ones paying what they can afford out of business.

If Osborne truly intended Britain to get a payrise he should continue topping up low wages, but make firms declare how much subsidy they receive for their staff to get a living wage.

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Rip-off News round-up. Our pick of the last week's media (Thu 9th July)

Is Britain sitting on a £200bn buy-to-let time-bomb? Landlords borrow vast sums to fund property empires

More than two million people are now private landlords. That’s up by 600,000 since the financial crash. In 2000, less than two per cent of mortgages in Britain were buy-to-let. Now there are an astonishing 900 BTL mortgages available, and they account for 15 per cent of all home loans. That’s roughly – wait for it – £200 billion of borrowing. That’s close to the national debt of Greece. And it’s borrowed by private individuals to buy not a home for their family, but to speculate on house prices. And it’s still growing. New buy-to-let mortgages account for 18 per cent of all new mortgages. What’s more, it’s given a helping hand by the tax system – it allows the interest payments on a buy-to-let property to be tax deductible. You pay tax on the rental income you receive, but MINUS what your mortgage payments cost you. That costs the Treasury about £5 billion a year. It is, in effect, a subsidy to landlords which people just trying to buy a house to live in do not enjoy. It’s all aided the boom, which prompted the Bank of England last week to raise its own red flag about the BTL bonanza. In its Financial Stability Report – designed to highlight early the potential risk to the financial system that could fuel a 2008-style crash – the Bank said buy-to-let ‘could pose a risk to financial stability’. One sign it highlighted was ‘a growing appetite for risk’ among lenders. Days later, reports emerged of a new price war among banks, cutting mortgage rates to lure new landlords. DAILY MAIL

Budget 2015: Benefit freeze to hit 13m families, costing some thousands, claims IFS

Thirteen million UK families will lose an average of £260 a year due to the freeze in working-age benefits, says the Institute for Fiscal Studies (IFS). Tax credit changes could hit three million families, which are likely to lose an average of £1,000, it said. George Osborne said anyone working full-time on the National Minimum Wage - taking into account taxation changes - would be better off. Under his new National Living Wage, all workers over the age of 25 will earn a minimum of £9 an hour by 2020. But even taking into account higher wages, people receiving tax credits would be "significantly worse off," said Paul Johnson, director of the IFS. The biggest impact on families will come from the freeze in working-age benefits and the changes to tax credits, said Mr Johnson. "It will reduce the incentive for the first earner in a family to enter work," he said. The number of families affected under the IFS analysis includes those who claim Child Benefit - which will be frozen from April 2016. The majority of families claim the benefit. The Resolution Foundation - a think tank that campaigns for low and middle-income families - said some families moving on to Universal Credit, or applying for tax credits after April 2017 could face much bigger losses. For example, a low-earning couple with with three children making a new claim would be £3,450 worse off, following the tax and welfare changes set out in the budget. BBC NEWS

Scrapping Inheritance Tax on homes worth up to £1m overwhelmingly benefits Londoners

George Osborne announced changes to the inheritance tax system (IHT) meaning a couple can hand a £1m estate on to their children without being taxed for the privilege. Currently, a couple has a tax-free allowance of £325,000 a person (£650,000 a couple).  But Chelsea, Westminster and the City of London, Westminster North, and Hampstead and Kilburn are the only four constituencies where the average selling price of a property last year fell between the two lines, and will therefore benefit from the change. No other boroughs come close. The highest-ranked constituency outside London is Esher and Walton, with an average price of £465,000. According to ONS data, only five constituencies in the UK have an average house price above the old threshold – and they’re all in London. Three are Tory-held seats, and two are held by Labour. Overall, Labour constituencies (including Scottish Labour and Labour co-op) have a median price (£127,500) only 61 per cent that of Conservative constituencies (£207,625). CITY AM

Osborne’s tax-cutting rhetoric masks £47bn increase in taxes overall

When you heard George Osborne say six times in his Budget speech that he had moved Britain towards a “lower tax society”, he made a small but important mistake. He really meant “higher tax”. The independent Office for Budget Responsibility was crystal clear on the issue. Robert Chote, its chairman, said that the whole Budget contained “a package of tax increases that will raise £47bn”. There were some cuts to corporation tax, inheritance tax and a rise in the tax-free personal allowance, which the chancellor dwelt upon in his speech. But Mr Chote pointed out that: “the tax increases are roughly twice the size of the tax cuts in aggregate”. The big revenue raisers are the new dividend tax regime, the 3.5 percentage point rise in insurance premium tax, higher rates of vehicle excise duty, restrictions in income tax relief for pension contributions for those earning over £150,000 and a huge one-off boost in corporation tax revenues as companies are forced to pay their bills earlier, helping revenues in 2017-18 and 2018-19. Meanwhile, the “tax avoidance, evasion and aggressive tax planning” clampdown that Mr Osborne highlighted in his speech has not been going to plan. Instead of raising £5bn a year from such measures from 2017-18 as promised in the Tory manifesto, the chancellor has found only £1.3bn. FINANCIAL TIMES

Businesses pocket £93bn in subsidies and tax breaks

Taxpayers are handing businesses £93bn a year – a transfer of more than £3,500 from each household in the UK. The total emerges from the first comprehensive account of what Britons give away to companies in grants, subsidies and tax breaks. Many of the figures, especially on direct payments, are hard to unearth, as they are scattered between various arms of the state. The government admits: “There is no definitive source of data about spending on subsidies to businesses in the UK.” Many of the companies receiving the largest public grants over the past few years previously paid little or zero corporation tax, the analysis shows. They include some of the best-known names in Britain, such as Amazon, Ford and Nissan. For example, in 2012, Amazon was attacked by MPs on parliament’s public accounts committee for avoiding UK tax. Yet in the same period, the online retailer was awarded £16.5m in grants by the administrations of Scotland and Wales to help build distribution centres. To link the Wales plant to the transport network, the Welsh assembly built the mile-long “Ffordd Amazon road” at an additional cost of £3m. The main subsidies include: £14.5bn in subsidies and grants (rail, defence, etc); £44bn in Corporate tax exemptions (mainly write-off expenses, and investment incentives); £15bn in hidden transport subsidies (rail, airline); £3.8bn to energy firms. GUARDIAN

Biggest banks welcome budget that spreads “bank crash” taxes from guilty big banks to small

So far, the bank levy has raised over £8bn for the exchequer, imposed after the global financial crisis. The shock changes to the bank levy announced by George Osborne following sustained lobbying by the industry. Major lenders will be the largest beneficiaries. The change to the bank levy follows a series of complaints by the major banks, particularly those such as HSBC and Standard Chartered, which are based in London but do much of their business overseas. Responding to complaints from banks that the levy has been hiked too often and without warning, Osborne set out a timetable of reductions from 0.21% to 0.18% from January 2016 and 0.17% from January 2017, before reaching 0.10% from January 2021. But the chancellor’s move to scale back the levy, which has raised £8bn since 2010, came alongside a new 8% surcharge on bank profits that experts said would spread the tax burden more widely across the sector, rather than just the biggest banks. Shares in HSBC and Standard Chartered, which had sunk this week on concerns about the situation in China, were lifted off their lows. But smaller banks fell following the surprise announcement because they will be hit by an industry tax for the first time. Matthew Barling, banking tax partner at accounting group PwC, said that while banks with large overseas operations would welcome the reforms, the overall tax burden on the sector was rising. GUARDIAN

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Graphs at a glance: Bank of England survey shows banks are not bothered about "public anger against, or distrust of, financial institutions"

If you crashed your mum's car, you would be on your best behaviour for a while until she forgave and forgot. You would do all the good things, washing up and stuff, to reduce her anger and mistrust. So she would lend you her car again when it gets back from the garage with the repair bill for your mum to pay. 

So why, having crashed the World Economy and handing the bill to the World's taxpayers, did the banks carry on regardless with scams like PPI, IRSA, Libor, Forex, aiding tax evasion and money laundering? 

Didn't they want to assuage their customers' anger and regain their trust?

Actually, data from the Bank of England shows they weren't bothered. 

In July 2015 the Bank of England (BofE) published its biannual "Systemic Risks Survey". This report, produced since 2008, looks into what bankers worry most about. 

The survey works by:
"quantifying and tracking, on a biannual basis, market participants’ perceptions of such risks. The survey covers aggregate risks to the UK financial system, including the probability of a future high-impact event and confidence in the stability of the UK financial system, as well as specific sources of risk which could either have a particularly large impact or be especially challenging to manage as a firm"

The data reveals since 2008 the Financial Services Industry has never been bothered about public anger and mistrust. 

The report identifies 21 specific causes for concern ranging from "Sovereign Risk" to "Cyber Attack". From its first publication "public anger against, or distrust of, financial institutions" ranked lowest or second lowest in twelve of the fourteen reports. Even when banker angst at what their customers thought of them peaked in the first half of 2010 there were only 6 items less important.

On the other hand, the third most scary thing for the finance industry according to the survey is "Risks around regulation/taxes". 


In his Mansion House Speech in June 2015 the Chancellor, George Osborne, dropped a heavy hint that the time for regulatory bashing bankers was coming to an end. Osborne said:"simply ratcheting up ever-larger fines that just penalise shareholders, erode capital reserves and diminish the lending potential of the economy is not, in the end, a long term answer."

This is certainly true. However Osborne goes on to say something that probably isn't true:
"individuals who fraudulently manipulate markets and commit financial crime should be treated like the criminals they are – and they will be."

Taking away the £billions of bonuses (the Office for National Statistics states £87 billion paid to UK Financial Services between 2007 and 2013) pocketed during the bank crash and the associated frauds of the last few years has proved impossible. Doubtless some of these bonuses were fairly earned by earnest bank tellers. And doubtless these bank tellers are used as human shields for the 'bad bankers' who won't have to return anything. 

The Prudential Regulation Authority (PRA, who took over part of the old FSA's job) said in July 2014 the long promised "banker bonus clawback" would come into force for bonuses awarded after January 2015. By June 2015 the PRA for some reason delayed this to January 2016. Giving the bankers an extra year to safely stash their ill-gained swag, and redefine future 'bonuses' as 'allowances' or something else not covered by the clawbacks. 

Christine Lagarde, the head of the IMF, said in May 2014:
"the behavior of the financial sector has not changed fundamentally in a number of dimensions since the crisis. While some changes in behavior are taking place, these are not deep or broad enough. The industry still prizes short-term profit over long-term prudence, today’s bonus over tomorrow’s relationship.

Some prominent firms have even been mired in scandals that violate the most basic ethical norms—LIBOR and foreign exchange rigging, money laundering, illegal foreclosure.

To restore trust, we need a shift toward greater integrity and accountability. We need a stronger and systematic ethical dimension."

Evidence presented to Parliament by IPSOS-Mori shows the depth of public mistrust and support for more regulation in the UK.




To restore trust the bankers need to see trust as something worth restoring, which they evidently don't. To strengthen regulation the government needs to decide who is more important to it, the financial sector or the general public.

Asked which risks would be most challenging to their firms, managing angry customers barely registered at all. Regulation, however, figured highly. 

The government is signalling that the frightened little bankers shouldn't worry for their wallets. Osborne will tuck them up and kiss their fears away. 

Which of course means the rest of should be afraid, very afraid.

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The "No alternative" Eurozone solution for Greece is the exact opposite we, the US, France, etc., have chosen for ourselves

KJ has it all explained to him by Fee, as usual...

SOURCE BBC NEWS: Greek debt crisis: IMF says extra 50bn euros needed, criticises EU plans

Greece will need an extra 50bn euros ($55bn) over the next three years to stabilise its finances under the existing, disputed bailout plans, the International Monetary Fund (IMF) says. The IMF also cut its forecast for Greek economic growth from 2.5% to zero. And it repeated its earlier suggestion that Greece needed debt relief in the form of extended repayment periods and lower interest rates.  The European Commission, the European Union's executive arm - one of the "troika" of creditors along with the IMF and the European Central Bank - wants Athens to raise taxes and slash welfare spending to meet its debt obligations. But in its report on the embattled Greek economy, the Washington-based global financial body says changes in Greek policies and its economic outlook since earlier this year "have resulted in a substantial increase in financing needs" not met by the existing proposals of either the government or its creditors.

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Rip-off News round-up. Our pick of the last week's media (Thu 2nd July)

Regulator demands energy firms end the madness where the POOREST are charged MORE

Those least able to pay are being charged huge fees and forced to pay more for the energy they use by suppliers. Industry regulator Ofgem says there are now a record 7.2million prepayment gas and electricity meters in homes. But despite a big chunk of those being low incomes households, they pay higher prices than many others . To make matters worse, just over half of suppliers add a fee to install a meter in the first place. Others want money to have them removed. Ofgem also found firms demanding “security deposits” of up to £5,000 in one case before they’re supply a customer. Ofgem wants the Energy firms to ditch charges, because they are preventing prepayment meter (PPM) customers switching to cheaper deals. The average PPM customer pays £1,266 a year for gas and electricity. Yet they could save around £66 a year by moving to the cheapest PPM tariff, and £300 by switching the best deal on the market. The Big Six suppliers - British Gas, SSE, ScottishPower, EDF Energy and E.On - don’t levy a fee but some smaller firms do. Extra Energy, for example, has a £160 fee, said Ofgem. But some big suppliers want sizeable security deposits before they’re take on customers, often those they deem a credit risk. Ofgem found npower wanted £1,364 upfront in one case and E.ON asked for £5,000 in another. Philip Cullum, a partner at Ofgem, said the charges “fall on those least able to afford them.” The findings come ahead of a report from the Competition and Markets Authority, expected next week, which is set to criticise energy suppliers. MIRROR

Amazon stokes row over internet giants' tax bills as it pays just £11.9m in tax on £5.3bn worth of UK sales

The online retailing giant recorded sales up 14 per cent last year. But the group's UK subsidiary reported a profit of just £34.4million and thus incurred a tax bill of £11.9million. The news will fan the flames of the argument over internet giants' tax bills, with firms such as Amazon and Google attacked for booking profits in lower tax countries. Amazon employs more than 7,700 people in the UK and its sales in the country account for 9.4 per cent of its global turnover. But sales in Britain are taken through the group's Luxembourg arm, called Amazon EU Sarl. The Luxembourg business is where sales from many countries in Europe are booked and are not taxed in the country where the shopper carried out the transaction. In April Chancellor George Osborne said firms that move their profits overseas to avoid tax will be subject to a 'diverted profits tax'. The so-called 'Google Tax' is designed to discourage large companies from diverting profits out of the UK to avoid tax. Firms such as Apple, Google and Starbucks have all seen their European tax payments criticised for being too low. In October, the European Commission said it would launch a probe to see whether Amazon's tax affairs complied with state aid rules. This investigation follows other probes the EC has launched into the tax affairs of computer giant Apple, coffee chain Starbucks, and the financial arm of car maker Fiat. DAILY MAIL

Government shelves multi-billion railways upgrade plan due to rising costs and delays. But HS2 unaffected

In a statement to Parliament Transport Secretary Patrick McLoughlin said he was pausing key parts of the £38.5bn Network Rail upgrade programme. “Much of this work should have been done decades ago – successive governments have failed to invest in our rail network,” he told MPs. Casualties of the announcement include a “pause” on upgrades to the Midland mainline to Sheffield and the Transpennine route between Manchester and Leeds. Some aspects of the announcement appear to undermine George Osborne’s stated goal of creating a “northern powerhouse”, of which improved regional transport links are a large part. But the Government's flagship HS2 scheme appears to be unaffected by the policy change. The Network Rail upgrade plan, launched by the Coalition, was billed as the largest modernisation of the railways since Victorian times”. INDEPENDENT

UK tax policy dictated by companies not ministers says leading treasury advisor

Philip Baker QC is a leading barrister and adviser to the Treasury on its recent “Google tax”, aimed at stopping international companies from avoiding tax. He said: “I don’t think in the last 20 years or so one can say that governments have driven corporation tax policy. It’s the large companies that have driven the direction of corporate tax policy.” He stressed that more coordination was needed between EU member states on tax, such as measures proposed by the European commission last week. Known as the Common Consolidated Corporate Tax Base (CCCTB), these new proposals were set out by commissioner for tax Pierre Moscovici in answer to the LuxLeaks scandal, which last year laid bare the extent to which some smaller EU countries had set their tax policy to routinely facilitate tax avoidance by multinationals, eroding tax receipts beyond their borders. Baker told the tax conference he thought it regrettable that the UK appeared to have immediately rejected such plans out of hand. GUARDIAN

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