SHORT SIGHTED EUROSTAR SELL OFF

The news that the UK Government plans to sell its stake in Eurostar should not surprise anyone. The records of various Westminster Governments since 1979 when it comes to selling off of state assets leave a great deal to be desired. A few year ago Royal Mail was privatised on the cheap and the public have been left short-changed. It has to be unacceptable that state assets, particularly those which are so vital to infrastructure are being auctioned by a Westminster government that is simply ideologically opposed to state ownership.

This proposal reflects the lop-sided nature of UK economic policy. Increasingly desperate attempts by Westminster governments to balance the books have been based on painful austerity rather than investment and growth. Now they are desperately attempting to fill the hole in public finances by selling-off important assets. This is a short-sighted attempt to make a fast buck at the expense of the future of the UK’s infrastructure and economic prospects.

This process may well end with ‘external nationalisation’ where former UK state assets are owned by foreign governments who pursue their own interests, at our expense leaving UK citizens powerless. There has to be a wider discussion on this particular proposal with the devolved bodies in Wales and Scotland. The Eurostar is an international link, particularly important to our joint participation in the EU and the single market. Businesses here in Wales will be affected in the long-term by the decision to sell-off and there will undoubtedly be an impact on our economy in Wales.

BETRAYING WALES OVER WELFARE

Plaid was right to criticise Labour MPs from Wales who collectively voted in favour of Chancellor Osborne’s welfare cap in the House of Commons. Plaid Cymru’s Jonathan Edwards, along with his Plaid Cymru colleagues Elfyn Llwyd and Hywel Williams were the only Welsh MP to oppose the cap, as Labour in Wales MP’s voted alongside Conservative and Liberal Democrat MP’s to betray some of our country’s most vulnerable people to literally limit the help available to the needy. This is a yet another classic example of Labour in Wales saying one thing and Labour in Westminster doing something different, so much for standing up for Wales!  

Plaid Cymru’s Jonathan Edwards MP  said:

“This was a significant vote which proved that Labour MPs from Wales make their decision based on orders from London, rather than on the needs of their constituents.

“It signals a betrayal of some of our nation’s most vulnerable people by a Labour party whose fork-tongued politicians say one thing in Wales and another in Westminster. The people of Wales deserve better than their spineless hypocrisy.

“Plaid Cymru was the only party from Wales to unanimously vote against this ill-judged and immoral policy – Welsh voters will no doubt bear this in mind at the ballot box.

“With the economy being so unpredictable, it makes no sense whatsoever to put a cap on welfare spending with no idea of how many people will need support should unemployment rise drastically and public services face further cuts.

“We in Plaid Cymru have proposed far better ways of bringing down the welfare bill than making the vulnerable pay for the failure of the banks. A living wage, rent caps, and scrapping mandatory zero-hour contracts are just some policies that would put an end to the “working poor” label once and for all.

“It is now clearer than ever before than when it comes to protecting the interests of the Welsh people, Plaid Cymru is the only party to be trusted.”

FOOD POVERTY

The quiet if not stealthy rise in the number of food banks across our country and the growth in the number of people who have been driven to use them should be shocking. What should also shock us is the speed with which food banks have become an established and sadly necessary part of our social landscape and people’s lives.

One interpretation is that, if nothing else the flawed austerity policy being actively pursued by Westminster is clearly not working for Wales. Also perhaps the growth in the number of food banks is also a clear indicator of a good forty years of failure of the Union to deliver real and lasting prosperity and economic benefits to the Welsh people.

According to the British Medical Journal (BMJ), food poverty may well be becoming the next public health emergency. The number of people using food banks in Wales has rocketed in recent years, and has almost tripled in the last year. Figures produced by the Trussell Trust show that the number of food bank users has risen from 12,377 over six months in 2012 to 32,500 for six months in 2013 and also that some eleven thousand children have used food banks in the last six months in Wales.

The growth in the use of food banks is a result of the combined effect of the soaring cost of living, austerity cuts and ongoing stagnation in wages all of which means that more and more people in Wales are dependent on donations and charity to eat. The figures show that over thirty thousand people in Wales have been forced to take emergency food supplies or face going hungry. A third of these are children. Health experts are correct to be disturbed by these figures which suggest that food poverty could be the next big health emergency to hit Wales.

We have to get the basics right and a healthy diet is part of the solution, and an action needs to be taken to stop this food poverty becoming a major public health emergency. The Welsh Government should shake of it's self induced lethargy and actively and urgently revise its Anti-Poverty Strategy to introduce measures that will tackle the problem of food poverty head-on.

There are a number of ways to help people to help themselves including encouraging community food growing schemes, by making more land available for allotments and by working with food producers to make sure surplus stock can be sold at markets at affordable prices as well as support for producer co-ops are all measures that could bring down the cost of food.

The Labour in Wales Welsh Government needs to act to develop a long term sustainable food plan to guarantee good quality food at affordable prices to people in all parts of Wales. We need to see long term action being taken to minimise the impact of damaging UK Government austerity measures on Wales.

As part of this approach Plaid Cymru has advocated a ‘no evictions’ policy on the Bedroom Tax so that nobody can be turned out of their home as a direct result of this cruel tax. It has to be unacceptable for families living in Wales in the 21st century to find themselves in living in such a desperate and insecure situation. That’s why Plaid Cymru continues to fight for serious action to help and support, not punish these struggling families and children.

TIME TO COME CLEAN ON ENERGY SUBSIDIES

The recent self generated row over the green levies is a classic attempt to distract people’s attention away from the realities of energy subsidies.  As the Con Dem government denounces proposals for a two-year price freeze as "socialism" the Westminster government has guaranteed EDF and Chinese state investors in the nuclear sector fixed above average prices for energy the next 35 years.

The small print of the deal for the new nuclear power station at Hinkley guarantees the French-owned EDF and Chinese state investors a strike price of £92.50 per MegaWatt Hour (or £89.50 if a second plant is built), this is around twice the current market rate for wholesale energy. This price per unit will rise in line with inflation and is being guaranteed for 35 years – so much of the ‘free market’.

The real irony is that in the event of wholesale prices falling or rising at a slower rate than expected, then it is we, the public who will pick up the tab in the form of higher taxes or higher bills. The Energy Institute at University College London has estimated that the annual public subsidy will be around £ 800 million to - £ 1 billion pounds. This is on-top of the current £ 2.3 billion pound annual subsidy most of which ends up as a form of funding to deal with legacy nuclear waste.

The problem is that we all face is significantly down to the cumulative effect of an almost unregulated energy market and the unscrupulous activities of the ‘Big 6’ energy cartel members who will continue to maximise their profits at our expense because they simply can get away with it. The three Westminster based political parties have dropped any pretence of trying to regulate the energy market, to curb excessive profiteering or even to attempt any long term energy planning.

There is no quick fix, as energy efficiency schemes install insulation help to reduce carbon emissions and reduce fuel energy bills over the long term rather than the short term. If green levies are to be reduced, and I don’t think that they should be, then energy efficiency and fuel poverty reduction schemes should be paid for out of (progressive) general taxation - with the burden placed on higher end of the income bracket.

OUR WATER ?

The sooner the powers over the water industry and water resources are devolved to the Senedd the better. The bottom line being that the Welsh people should be able to profit from the sale and development of our natural resources. The ‘not-for-profit’ social enterprise model instituted in Wales by Glas Cymru shows that for once our country is ahead of the curve when it comes to managing its water resources. 

Water is a valuable asset in Wales and while many of the regulatory powers relating to Water in our country are in the hands of the Welsh Government, the water clauses in the Government of Wales Act 2006 (thanks for that Mr Hain!) actually prevent us from taking financial advantage of our natural resources to our benefit.

The Con Dem’s Water Bill is decidedly ideologically driven and aims to introduce more market competition into the water industry. Whatever the Con Dem’s do in England for once should have little effect in Wales, as for most of us our largest water supplier Glas Cymru, which is a not-for-profit company – something that could be used as a successful social enterprise and a business model elsewhere.

One thing that we don’t need to do (and we probably won’t despite the party formerly known as New Labour’s ideological commitment to the nominal ‘free market’) is turn the clock back in Wales by moving from a not-for-profit system which puts customers first to one sees boosting the shareholders’ dividends and profits  as the prime motivation. Meanwhile the draft Water Bill slowly grinds its way through the House of Commons will continue to makes progress and no doubt the outcomes of private discussions between the Welsh and UK Governments will no doubt eventually emerge.

The Senedd, in so far as the clauses in the Draft Bill (now at the Second Reading Stage in Westminster) affect Wales is at least partially involved in the process. The National Assembly for Wales’ Environment and Sustainability Committee is currently engaged in an inquiry into water policy in Wales. Amongst other things the committee is remitted to ‘Assess the implications of the Draft Water Bill for Wales, particularly with regard to competition in the non-household market.’

We need to ensure full transparency with detailed debates in the Senedd about what exactly the Welsh Government’s plans for the water industry. Water in our country has always been sensitive issue and Plaid has been consistently calling for the devolution of powers over water resources so that our country can tap the potential of our natural resources. 

THE INDIRECT CONNECTION

We modern humans have always lived in pretty well connected world, so if you think that there is no direct or even indirect connection between a public meeting about the plan to build a gas fired power station in Wrecsam and the suppression of a teacher union in Bahrain, then think again. The plan to build an £800 million pound gas-fired power station in Wrecsam, which Wrexham Power have said could create up to 1,200 construction jobs and 50 permanent posts on the proposed site at Wrecsam Industrial Estate, has led to the creation of an action group Wrecsam Residents Against Power Scheme (Wraps) whose concerned members have "many reservations" about the proposals for the gas fired power station.

The plan to construct (yet) another gas fired power station (in Wales) adding to ones constructed earlier in Pembrokeshire and in Newport (Gwent) is part of yet another Conservative inspired ‘dash to gas’. Whether the thrown bone of jobs is enough of a distracter to allow to project to go through on the nod is a matter of conjecture. If nothing else the Con Dem Westminster Government is running greater risks by increasing the UK’s dependency upon imported gas from the chronically unstable Persian Gulf and Russia.

Successive Westminster Governments should have been working consistently to ensure our energy independence. Instead they have presided over our increasing dependence on imported energy supplies and left energy planning to the privatised energy companies who are only interested in generating more profits.  Much of the gas for the new generation of gas fired power stations comes from the Persian gulf and despite Mr Cameron’s best efforts to sell the Gulf elites more rubber and real bullets than they can use in a month of Sundays the region remains chronically unstable.

Bahrain has a reputation as being quite the repressive regime having cracked down on protests for democracy in 2011. Amongst those arrested in the crackdown were members of the Bahrain Teachers Association. Amnesty International has repeatedly called for the release of the jailed president of the Bahrain Teachers Association, Mahdi Abu Dheeb. He was convicted by a military court of plotting to overthrow the government during unrest that swept Bahrain in 2011, receiving a 10 year sentence, reduced to five on appeal.

Mr Abu Dheeb and his vice-president Jalila al-Salman have made allegations that they were tortured in detention after calling for a strike by teachers in March 2011 to support pro-democracy activists who had occupied the Pearl Roundabout, in Manama (the capital city). The Bahrain Teachers Association was subsequently dissolved by the government after its leaders were arrested. Ms Salman was originally sentenced to three years in jail but that was reduced to six months on appeal. In March this year she was sacked from her teaching job after criticising Bahrain's human rights record at a conference in Washington DC.  All these people did was call a strike as trade union leaders.

This is where energy policy, political repression and Human Rights all meet up. On a very basic level, to have an energy strategy that is to all intents and purposes dependent on imported gas from a politically unstable region is questionable to say the least. Surely if nothing else the events of the Arab spring should have taught the West one thing at least, in that at some point even the most heavily tooled up repressive regime can fall if enough people are willing to challenge it. At which point when the lights begin to flicker where exactly will we be left standing?

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. 

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.

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...

A QUIET SENSE OF URGENCY...

There is an increasingly desperate search for secure energy supplies, which is one of the reasons why George Osborne jumped in with both feet in relation to exploitation of Shale Gas reserves, hence the creation of the Office for Unconventional Gas and Oil. Just exactly how that fits in with the concept of Devolution in Wales is open to question? The chancellor also started the ball rolling on yet another Conservative driven dash for gas by approving the construction of potentially up to 30 new gas-fired power stations, to be built over the next two decades.

The UK Westminster government wants up to 26 GW of new gas generating capacity by 2030 much of which may come from the potentially environmentally questionable process known as fracking. Back in March 2011 the House of Commons Energy Select Committee came out in favour of fracking as an option for ‘secure energy’ simply stating that any environmental problems associated with fracking in the US would be overcome by tight regulation and good industry practice.

Options for energy exploitation (South Wales)

I am a big believer in developing Wales’s secure energy potential; unlike the Chancellor and the Con Dems I actually believe that we should have secure sustainable energy supplies. I also think that they should be community beneficial and just happen to think that we in Wales should have control of them. One inescapable part of the problem is that we (the population of the planet) are running out of easily (relatively) accessible hydrocarbons (oil, gas, etc) no matter how you spin it they are a finite resource.

The search for conventional hydrocarbons (oil) is becoming increasingly costly. Work on the Kashagan oil island in the Caspian Sea, off Kazakhstan has cost $46 billion dollars or around £ 28.8 billion pounds to develop. It is one of Kazakhstan's most ambitious project and just happens to be the world's largest oil find in the past 40 years. Kashagan may be as good as it can get for the Kazakhs and the Oil companies, but, one inescapable fact is that the field holds approximately 13 billion barrels worth of recoverable oil or around enough oil to fuel the world for nearly five months.

At the moment much of the UK’s gas supplies come from Qatar (in the Persian Gulf) which while being relatively stable has some Human Rights issues. As stable as it is, the problem is that the Middle East and the Gulf region are unstable. If some of Qatar’s despotic and repressive neighbouring rulers (run out of rubber bullets, tear gas and live rounds) and fall to popular unrest (at some point the repressed will lose patience and then it comes down to a simple if bloody numbers game) then we could be talking about lights out in the UK and flickering lights for much of Europe.  

Options for energy exploitation (North East Wales)

Hence the Chancellor’s quiet sense of urgency surrounding exploiting the Shale gas reserves. Now there are potentially sizeable reserves of Shale gas under some parts of our country with an estimate of recoverable gas reserves, possibly worth £120bn something which have got some people and some of the energy companies salivating.  Oddly enough Gazprom, the monopolistic gas producing arm of the Russian State, with its hands tightly gripped on the gas pipe, of most of Eastern Europe, does not favour Shale Gas production.

Now this all sounds good, but, the potential impact of the hydraulic fracturing technique (fracking) on people's health and environment is potentially pretty grim. The process can use a combination of water, sand and chemicals which are pumped into rock formations under high pressure. Something which has led to a sizeable number of environmentalists to raise real concerns about the fracking method could which can contaminate drinking water supplies.

Something else that is worth thinking about is that to make the extraction process work economically there is a requirement to drill lots of wells in close proximity to each other to aid extraction. Something that might lead to a far more significant environmental footprint during and after the gas is gone. In parts of south and north east Wales, whether with deep mined or open cast coal mining we have seen how the post mineral extraction clean up works.

One unanswered question is what will happen to any tax revenues, drilling permit fees, etc from Shale gas extraction. The Labour Party in the late 1970’s and the Conservatives through the 1980’s failed to pump revenues into an oil and gas fuelled sovereignty fund (like Norway did) choosing to blow the lot on subsidies for inefficient nationalised industries and tax cuts for the rich.

Ultimately Shale gas is also a one off, literally a one hit wonder, once gone it’s gone for goods. UK reserves, even if 50% was extracted might last 10 years, and then what? Over the last 15 years successive UK governments should have been working hard to develop non hydro carbon dependent sustainable energy supplies. Rather than do something they simply left energy planning and energy development to the whims of a cartel dominated nominal free energy market.

The main beneficiaries at the moment for Shale exploitation would by the UK Treasury (tax) and the Crown Estates which with its urban, rural and marine holdings across the UK, including the seabed and large areas of land, stands to profit from renewable energy developments and off-shore dredging. Any shale gas extraction should be regulated, supervised and approved (but only after a full and comprehensive environmental assessment) here in Wales, not in Westminster.

Any tax or licence revenues raised should go into a ring fenced all Wales sovereign energy fund which the National Assembly should avoid plundering for short term financial fixes. As we in Wales will have to live with any consequences (both long and short term) of an environmental disaster it is only reasonable that our natural resources should be controlled by and developed for the benefit of the Welsh people.

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.

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...

RAIL FRANCHISE FARCE

U-turn if you want too? 

Having been away for the best part of a week – it is easy to lose track of things – so I missed out on one of those decisive Cameron U-turn moments – when the rail franchise bids got derailed. This is one of those moments when political comedy drama and actual politics / governance almost seamlessly blend into one. The Omnishambles that the English West Coast Main Line bid seems to have become suggests to me that it’s time to rethink of the whole privatised rail industry structure. This Whitehall shambles brings into question the competence of a private franchise being responsible for the electrification of the Great Western line from Swansea to London. The whole process has been discredited, we would be better off with a publicly owned rail industry, something that would widely supported by the electorate and would be far better able to meet commuter and economic needs than private firms.

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.

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.