FORUM: A plan of action for the ‘alternative’

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Published: 7 April, 2011
by NATALIE BENNETT

Many of the rich made money from the overheated boom that helped cause the crisis – now they should help fix the mess

THERE were moments on the March for the Alternative when it seemed all of Camden was on the Embankment. 

It was inspiring and enthusing but we’re left now, after the banners have been folded and the placards stored, asking “what next?” Certainly we’re going to see more excellent UK Uncut actions highlighting the failure of many of our high street names to make fair contributions to the society from which they profit, and the NUT in Camden was last week on strike to defend critical provisions in schools, a route other unions are likely to follow.

Clearly this isn’t enough. The anti-cuts campaign has to go further to win the argument that the cuts aren’t necessary, although some action to deal with the deficit certainly is. That the funds could come from making multinational corporations and the rich pay a fair share of their taxes, while entirely demonstrable, is an idea that has yet to gain widespread acceptance. Yet even this reasonable idea seems too radical for the Labour Party which is hanging back through lack of courage or conviction, perhaps both.

The argument also needs to be won because over the last decade or two, false “truths” have taken broad root, and they need to be grubbed out.

One is that “tax is bad”, and countries have to compete by lowering their corporate rates, and those for high-income earners. Another is that “the market” rules our lives, and we must bend before its power.

Grasping just how exceptional and astonishing that would have appeared to earlier generations requires a short excursion into history. The last time Britain had a deficit of our current order, just after the Second World War, the top tax rate was 90 per cent – yes 90. There was recognition of crisis and those who could best afford it had to contribute to dealing with it.

Moving on to times more of us can remember, in 1980 global corporate tax rates averaged just under 50 per cent (remember George Osborne now wants to race ours down to 23 per cent).

Then there are some economic fundaments: “the market”, “the economy”, are not some independent entities, they are supposed to be the ways by which we ensure basic human needs are met. So what’s the “market” now? 

Well 95 per cent of modern trades in stocks and bonds are not productive investments, but merely the shuffling of ownership of existing assets.

Today 60 per cent of global trade occurs inside multinationals, where governments have no way of tracking the level of profits or where they are generated. If you’re wondering why Britain is dotted with “clone town” high streets, with small local businesses which employ six times as many people for each pound spent as the chains crowded out, there’s part of your answer.

So what about the politics? How has it happened that the UK now has an estimated tax gap of £160billion, lost to evasion and avoidance? That’s more than 10 per cent of our annual gdp that’s not going to the government, and the government appears perfectly relaxed about it.

If you want to know just how bad this has got, note that Private Eye has just exposed the HM Revenue and Customs over its “large business service,” which this year has collected £322,000 from “fewer than five” cases – 0.01 per cent of the missing funds.

It’s not just a case of individual culpability. It’s easy to point to the cabinet and its 18 to 23 millionaires (depending on who’s counting). But a lot of this happened under a Labour government, some of whose members might have often yachted with millionaires, but didn’t contain a lot of them. There’s been a regulatory capture, and a breakdown of once, rightly, strict divisions between private business and public service.

Private interests have taken over what should be public controls. 

To give just one astonishing example, the International Accounting Standards Board, which sets the global rules for companies’ financial data, is a private company registered in tax-haven Delaware, financed by large accountancy firms and some of the world’s biggest multinationals.

So what’s to be done? First, we need the win the argument – to convince more and more people that the current recipe is pouring us all into the soup. 

Then we need to map out a plan of action.

Green MP Caroline Lucas last month tabled a private member’s bill, the Tax and Financial Transparency Bill, which would require all companies filing accounts in the UK to include a statement on the turnover, pre-tax profit, tax charge, and actual tax paid for each country in which they operate. That’s a start towards real corporate social responsibility – paying your fair share of taxes in the country in which profits are generated.

Then we could set tax rates such that rich individuals and large companies are not grossly enriching themselves at the expense of the rest – not snatching the housing benefit from the hands of low-paid key workers who can’t otherwise afford to live in London, not demolishing pensioners’ luncheon clubs in community centres that they’ll then buy up to convert into luxury flats. 

Many of the rich made their money from the overheated boom that helped cause the crisis; they should help fix the resulting mess.

It won’t be easy – the cheer leaders for the rich are heavily embedded, particularly in our mainstream media – but this is the only alternative future worth contemplating.

• Natalie Bennett is a journalist and Camden Green Party activist