WAITING FOR THE WORD

As part of the public spending review, the Chancellor George Osbourne announced that the Welsh government's budget will be cut by two per cent in 2015. Revealing details of the spending review MPs were told that the day-to-day revenue budget would be set at £13.6 billion pounds. He also revealed that the UK government would publish its response to the Silk commission on assembly powers shortly and details of an "impressive" M4 relief road plan would be revealed on Wednesday. The Wales Office (the Whitehall department) which represents Wales in the UK government would get a cut of 10% in its running costs. The Welsh government budget cuts are part of £11.5 billion pound savings from the UK government's overall spending plans of £740 billion pounds. Mr Osborne has more than once (before today) highlighted the need for a M4 relief road around Newport, while supporters of the scheme, and those who oppose it were hoping that the Chancellor would give the scheme the go-ahead this week it now appears that they and the residents of Brynglas (who’s homes have been threatened by a new M4 tunnel) will now have to wait a little longer before they get a definitive answer. Serious questions remain over how much the project will cost up to £1 billion pounds will be paid for? Will it be a toll road? Just exactly how better the money could be spent?

NOT ON GEORGE’S RADAR...

Across the other side of the pond tax evasion remains an important issue, on this side of the pond you get the impression that the Conservative part of the Con Dem Westminster government just hopes it will quietly go away. As a direct result of the US government’s pursuit if tax evaders Switzerland's oldest bank is to close permanently after pleading guilty in a New York court to helping US citizens evade paying their taxes. The Swiss bank, Wegelin (established in 1741) will pay $57.8 million dollars (£36 million pounds or 44 million euros) in fines to US authorities.

Once the fine has been paid then Wegelin will cease to operate as a bank. The bank had accepted that it had allowed more than 100 American citizens to hide something close to $1.2 billion dollars from the Internal Revenue Service for nearly 10 years. Wegelin, based in the small Swiss town of St Gallen, was started 35 years prior to the US declaration of independence. It is the first foreign bank to plead guilty to tax evasion charges in the USA. In recent year other Swiss banks have taken steps to prevent US citizens from opening offshore accounts to avoid paying tax.

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. The problem is that successive Westminster Governments are involved in tax evasion and indirectly support tax evaders, as a significant proportion of tax evasive activities revolve around the UK Crown Dependent territories. 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.

I am shocked to discover that there is tax evasion here?

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? Perhaps it's just that we are ordinary taxpaying citizens just expect too much from government.

As the UK Government continues to be heavily involved in aiding and abetting tax evasion worldwide via British Overseas territories (including the Cayman Islands) and will actively fight in Europe to prevent open and transparent accountability and regulation for the City of London but won't chase up tax evaders.

Expecting the Tories or the party formerly known as New Labour to seriously tackle tax evasion is perhaps a little naive as they are part of the problem. The Lib Dems might deliver on electoral reform or any of the three Westminster parities to have an honest debate about Party funding before tax evasion is dealt with. Westminster helps to hide some £ 1.6 trillion pounds from various nations’ tax authorities, and some of the city banks are hand in wallet with drug dealers, dictators and terrorists when it comes to money laundering. Hmmm...Over to you then George...

THE CONTENTS OF GEORGE’S IN-TRAY?

Tax evasion! Surely not!

One way or another, tax evasion and tax avoidance is rarely out of the headlines especially as many heavily indebted governments are increasingly keen to hunt down every tax dollar / euro or pound that is owed. Considering that the Conservative elements of the Con Dem coalition government continues to looks slightly uneasy whenever tax avoidance and tax evasion comes up I cannot help wondering whether or not the National Audit Office report on tax evasion will make it out of George Osborne’s in tray.

A National Audit Office report has 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.  HMRC is faced with a backlog of 41,000 cases with potentially up to £10.2 billion pounds worth of evaded tax at stake. The National Audit Office (NAO) said tackling tax avoidance was difficult but HMRC had to do better. In the last two years HMRC has successfully challenged 40 tax avoidance schemes.

The NAO revealed that between 2004 and 2011 some 2,300 avoidance schemes were disclosed to the tax authorities, but as around 100 new schemes have emerge every each year. It has been estimated that there are potentially some 30,000 users of what are known as employment intermediary schemes and partnership loss schemes - where partnerships that make record a loss to shelter their other income from tax. The loss is artificially inflated via "circular loans" (or deferred expenditure) which are never actually incurred to exceed the amount actually invested in the partnership.

HMRC has tried to tackle the practice with enforcement action in a few “lead" cases, but investigations can take years to resolve and any rulings cannot always be applied successfully elsewhere.  Despite this since April 2010, HMRC has been started 110 avoidance cases and despite being successful in the vast majority of cases where judgements have been reached the NAO suggested that there was no evidence that litigation was proving an effective deterrent to tax evasion and avoidance.

Tax evasion is only part of the problem, as Tax Research UK estimated that the Exchequer loses out to the tune of £64 billion pounds per year through shadow economic activity, which is 16 times larger than the estimated £ 4 billion pounds that the UK Government misses out on due to tax evasion. That works out at roughly about £1 pound out of every £8 in the economy.

Despite this the Con Dem Government continues to pursue a reckless slash and burn (cut) approach to the public sector. They have reduced the number of staff in Revenue and Customs from around 100,000 to 65,000 and there are further plans to reduce the numbers to around 50,000 by 2015.

To expect the Tories or New Labour for that matter to seriously tackle tax evasion is perhaps a little naive as they are part of the problem. It would be a bit like expecting the Lib Dems to deliver on electoral reform or any of the three Westminster parities to have an honest debate about Party funding.

Perhaps the ordinary tax paying citizens just expect too much, I mean the UK Government continues to be heavily involved in aiding and abetting tax evasion worldwide via British Overseas territories (including the Cayman Islands). They help to hide some £ 1.6 trillion pounds from various nations’ tax authorities, and some of the city banks remain hand in glove with drug dealers, dictators and terrorists when it comes to money laundering. So clearly we are not all in it together.

SELF-INFLICTED WOUNDS

On the train to where?

There comes a moment, when you have had a long day, when it can become difficult to tell the difference between fiction and non-fiction or comedy drama and reality. That moment for me came on Friday night when I watched Newsnight on BBC 2. For the best part of twenty minutes I might as well have been watching an  episode of In The Thick of It, rather than actual news coverage of the Con Dems latest collection of self inflicted wounds e,g. George Osborne’s First class PR disaster,  Andrew ‘Thrasher’ Mitchell’s belated resignation (after 28 days of hoping the problem would go away) or David Cameron’s blundering intervention in relation to the ‘energy market’... perhaps  Malcolm Tucker can drop is and help get DC (and his clique) out of the mire...

ONE STEP BEYOND...

News that the Chancellor, George Osborne has promised to look at the cost of the Severn Bridge tolls, after halving Humber Bridge fees in his Autumn Statement last week is interesting news. There may be a deal on the Severn crossings as the Chancellor is willing if not keen to talk to the Welsh government. From January 1st Tolls for cars on the Severn bridges are due to rise to £6, while vans and small buses will have to pay £12.10 (a 60p increase) and heavy goods vehicles and coaches will pay £18.10 (an increase of 90p).

The tolls on the Humber Bridge between East Yorkshire and North Lincolnshire are paid in each direction and are currently set at £3 for cars and up to £20.30 for an articulated lorry. The chancellor announced that he was writing down the outstanding debt on the Humber crossing by £150m which would allow tolls to be cut in half. This decision was included in the UK Treasury's National Infrastructure Plan; which also included a pledge to work with the Welsh government to improve the M4 in south east Wales - which if nothing else shows how bereft of ideas concerning Wales the Con Dems are.

The UK government is apparently "holding open the opportunity of a discussion" on the Severn crossing tolls. The Welsh Government First Minister, Carwyn Jones has pointed out that the Treasury has failed to match the cuts given to the Humber Bridge Board. A Welsh government spokesperson stressed it was for UK ministers to take action as “the Severn crossings are owned by the UK government. The Welsh government does not set the tolls, nor do we benefit from the toll income."

Very true, but a little inconsistent, as while there was consistent and persistent bleating from duly elected Westminster Labour sheep between 1997 and 2010 along the lines of there is nothing we can do to reduce or stabilise the tolls! It turned that this is or was not quite true as the last New Labour Government intervened in October 2009 in relation to the Humber Bridge. Perhaps New Labour’s representatives in Wales hoped that no one would?

The (then) New Labour Minister of Transport Sadiq Khan, announced a grant of £6m to the Humber Bridge company, saying that, “the Government was committed to doing everything it can to protect communities and businesses from economic downturn and help the country to recover. That is why I decided not to accept the Humber Bridge board’s proposed toll increases”. New Labour, then fully in control at Westminster and in coalition Government in Wales did precisely nothing to try to reduce the impact of the Severn bridge tolls between 1997 and 2010, which somewhat ironically may not be the case when it comes to the Con Dems.

AN ACUTE LACK OF FAIRNESS...

I spent the first half of the week on a very intensive training course (complete with an exam - which thankfully I passed) so I missed the strike day entirely. It's literally taken until today for the deprogramming to kick in and to put thought to blog. Wednesday came and went, the Conservatives are feeling good, having a pop at the Unions over strikes for the Tories is like playing to a familiar audience.

The amply rewarded and well-paid card carrying largely Labour dinosaur Union bosses are happy as they got to have a go at a Conservative led Government. The current (New) Labour leader is quietly hoping that the strikes will go away and no one remembers that this whole economic mess originated when New Labour were running the show.

Now to be fair it's a devilishly awkward situation that the party formerly known as New Labour finds itself in. I mean they are trying to sit on the fence and avoid taking an official position, neither for or against the strikes. Fence sitting aside as the dust settle a lot of people who can least afford it are out of pocket at a time of year when they can least afford it.

The anger of public-sector workers who took part in strike action on Wednesday remains understandably undiminished. They are being asked to make significant financial sacrifices to pay for the mess, those responsible for the mess the private finance sector, are definitely not being asked to make the same level of sacrifice and by and large appear to have got away with it and escaped unpublished for their actions.

Understandably public sector, many of whom are not paid very much, are a tad upset that part of their pension, for which they were entitled to plan for many years, is going to be taken away. I have no doubt that the scale of government borrowing requires emergency action, yet any savings from changes to public-sector pensions won't actually come through until some years after this financial disaster has faded into memory.

Apparently the Government has moved some distance towards meeting the unions' objections, apparently by reducing the cuts for those nearing retirement. If this is the case, then serious efforts should be made to get a deal on the table and to sign it. Both the Unions and the Government should accept it an honour it.

Why do the cuts need to be so apocalyptic? Could not saving be made in other areas? Trident perhaps or a couple of aircraft carriers (one of which there are no plans to even use!). The UK Government can manage to find the money to spend on wars and their aftermath, but, not apparently when matters are deemed less urgent.

I wonder if the (subconscious or not so subconscious) motivation for the attack on the public sector workers is more ideologically driven rather than financially driven. It is worth noting that both Cameron and Osborne were heavily involved if not key players (coat holders) for Michael Howard’s thankfully unsuccessful campaign to be Prime Minister.

That thought aside, one financial cuckoo that's coming home to roost is that of PFI – something that the public sector was forced to use by the last Labour Government (and is still favoured by the current government) and for which we will all be paying for many years to come. We will all be paying for a whole raft of Blair’s legacies, including a couple of wars and the London based and largely London beneficial Olympics.

For the next ten years at least, public spending is going to be under severe pressure. Harsh choices will be made and priorities decided; and some changes may need to be made to relatively generous future pension rights of public-sector staff. I don’t necessarily dispute that, but, I question on whose behalf these decisions are being made and what efforts are being made to ensure that we all pay our fair share?

From where I am sat (in the cheap seats) this Conservative Government is the Trade Union leaders' best mate (if not a convenient ally). This is government for the rich and by the rich (for that's how it appears to me) has stood by while the City fat cats continue to be rewarded for failure and to rake in fat bonuses and done nothing.

The Con Dem's biggest problem is the acute lack of fairness, as boardroom pay has raced ahead, and tax evasion and tax avoidance largely goes unpunished. Excessive profiteering by the energy cartel has gone unpunished and those who can least afford are getting hammered. David Cameron and Mr Osborne remain utterly unconvincing as they continue to fail to convince most people that they (of all people) are genuinely "all in this together".

Last Tuesday George Osborne showed that he failed to even consider any idea for public disclosure of tax returns or a ban on honours to those who have already rewarded themselves pretty handsomely. Nothing was done about tax avoidance; and no consideration was given to a "Robin Hood tax" on financial transactions (something that needs to be done on global basis). Rather than criticising the strikers, Cameron might want to take steps to ensure that the bankers and the rich are in this, too, like the rest of us.

HIRED HELP?

The Conservatives (sorry Con Dems) since coming to power have imposed a bank levy which will raise an estimated £2.5 billion pounds a year. Sounds good and reasonable, unless, you note that during the same period they have slashed corporation tax rates from 28% to 24% which means that any impact on the finance houses in the City will be relatively minimal.

As for the levy itself, which originally proposed that a levy of 0.07% on all of a banks liabilities, HM Treasury has watered it down, saying that the banks won't have to pay the tax on the first £20 billion pounds of their liabilities. The chancellor has also chosen not to take forward the recommendation of Sir David Walker that banks should be forced to disclose all pay packages above £1 million pounds.

Also there won't be any action to curb the bonus culture which is expected to see £7 billion pounds splashed out this year. Just for the record, back in 2010, the big 4 banks between them managed to pay some 200 of their staff an average of £1 million pounds last year, very nice if you can get it., even better if we are in tough economic times and all in it together so to speak.

Oddly enough it gets better or worse depending on where you stand, the Conservatives have also been accused of introducing laws to give a full tax exemption for British companies tax haven branches which allows them to benefit from an 8% tax rate for profits diverted to havens via internal financing.

A Daily Mirror investigation suggests that of the 498 Tory MPs and peers some 134 have been or are employed in the financial sector, this figure also includes 70 of the party’s 305 MPs. It has also been suggested that among the 193 Conservative peers, over a third work or have worked in finance or banking.

The Financial Times has noted that an investigation by the Bureau of Investigative Journalism which has revealed that financial services companies and individuals donated £11.4m to the Tory party in the first three quarters of 2010. The investigation noted that some 450 separate donations to Conservative Central Office were made by individuals, companies and limited liability partnerships and that 27%, or £3.3m, of the £12.18m donated to the party came from hedge funds, financiers and private equity firms.

Clearly the Conservatives have come a long way over the last few years since those heady days in opposition when they needed to look good, by way of comparison with the years of new Labour sleaze. So it should come as no surprise that Mr Osborne will soon fly off to do battle on behalf of the City banks in Europe to prevent a pan European levy on the banks, still with hired help it's may be appropriate to pay for what you get. I wonder what his hourly rate is?

PAYING FOR WHAT YOU GET?

The Lib Dems as part of the Con Dem coalition government have not just signed up to George Osbourne's savage public sector cost cutting exercise scheduled for October, they are going to have to sign up to helping to bail out their own party out of the financial hole they find themselves in. Some 20 Lib Dem staff have lost their jobs at Lib Dems HQ, the rank and file are facing a 15 per cent rise in their membership fees.

The emergency conference to approve the coalition deal with the Tories cost them the best part of £100,000. Now with potential Lib Dem support at the polls next year in Scotland (Parliamentary elections), Wales (National Assembly) and England (Local Government) looking to crash as a direct result of the coalition deal, not mention the cuts, and a potential electoral reform defeat / farce (take you pick) means that things may be starting to look grim for the Lib Dems.

What may make things more interesting is that the Lib Dem's may well be pretty skint - the Electoral Commission has revealed that the Lib Dems received £6.4 million but spent £6.6 million in the last Westminster election. As part of the Lib Dem austerity measures the party's membership fee is going to go up to £60 pounds. £60 pound to help fund potential electoral oblivion - that's value for money!

DON'T LET WALES MISS OUT

It looks like Wales may miss out on any chance of rail electrification this time thanks to a combination of New / Old Labour and the same old Tories. With Whitehall tightening its belts and facing significant spending cuts there is a real and growing concern that the proposed upgrade of the Swansea to Severn Tunnel (and on to London) railway may yet end up as a casualty of Tory spending cuts. No doubt New / Old Labour will be quick to blame the Tories (they have after all done this for years, even when they have been in power), but that would hide the fact that both Tony Blair and Gordon Brown's New Labour Government long ignored Wales and Welsh issues.  

The planned rail upgrade, was however, conspicuously absent from the George Osborne's list of capital projects that were to take place before his Budget speech. The rail project is being reconsidered as part of the Comprehensive Spending Review, which is due to be published in the autumn. With the Tories getting ready for what are expected to be pretty savage and deep spending cuts, what guarantees can be extracted for this key project to proceed - a good question that is in need a serious and urgent answer.

More locally within Gwent, the National Assembly's commitment (in March 2010) to finish the work on Gaer junction, so that direct trains can run between Newport and Ebbw Vale was warmly welcomed, along with the prospects of a new railway station in Ebbw Vale town centre and an hourly service. These are important small steps forward to improve our public transport infrastructure and to give people a real choice when it comes to using their cars or not. Now, while it it obvious that much more needs to be done, these improvements should be completed despite the threat of immanent budget cuts.

Elsewhere in south Gwent, there is much that can be done to improve our rail services. Both Caerleon and Magor would benefit from new railway station's and serious consideration should be given to reopening the line to Usk from Little Mill, In recent years we have seen hard won improvements to Severn Tunnel Junction, yet even here there is room for improvement. No to mention the fact that better facilities and better access is needed at Caldicot, Chepstow and Abergavenny Stations, as well as more frequent stopping services.

The National Assembly does not have the same powers over transport as does the Scottish Parliament (it should) and neither does it have the same financial settlement (Wales needs fair funding) - but despite these limits there is much that can be done. We also need to get serious about getting freight off the roads and onto the rails where it belongs - if this can be done along with rail electrification then we can reduce both pollution and road congestion. If Government wants to change the way we use public transport when we need a public transport system that's fit for purpose and fit for us to use.

PM DAVE'S VISIT

I wonder if sometime during PM Dave (or are we back to David now?) Cameron's visit to Wales  we will get told that the Liberal Democrat / Conservative Government is going to commit to completing the electrification of the main south coast rail line from Swansea to Severn Tunnel (and on to London). Or will it be one of the first big  infrastructure projects to bite the bullet under 'Slasher' Osbourne's programme of cuts? If this is so, then it will show a fundamental difference between Ireland and the UK, where, despite the austerity package to fix the financial crisis work continues on the West Coast Rail Corridor  project. 

HERE WE GO AGAIN!

Here we go again, same old Tories, trying to sell the public something they already own. This time, unlike the Trains, energy companies, phone system, BP, etc they plan to sell 'poor people' shares in banks that they already own, well at least have already paid for(and will keep paying for some time). The Tory shadow chancellor George Osborne, now plans to sell the public discounted shares in state-owned banks under a "people's bonus" plan.

In a Sunday Times (21st February 2010) interview, Mr Osborne said the measure would be a reward for the £850bn of public money used to prop up failing financial institutions. The Tories plan to target young people and people on low incomes with special extra discounts. This has more than a faint whiff of desperation as the Tory lead in the polls may well have crashed. Mr Osborne told the Sunday Times: "The bankers have had their bonuses. We want a people's bank bonus for the people's money that was put into these organisations."

One does hate to point out that we already own some of the banks, it's just that the banks and the New Labour Government keep forgetting it. This desperate desire to privatise, the Royal Bank of Scotland and the Lloyds Banking Group, does appear to have an air of desperation about it, mind selling cheap under valued shares will be nothing new to a Tory Government, that's what they did last time, which certainly helped their chums in the City line their pockets.