FOR THE UK SEE ENGLAND

For UK see England?

Representatives from five cities in the North of England have called for a £ 15 billon pound 15-year plan to be adopted to improve transport. The plan is outlined in the One North report which calls for a  125 mph trans-Pennine rail link, a faster link to Newcastle and better access to Manchester Airport are needed. It has been developed by an alliance of five cities - Leeds, Liverpool, Manchester, Newcastle and Sheffield and has been previously backed by George Osborne has who pledged support to this Crossrail of the North. The proposals are yet incidentally another all-England infrastructure project to add to the questionably beneficial massive HS2 rail project, the much delayed London Crossrail project and the proposed Crossrail extension to Hertfordshire. No don’t get me wrong much of this infrastructure is necessary and very much long overdue. However, I cannot help but wonder if Westminster is contemplating on some subliminal level the end of the Union and is concentrating resources in England, or perhaps this merely be a case of for the UK see England.

STILL WAITING FOR CARWYN AND GEORGE

The Labour in Wales run Welsh Government has now promised an update on its stance on the M4 Relief Road by mid-July – so much for the previous promise f a decision by the end of last year or early this year. None of this brings the slightest crumb of comfort, peace of mind or clarity to the residents of Brynglas (in Shaftesbury ward in Newport) whose homes may yet still be threatened by a new tunnel.

They have been left in the lurch as they are now going to have to wait until mid July before they hear about the fate of their homes. Until the Welsh Government announces its conclusions from what was a significantly flawed consultation exercise on the M4 which looked at a number of options, including improving the existing M4, a variety of upgrades to the Southern Distributor Road (SDR), the construction of a new tunnel and a new M4 relief road across the Gwent levels south of Newport – people continue to live in limbo.

We are still well short of the white smoke from either Westminster or Cardiff Bay as no agreement between the Con Dem Government and Welsh Government on how any relief road (George Osborne’s’ favoured option) would be funded has been reached. What has been quietly overlooked in relation to the on-going problems with the M4 and some of the larger options for dealing with the traffic congestion on the existing M4 is the problem of the funding model.

Amongst the reasons why the option of the M4 relief road (South of Newport) was dropped a few years ago; aside for the financial cost (around £1 billion pounds) and environmental impact was the key issue of the funding model. Ministers were advised that not only would the new relief road to be subjected to tolls, but the existing M4 would also be tolled.  Interestingly enough the only other toll road in the UK is the M6 in the Midlands which has seen toll prices increase by 175% since it was opened.

Another one of the reasons why this option was dropped was because of evidence gained from the operation of the M6 toll road - which had never made any money because motorists can avoid it by using nearby non tolled motorways.  That tolled Motorway has seen the number of users drop and it has done nothing to reduce congestion.

It is simply unacceptable for motorists to end up paying tolls on the Severn bridges, on the existing M4 any potential new relief road.  There are already significant complaints about the cost of the tolls on the Severn bridges and an additional burden on motorists and businesses can no way be justified. This is why Plaid Ministers in the then One Wales Government took  officials’ advice not to proceed go ahead with the relief road but opted to work to ease congestion around Newport by using the southern distribution road (SDR) as an alternative route.

What, in the seriously flawed consultation process, was Option C which would involve the grade separation of some junctions and partial or full closure of other junctions on the Newport A48 Southern Distributor Road was the most sensible option if combined with improvements to the existing M4.  This option would not only provide an alternative route to the M4 in the event of periodic accident related closures and congestion but would provide much better value for money coming in at around £300m. Incidentally the option D which included a new tunnel and widening of the M4 was priced at around £500 million.

At the moment the Labour in Wales Government and the Con Dem Westminster Government appear to be in favour of the most expensive (financially and environmentally) option – their only quarrel appears to be how it will be funded and whether or not it will be tolled. My own personal theory is that one of the reasons why Government at various levels favour the more expensive options may have something to do with the ongoing (and pretty profitable) if questionable relationship between Government and the Construction industry. 

THE ISLE OF THE BLESSED TAX EVADERS

Luxembourg has agreed to reduce the secrecy surrounding its banks, saying that it will implement rules on the automatic exchange of bank account information with its European Union partners from 2015. The country with a population of only 500,000 people, has banks and other financial institutions with assets worth more than 20 times the country's economic output. The Prime Minister of Luxembourg, Jean-Claude Juncker, plans to introduce the reforms in two years, in line with the EU Savings Directive. The rules of the Directive aim  to create greater transparency and minimise tax evasion. 

Since the financial crash Calls for a crackdown on bank secrecy have been increasing, as governments are increasingly desperate to raise more taxes to support their finances. Luxembourg will now move to strengthen co-operation with foreign tax authorities. Germany signed a tax evasion treaty with Switzerland - another European banking centre known for its secrecy – earlier in the month. The treaty aims to give the German tax authorities the ability to claw back taxes from their citizens who may be hiding money in Swiss banks. Austria, the only EU hold out against banking transparency, has attacked the UK as an “island of the blessed for tax evasion and money laundering". 

Austria’s finance minister, Maria Fekter, has been under intense pressure to put an end to Austria's long-held tradition of allowing foreigners to bank secretly. She has attempted to deflect attention towards the UK. Fekter, a member of Austria's governing coalition, says the European Union cannot force Austria to reform its controversial banking secrecy laws without also forcing the UK to crack down on tax havens in its jurisdiction. Across the pond, the US Government is trying to crack down on its citizens hiding money offshore and is due to start talks with Austria soon. These recent developments leave David Cameron and George Osborne, staunch defenders of the City of London and Crown Dependency Tax Havens, which coincidently happen to be centres of worldwide money laundering operations. 

OVER TO YOU DAVE

Tax evasion and tax avoidance, one way or another, is rarely out of the headlines especially as many heavily indebted governments are increasingly keen to hunt down every tax dollar / euro / pound that is owed by tax evaders avoiding (unlike the rest of us) paying their dues to society.  This week, the International Consortium of Investigative Journalists [ICIJ] who are based in Washington DC, have in collaboration with international media, began publishing  results into their research into tax evasion and off-shore tax havens.

The journalists have been sifting through an electronic mountain of information - literally  millions of records leaked from Britain's offshore financial industry, exposing for the first time the identities of thousands of holders of anonymous wealth from around the world. The list is interesting from presidents, ex-presidents, oligarchs,  plutocrats, a daughter of a notorious dictator and a British millionaire who is accused of concealing assets from his ex-wife.

The shock waves resulting from the leak of some 2 million emails and other documents, mostly from the British Virgin Islands (BVI), should expose the scale of the offshore tax evasion trade and the identities of tax evaders. It has been estimated that wealthy individuals involved in tax evasion and tax avoidance could potentially have as much as $ 32 trillion dollars (£ 21 trillion pounds) stashed in overseas and off-shore tax havens – which if equally divided could perhaps roughly give around $3000 dollars to every living person on earth.

Across La Manche things may be starting to get interesting, Jean-Jacques Augier, President François Hollande's campaign co-treasurer and close friend, has now identified his hitherto secret his Chinese business partner. The French President is already wallowing in a scandal as it turns out that his former budget minister consistently lied about having a Swiss bank account for 20 years. On the other side of the planet, the Mongolia's ex finance minister and deputy speaker of its parliament may have to resign from politics as a result of his off-shore financial interests.

While there is nothing wrong with a company being based in a tax haven does not necessarily mean that a company is avoiding tax or taking advantage of the hitherto pretty impenetrable secrecy that tends to surround tax havens, even if the tax jurisdictions are closely associated with tax evasion. That said, tax havens tend to be masked by secrecy and low taxes, and there have been few attempts to identify them. UK Revenue and Customs does not provide a list of tax havens.

The ICIJ has done an excellent job with its naming project, which may damage the confidence of the world's wealthiest people, who can no longer be certain that the size of their fortunes remains hidden from governments and from their tax paying neighbours. As well as Brits hiding wealth offshore, the data reveals a staggering array of government officials and rich families from Canada, the US, India, Pakistan, Indonesia, Iran, China, Thailand and former communist states. The ICIJ data reveals that their secret companies are mostly based in the BVI.

The Westminster government may have half-heartedly highlighted shown a desire to clamp down on tax avoidance and the PM might have slagged off celebrities, for using a tax avoidance scheme in Jersey. Yet he seems to be acutely reluctant to deal the tax havens that happen to be UK Crown Dependent territories.  Most reasonable people accept that there is a real need to deal on a global basis with the problem of off-shore companies and those individuals who are actively engaged in tax avoidance, tax evasion and / or money laundering. It’s all a tad embarrassing as the problem is that the UK is at the heart of the problem and has consciously chosen not to regulate its own crown dependencies.

The scale of the off-shore problem may take your breath away. The Cayman Islands; currently home to some 12,000 corporations has a population of 50,000, yet is home to 70% of the planets hedge funds (as of June 2012). The British Virgin Islands (population 22,000) is home to 823,502 registered companies. General Electric who paid no tax in 2010, made a $14.2 billion dollar profit. Barclay's has 181 subsidiaries (as of June 2012) registered in the Cayman Islands and paid little UK tax on its worldwide profits. The Dirty Digger's News Corp managed to base 152 subsidiaries in tax havens across the planet (according to the US Government) and managed to pay no UK corporation tax between 1998 and 1999.

US President Obama was 100% right to suggest that the governments of the world should jointly tackle the issue of tax evasion and tax havens. By tackling the tax havens, the tax avoidance and the questionable dealings of the derivative traders, hedge funds and the off balance sheet trading then we might go so way towards dealing with the consequences of the worldwide financial crash. Yet that nice Mr Cameron and the other 18 millionaires in the cabinet do seem to be stalling when it comes to closing  the tax loopholes.

The BVI has incorporated more than a million such offshore entities since it began marketing itself worldwide in the 1980s. Company owners' true identities are never revealed. Even the island's official financial regulators normally have no idea who is behind them. The British Foreign Office depends on the BVI's company licensing revenue to subsidise this residual outpost of empire, while lawyers and accountants in the City of London benefit from a lucrative trade as intermediaries, claiming that the tax-free offshore companies provide legitimate privacy.

Closer to home, in November 2012 a National Audit Office report revealed that of HM Revenue and Customs (HMRC) is struggling to curb aggressive tax avoidance schemes is costing the UK billions of pounds in lost tax. Much to the embarrassment of the Con Dems, tax evasion and tax evaders and the hunt for their concealed cash remains a big issue in the USA, in the UK you get the impression that the Conservative dominated Con Dem Westminster government hopes will quietly go away.

One result of the US government’s pursuit of tax evaders means that Switzerland's oldest bank is to close permanently after they pleaded guilty in a New York court to helping US citizens evade paying their taxes. It was the first foreign bank to plead guilty to tax evasion charges in the USA. Other Swiss banks have taken steps to prevent US citizens from opening offshore accounts to avoid paying tax. Yet here in the UK, the Con Dem Government has reduced the number of staff in Revenue and Customs from around 100,000 to 65,000 and plans to further reduce the numbers to around 50,000 by 2015.

The reality is that the UK Government is in up to its neck when it comes to tax evasion, it’s heavily involved in aiding and abetting tax evasion worldwide. British Overseas territories, including the Cayman Islands, help to hide around trillions from pounds from the different nation’s tax authorities. In the belly of the beast lies the City, which may explain Cameron’s reluctance to do anything about the problem as some of the city banks are hand in glove with drug dealers, dictators, rogue states and terrorists when it comes to money laundering and may perhaps also offer comfy lucrative seats on the board to former Westminster politicians further down the line.

NOT SURPRISING REALLY

Quids in!

The news that Energy supplier SSE has been fined £10.5 million pounds by the Ofgem (the energy regulator) for misselling gas and electricity should come as no real surprise. Neither should the fact that this is the largest ever imposed on an energy supplier by Ofgem. SSE, the energy company formerly known as Scottish and Southern Energy, was found guilty of "prolonged and extensive" misselling as a result of management failures. The misselling related to a combination of telephone, in-store and doorstep sales and was exposed by customers. They had been  contacted by SSE and were exposed to misleading statements, inaccurate and misleading information on SSE's charges, and misleading comparisons between SSE's charges and costs of other suppliers. Customers were told they could save money when in fact they were switched onto a more expensive contract.

Ofgem no doubt hopes that a "clear message" has been sent to energy suppliers who failed to treat customers fairly. This is the second of four misselling cases that were started by Ofgem in 2010. Back in March 2012, EDF Energy paid out £4.5 million pounds to vulnerable customers after they breached marketing rules. Scottish Power and Npower are also subject to ongoing investigations. Considering that we have what is in effect a fairly unregulated energy market, one that is dominated by a 6 member energy cartel, where profit is the only motive this should not surprise anyone. The energy company bosses rake in fat bonuses (Centrica, who own British Gas, split £16 million pounds between themselves recently).

Before the last Westminster General election, the  Conservatives talked about having an independent inquiry into the £25 billion-a-year energy industry which has been subject to lengthy and repeated criticisms surrounding accusations of profiteering on electricity and gas. This, was, however, quietly kicked in to the long grass by the Com Dem Coalition Government. So there we have it successive Westminster Governments (of the formerly New Labour and the Con Dem coalition variety) have done nothing to regulate the culture of excessive profits that predominates amidst the ‘Big 6’  and we should not expect anything to be done soon to help us hard pressed customers. 

A ROAD TO NOWHERE…

We have had a fantasy barrage (as proposed by Peter ‘the Pain’ Hain) and now we have a road to nowhere which press reports suggest that Chancellor George Osborne will announce plans to support a new toll motorway in June's comprehensive spending review. The one thing Wales does not need is yet another expensive toll road with yet a franchise holder milking it for every penny and pound that they can squeeze out of us.

Interestingly enough the BBC suggests that Westminster sources have confirmed that an agreement in principle had been reached but a deal on funding was not finalised. Considering that when the Welsh Government looked at this option it was binned on grounds of cost.  One of the reason why, when Plaid was in government (between 2007 and 2011) that the M4 Gwent Levels relief road was dropped was that it was unaffordable.

During the botched consultation in the spring of 2012, the one option that made the most sense was the one that would have involved the grade separation of some junctions and partial or full closure of other junctions on the Newport A48 Southern Distributor Road (SDR) which should be a real alternative route to the M4. Price wise that would have come in at around £300m, this would be more affordable that the £ 1 billion pounds plus that any Gwent Levels M4 relief road would cost.

Plaid Cymru Economy and Transport spokesperson Jonathan Edwards MP said:

"Plaid Cymru when in government looked afresh at the needs of the M4 and Wales-England transport corridor under Ieuan Wyn Jones. This included the principle of tolling, which we rejected. We embarked on a programme of improvements, including the Newport distributor road and the rail electrification, which could alleviate congestion and meet both business and environmental objectives. These need to be fully rolled out as an alternative to a highly expensive, environmentally damaging brand new motorway. The proposal that such a motorway would be tolled in Wales is the worst of all scenarios as we need to attract business investment not put it off with a penalty charge for coming to Wales.

“Wales has a real need for useful infrastructure spending, linking all parts of our nation and increasing connectivity. Rather than tolls, what's needed is a swift implementation of the Silk recommendations and a Barnett floor so we can borrow effectively and efficiently to invest.

“But does anyone seriously think that charging motorists to cross the Severn Bridge and then charging them again to use the motorway a few miles later is going to make south Wales more economically competitive?

“The only other toll road in the UK is the M6 in the Midlands which has seen toll prices rise by 175% since it was opened but the number of users plummet. It has also done nothing to reduce congestion. The lack of any other toll road proposals shows what people think.

“Wales has a greater capacity for borrowing money because we don’t have as many debts due to PFI, but we have to make sure that this is invested in schemes which will pay their way both in the short and longer term for the economy and sustainability."

The Party of Wales former Transport Minister Ieuan Wyn Jones said:

“The reason that the M4 relief road was abandoned was not simply the issue of affordability at £1 billion but also the fact that I was advised that not only was the new relief road to be subjected to tolls, so was the existing M4 to be tolled. This was due to the evidence that had been gained during the operation of the M6 toll road which had never made any money. I came to the conclusion that it was simply unacceptable for motorists to have to pay tolls on the Severn bridges and on the existing M4 and new relief road. There was already significant complaints about the tolls on the Severn bridges and this additional burden on motorists and businesses could not possibly be justified. That is why I accepted my officials’ advice not to proceed with the relief road but to ease congestion around Newport by linking into the southern distribution road as an alternative route.”

A BUDGET FOR AN ASPRIN NATION

It was more like a budget for an aspirin nation, along the lines of an economic take two aspirin and it will be better in the morning, than a budget for an aspiration nation. The problem is that George Osborne’s Budget brings scant benefit to the Welsh economy and provides clear indication that Con Dem Treasury policies are failing Wales.

The Chancellor’s not unsurprisingly failed to transfer key job-creating powers from Westminster to Wales something that means his Budget will fail to boost demand in the Welsh economy and prevent vital investment in major infrastructure projects.There was a basic failure to accept that Plan A, such as it was, has failed.

It’s time to try something different (Plan B perhaps) and to adopt a range of progressive policies including reversing the tax cut for those earning over £3,000 a week which is still due to be implemented in April 2013. Once again a Westminster Government has failed to cut its cloth to match reality as the pursuit of World Power Status continues with the Trident renewal which is set to cost £100 billion pounds over the lifetime of a new system carries on.

The Chancellor also failed to make progress on introducing a Financial Transaction (the Robin Hood) Tax that would raise £20 billion a year and help curb the speculative behaviour in the financial sector which caused the crash in the first place and the decision to scrap the stamp duty on shares trading is a regressive move as it’s the only thing in the UK currently resembling this tax.

There are some positives such as the announcement on childcare support which is a positive move but even this does not help people on tax credits or universal credit as those on the lowest incomes will still face the greatest barriers to finding work. The scrapping of the planned rise in fuel costs was also a positive, but the opportunity to sort out a longer-term solution with a fuel duty stabiliser to prevent soaring prices at the pump, was missed.

The announcement of the £10,000 tax threshold is also welcome as it will help people on lowers incomes, something that Plaid has long supported. Despite the few positives, ordinary families in Wales are still set to pay the price for the failings of the banks and the self-defeating policies of the Treasury.

Most importantly for Wales, what the Chancellor should have announced is the implementation of the recommendations made by the Silk Commission. This would have ensured that we in Wales have control over the levers that would allow investment in major infrastructure projects, creating jobs and boost demand in the economy.

FROM THE LAND OF CHEESE AND CHOCOLATE…

George Osborne and the Con Dems are prettymuch on their own when it comes to standing up for the bankers and their bonuses. Swiss voters have overwhelmingly voted in a referendum to impose some of the world's toughest controls on executive pay. Almost 68% of the Swiss voters backed plans to give shareholders a veto on compensation and ban big payouts for new and departing managers.

More popular than the Bankers...

While understandably some Business groups argued the proposals would damage Swiss competitiveness ordinary Swiss voters were more concerned with the growing economic divide in the country. The Swiss vote came a few days after the European Union agreed new measures to cap bankers bonuses. Referendum results showed that all 26 Swiss cantons backed the proposals, with 1.6 million voters voting "Yes" with 762,000 voting “NO”.

Multibillion dollar losses by Swiss banking giant UBS (which were covered by the Swiss government), and thousands of redundancies at pharmaceutical company Novartis, have caused a wave of anger in Switzerland as high salaries and bonuses for managers had remained unchanged. The new measures  give Switzerland some of the world's strictest corporate rules, with Shareholders having a veto on salaries, golden handshakes will be forbidden, and managers of companies who flout the rules may  face prison (now there’s a nice idea!).

The so called "fat cat initiative" will be written into the Swiss constitution and apply to all Swiss companies listed on Switzerland's stock exchange. Last week the European Union agreed a deal which means that bankers bonuses will be capped at a year's salary, but can rise to two year's pay but only if shareholders approve. The Con Dem Government has argued the EU bonus rules will drive away talent and restrict growth in the financial sector.

Remember this...

"It is wholly untenable to have millions of people making sacrifices in their living standards only to see the banks getting away scot-free." 

Nick Clegg, Deputy Prime Minister, 17 December 2010 

and also this...

"Bankers have to realise that the British public helped to bail out the banks and it is very galling when they see bankers pay themselves unjustified bonuses." 

David Cameron, Prime Minister, 17 December 2010

The former New Labour government made much of its light (more like non-existent) financial regulatory touch, well at least until the wheels came spectacularly off the wagon. The Con Dem's have effectively refused to take any action over banking regulation until after the next Westminster general election. Interestingly enough before the government limos arrived (and they were in government) before the last Westminster election Vince Cable (currently the Business Secretary) and George Osborne (currently Chancellor) were at it hammer and tongs as to who was going to be toughest when it came to regulating and controlling the worst excesses of the banks.

Personally I think that The Con Dem UK Government (and their formerly New Labour predecessors) have missed an opportunity to break up and 'privatise' the larger 'publicly owned' financial institutions, they should have sold the shares on the open market with specific quotas on how many shares any one institution can own. From where many people are sat these bloated overgrown banking organisations appear to be a serious block on the ‘free market’ and too busy lining their own pockets. George Osborne and the Tories appear to have reluctantly gone along with the much publicly stated need to regulate the more unsavoury aspects of the banking sector, but, whether they will actually and eventually do anything is open to question.

Perhaps they ought to come clean and simply declare an interest as regulating the banks in the City may impinge on the acquisition of future lucrative directorships in City banks unless they have them already that is? One question that may also remain unanswered is whether or not they will do anything about tax evasion, tax avoidance and the regulation tax havens? It's odd really because the Con Dem's have displayed such zeal in their efforts to chase people on benefits.

PLAN B OR ABANDONING AUSTERITY?

The latest GDP figures don’t make pleasant reading, showing that GDP fell by 0.3% in the last quarter of 2012, this should give further confirmation to most people (including economists) that the Con Dem Coalition Government’s questionable austerity experiment (Plan A) is clearly failing. This has prompted a flurry of calls for a change of approach (Plan B) from all quarters, including the chief economist of the International Monetary Fund (IMF). It’s time for the Chancellor to change course and announce radical growth measures in the Budget which takes place on 20th March.

Austerity is not just not working, it’s actually smothering any prospects of sustained recovery and economic growth. It’s time for some balanced well thought out investment in infrastructure and green energy which will help to create  jobs and provide the key to getting the economy back on track. Plaid Cymru has long advocated a progressive alternative to drastic public sector cuts (and their consequences) in order to stop the UK sliding back into recession and to avoid a whole decade of economic decline.

Plaid Cymru's Treasury spokesperson, Jonathan Edwards MP, said:

"These latest GDP figures signal the latest disaster for a Chancellor whose ideologically-motivated policies make him deaf to all warnings and cautions.

"Tackling the Government deficit and debt should only be done when the economy is growing and confidence is high. Current austerity is strangling any sustained recovery. 

"It looks increasingly likely that the cherished AAA credit rating is in jeopardy making the pain of the Government debt pointless. There is now a real threat of a triple-dip recession and the Chancellor has no choice but to change course.

"We must invest in infrastructure and focus on creating meaningful jobs if we are to get the economy back on track - this is what Plaid Cymru outline in our plans for a Bank of Wales to support SMEs and what we achieved in our recent Budget deal with the Welsh Government.

"Wales is suffering disproportionately as a result of the Coalition's austerity experiment. The Bevan Foundation recently announced that welfare cuts would wipe £100m from the Welsh economy. Real terms cut to benefits will suck demand out of local economies as ordinary families are forced to tighten the purse-strings even more.

"As the Chancellor announces his Budget in March, we in Plaid Cymru will present our alternative economic vision that would generate growth, tackle unemployment, and equip Wales with the powers necessary to have meaningful control over its own economy."

WAITING FOR THE GLIMMER MAN...

Yesterday we were waiting with no particular degree of anticipation for Chancellor George Osborne to inform MPs (and the rest of us) that there was no "no miracle cure" to the UK's economic woes in his Autumn Statement. The Chancellor made his statement against a pretty grim economic background when compared with his budget forecast made last March in the Budget. Mr Osborne continued to state that the coalition was continuing to "confront the country's problems" and was hard at work reducing the deficit.

The cancellation of the proposed 3 pence a litre increase in fuel duty may help a little and the  extra £227 million pounds for capital projects is useful it does little to redress fair funding for Wales. When it comes to growth being predicted to be -0.1% in 2012, down from the 0.8% prediction in the Budget in March we are truly in the realm of old style Soviet economic statistics. I suspect that some of the Con Dems (the Cons rather than the Dems I suspect) actually believe that austerity is the answer to the economic disaster left behind by Gordon Brown (and New Labour).

The party formerly known as New Labour predictably called the government's economic policy "a terrible failure” not that they would have done anything different if Gordon had managed to pull the electoral fat out of the fire back in 2010. What’s pretty clear from all of this is that the Con Dems are out of ideas, there was not really a Plan A, so there is little likelihood of a Plan B and clearly no desire to sort out the ongoing UK’s problem with tax evasion. So much for being all in it together.

Almost unnoticed by the UK’s self Anglo centric media the Irish Government presented its sixth austerity budget since the banking and economic collapse. Tax rises and spending cuts were announced as the government aims to save another 3.5 billion euro (around £2.8 billion). All of the so called economic "low-hanging fruit" has been picked clean after four harsh years of austerity. A new property tax (set at 0.18% of the value of a home up to 1 million euros (£800,000 pounds or $1.3 million dollars) and cuts to the health and social welfare budgets are planned.

Since 2010, Ireland, following an international bailout, has been forced to follow strict spending limits set by the EU and International Monetary Fund. The Irish government stated that it would meet its deficit reduction target for 2012 and that it  projected a budget deficit of 8.2%, compared with a target of 8.6%. Therefore the deficit would continue to fall steadily to 2.9% by 2015, it added. Irish economic forecasts (unlike on this side of the Irish Sea) were based on economic growth of 1.5% in 2013, rising to 2.9% growth by 2015.

Ireland is no Greece and while it has been riot it has not been protest free. The evident anger (if not quiet rage) at the bankers and the elites abject criminality and sheer folly may have been sidelined at the prospect, after hard years, by some light at the end of Ireland's dark economic tunnel, but, I suspect that it won’t be forgotten. Despite some economic glimmers  there are still plenty of people across the Celtic Sea who are less than happy with the choices made by the Irish elite and the fact that they have largely got away without punishment for their crimes, misdemeanour's and bad decisions.

There have been calls for a new republic and a fresh start literally writing off the past (and the debt) in a simular manner to Iceland. in ‘Towards a Second Republic’, Peadar Kirby and Mary Murphy exposed the winners and losers from the current Irish model of development and related the distributional outcomes of the use of power by Irish elites. It’s analysis of Ireland's economics, politics and society, draws some important lessons from its cycles of boom and bust. They also look at the role of the EU and compare Ireland's crisis and responses to those of other states.

The book (which is well worth a read) also includes proposals to construct new and more effective institutions for the economy and society are also included. Considering (somewhat closer to home) that  there have been no real consequences (or punishments for that matter) for the banking crash for the inhabitants of the Westminster village or the bankers (save for the loss of the odd bonus), I suspect that it won't be on the Christmas reading list of any elite reasonably near here.

TAX TO GO?

News that Starbucks is planning to change the way it operates so that it pays corporation tax in the UK will be a small crumb of comfort to ordinary tax payers. Starbucks despite having around one-third of the UK coffee shop market, has only paid corporation tax only once in the past 15 years. In its simplest form Corporation tax is paid by foreign companies on profits made in the UK. UK-based companies pay corporation tax on their taxable profits wherever they are made. Starbucks, sold nearly £400 million pounds worth of goods in the UK last year, but paid no corporation tax at all, because it transferred some of the money to a sister company in the Netherlands in the form of royalty payments, it bought its coffee beans from Switzerland and paid high interest rates to borrow money from other parts of the business.

Starbucks is throwing in the towel in relation to paying Corporation tax; this may be timely as the House of Commons Public Accounts Committee has produced a report calling for HM Revenue and Customs (HMRC) to "more aggressive and assertive in confronting corporate tax avoidance". Interestingly enough HMRC revealed that in 2011-12, £474.2 billion pounds worth of total tax revenue accrued to HM Revenue and Customs (the Department) which was £4.5 billion pounds higher than for the period 2010-11. Oddly enough there was a decrease in corporation tax revenue of £6.3 billion pounds.

The House of Commons Public Accounts  Committee also heard evidence from heard evidence from Google and Amazon. Amazon has a reported turnover of £207 million pounds for 2011 for its UK Company (Amazon.co.uk), on which it has shown a tax expense of only £1.8 million pound, yet showed a European-wide turnover of €9.1 billion for its Luxembourg based company (Amazon EU Sarl) and a tax of €8.2 million. Amazon.co.uk is a service company in the UK providing services to Amazon EU Sarl for which it receives payment. That company is owned by a holding company, which is a subsidiary of Amazon's group companies.

Amazon subsequently provided a copy of the unaudited accounts for Amazon Europe Holding Technologies S.C.S for 2011 showing a profit of €301.8 million and no tax payments.  Amazon also provided information showing that for 2011, £3.35 billion pounds worth of sales were from the UK, 25% of all international sales outside the USA.  Yet Amazon has over 15,000 staff in the UK, invoices UK customers from the UK, hires UK staff in the UK, has inventory physically in the UK for UK customers and to all intents and purposes has the majority of its economic activity in the UK, rather than in Luxembourg, but pays virtually no corporation tax in the UK.

The inability of HMRC to properly curb aggressive tax avoidance schemes which are costing the UK billions of pounds was flagged up by the National Audit Office (NAO) The NAO revealed that HMRC was dealing with a backlog of 41,000 cases involving individuals and small companies, with up to £10.2 billion pounds at stake. I am sure that the news that Con Dem Chancellor George Osborne plans to introduce a general anti-avoidance rule and hold talks with other G8 developed countries about clamping down on tax avoidance will make us all sleep soundly in our beds – perhaps not!

TAX EVASION.GOV.UK?

Most of us pay tax, one way or another and indirectly via democratic elections we have some form of impact on the way tax within these islands is set, collected and spent. Some people, who hold directorships of companies based or operating in tax havens, also as Peers and MPs, hold office within the UK Parliamentary system and can have impact and influence on the UK Tax system. This surely is a blatant conflict of interest and should not be acceptable anytime, let alone during a recession.

A full list of 68 UK Peers and MPs with directorships or controlling interests in companies linked to tax havens has been published by the Guardian (21.09.2012). It appears that some of the UK’s Parliamentarians who are able to influence tax laws have positions as directors and non executive directors in major companies with offshore links. There are 27 Tories - six of whom are MPs – 17 Labour peers, three Lib Dem peers and another 21 are either crossbench or non-affiliated peers.

The Guardian examined the Parliamentary registers of members' and Lords' interests to identify companies where Parliamentarians are registered as directors or a non-executive directors. They then cross-referenced this with accounts or other financial records to find out if the companies were registered, or had a parent company or subsidiary, in a jurisdiction known as a tax haven.

Tax havens tend to be masked by secrecy and low taxes, and there have been few attempts to identify them. UK Revenue and Customs does not provide a list of tax havens. While there is nothing wrong with a company being based in a tax haven does not necessarily mean that a company is avoiding tax or taking advantage of the secrecy that tends to surround tax havens, even if the tax jurisdictions are closely associated with tax evasion.

Across the pond, in America, there has been a great deal of ongoing irritation with tax evasion, back in March 2009, the 111th US Congress (2009 – 2010) brought in House Resolution 1265 (111th): Stop Tax Haven Abuse Act, which aimed to restrict the use of offshore tax havens and abusive tax shelters to inappropriately avoid Federal taxation, and for other purposes., it originally died (was referred to committee). Yet this issue won’t go away, the bill was reintroduced as HR 2669 on July 27th 2011 and again referred to committee and the report stage is awaited.

One of the things the bill did was list the 34 states and dependent territories seriously involved in tax evasion.

1) Anguilla.
2) Antigua and Barbuda.
3) Aruba.
4) Bahamas.
5) Barbados.
6) Belize.
7) Bermuda.
8) British Virgin Islands.
9) Cayman Islands.
10) Cook Islands.
11) Costa Rica.
12) Cyprus.
13) Dominica.
14) Gibraltar.
15) Grenada.
16) Guernsey/Sark/Alderney.
17) Hong Kong.
18) Isle of Man.
19) Jersey.
20) Latvia.
21) Liechtenstein.
22) Luxembourg.
23) Malta.
24) Nauru.
25) Netherlands Antilles.
26) Panama.
27) Samoa.
28) St. Kitts and Nevis.
29) St. Lucia.
30) St. Vincent and the Grenadines.
31) Singapore.
32) Switzerland.
33) Turks and Caicos.
34) Vanuatu.

Now oddly enough more than a few of them are UK Crown Dependent territories. A couple of months ago the Treasury Minister David Gauke said that it was "morally wrong" to pay tradesmen such as plumbers, builders and cleaners in cash in the hope of avoiding tax. He said that the practice came at "a big cost" to the Treasury and meant other people had to pay more to help balance the books. The Westminster government may have highlighted this in its desire to clamp down on tax avoidance, the problem is that it will hit those who can least affords to tax evade.

US President Obama was 100% right to suggest that the governments of the world should jointly tackle the issue of tax evasion and tax havens. By tackling the tax havens, the tax avoidance and the questionable dealings of the derivative traders, hedge funds and the off balance sheet trading then we might go so way towards dealing with the consequences of the worldwide financial crash. However, I suspect that nice Mr Cameron and the other 18 millionaires in the cabinet will do nothing to close the tax loopholes – so much for all of us  being in it together? Hmmm...over to you George...perhaps not!

SUMMER RECESS READING?

The Treasury Minister David Gauke has said it is "morally wrong" to pay tradesmen such as plumbers, builders and cleaners in cash in the hope of avoiding tax. He says that the practice came at "a big cost" to the Treasury and meant other people had to pay more to help balance the books. The Westminster government has highlighted this in its desire to clamp down on tax avoidance. The minister’s pronouncement may indicate a desire by the Westminster government to hit out on those who can least affords to tax evade.

On a similar theme, a report written by James Henry, a former chief economist at the consultancy McKinsey, for the Tax Justice Network, ‘The Price of Offshore Revisited’ makes interesting reading. The report estimates that the global super-rich elite had the best part of some $ 21 trillion dollars (or £ 13 trillion pounds) stashed away in secret tax havens by the end of 2010. The figure is equivalent to the size of the US and Japanese economies combined. Why do I somehow suspect that this interesting document will probably not be on George Osborne, David Cameron or David Gauke’s summer recess reading list.

UNDER PRESSURE?

Under pressure?

The Chancellor's announcement that the proposed fuel duty rise of 3 pence (which was set to be introduced in August) but has now been scrapped should be welcomed for what it is - a U-Turn. George Osborne's decision comes after a long campaign jointly led by Plaid Cymru and the SNP which put sustained pressure on the government to act over the issue which proved to be another 'elephant in the room' as far as the latest Budget was concerned.

Plaid Cymru Parliamentary Leader Elfyn Llwyd MP said:

"I am very pleased that the Chancellor has finally seen sense and scrapped this damaging proposal which would have put even more strain on businesses and ordinary people's pockets during a time of financial crisis.

"This was the elephant in the room as far as the Budget was concerned, with the Chancellor repeatedly ignoring the fact that soaring fuel prices were the main drivers of rising inflation.

"Rising fuel costs impact the daily lives of the majority of ordinary people, particularly in rural areas such as my Dwyfor Meirionnydd constituency where efficient transport is essential.

"This latest in a string of government u-turns will offer people some relief as they struggle to make ends meet - at least until the end of the year as the Chancellor has noted.

"However, it is a shame that it took until this morning for the Labour Party to declare its support for this hugely important campaign. Had they acted sooner, a full cross-party campaign may have pressured the Chancellor into changing his mind months ago.

"Sadly, Labour's lethargy and the Coalition's complacency has yet again left many people suffering unnecessarily.

"Plaid Cymru alongside the SNP have been calling for a genuine fuel duty stabiliser for nearly a decade and that is yet to be achieved, but at least this further damage has been avoided.

"We can only hope that in future, campaigns which put people before politics will be met with greater enthusiasm from all parties."

SONS OF BANKERS AND FRIENDS OF BANKERS…

PLAID is right to call for any banking reform to benefit small businesses. It is very important that the Banking White Paper does not water down proposals for the separation of retail and investment banking interests which will protect ordinary customers money.

That said, few outside the Westminster village will be shocked to discover that the wealthy banking lobby have successfully in persuaded the Con-Dems to relax recommendations from the Independent Commission on Banking. These recommendations related to enforcing a separation between retail banks, which hold savers deposits, and investment banks which use investors funds to make money (casino banking).

Plaid also called for an end to credit default swaps for businesses, warning that small companies have been mis-sold complex financial products by banks and then have found themselves in financial difficulty afterwards. A complete separation of retail and investment banking interests should provide significantly better protection for customers and small businesses and should take much of the risk out of banking.

We should never again allow ourselves to be in the situation where private sector investment banker's failures can effectively bring the economy crashing down on the rest of us. Retail banks where consumers, including families and small businesses, deposit their savings need to be protected thus ensuring their long-term sustainability.

All pretty sensible stuff, the bad news is that the banking lobby already appear to have been busy persuading the Conservatives and Liberal Democrats to water down the recommendations of the independent commission on banking. The problem is that weakened proposals may not protect small businesses who have been mis-sold complex financial products in recent years and some of whom may never see their money again.

Plaid Cymru has long argued that banks should not have interests and risks which could be to the detriment of the entire sector and to the wider economy. The problem is that when New Labour had their noses in the trough (between 1997 and 2010) the importance of the financial sector grew from 11% of the total economy to more than 18%.

This unbalanced the economy largely because New Labour (and the Conservative Government's before them) turned their backs on the manufacturing sector, something that hit the Welsh economy and our manufacturing sector badly and ensured that an even greater inequality between London and the rest of the UK. This is one of the reasons why the UK was hit so badly when the crash came and has been struggling to recover since.

Interestingly enough a recent poll in the Independent on Sunday (17.06.2012) revealed that 59% thought that George Osborne is out of touch with the public (20% disagreed and 21% didn't know), 25% thought that he is leading the country's economy in the right direction (46% disagreed, 29% didn't know). Some 52% thought he was arrogant (24% disagreed and 24% didn't know) and 48% thought that he had made too many mistakes to be taken seriously (25% disagreed and 26% didn't know).

Additionally 25% agreed that George was doing a good job in difficult times - some 46% disagreed and 27% didn't know. The final poll question asked whether citizen Osborne is too posh to understand the financial pressures on ordinary people – 55% agreed, 23% disagreed and 22% didn't know.

PASTIES, PETROL CANS AND PANIC

In many ways watching the growing pasty and petrol related crisis develop over the last few days has been a bit like watching a car accident in slow motion. Cameron's ill-thought out suggestion that everyone top up their tanks provoked a run of fuel and drained petrol stations and all this at least a week in advance of any potential strike by tanker drivers.

Clueless?

Pastygate, as it has been dubbed, which involves the introduction of vat on pies and pasties amongst other things, in the budget last Monday. If it does nothing else has clearly shown most people how entirely cut off from ordinary people this Con Dem government is, despite Cameron's publicly stated love of pasties.

Incidentally for the record while not averse to the odd pasty my personal preference is for oggies. That aside I suspect that this fiasco could partially be put down to the loss of Andy Coulson, who if nothing else may have given Cameron and Osborne a faint understanding of how the rest of us live and think.

If you had thought that it had become slightly surreal when Francis Maude (currently a Cabinet Office Minister) suggested motorists might store petrol at home in "jerry can" as well as topping up their tanks – which no doubt helped to feed the panic buying frenzy in some areas and as you can imagine did not go down particularly well with the Fire Brigade.

No Petrol

Incidentally the Retail Motor Industry Federation said that petrol sales rose by 45% and diesel was up 20% amid talk of a strike bringing disruption to forecourt supplies on Tuesday.

Then the footage of the chancellor struggling to remember when he last bought a pasty from Greggs, or perhaps quite exactly who was this Gregg is or what he does was pretty tortuous. As no doubt will be the argument about whether you can eat them tax free if they're served cold.

Who's Greg?

The chancellors memory problems may pale into insignificance when compared no doubt to Cameron's future loss of memory when it comes to any questions in relation to what exactly you get for a quarter of a million pounds donation to the Conservative Party apart from a place at a dinner (sorry donor) party with the Camerons. Part of the problem with the Pastygate problem is that it shines a light on the current Cabinet which is largely if not exclusively made up from the ranks of the wealthy.

Twenty nine ministers are entitled to attend regular Cabinet meetings, of those some twenty three have investments and assets that are estimated to be personally worth more than £1 million each. Dave and his ilk (including formerly New Labour’s Milliband) can claim to chomp as many pasties as he likes but that chasm is one between the elite and the voters that will never be bridged.

SAME OLD, SAME OLD?

It can be said that New Labours "ethical foreign policy" expired in the House of Lords in the early hours of a dark and windy night in 2005 at around 2am,  any idea that "we are all in it together" expired in broad daylight live on television something between 12.30pm and 13:30pm  today. In many ways the Conservative dominated Con Dem Government’s decision to scrap the 50p tax rate for high-earners should not been much of surprise, they have in many ways simply reverted to type.

One principle that George Osborne clearly does not subscribe to is that of progressive taxation. The Con Dems plan from 2013 onwards to cut a further £10 billion pounds worth of welfare. Rather more alarmingly it can be said that cutting taxes for high earners whilst slashing support for those less fortunate has merely highlighted the fact that the Westminster seems to have become a plaything of the rich elite and their friends.

We live in one of the most unequal societies in the developed world as a direct result of thirty years of Tory-New Labour government in London. One of the main reasons why the 50p tax rate hasn't worked is because enough of those who should be paying it have been able to use various tax dodges. If you believe in a fair society then everyone needs to pay their fair share. As a society we need to crack down on tax havens, tax avoidance and off-shore finance so that everyone pays a fair and correct amount of tax, not to mention cutting back on pension perks for high earners. .

TRUE TO THEIR ROOTS...

Despite the thin layer of ‘caring Conservatism’ and the ‘green wash’ Cameron’s Conservative Party and its government are true heirs to Thatcher, being as ideologically committed to ‘privatisation and dismantling the structures of the state government as she ever was. David Cameron’s Conservative Government is now considering private investment in England's road network . The PM in a speech today will amongst other things call for tolls for new roads as a way of attracting more money from pension funds and other investors for infrastructure investment and development.

Cameron has noted that more work is needed to relieve gridlock by widening "pinch points" and allowing traffic to use the hard shoulder on motorways. His call for an innovative approaches to finance road improvements, and road tolls are only one option. In plain english what we are talking about is the privatisation of the major highways. Cameron’s speech comes as a poll suggests that only 2% of people think he is living up to his "greenest government ever" pledge.

A YouGov poll commissioned by Greenpeace and the RSPB, suggests that the coalition has not persuaded people that it is living up to Mr Cameron's pledge to be the "greenest government ever". The opinion poll with a sample of more than 1,700 adults across the UK found shows that barely 2% of people asked (and incidentally no Lib Dem voters) thought that the government was meeting the promise, and only 4% believed current rules and regulations protecting the environment were too strong. A majority of people - 53% - believed its green credentials were about average, while 7% believed it was the least green government ever.

The news that Cameron’s government may also be planning to take over the liability for the Post Office pensions, potentially a first step to a further privatisation of the Post Office, along with Cameron’s NHS England reforms; may alarm some. It may also bring a comfortable warm glow to members of Labour in Wales who are more than happy for Cameron to push ahead with his privatisation agenda, so they can make hay by verbally opposing it.

Public sector regional pay variations may be just around the corner, something which could result in nurses, teachers, police officers and civil servants being paid less because they live and work in Wales. The real danger here is that this could damage the Welsh economy, it could bed in the already pretty rampant inequality that exists between Wales and the south-east of England. This is something that Mr’s T contemplated but never actually did, it should come as no real surprise though as ideologically the current government is being driven by David Cameron and George Osborne the masterminds of Michael Howard’s failed Westminster campaign in 2005.

This is perhaps part of some bizarre public manifestation of an ideological battle between the different but fundamentally economically interdependent sectors of the economy. As for trying to unravel the interlinked public and private sectors of the economy... let me know how that one goes. As for pitting private and public sector workers against each other – it is pretty pointless, as it is a game that no one can win. When it comes to supplying services to local government private sector employers (and their workers) may end up being the ones who bite the bullet as the full impact of public sector cuts roll on through

The problem with basing you positions and your decisions on and around ideology is that you tend to get trapped in the past. I have no doubt Labour in Wales will moan, groan and cry crocodile tears, the reality is that if New Labour was in power in Westminster they probably would have privatised the Post Office by now and be well on their way to expanding competition with the NHS in England (and probably Wales). I have little doubt that any changes would have been happily voted through by the Labour in Wales lobby fodder with scant if any thought on their part.