IT’S SEVEN YEARS ON SINCE THE BANKERS AND SPECULATORS, who had turned our economy into a casino, brought about the credit crunch and the worst recession since the great depression of the 1930s.
It’s been seven years of crushing austerity. The cuts in benefits and wage freezes have forced a million a year to queue at food banks to feed their families. The statistics of disabled people assessed for work who have died before being able to take up work, are shocking. The stress caused by the pressure being placed upon those out of work and in work has produced reported incidence of mental health conditions at epidemic proportions.
Independent analysis confirms that 80% of the cuts have fallen on women. The distributional analysis recently published by the Women’s Budget Group has demonstrated that if you calculate the total impact of tax cuts, cuts in benefits and the withdrawal of services, it is the poorest decile in our society that have been hit the hardest and the richest that have born the least burden of austerity.
Two groups in particular have been hit hard – young women with young children, and older, retired women. Older women suffer so much because in our culture caring responsibilities still fall the most on women. As caring services are cut the burden has fallen upon older women.
From the outset the left argued that austerity was a political choice and not an economic necessity. Time and time again this has been demonstrated by the decisions taken by Cameron and Osborne. In the latest budget it was starkly proven once again when Osborne chose to reduce inheritance tax and capital gains tax on the top 5% - paid for by cutting the benefits to disabled people by £30 a week. The Panama papers prove that austerity was totally unnecessary. $21 trillion is estimated to be hidden in tax havens. Tax avoidance has been produced on an industrial scale by the major accountancy firms and banks located in the City of London. Successive governments have turned a blind eye. Worse still the accountancy firms have permeated government and opposition party tax policy making.
The left has repeatedly argued that if the rich and the corporations paid their taxes the deficit would have been eradicated, debt would be on the downturn and our economy would be growing as a result of a sustained investment programme in our infrastructure, skills and public services.
The lid has been blown off the corrupt, inefficient and undemocratic political and economic settlement that has been imposed upon our society in recent years. A window of opportunity has opened up for us to expose the grotesque unfairness of our tax system and set out Labour’s offer of a fair and just alternative. We have started with the publication of a Tax Transparency Enforcement Programme, aiming to force through the registration of information held by companies and trusts in the UK and tax havens to tackle evasion and avoidance, plus the proper resourcing of HMRC to secure effective action against the evaders and avoiders.
The next stages will need to include a programme of action to regulate effectively the accountancy firms and banks which are at the heart of devising the avoidance schemes and also to develop a tax base which reflects the way the economy operates today and which is inherently fairer and more efficient in collecting the taxes due.
Interestingly over recent weeks, alongside the public outrage at the scandalous tax dodging of the super rich and corporations, shareholders’ anger has spilled over in a number of companies at the pay awards of senior executives - often in firms whose performance has been poor. The vote by shareholders of BP to reject pay awards was significant but not the only manifestation of this shareholder fury. Yet again the system has been judged to run counter to what is generally accepted to be fair and productive.
Shareholders may not at first appear to be the natural members or allies of the labour and trade union movement. However the tactic of seeking to use shareholder power and influence has long been used by progressive causes and trade unions over the years to highlight the injustices or unfair practices of a company.
And so alongside the left’s campaign to secure tax justice, now is also the time for the left to link shareholder action to Labour’s overall campaign for greater economic democracy and social justice in our economy overall. In this way we have the opportunity to create a broad alliance for an efficient, successful and fair economy.
Shadow Chancellor, MP for Hayes and Harlington, Chair of the Socialist Campaign Group of Labour MPs and Chair of the Labour Representation Committee. John has been involved in Labour Briefing since the early years.