Sir Winston Churchill to be the next face on the five pound note

The Governor of the Bank of England, Mervyn King, shows the design to Cameron...

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Liebrary: Is Corporation Tax being cut to make us more competitive? Or is there another reason?

Adam Smith, the patron saint of capitalism, theorised that by everyone behaving selfishly the 'invisible hand' of all the selfishness will distribute the wealth of the nation as if "the earth had been divided into equal portions among all its inhabitants". Smith wrote: 

"The rich only select from the heap what is most precious and agreeable. They consume little more than the poor, and in spite of their natural selfishness and rapacity, though they mean only their own conveniency, though the sole end which they propose from the labours of all the thousands whom they employ, be the gratification of their own vain and insatiable desires, they divide with the poor the produce of all their improvements. They are led by an invisible hand to make nearly the same distribution of the necessaries of life, which would have been made, had the earth been divided into equal portions among all its inhabitants, and thus without intending it, without knowing it, advance the interest of the society"

So why hasn't this beneficial outcome happened in Britain? Perhaps the flaw is it requires everyone to behave selfishly. Not just the wealthy, but also the rest of us. Just as the rich demand the gratification of their insatiable desires, for the 'invisible hand' to succeed ordinary Brits must demand as big a share as they can grab. Is it the fine balance of grasping that is the key? Is it all our fault, that although the wealthy are grabbing we aren't doing our bit?

During this time of 'austerity' appeals are made to the unselfishness of us Britons by political and business leaders claiming "we are all in this together". 

Are we ripped-off Britons too gullible, accepting wage freezes, benefits cuts, withdrawal of decent pensions, curtailment of employment rights? Governments have cleverly targeted minorities for their austere medicines. But as the scythe progressively cuts at one minority after another, we slowly realise that we are all minorities one way or the other: the disabled; the unemployed; the teachers; the public servants; the pensioners; the soldiers; the students; the nurses... 

The reality is those who make the appeals rely on the unselfishness of others as they selfishly feather their own nests. Cuts for all - with the biggest being tax cuts for companies, their top executives, and their owners.

For this post we focus on corporation tax cuts, and refer to some interesting graphs from the 2013 Budget Document:

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“Big 4” accountancy firms use knowledge gained from staff seconded to Treasury to help clients avoid taxes

"Scam": PricewaterhouseCoopers, Deloitte, Ernst & Young, KPGM... Fee tries to explain, but KJ and Chris get there in the end...

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Rip-off News round-up. Our pick of the last week's media (Thu 25th April)

Famous academic paper used to make the case for austerity cuts contains major errors

Another surprise is that the mistakes, by two eminent Harvard professors, were spotted by a student. He'd spotted a basic error in the spreadsheet. The Harvard professors had accidentally only included 15 of the 20 countries under analysis in their key calculation (of average GDP growth in countries with high public debt). BBC NEWS
(“When the facts change, I change my mind. What do you do?” – JM Keynes c.1940. “I change the facts” – George Osborne c.2013.)

OFT accuses pharma giant GSK of 'pay-for-delay' deals to protect profits

GlaxoSmithKline has been accused of paying three other firms to delay the release of cheaper copies of its anti-depressant drug, Seroxat, in a bid to protect one of its best performing products. The introduction of cheaper “generic” medicines leads to strong competition on price, drives savings for the NHS, benefit patients and, ultimately, taxpayers. GSK said they had only just received the OFT objections and needed “time to carefully review it.”  TELEGRAPH
(“How much time? About the same time it takes to collect our paper trail of bribery, then shred it,” said our pharma insider…)

Big Six energy firms 'hide profits to dodge price controls' and cash in as household bills soar
Energy firms may be hiding their profits from energy regulator Ofgem and understating how much they make from consumers. Their accounting methods could be obscuring how much energy groups earn from UK households, making it harder for Ofgem to regulate pricing. It follows the revelation last week that many of the big six energy firms – RWE npower, ScottishPower, SSE, Eon, Centrica and EDF – pay little or no tax in Britain. DAILY MAIL

Shelter inundated as housing costs and benefit cuts bite
Housing benefit changes and soaring living costs mean growing numbers of tenants are struggling to pay bills. A series of welfare changes took effect this month, including a £26k/year cap on household benefit claims, begun in four London boroughs and to be implemented nationwide from 15 July. Also, the so-called bedroom tax, which will result in social housing tenants losing 14% of their housing benefit if they are deemed to have one spare bedroom, or 25% if they are deemed to have two.  GUARDIAN

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Every minister should spend a year living the life of the people their policies affect the most

Osborne and Cameron see the light?...

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Liebrary: Are wages and employment rights being cut to make Britain more competitive? Or is there another reason?

Our leaders tell us we must be more competitive. So we can work ourselves out of the banker induced crisis. They tell us that to earn money to pay off the debts that came from the crisis we must compete with other countries to attract companies to Britain. 

To do this they tell us we must have a more flexible labour market (i.e. easier for companies to fire us), more competitive wage structure (i.e. pay us lower wages), and we must cut corporation tax for the companies (i.e. reduce companies' contribution to the public purse, paying for the NHS, schools, defence, roads and stuff like that).

So we thought we would look to see how uncompetitive we actually are in terms of wages, sackings, and tax at the moment:

a) Compare wages, and we see the UK average wage measured by the EU is well below other major European countries, and below the average of all the EU27 countries.

Statistics from the European Union, Europa.eu (As figures are in Euros, UK average wage rise is impacted by exchange rate of strengthening pound in this period)

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Big Six energy firms accused of being a 'cold-blooded profiteering' cartel, hiking prices and dodging tax

Chris meets an energy fat cat...

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Rip-off News round-up. Our pick of the last week's media (Thu 18th April)

Welfare cuts to hit the north and regions up to five times as hard as the Conservative heartland southern counties
Blackpool, the hardest-hit town, will see an average loss of £914 a year for every working age adult, or 4.65% of household incomes. It is only 0.86% in Surrey. This will also make a Conservative majority at the next election more unlikely, as those are the areas where the Tories must win more seats. FINANCIAL TIMES

Royal Bank of Scotland should stay in public ownership for now, says poll

A YouGov poll reveals only 9% of voters think RBS should see a swift return to the private sector, while 66% call for bailed out bank bosses to return their knighthoods. The government is understood to be keen to kickstart the selloff of part of its 82% stake in the bailed out RBS before the general election in 2015, even though – on current prices – this would involve a loss of around £20bn. GUARDIAN
(66%? What did the other 34% want done to those bank bosses?..)

Big six energy firms accused of 'cold-blooded profiteering'

Official figures showed the big six energy firms had more than doubled their retail (i.e. selling to households and businesses) profit margins over the last 18 months and were now earning an average of £95 profit per household on dual-fuel bills. Ofgem also said average margins in generation (i.e. extracting the oil and gas) across the big six increased from 18.4% in 2010 to 24.4% in 2011. Critics accuse energy firms of acting as a profiteering cartel, forcing poor households to either “heat or eat.” GUARDIAN
(“Hey, we’re also faced with a choice that rhymes. Compete or cheat...” said our energy fat cat insider.)

MP’s outraged that RWE, npower and others have paid little or no corporation tax despite significant profits rise

A spokesman for the energy sector defended them, saying they had spent tax-deductible billions on investment, and in any event paid proportionately more tax than other sectors compared to its contribution to GDP. But they are accused of hiding profits through the complex relationship between different divisions of the same company. Selling energy to consumers – the retail market – is separate from the business of energy generation, and they also have energy trading arms that buy and sell power daily in the "spot" and futures markets. GUARDIAN

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Welfare cuts will hit the north as much as five times as hard as the Conservative heartland southern counties

Cameron ponders the implications with IDS, Osborne and his party...

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Britain tops Europe's fuel poverty league table

Chris, KJ and Fee v the "Strivers v Skivers" brigade...

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