Income inequality and grossly overpaid CEOs

Your overpaid CEO won't take a pay cut? Here's what to do...

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Good capitalism is good business - some tips on how to spot it

By Richard Murphy, founder of the Tax Justice Network , director of Tax Research LLP, and author of The Courageous State*

Ed Miliband has announced himself in favour of good business. I am delighted he has. So am I. It’s astonishing that some are saying that by declaring himself against spivs, chancers, asset strippers, speculators and tax avoiders he is somehow anti-business. Far from it: he’s declared himself very pro-business precisely because it is these people who are anti-business.

But being anti-something is not good enough. Being pro-good business is what is required and that requires a clear understanding of just what a good business might be. I’m not seeking to offer a definitive guide here, but take these as examples. A good business:

1. Makes clear who it is so people know who they are dealing with
2. Makes clear who runs it
3. Makes clear who owns it
4. Makes clear the rules by which it is managed
5. Puts its accounts on public record if it enjoys limited liability, and does so wherever it is incorporated whether required to by law or not
6. Seeks to comply with all regulation that applies to it
7. Seeks to pay the right amount of tax due on the profits it makes in the place where they are really earned and at the time they really arise
8. Seeks to pay a living wage or more to all who work for it
9. Recognises trade union rights
10. Operates a fair pay policy so that the pay differential between highest and lowest paid in the company cannot exceed an agreed ratio that should never exceed twenty
11. Makes fair pension provision for all employees
12. Does not discriminate between employees on the basis of race, nationality, national origin, gender, sexual orientation, age, disability and similar such issues
13. Does not abuse the environment
14. Has a clear code of ethics that it publishes and is seen to uphold
15. Is transparent in its dealings with customers
16. Seeks at all times to minimise risk to those it deals with and takes all steps to ensure they know what those risks are
17. Accepts responsibility for its failings and remedies them
18. Works in partnership with its suppliers and does not abuse them
19. Advertises responsibly
20. Creates and supplies products meeting real human need

I could readily add to that list, which I do not think I have tried to prepare before. But the gist is obvious.

So what would this look like in practice, meaning how could this status be assessed?

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Exercising consumer rights

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Tax credits... for the super-rich

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Liebrary: How companies hide excessive interest rates on loans

One of the tell-tale signs of a rip-off is an extortionate interest rate. You don't need to look as far as the £9 billion British banks put aside to compensate consumers for their infamous Payment Protection Insurance rip-off. Britain's high-street banks charging up to 800,000% interest on unauthorised overdrafts provides a clear sign of what they are up to.


But it is not enough to simply look for ludicrous interest rates to spot a rip-off. Being wicked doesn't make a chap stupid. And anyone who paid attention in that maths lesson about percentages back when they were teenagers would be able to come up with this scam. If the inclination, or rather the incentivisation, took them.


A report by Barnardo's, the childrens' charity, highlights how poor families are ripped off by extortionate credit charges. The report, "A vicious cycle: The heavy burden of credit on low income families" states:


"Barnardo’s has found that an individual could pay £780 more when buying through rent-to-own companies than through the high street. 


In this example the person would face a premium of over £150 on the list price of a washing machine when purchased through rent-to-own. This is before interest of around £215 paid over three years. 


Perhaps more shocking is the premium paid on service cover. Two additional years service cover (on top of the statutory one year guarantee) costs £382 through the rent-to-own scheme. Three additional years taken from a high street retailer costs around a third of the price, at £130. There appears to be no clear rationale for this premium paid by low income families on service cover. 


The total cost through rent-to-own credit comes in at over £1,250 compared to £470 when bought from a high street retailer. "

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Liebrary: Are Britain's energy companies' charges for domestic gas & electricity really the lowest in Europe?

One of the true things energy companies say, (and never forget, the most effective rip-offs are done without lying) is that the UK has low domestic gas and electricity prices compared with most of the European Union. This statement has often been used by energy industry apologists to squirm out of a tight interview. 


The interviewer almost never knows the hidden truth behind the truthful facade.

What the apologists are rather shy about is the fact that the price difference is due to UK taxes on retail energy being about the lowest in the EU. If you strip out the government taxes - money which doesn't go into the pockets of the energy companies - UK energy prices are about the same as the rest of the EU.


Figures from the Household Energy Price Index for Europe (HEPI), show that the cash pocketed by the British energy companies is about the same as in the rest of the EU, in spite of them using the "UK's lowest prices" argument for their price hikes.

So that's ok, isn't it? We pay about the same as our European cousins?


Actually, it isn't. 


According to the International Energy Agency figures for 2010, Britain is 60.9% self-sufficient in Natural Gas, which is the source of gas (naturally) and electricity generation in the UK. 

Contrast that with the other European Union nations who have to import anything between 80% and 98% of their gas.


British energy companies claim to run on wafer-thin margins by moving their profits from downstream (selling to customers) to upstream (sucking the stuff out of the good Earth). 


Of course, the energy industry has a whole quiver of fibs, including:

• Retail prices go up with wholesale prices, but fail to come down with them.
• The accounting trick that allows them to fib about low profit margins.
• Confusing pricing that, according to the head of OFGEM in evidence to Parliament, has meant "40% of consumers who have switched [supplier] have switched to a weaker deal"
• Doorstep selling tactics described by the parliamentary energy select committee as "Del Boy sales tricks", tricking customers into worse contracts by contacting them individually at home.

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Occupy movement evicted

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Education cuts will scuttle literacy levels

Chris, Fee and KJ weigh up Michael Gove's suggestion for a £60m royal yacht against his education cuts

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MPs make a try for a discrete £20k+ pay-rise in the face of the public sector pay-freeze

The British Army has a brave tradition known as the "Forlorn Hope": a band of soldiers who would make the first assault against a well defended position. None of the Forlorn Hope was expected to survive unscathed; few were expected to survive at all. In spite of the extreme danger there was rarely a shortage of volunteers. Ambitious men who had a forlorn hope of being plucked from obscurity, veterans who hoped forlornly to show they still had what it takes, or those on their last legs forlorn and yet hopeful of leaving the mark they had failed to leave in their careers so far. Survivors were rewarded with promotion, glory, and cash.

British Members of Parliament have set up their own Forlorn Hope, in the form of the Committee on Members' Expenses. Their objective is to scale the heights of public outrage and outflank the entrenched disgust of voters at our MPs' pilfering, and breach the defences of the public purse. If their assault is successful they will earn the whispered gratitude of the whole House of Commons, perhaps with ministries for the survivors and peerages for the fallen.

As Britain was distracted by thoughts of Christmas food, presents, and relatives, our intrepid MPs quietly made their opening gambit. Objective, to sneak through a remuneration rise in the face of the current freeze on public sector pay. The committee, set up in July 2011, published its first report early in December 2011. One of its key recommendations (Recommendation 17):

1. IPSA provide a detailed explanation of the rationale for its existing London supplements (especially the Outer London one) and make transparent its current methodology for calculation of the rates.
   
   
2. A body independent of both Parliament and IPSA be commissioned by the House Service to undertake a financial cost-benefit analysis to determine whether extending IPSA's current system of London and Outer London supplements to other regions in the UK could provide greater value for money for taxpayers..
   
   
3. In not more than six months' time, the House should have the opportunity to consider the merits of that cost-benefit analysis and evaluation and to make a decision on whether there should or should not be a system of regional supplements instead of the existing travel and accommodation provisions.

(IPSA=Independent Parliamentary Standards Authority)

The committee, you will note, has identified “a system of regional supplements” as a means of capturing a few extra £000s using the Outer London allowance as its Trojan Horse. So, what is this all about? Referred to as the London Area Living Payment, the details are:

Eligibility:            MPs for constituencies in Greater London, plus 24 MPs who are outside Greater London but are in the “London Area” (within 20 miles of Parliament).

Value:               £3,760 per annum for MPs in Greater London

                        £5,090 per annum for the 24 MPs in the “London Area”

In order to reinforce the argument for inflating these relatively modest amounts, the committee asks IPSA to ‘make transparent’ its methodology for calculation of the London supplements. IPSA publishes an FAQ document, with the following statement on how it calculates the additional £1,330 per annum for the outer London MPs:

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38% of appeals heard at a tribunal against "Fit to work tests" are successful.

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