Outsourcing promises cost savings in a time of austerity. History shows these promises of efficiency and cost savings are false. But even if they aren't don't give up your rights in exchange for a handful of silver.

Hold on to your rights.  Rights are not given to you by the powerful through their benevolence. Rights are given only when the powerful need you to fight their wars, work in their companies, or vote for them in elections. Rights are given reluctantly, and are taken back when the opportunity arises. Such an opportunity was created by the banking crisis, smuggled in under the cloak of 'Austerity'.

In the last two centuries the industrial revolution and worldwide wars made the powerful very dependent on ordinary people. Robber barons needed ordinary people in their armies and their factories just to stay ahead of other robber barons. Things are changing. Recent decades have brought automation of factories, computerisation of routine jobs, globalisation of the supply chain, and missiles and drones requiring very few to press the buttons that destroy very many. As time passes, the powerful need us less.

When the powerful tell you they are taking away your rights for your own good, don’t trust them. Employment rights, the right to a fair trial judged by your peers, the right of habeas corpus, the right to a fair share of the nation’s wealth, the right to the protection of the law regardless of your ability to pay a lawyer, the right to a high standard of health and education, and many more hard won rights are being eroded. The powerful are using the opportunity brought by banking crisis austerity as cover. 

They tell us we are in a crisis so severe that we must cut costs by cutting benefits, pay, pensions, and services. But not severe enough that we can't still cut top rate income tax, cut corporation tax, and not severe enough that we need a wealth tax. Give the rich a bigger share and, in exchange for our rights they promise the rich will be generous to us. We don't trust in this bargain, but in the face of the powerful we feel powerless.

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Outsourcing public services: a case of privatised profits, socialised losses

Guest post from the Scriptonite Daily blog; the "Barnet Casino" video is from The Barnet Alliance (produced by Azi Khatiri, drawn by Ellis Nadler).

It is clear and beyond doubt: it simply costs more to live in a state where the basics we need to survive are handed over to private interests to profit from.  We had it better when we shared.

So, the privatisation of our public services has seen a rise in personal debt; that makes sense.  But one would think that there would have been a corresponding fall in public debt.  Instead, as we have seen, the debt has risen.  So what are they spending all this money on?

The truth is, they never really privatised as they said they did.  They privatised profit, and they socialised investment and losses.

It doesn’t matter which sector you choose, the role of the state has become handing out tax breaks and subsidies whilst acting as a guarantor against losses.  This is the role of tax payer money which successive governments have prioritised above social utility – or making life better.

Socialised Losses

The most obvious recent example was the Bankers Bailout.   In the bailout of 2008/9, the UK government had to guarantee funding to the banking sector, of 101% of GDP.  That is, the UK diverted over £2trillion of tax payer money from public expenditure, to a handful of banks.

This is equivalent to almost 3 times its entire annual budget;  twenty years of NHS spending (£106.7bn a year); forty years of education spending (£48.2bn); or five hundred years of job seekers allowance (£4.9bn a year).

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Cayman Islands revokes HSBC’s local banking license

KJ to the rescue?...

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Rip-off News round-up. Our pick of the last week's media (Thu 28th March)

New £80bn 'Help to Buy' scheme may get you on the housing ladder – but if prices rise, so does your debt

Help to Buy should initially mean it becomes easier to get on to the property ladder. But the Chancellor admits he hopes it causes a steep climb in house prices. But this will cause a mini bubble. When the scheme ends in three years, the number of buyers will drop, and house prices will fall again. This could leave many homeowners who bought a home with a small deposit stuck in negative equity — i.e. they owe more than the value of their home. DAILY MAIL

(“Cheap credit to house buyers who can’t otherwise afford it? Why didn’t I think of that first? Oh, right, I did,” said every bank that caused the biggest global economic collapse since the 1930s...)

OECD says UK tax hits stay-at-home mothers hardest

A family with one worker and two children lost 27.9% of wages in tax in 2012. This compared with 26.2% in 2009 before the Coalition was elected. The international average for such a family is 26.1%. Also, “well off” British families with stay-at-home mothers are now worse off, paying 40.5%of earnings in tax compared to international average of 38.6%. This contrasts with both single people and two-earner families which have benefited from cuts in the tax-free personal allowances and other changes. DAILY MAIL

The Cayman Islands Monetary Authority has officially revoked the banking license of HSBC S.A. (Cayman Islands Branch)

The CIMA concluded that HSBC’s activities were “detrimental to the public interest, the interest of depositors or of the beneficiaries of any trust or other creditors and that the direction and management of its businesses has not been conducted in a fit and proper manner.” Following recent record fines for money laundering whilst paying multi-million pound bonuses to hundreds of its staff, HSBC’s marketing teams are already at full stretch trying to rescue their reputation. CAYMAN NET NEWS

(NEWS LATEST: HSBC launches new advertising campaign, called “We try so hard to dodge tax for you, even the Cayman Islands won’t touch us.”)

45% rise in UK banks’ core profits wiped out by billions in fines, regulation violations and their own mistakes

The UK’s five major banks were hit by PPI mis-selling compensation costs of £7.4bn. In addition, there were other fines and penalties from regulators and "redress provisions" of £4.7bn, and a £12.8bn accounting hit for losses caused by the revaluation of "own debt." The news is likely to provoke stern words from bank shareholders. BBC NEWS

(...those stern words being: “Either stop screwing customers, or stop getting caught. Preferably the latter.”)

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Cyprus latest: EU forces closure of banks

Cameron catches up on the news...

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Britain's tax policy helps those who help themselves

As the 2013 Budget cuts corporation tax to the lowest in the G20, we look at some statistics from our guest post from the Tackle Tax Havens blog

$1-1.6 trillion

Annual cross-border flow of the global proceeds from tax evasion, corruption and criminal activities. Every $100 million recovered could fund full immunisations for four million children or provide water connections for 250,000 households.

www.unodc.org/unodc/en/press/releases/2007-09-17.html

$120 billion

Amount that could be delivered to fight poverty per year by Tax haven crackdown.

Oxfam, press release, 13th March 2009

$100 billion

Amount that the Senate Permanent Subcommittee on Investigations estimated in 2008 that the U.S. lost in tax revenue due to offshore tax abuse every year.

Committee on Homeland Security and Governmental Affairs, Permanent Subcommittee on Investigations

$1 trillion

Amount of unrepatriated foreign profits sitting offshore.

Drucker, Jesse. “Tax Holiday for $1 Trillion May Lure Back Profits Without Growth.” Bloomberg. 17 March 2011

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Barclays' latest £38.5m fat cat bonuses

KJ, Fee and Chris try to keep up with the news...

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Rip-off News round-up. Our pick of the last week's media (Thu 21st March)

Barclays quietly announces £38.5m fat cat bonuses on busy budget day, hoping nobody notices
Barclays promised it was "changing" after being fined £290m last year for its role in the Libor-rigging scandal. But it has just awarded its investment bank chief Rich Ricci £17.5m and CEO Antony Jenkins £5.3m. Ricci’s payday was dwarfed by the £44m he collected in 2010. Barclays were accused of sneaking out its news on budget day, in the hope that the media wouldn't notice. GUARDIAN

(But did Rich Ricci notice? £44m in 2010, £17.5m now? Probably not...)

Morrisons wants government to crack down on big corporates that dodge tax

Dalton Philips, CEO of the supermarket giant, said he was concerned about the tax transparency of other large corporates who were dodging tax, giving them an unfair trading advantage, and wanted the Government to require those operating here to disclose payments. ‘We believe that this will encourage those companies that are concerned about their reputation to ensure they pay their fair share,’ he said. DAILY MAIL

(“Our reputation, eh? How about we used a fraction of the dodged tax to pay for another glossy marketing campaign saying how much we love you all,” said a chorus of the marketing directors of all the tax dodging corporates...)

UK water companies avoid paying tax using £3.4bn loophole
Water companies are loading up with debt to offset profits and avoid tens of millions in tax. One third of the money we pay for our water bills now goes on paying the debt interest and dividends. Meanwhile, water bills are rising by 3.5% on average to £388 a year, for “infrastructure investment”. The UK Treasury nearly closed the “Eurobond loophole” last October, then decided against it. When asked to criticise the tax dodge, Ofwat preferring to focus on its job as the water regulator, saying “…if companies don’t deliver, we take action. In the last seven years, companies have had to pay out more than £550 million [in fines], from their own pockets, where they have let customers down.” TELEGRAPH

(Errr… and how does that money get into their own pockets, Ofwat? Of-Twat, more like it...)

Tenants use payday loans to pay rent
One quarter of the private tenants surveyed said they have had rent increases averaging £300 in the last year as wages remain stagnant. Almost two thirds are struggling to pay their rent or have fallen behind. So tenants are resorting to "drastic" measures such as using payday loans and credit cards to pay their rent. Some desperate parents have been forced to borrow cash from their children. TELEGRAPH

(All together now with the government’s Plan A mantra: “It’s immoral to have our children pay for a crisis we created!”)

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Government’s Treasury expert says Cameron is wrong over austerity “success”

Osborne hopes Cameron doesn't embarrass everyone again...

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Tax Dodging in Britain is a government regulated sport

UPDATE NOV 2016: An HMRC taskforce set up to catch wealthy tax dodgers has claimed just one scalp in seven years, and that was back in July 2012. The 380-strong unit targets the super rich who hide their money offshore or use aggressive avoidance schemes. More than 2,000 individuals – each worth at least £20million – are suspected of dodging almost £2billion between them. MPs sitting on the public accounts committee said a report from the National Audit Office, titled HMRC’s approach to collecting tax from high net worth individuals, showed the wealthy were often let off the hook while families and small businesses were hounded.



A chancellor is reputed to have said: 

"Laws, like sausages, cease to inspire respect in proportion as we know how they are made" 

Not said by our chancellor of the exchequer but by Bismark, the Iron Chancellor of 19th Century Germany. He may not have been the first to say it, but like most witticism the originator rarely gets the credit.

Successive British governments, from left to right, have bent over backwards to keep a sausage machine of laws creating loopholes for tax avoidance. The industry knows it; the tax dodgers know it; the government and government in waiting (the opposition) know it.

In Britain tax dodging is a government regulated sport. In a session of the Public Accounts Committee (PAC) of the UK Parliament looking into tax avoidance schemes they questioned Aidan James, a director of a tax consultancy advising those who want to avoid tax:

Q103 Ian Swales: How many of the schemes you have marketed are now illegal?

Aiden James: Most of them.

Ian Swales: Most of them?

Aiden James: All of them, I suspect.

Q104 Ian Swales: All the schemes you have marketed are now illegal, so you are now looking for the next loophole-is that a fair description of your business?

Aiden James: That is how it works, yes.
.....

Q110 Stephen Barclay: The model, if I am understanding correctly, Mr James, is that most of the schemes that you introduce get closed down within a relatively short period of time.

Aiden James: Yes.

Q111 Stephen Barclay: So then you aggressively target a client base and get as many as you can through in a short period of time on the basis that HMRC cannot pass retrospective legislation. Therefore, your clients will get a tax window where they can reduce their tax until HMRC wake up and close that scheme down, by which time you have moved the game on to the next scheme. Is that a fair summation?

Aiden James: I would agree with all that you said apart from "aggressively market". 

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