Economy

Slowly but surely, we need to reshape the discussion.

Each one of us has an important role to play in this.

We need you all to help raise the quality of economic discourse in this country.

We need you all to be the advocates of the transformative economics we are developing to achieve that fairer, more equal, more democratic, sustainable prosperous society we aspire to.

And as we approach the election, we will work together to sharpen and develop our ideas collectively.

If the Tories are the party of a failing past and present, Labour must be the party of the future.

If the Tories are the party of fear, Labour must be the party of hope.

That’s what this conference today is all about.

Let’s go to it.

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Labour is the party of hope - John McDonnel's Speech on the Economy

Slowly but surely, we need to reshape the discussion. Each one of us has an important role to play in this. We need you all to help raise the quality... Read more

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This blog originally appear at http://waitingfortax.com/2016/03/16/the-future-of-tax-avoidance/ and is part of the 'Waiting for Godot: Some Musing on Tax' series.

We don’t know much about tax avoidance. Not how much it costs us. Nor how to stop it. We barely know what it is. But we’re pretty sure we don’t like it. And we now know, thanks to Deutsche Bank and UBS, that the Supreme Court doesn’t either.

Last week’s decision concerned a scheme dating back to the early 2000s. Glory days for tax advisers who found, come bonus round, a willing buyer in every board room in City. The Deutsche Bank and UBS arrangements were variants on a scheme that lasted a number of years. You’d line up willing (and few weren’t) participants. To them you would deliver, instead of a cash bonus, shares in a cashbox company. It would declare a dividend in the amount of the cash bonus. Employees would pay a lower rate of tax, or even none at all.  And there’d be a nice little NICs saving for you too.

We barely noticed, prior to 2008, this stuff. And when we did we didn’t care. But true to history, which tells us tax avoidance is the most reliably pro-cyclical industry of all, this all changed with the financial crisis. Who could we find to blame? Whose shoulders might bear the burden? From whose had it, well, slipped a little?

We soon found out.

That our judges sit aloof from the winds of public opinion is an article of public faith. But the faith of tax lawyers quickly lapsed. Points that, before the financial crisis, HMRC lawyers had regarded as so hopeless as not even to bother to argue acquired, a mere few years later, the fixed status of orthodoxy.

The speed of this process caused concern in the legal community. Government appointed a ‘study group’ to help it decide whether to adopt a General Anti Abuse Rule to tackle tax avoidance. That group included, amongst others, a retired Law Lord and a serving High Court judge. It agreedunanimously, that when confronted with avoidance judges adopted a “stretched interpretation” to the law. And quite how stretched depended on how much her or she disapproved of the transaction before her.

The Future Of Tax Avoidance

This blog originally appear at http://waitingfortax.com/2016/03/16/the-future-of-tax-avoidance/ and is part of the 'Waiting for Godot: Some Musing on Tax' series. We don’t know much about tax avoidance. Not how much it costs us.... Read more

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This blog originally appear at http://waitingfortax.com/2016/01/01/the-year-ahead-some-personal-reflections/ and is part of the 'Waiting for Godot: Some Musing on Tax' series.

Along with so many other members (and former members) of the Labour Party my thoughts in the second half of 2015 have been much absorbed with how to respond to the new direction it has chosen to take.

I have never pretended to be tribally Labour. My affinity is more to an idea of social justice than to a Party which once manifested its delivery and contains elements which hope to do so again. So I do not have to pretend, now, that I have not asked whether Labour remains the Party for me. My analysis, right or wrong, is that the path the Party is set upon may well lead (indeed without change is likely to lead) to permanent electoral oblivion. I also believe I could have more influence on Government policy were I not a member of the Labour Party. And the choice between working to save the Labour Party and working to better my country seems to me no choice at all.

What has kept me in the Party is the hope that Labour might again choose to manifest itself as a machine for delivering social justice. That, and a dogged attachment to the idea of good governance. Challenge, Transparency, Accountability, Honesty, Representation, Diversity: it is a (rather lawyerly) adherence to an idea of how good policy is formed and implemented and overseen that has kept me in the Party. Not because I think Labour has any monopoly over those qualities – it absolutely does not – but because good Government depends upon good governance and good governance demands good opposition.  And, enfeebled though its capacity to fulfil this role presently is, Labour is the only opposition the country has.

So I remain to try and cause it to so manifest itself again.

It has been said, and often, that candidates other than Corbyn offered little in Labour’s leadership elections. I think this is broadly true. But it is much less damning than might at first be thought.

Cooper, Kendall and Burnham thought they were competing against each other – and would have time after victory to put together a policy offer. This is, of course, exactly how good ideas are made. They do not spring fully formed from the mind of some mythical leader. They emerge from a process of deep and iterative thought. As I listened to the early leadership hustings what I most wanted was to hear someone with the courage to admit that they were still embarked on the journey of finding out what the solutions were. And Cooper, Kendall and Burnham did not see until it was upon them the Corbyn steamroller. And then it was too late to respond. And in this, of course, they were mistaken, but they were far from alone.

And although I do not know what they were for I have little sense of what Corbyn’s Labour is for either. His appeal in the leadership campaign was primarily to higher spending and a largely unarticulated notion of change. Since his victory his more lavish policy offerings – for example, closing the so-said £120bn so-called tax gap or ditching the so-called £93bn of so-called corporate welfare, have (rightly) been shelved.  And the gruel that has been replaced them has largely been drawn from Labour’s 2015 Election Manifesto; that and the policy platform of Stop the War.

But whether or not you think this analysis fair, what certainly is fair is the challenge laid down by those who remain supporters of Corbyn’s brand of politics: what is Labour’s rump for?

I have tried to engage with others in the rump to formulate a mode of responding to this challenge, and I will continue to. I hope something emerges soon because I believe time is short. But for the meantime I will write personally, offering some tentative thoughts here and elsewhere. I should say, in particular, that I am very grateful to the New Statesman’s political blog for giving me the space to write. I hope they will continue to, especially as I wander further from my area of professional expertise.

So in the coming months, at least as time allows, because my workload in the coming months is especially heavy, I will write on some of conversations I believe the Party should be having. I hope to write on the following themes.

The Year Ahead: Some Personal Reflections

This blog originally appear at http://waitingfortax.com/2016/01/01/the-year-ahead-some-personal-reflections/ and is part of the 'Waiting for Godot: Some Musing on Tax' series. Along with so many other members (and former members) of the Labour... Read more

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Osbournes YoYo Ecomonics

 On Friday George Osborne fired a warning shot from China of the possible cuts to come in next month’s budget.

Despite delivering an Autumn Statement just three months ago which promised an increased budget surplus of £10.1 billion by 2019/20, the Chancellor now blames global economic difficulties and slower than forecast domestic growth for these potential cuts. As John McDonnell has said – this is a total humiliation for the Chancellor. While Osborne is sticking to his message of a ‘long term economic plan’, the reality is that his rhetoric on the economy has been more up and down than a yoyo in the past year.

Before the election Osborne was warning of serious times ahead for the economy requiring £30bn spending cuts, including £12bn savings on welfare, in the coming years. By the summer Osborne was giving a ‘big budget’ with ‘big ambitions’ but which admitted growth was slowing and revised the 2015 forecast down. By November Osborne was touting a miraculous £27bn improvement in the public finances and promised this would allow him to “fix the roof while the sun is shining.”

Now, just three months later we have another twist in the tale as it turns out that the sun isn’t really shining on Britain’s economy at all, inflation, growth and wage forecasts are down, our economy faces ‘a cocktail of threats’ and we should expect further spending cuts in the March Budget. Quite apart from the uncertainty that such swiftly changing messaging and policy wreaks on businesses and families, the short-sightedness of the Chancellor on these issues is worrying.

As a member of the Shadow Cabinet and National Executive Committee I’m always keen to hear your views and suggestions about our campaigning work against the Tories, or on any other issues. I also spend lots of time visiting local Labour parties around the country, talking about the kinds of issues in this email and the ways we can campaign against the Tories nationally and locally. If you've any thoughts about how we are doing, how we could do better, or if you'd like me to come and speak at your CLP please do get in touch at sarah_coombes@labour.org.uk.

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Tories' Marriage Tax Allowance Flops

One of the Conservative Party’s flagship policies – the Marriage Tax Allowance – has flopped in its first year.

The Marriage Tax Allowance was announced by the Tories in 2013 and registration for it opened a year ago. The Tories had previously said that 4.1 million couples would benefit from the Marriage Allowance. But in response to a Parliamentary Question the Treasury has now admitted that just 330,000 couples have successfully claimed the allowance so far. This means that on the Government’s own figures around 3.8 million couples are missing out. And, given that there are 12.5 million married couples in the UK, just 2.7 per cent of all married couples are actually benefitting from the allowance. And the failure comes despite the fact the Tory Government has spent £2 million promoting it since last October.

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'Arrogant Disregard for Democracy' by Ministers Avoiding Questions in the Commons

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New research by Labour has shown that Cabinet Secretaries, the Prime Minister and the Leader of the House of Commons have been avoiding answering Urgent Questions in this Parliament, sending junior ministers in their placeUrgent Questions (UQs) are questions of an urgent nature relating to matters of public importance and are submitted via the speaker. Since the General Election senior members of government have only attended Parliament to answer these questions 29.5% of the time, in yet another sign of increasing complacency of this Tory Government.Urgent Questions are an important way of holding the Government to account and senior Ministers, including the Prime Minister should not be able to shrug off their responsibilities so lightly.

  • Analysis of Urgent Questions submitted in Parliament since the General Election shows that senior members of the Government have only attended Parliament to answer 13 of 44 UQs – a rate of only 29.5%. 

  • This is despite the Urgent Question being specifically directed at ‘The Secretary of State’, ‘Prime Minister’ or ‘Leader of the House of Commons’ 

  • In addition to this, the rate of Cabinet members answering UQ’s has declined from 40.7% in 2015 to 11.8% in 2016. 

  • The rate has decreased even further from the previous Parliament – where the rate of UQs answered by Conservative Secretaries of State was 61%.

 Some senior Ministers have been more absent than others

  • Theresa May has only attended the Commons to answer 1 of 7 UQs directed towards her, on the state of British border forces.  This is a rate of 14.2%.  

  • Jeremy Hunt only attended the Commons to answer 1 out of 8 UQs directed to him – only 14.3%

  • Phillip Hammond failed to attend the Commons to answer any of the 5 UQs asked of him. 

  • Sajid Javid has only answer 1 of 4 UQs asked of him. 

  • In contrast, John Whittingdale answered 75% of UQs asked of him.

Articles in the press on the issue:

The Independent: http://www.independent.co.uk/news/uk/politics/ministers-increasingly-refusing-to-show-up-to-parliament-to-answer-questions-granted-by-house-of-a6900201.html

The Mirror: http://www.mirror.co.uk/news/uk-news/cowardly-cabinet-ministers-accused-insult-7458573#ICID=sharebar_twitter

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Tory Economic Failure continues and now a lack of Democracy

Osbournes YoYo Ecomonics  On Friday George Osborne fired a warning shot from China of the possible cuts to come in next month’s budget. Despite delivering an Autumn Statement just three months... Read more

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Week by week Osbourne's economic plan is seen to be falling apart.

This week a Social Mobility Report revealed social mobility ‘cold spots’ around the UK. While poorer kids do well in London and its commuter belt, disadvantaged kids are badly let down in coastal areas- like Blackpool, Great Yarmouth and Minehead, Industrial towns – like Mansfield and Stoke – and rural areas like Norfolk.  So much for Osborne’s ‘rebalancing’ of the economy and opening up opportunity.

You can read the report at: https://www.gov.uk/government/publications/social-mobility-index
 
Last week the Chancellor’s claim that the tax deal HMRC had struck with Google was a ‘major success’ spectacularly unravelled. Far from a major success Google, the tax deal that HMRC apparently spent 6 years negotiating, amounts to just 3% tax on a company whose UK revenues amounted to $1.9 billion in quarter one of this year alone. It is a smoke and mirrors deal, done behind closed doors, which John McDonnell has rightly attacked as ‘derisory’.

Read John McDonnell’s recent letter to Osborne at: http://press.labour.org.uk/post/138488388094/google-john-mcdonnell-letter-to-george-osborne
 
The week before the Cabinet held a discussion on the UK’s dire trade situation. In 2012 Osborne unveiled a target to double UK exports to £1 trillion by 2020. Not only does that target look set to be woefully missed, by a whopping £350 billion, but the UK’s current account deficit has now risen to the highest level since 1830 – when the Duke of Wellington was Prime Minister.

Read my article on all of these issues at: http://www.newstatesman.com/politics/economy/2016/01/five-years-mistakes-george-osborne-have-left-economy-more-vulnerable-ever

As a member of the Shadow Cabinet and National Executive Committee I’m always keen to hear your views and suggestions about our campaigning work against the Tories, or on any other issues. If you've any thoughts about how we are doing, or how we could do better, please do get in touch with my office at sarah_coombes@labour.org.uk.

Finally throughout 2016 I’ll be out campaigning across the country. If you want me to help in your patch and want to join me on one of my campaign days let me know.

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Google Tax Deal 

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George Osborne's 'major success' on the Google tax deal has completely unravelled in the last weeks. It's a derisory deal for the British public and Labour have done a good job of holding Osborne to account.

Here are some figures behind the deal:

  • 0 - The number of times Osborne has come forward to explain himself in a live broadcast interview or in front of the House of Commons

  • 3%  - rate of tax paid by Google over the last 10 years

  •  -  the number of years HMRC spent negotiating the deal, details of which are still undisclosed

  • 20% - the set UK rate of corporation tax companies are supposed to pay on their profit

  • 25 – the number of meetings Tory Ministers had with Google executives over the last 18 months

  • £130 million – the 10 years’ worth of tax paid by Google to HMRC

  • $1.9billion – Google’s UK revenues in quarter one of 2016 alone

 

Inequality

Last weekend Cameron continued his push to reshape his Prime Ministerial legacy as one of social justice and equality. The long dormant 'One Nation' theme has been reprised in an article discussing problems of racial and social inequality in Britain - particularly in our justice and education systems.

This is a hugely important cause and one that David Cameron is right to talk about. Unfortunately Cameron's record so far makes him ill-equipped to talk about these issues. 

These are some of Cameron's damaging policies over the last 6 years:

  • In 2012 the Coalition Government tripled tuition fees to £9,000 per year.

    • The Independent Commission on Fees has found significant and sustained fall in part time and mature students since this change

    • Since 2009/10 48.4% drop off in Part Time Students and 10% drop off in Mature students

    • The commission identifies this as a major social mobility concern

  • In January this year the Tories voted to scrap maintenance grants for students from poor backgrounds and replace them with loans.

    • This is quite simply and opportunity tax on more than 500,000 students who currently receive important maintenance grants to support them through university.

    • Students from families with household income of less than £25,000 currently get a Government grant covering living costs of £3,387 a year.

    • This change will leave the poorest students with huge burdens of over £50,000 of debt

  • George Osborne announced in the Autumn Spending Review that the Government would scrap grants for student nurses and replace them with loans

    • Student nurses are currently eligible for grants of up to £6,567 a year over their three year course depending on family income and other circumstances

    • If these grants are scrapped student nurses could be saddled with increased debts of up to £20,000

    • There is already a chronic nursing shortage in the NHS, with nursing shortages hitting dangerous levels in 90% of hospitals last year

ESOL Cuts

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David Cameron recent singled out Muslim women as needing to learn English to prevent their children becoming radicalised and has allocated £20 million to help them do so. The crassness and hypocrisy of Cameron on this matter is astounding.

Here are some of the real facts:

  • Since 2009 the overall adult skills budget that funds ESOL (English for Speakers of Other Languages) has been cut by 35%

  • This has led to an overall drop in ESOL uptake by 22% since the Tories came to power

  • 80% of ESOL providers have seen waiting lists rise to up to 1,000 people

  • 2/3s of ESOL learners are women

  • Last year the Government announced the sudden and immediate withdrawal of ESOL funding

  • The Association of Colleges estimated this would affect 16,000 learners across 47 colleges with women and ethnic minorities disproportionately hit

Read my article on the issue at: http://blogs.spectator.co.uk/2016/01/if-cameron-wants-female-migrants-to-learn-english-why-did-he-cut-esol-funding/

 

Long Term Economic Failure

Week by week Osbourne's economic plan is seen to be falling apart. This week a Social Mobility Report revealed social mobility ‘cold spots’ around the UK. While poorer kids do... Read more

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This month saw the official launch of SME4Labour – the new organisation building links between the Labour Party and small and medium-sized enterprises, micro businesses, start-ups and the self-employed.

Formed by a group of small business owners, freelancers and people with an active policy interest in SMEs, we were delighted last week to hold our first parliamentary reception. It was hosted by the Shadow Minister for Small Business, Bill Esterson and attended by Jeremy Corbyn, Tom Watson, John McDonnell, Angela Eagle, Seema Malhotra, Yvette Cooper, Chuka Umunna and more. The queue was so big that many people couldn’t get in the room.

It just goes to show that what we hear in the Tory media is just plain wrong; Labour is a passionate advocate of business. Labour representatives up and down the country work hard to support the small businesses and family enterprises that are the foundation blocks of our communities. In turn, when Labour wins it is often because the SME community which has supported us.

SME4Labour exists because there has been a historical gap within the Labour movement in representing the SME community. Yes, we have groups of successful entrepreneurs and committed donors – who which are important to our party and its representative nature – and the Labour Finance and Industry Group (Labour Businesss) has done a great job to influence policy across finance, enterprise and industry. 

Yet there has been no Labour-affiliated entity to specifically represent the 50% of the private sector that does not comprise large or multinational corporations. Until now.

SME4Labour represents the 99.9% of Britain’s 5.4 million businesses which employ less than 250 people. We represent the 15.6 million people employed by SMEs, who make up 60% of all private sector employment in the UK. And we speak for businesses with a collective turnover of £1.8 trillion, according to the Federation of Small Businesses.

But it’s not just about numbers, it’s also about us as individuals. Many Labour members and voters will own, work for or be related to someone who runs an SME. Others will be self-employed or consider themselves an entrepreneur. Not only are SMEs a large part of the economy – behind them are real people with jobs, homes and communities.

It’s Time to Make Sure that Labour Represents Small Business

This month saw the official launch of SME4Labour – the new organisation building links between the Labour Party and small and medium-sized enterprises, micro businesses, start-ups and the self-employed. Formed... Read more

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