Sort out the tax dodgers, Labour, then the benefit bill won’t be a problem

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Off-message: If Rachel Reeves had promised to get as tough on tax avoidance in her previous job as she is promising to be on benefits now, Labour might have had more credibility.

A lot of people have been getting their knickers in a knot about Rachel Reeves’ interview in today’s Observer – and rightly so.

In it, she tells us (wrongly), “We are not in an environment where there is more money around,” and says that Labour will be tougher than the Tories when it comes to slashing the benefits bill. She stressed that she wanted to explode the “myth” that Labour is soft on benefit costs.

There are a few myths feeding into these statements. Firstly, the myth that millions upon millions of British citizens are living a life of luxury on benefits, which is, quite frankly, infantile nonsense. Benefits do not pay the ordinary claimant enough to afford huge luxuries and never did. They were always intended to cover the cost of survival while the recipient looked for something better. Anything else is a lie concocted by unscrupulous politicians, that you would be a fool to believe.

Then there’s the myth that the British taxpayer is being defrauded out of a fortune by benefit cheats who are (again) living a life of luxury at our expense. One look at the figures dispels that idea! The fact is that only seven people in every thousand commit benefit fraud – at a consequently small cost to the overall budget – and the amount they receive simply would not support the lifestyle our politicians are suggesting for them.

Let’s move up to a bigger myth – that people prefer to live on benefits than get a job. We’ve now moved from infantile nonsense to dangerous nonsense. The current situation, engineered by the conservatives in both Coalition parties, means there are very few jobs available – around 500,000 at any one time, with 2.5 million people chasing them.

And what kind of jobs are they? How many are zero-hours contracts? How many are part-time? These jobs do not pay more than benefits (“Making Work Pay” – another Tory lie) so anyone taking them will be out-of-pocket.

Meanwhile, the Tories in power have rigged the system so that anyone who does not spend the entire working week pestering local businesses for jobs that they aren’t offering will be sanctioned and will lose their benefit for a period of up to three years! It is entirely disproportionate, considering the state of the economy, and may cost jobseekers a lot more than a few quid a week in the long run.

But this is how the benefits bill will be slashed – by the Conservatives and by Labour, if Rachel Reeves is to be believed. Ministers of any party, living in the la-la land of made-up statistics, will sanction people for failing to work hard enough at securing jobs that don’t exist!

Ms Reeves says Labour’s jobs guarantee will ensure that those jobs do exist but we don’t know that for sure. We do know that she intends to continue Tory policy on sanctions – blindly.

Finally, we have the biggest myth of all – that there isn’t enough money. HM Revenue and Customs just released estimates for the last-but-one tax year (2011-12), suggesting that it failed to collect £35 billion in evaded or avoided tax during that year.

That’s seven times more than the national bill for JSA, and more than 29 times the estimated cost of all benefit fraud. But wait – it gets better! This is only an estimate and it has long been believed that the true cost of the so-called “tax gap” is £120 billion – equal to each year’s national deficit, 24 times the cost of JSA or 100 times the cost of benefit fraud.

Why isn’t our government going after these criminals? Why hasn’t Labour promised to go after them if the Tories won’t?

Simple: Both main parties have been re-writing tax law to make it easier for rich individuals and large corporations to avoid paying tax, and ignoring flaws in tax laws that make avoidance possible.

So for example: In the late 1990s, the then-Labour government removed the tax on dividends that meant companies had to pay tax on profits if they wanted to pay them out to the owners. So for example Arcadia boss Philip Green’s wife Tina, who is technically the owner of the company and lives in Monaco, received a tax-free £1.2 billion dividend in 2005; if this tax had been in place, £300 million of that would have gone to the UK Treasury.

Gordon Brown slashed Capital Gains Tax from 40 per cent to 10 per cent in 2000, meaning income that his friends in private equity managed to engineer into capital gains would be taxed at a lower rate than was paid by their cleaners. Not the finest hour for the Party of the Worker!

And towards the end of its term, New Labour started dismantling the rules that guarded against industrial-scale tax avoidance by British multinationals, meaning profits returned to the UK from overseas subsidiaries would be exempt from tax. This created a substantial incentive for firms to send their income offshore.

Before the 2010 election, our old friend David Gauke made a lot of noise about stopping the limitless tax deductibility of interest payments, that had been used by Boots (the chemist) to slash its tax bill. Six months after the election, when he was in a position to do something about it, he was telling everybody the rules would not be altered because business considered them a competitive advantage.

The Coalition brought in tax exemptions for companies’ tax haven branches and for profits parked in tax haven subsidiary companies. Meanwhile, tax breaks for the cost of funding these offshore set-ups, from the UK, are also provided.

Corporation Tax will drop to 21 per cent by 2014, even though there is no evidence that cutting the rate will make the UK any more competitive in world business.

The Treasury’s mission is now to adjust the framework of tax laws to suit big business. The ‘Big Four’ accountancy firms are now well-entrenched in writing our tax laws for us – and they run the most popular tax avoidance schemes. Consultations have descended into a process of agreeing laws demanded by big businesses.

There are clear and irrefutable arguments that reversing these legislative idiocies and closing every other tax avoidance loophole will do far more for the economy than flogging the unemployed to death, looking for jobs that don’t exist.

But I don’t think former Bank of England economist Rachel Reeves will be interested in that. In 1975, an appalled taxpayer wrote to then-Chancellor Denis Healey, complaining that an employee of the Bank (which is supposed to work on preventing tax avoidance) had been giving advice on how to avoid tax. “I wonder if this is really part of the Bank of England’s duties,” the correspondent wrote.

The behaviour of Ms Reeves, the former Shadow Chief Secretary to the Treasury, suggests that she believes it is.

‘Papers, please!’ Harsher laws for immigrants could mean Nazi-style ID checks for British citizens

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Prove who you are: Theresa May and David Cameron check the credentials of two police officers, to ensure they aren’t illegal immigrants. No, not really – but don’t be surprised if police checkpoints start appearing everywhere with people in peaked caps demanding your papers, just like in Nazi Germany during the 1930s and 40s!

Theresa May has responded to criticism of her policies on immigrants by revealing her plans for the latest Immigration Bill – countering a threat that is perceived to be much worse than the reality.

Experts say this will require a system of identity checks for everyone, requiring British citizens or those with permanent residence to prove that their own presence in the UK is legal.

In a move that seems designed to appease the Daily Mail and its readers, she wants banks to check the immigration status of people applying to open accounts, and private landlords to make similar checks on their tenants.

You will notice that this means the government wants other people to carry out its responsibilities.

The Home Secretary also intends to “streamline” the appeals process in immigration cases. Under the current government, this word generally means “make less fair”, and this is borne out by a passage stating the measures aim to “deport foreign criminals first and hear their appeal later”. In such circumstances, how can we be sure they really are criminals?

There will also be a requirement for temporary migrants like overseas students to contribute towards NHS costs. This is not necessarily a bad thing – although it would be unfair if this money found its way to the private companies now infesting the NHS, rather than the public service itself.

But there will be no tightening of border controls, no “streamline” for bureaucratic deportation procedures, and no measures to tackle forced labour or lack of enforcement of the minimum wage.

Immigration Minister Mark Harper was quoted on the BBC website, saying: “The law must be on the side of people who respect it, not those who break it.” Fine words from the man who was unable to say whether flak-jacketed immigration officers had discriminated against people of ethnic minorities when they carried out their spot-checks at railway stations in August.

The BBC article also quotes Don Flynn of Migrants’ Rights Network, who reiterated that evidence contradicts the view that immigrants are attracted to the UK by benefits and free services; and Dr Richard Vautrey of the BMA, who said a system is already in place for hospitals to recover the cost of treating patients who are not eligible for NHS care – and introducing a system for GPs could be a “bureaucratic nightmare”.

The Guardian tells us the Immigration Law Practitioners’ Association (ILPA) has warned Theresa May her plan, for millions of private landlords to face “proportionate” fines of up to £3,000 if they fail to conduct checks on the immigration status of new tenants and other adults living in their properties, is unworkable.

“British citizens, European economic area nationals and third country nationals alike would be required to produce identity documents at many turns in a scheme that would be intrusive, bullying, ineffective and expensive and likely racist and unlawful to boot,” said the ILPA response.

And the Residential Landlords Association said landlords would need to know about a potential 404 types of European ID documents, in order to operate the scheme – saying some landlords would refuse to house migrants, for fear of falling foul of the new rules – and isn’t that the point of the exercise?

The Guardian quotes Habib Rahman, of the Joint Council for the Welfare of Immigrants, who predicted that “these measures will divide society, creating a two-tier Britain, a return to the days of ‘No dogs, no blacks, no Irish’ and of ill people with no access to healthcare walking the streets of Britain. This bill is a travesty and must be stopped,” he said.

BBC home affairs correspondent Dominic Casciani tells us the ultimate goal is increased public confidence in the system.

But if we are doing all the work ourselves, why should this add up to increased confidence in the government?

Why does Gove want to sell school places to foreigners when there aren’t enough for British children?

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The stupid boy sitting at the back: Michael Gove has just one aim for the education system – to make it profitable. If he succeeds, YOUR children will pay the price.

The revelation that Michael Gove has a plan to sell places in academy schools to students who currently live overseas came less than a week after the BBC reported that a shortage of school places was likely to harm the quality of education here.

England needs to find 250,000 primary places – within two months – and this means that schools that perform poorly may expand to accommodate the need, even though the education they provide is substandard.

It is into this environment that Michael Gove apparently wants to introduce a paying market.

Academies are not allowed to make profits at the moment, but it seems likely that a Conservative government would change this requirement in order to allow paying pupils in – effectively accelerating towards the privatisation of the education system.

In an environment with too few school places for the British, parents need to realise that their children will be passed over in favour of paying foreign students. In essence, this is a plan to exclude poor people from education.

The evidence suggests that this has been the plan all along. A Guardian article yesterday noted that “Other milestones are already in place: performance-related pay for teachers is on its way. Around half the country’s secondaries are now academies, reluctant primaries are being forced down the same route and the 2011 Education Act decreed that if a new school is needed, it can only be a free school or an academy.

“Once schools are out of the maintained sector, only governed by a commercial contract with the secretary of state (the basis on which “independent” state schools are set up), it is only a short step to a new procurement process, which allows multinational for-profit chains to enter this market.

“And the point about schools run for profit is that they do what they say on the tin – seek to make a profit. So the first stop may be wealthy foreign pupils seeking access to selective, oversubscribed academies, but where would that stop? Co-payments? Fees for domestic families?”

The article continues: “Profit-making schools have a very mixed record in nearly every country where they have already been tried, notably Sweden, the US and Chile. Quality is often poor.

“If they fail they are swiftly closed down or reopened under new management – hardly a culture conducive to fostering sustained improvement.”

From here on, the article suggests, we should rename the British education system the “domestic market for education businesses”.

And your child’s education can go to hell. After all, the Tories educate their children privately, don’t they?

It is not only notable but sinister that Downing Street has declined to comment on the leaked letter that revealed the proposal.

Silence is not denial. In fact, with the current government, it might as well be an admission of guilt.

David Cameron has started to privatise the National Health Service; he has started to privatise the police. Now it seems he is ready to privatise education as well.

How long do the so-called ‘Working-Class Tories’ have to be exposed to this before they realise that their government is screwing them over?