Employee Shareholder Contracts: destroys employees' rights to save good companies 83p a week for each employee (but saves dodgy companies much more)

In October 2012 Eric Pickles, Secretary of State for Communities and Local Government, introduced a new bill. The “Growth and Infrastructure Act 2013” sounded like a good thing. Who wouldn’t want some growth and some infrastructure? However, hidden in the bill is “Employee Shareholders” legislation that destroys employees' rights. We wrote about it back then when the bill was first introduced, and are disappointed none of the 'great and good'  of our nation managed to strangle it.

Why these fundamental changes to the “Employment Rights Act 1996” were implemented by Pickles’ Department for Communities and Local Government and not by Iain Duncan-Smith’s Department for Works and Pensions perhaps exposes a low Duncan-Smith was not prepared to go down to. In April 2013 the bill became law, and from September 2013 these new employment contracts can be written and employees’ rights endure the following beating:

Among the rights lost are the right to training; the right for flexible working; protection against unfair dismissal; the right to redundancy payment:

An employee who is an employee shareholder does not have—

(a)         the right to make an application under section 63D (request to undertake study or training),

(b)         the right to make an application under section 80F (request for flexible working),

(c)         the right under section 94 not to be unfairly dismissed, or

(d)         the right under section 135 to a redundancy payment.

In return, the employer is supposed to give the employee between £2,000 and £50,000 (can be more, but tax protection is limited to £50k) of “shares”. However, these aren’t shares as we know them. The employer can decide whether these pieces of paper do or do not have the rights shares usually have:

• Voting rights.
• Rights to dividends.
• Rights to a share of surplus assets if the company is wound up.
• Right to be sold (the employer can place restrictions on who can buy the shares – e.g. they can only be sold back to the employer. And whether the shares have ‘drag along’ or ‘tag along’ rights when the company itself is being sold)

Quite apart from not having rights to vote, dividends, etc. this creates another key weakness for these ‘shares’. Because they have fewer rights than real shares they can’t be valued against real shares. So they are worth pretty much whatever the employer says they are worth when he takes them back (at the time of your sacking).

In short, what do you call a share that has no votes, no dividends, and can only be sold to whomever the employer says? Answer: bog-roll.

The prime beneficiaries of this change in employment law will be companies that tend to get into hot water with current employment law. The Department’s own impact assessment states that the cost benefit for companies that don’t have to pay out for breaching employment law is just £43 per year per employee – that’s 83 pennies a week:

"Not including tribunal awards and settlement payments, our estimated  expected avoided cost per individual that a company employs as an  employee shareholder rather than an employee is around £43 each year.  This avoided cost is related to the fact that an employee shareholder does not have certain statutory employment rights."

“Not including tribunal awards and settlement payments” means the sort of companies that do habitually have to pay tribunal awards and settlements for breaching workers’ rights will save much more because their workers won’t have those rights anymore.

And of course employers tend to lay off people when their company is in trouble. Which is when the shares are most worthless. So, for the employer it is a win-win, and for the employee a lose-lose.

Further abominations from this change in legislation include:

1) Can companies advertise jobs only on an ‘employee shareholder’ take it or leave it basis? Yes they can, as clarified by Lord Younger:

Viscount Younger of Leckie: 

"It should be up to employers to recruit as they see fit. If a company wants to recruit an employee shareholder, as companies already do with employees and workers, it should be able to do so in its own way. Taking the argument further, if an employer wishes to post a notice for, or advertise, an employee shareholder position, they should be free to place this as one role, just as they would be able to do in an advertisement for any other role."

2) Can you lose unemployment benefits if you refuse to apply for an ‘employee shareholder’ job? After much pressure the government conceded to amend the guidance stating that you cannot lose benefit. But ‘guidance’ is just guidance, and unlike the law changes at a whim.

Mr Chuka Umunna (MP for Streatham) (Lab)

"Whether or not JSA claimants could lose their benefit if they refuse to accept job offers carrying the employee shareholder status was an obvious question. I first asked it in November [2012], when the Government ignored it. I repeated it, and the Government said that they could not lose their benefit. When they were mauled on the point in the other place, they effectively admitted that they could. In order to get the proposal through in the face of opposition from several former Conservative Cabinet Ministers, the Government had to come to the House last week and agree to amend the guidance for Department for Work and Pensions Jobcentre Plus advisers to state explicitly that a jobseeker cannot be mandated to apply for an employee shareholder job."

3) If you have been unemployed, is it really an option to refuse to take an ‘employee shareholder’ job? For many people it is not:

John McDonnell (MP for Hayes and Harlington) (Lab)

"There are more than 2.5 million unemployed, and it is rising. People are desperate for work and will do anything they possibly can to find a job. The pressure to take the shares or perhaps lose the job—that informal pressure—will ensure that this is not voluntary. It is like putting food on a plate in front of a hungry person and saying that it is voluntary to eat it."

Another step eroding employment rights in Britain, when according to the OECD we already have close to the weakest employment rights in the developed world:

http://www.oecd.org/employment/emp/oecdindicatorsofemploymentprotection.htm

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Rip-off News round-up. Our pick of the last week's media (Thu 29th August)

Furniture and carpet retailers investigated over bogus “bargain” claims

Carpetright and ScS are among six chains accused of inflating prices for short periods in order to mislead shoppers into believing they are getting a bargain during sale periods. Typically, just 5% of products were sold at the artificially inflated reference price, while a significant number of products were found to have never been sold at that price level. GUARDIAN

Employers who pay below minimum wage to be actively named and shamed, at last

Minister says the current system of issuing financial penalties, without naming the offending employer, has not sufficiently deterred companies from underpaying staff. The policy could embarrass hundreds of companies which pay below the minimum wage of £6.19 for people over 21. In the last tax year HM Revenue & Customs, which enforces minimum wage laws, found 736 employers who were paying staff too little, leading to the recovery of £3.9m in unpaid wages for more than 26,500 workers. Since 2011, when rules were first relaxed to allow officials to name and shame the worst offenders, just one company – a hair and beauty salon in Leicester – has been exposed. GUARDIAN

Police called in over alleged fraud by Serco staff

A government audit has shown that some Serco staff were recording prisoners as having been ready for court when in fact they were not. This data is regarded as a key performance measure for the £285m contract with Serco that could determine whether or not it is terminated. Last month the Serious Fraud Office launched an investigation into potential overcharging by tens of millions of pounds by the private security company G4S on a £700m contract for the electronic tagging of offenders. GUARDIAN

Private patients 'paying too much' through lack of competition

Most patients in UK private hospitals are paying more than they should for treatment because of a lack of local competition, says the Competition Commission. More than 100 private hospitals around the country are in areas with little rival healthcare provision, and many of these hospitals are owned by three major groups. The Competition Commission said it believed that the lack of local choice pushed up health insurance premiums for all patients. BBC NEWS

New rules mean fraudsters could be "tipped off" about inspections by trading standards officers

The proposed legislation includes a plan which would require officers to give a warning of at least two days for routine inspections, and explain the reason for the inspection. The government says that this is part of a policy to reduce the burden of regulation on businesses. However, Andy Foster, of the Trading Standards Institute, said: "the only people that gain from this are the fraudsters and the conmen". He said fraudulent businesses, such as counterfeiters, would be able to get rid of evidence before inspectors arrived. INDEPENDENT

Workless households at record low, says ONS

A workless households is one where no adult aged 16 to 64 is in work. The Office for National Statistics said there were 3.5 million such households in the UK between April and June this year, about 17.1% of all households including a working age adult. This was down from 3.7 million, or 17.9%, a year earlier. The highest percentage of workless households was in north-east England. But Stephen Timms, Labour's shadow employment minister, said: "Underemployment is at record highs, long-term unemployment is at its highest level for 17 years, the number of young people out of work is edging back towards a million, and millions are working harder for less. It is becoming harder and harder for millions to make ends meet." BBC NEWS

Help To Buy scheme will create another house price bubble, warn banks

A body representing some of Britain's biggest banks has warned the government Help to Buy scheme could create a bubble.  House prices could rise more than 11% in three years due to government stimulus, according to a report by the Intermediary Mortgage Lenders Association. The new housing bubble will also make life even more difficult for those trying to buy their first home. Lenders say the government's Help to Buy scheme, which is designed to allow more people to buy property, could easily push average house prices up to £180,265 by the end of 2016. TELEGRAPH

Energy bills set to be 'simple and fair'

By the end of this year each supplier will offer no more than four core tariffs for electricity and four for gas. All will have a standing charge and a singe unit rate - rather than several. This will dramatically slim down the previous tariff ranges where individual suppliers offered hundreds, if not thousands, of tariff types. But consumer champion Which? says this doesn’t go far enough.  They argue that the big energy firms conceal their true profitability within their parent companies. Which? wants OFGEM to require energy businesses to separate their retail/supply operations from their "upstream" generating divisions. Which? said: "We want the Government to ring-fence energy supply from generation businesses to increase confidence that there is effective competition in the energy market.” TELEGRAPH

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Badger cull: government promises it will be safe, humane and effective

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Graphs at a glance: Are cuts to incomes and services really necessary? Are Britons really too expensive for Britain?

In August 2013 the Office for National Statistics (ONS) revised the second quarter growth figure from a spongy 0.6% to a strident 0.7%. This allowed George Osborne and the Tories to trumpet that the economy was "moving from rescue to recovery". Recovery will happen eventually, maybe sooner, maybe later. 

But just as it is hard to say whether the man running in front of a raging bull is leading it or being chased by it, it will be hard to say what role the Chancellor's policies have in our economic recovery.

The banker induced economic crisis, like all busts and all booms, is transitory. Governments are using a transitory crisis to inflict permanent pain including cuts to pensions, pay and benefits, the proliferation of 'zero hour contracts', and changes to employment law eroding workers' rights. What we sacrifice in the bad times will not be returned to us in the good.

It is not because our economy can't afford the costs of health, education, pensions, workers rights etc. While the banker induced crisis knocked us back for awhile, the medium term GDP forecast shows a very healthy growth trend (see graph of government forecasts below). 

The economy is strong enough to support us. The Credit Crisis is being used as cover to increase inequality.

The underlying reason we ordinary Ripped-off Britons are becoming too expensive is that our share of our nation's wealth is being reduced. The national pie is getting bigger but our share is being cut down faster:

The TUC report, from which this graph is taken, explains:

1. 1961 to 1981: during this period the wage share was relatively high (always above 58 per cent) and income inequality was relatively low (Gini always below 0.28).
2. 1982 to 1987: over this six-year period, the wage share fell below 58 per cent and income inequality grew rapidly (with the Gini rising from 0.26 to 0.31).
3. 1988 to 2010: during this period the wage share was relatively low (between 51 and 56 per cent) and inequality relatively high (always above 0.32)."

The Nation has the money to maintain pensions and services. However, those who hold the ladle, those in government and in the company boardrooms, choose to serve themselves more by giving the rest of us less. If the head of a household decides to cut the milk-money from 5% to 3% of household income, then milk becomes unaffordable not because people drink more milk but because the share going to milk has been cut.

We are bamboozled into letting go of our rights as an act of "we are all in it together" solidarity to help the nation recover from the banking crisis. But we will not easily recover those rights when the recovery comes. Even then we will be left with less salary, less pension rights, less workers' protections, less health and less education. All so that those with the most can take more. To be fair to the Tories this is not new - it's been happening for years.

http://topincomes.g-mond.parisschoolofeconomics.eu/#Database:

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Graphs at a glance: Are cuts to incomes and services really necessary? Are Britons really too expensive for Britain?

In August 2013 the Office for National Statistics (ONS) revised the second quarter growth figure from a spongy 0.6% to a strident 0.7%. This allowed George Osborne and the Tories to trumpet that the economy was "moving from rescue to recovery". Recovery will happen eventually, maybe sooner, maybe later. 

But just as it is hard to say whether the man running in front of a raging bull is leading it or being chased by it, it will be hard to say what role the Chancellor's policies have in our economic recovery.

The banker induced economic crisis, like all busts and all booms, is transitory. Governments are using a transitory crisis to inflict permanent pain including cuts to pensions, pay and benefits, the proliferation of 'zero hour contracts', and changes to employment law eroding workers' rights. What we sacrifice in the bad times will not be returned to us in the good.

It is not because our economy can't afford the costs of health, education, pensions, workers rights etc. While the banker induced crisis knocked us back for awhile, the medium term GDP forecast shows a very healthy growth trend (see graph of government forecasts below). 

The economy is strong enough to support us. The Credit Crisis is being used as cover to increase inequality.

The underlying reason we ordinary Ripped-off Britons are becoming too expensive is that our share of our nation's wealth is being reduced. The national pie is getting bigger but our share is being cut down faster:

The TUC report, from which this graph is taken, explains:

1. 1961 to 1981: during this period the wage share was relatively high (always above 58 per cent) and income inequality was relatively low (Gini always below 0.28).
2. 1982 to 1987: over this six-year period, the wage share fell below 58 per cent and income inequality grew rapidly (with the Gini rising from 0.26 to 0.31).
3. 1988 to 2010: during this period the wage share was relatively low (between 51 and 56 per cent) and inequality relatively high (always above 0.32)."

The Nation has the money to maintain pensions and services. However, those who hold the ladle, those in government and in the company boardrooms, choose to serve themselves more by giving the rest of us less. If the head of a household decides to cut the milk-money from 5% to 3% of household income, then milk becomes unaffordable not because people drink more milk but because the share going to milk has been cut.

We are bamboozled into letting go of our rights as an act of "we are all in it together" solidarity to help the nation recover from the banking crisis. But we will not easily recover those rights when the recovery comes. Even then we will be left with less salary, less pension rights, less workers' protections, less health and less education. All so that those with the most can take more. To be fair to the Tories this is not new - it's been happening for years.

http://topincomes.g-mond.parisschoolofeconomics.eu/#Database:

Read More

Rip-off News round-up. Our pick of the last week's media (Thu 22nd August)

David Cameron condemned over ‘ridiculous’ reforms to the £2bn lobbying industry

The head of the Commons committee scrutinising David Cameron’s flagship law to end Britain’s lobbying scandals called it a “useless dog’s breakfast” and said the Government should urgently postpone its current fast-tracked progress through Westminster. Research published last month by the Association of Professional Political Consultants (APPC) showed ministers in the Department for Business held 988 meetings with lobbyists in 2012. But, under the new law, just two were with consultant lobbyists who would have been obliged to declare the meetings. INDEPENDENT

Jeremy Hunt plans sale of confidential patient medical records to private firms

Confidential medical records may be offered to private companies for as little as £1, according to plans drawn up by officials. The new General Practice Extraction Service will consolidate NHS patient records sent to a central database by GPs around the country. The project has been described by campaigners as an "unprecedented threat" to medical confidentiality. The records will be anonymised but will include details of medical conditions. Private firms such as Bupa are able to purchase the records for research by applying to the Health Service. DAILY MAIL

Credit card protection compensation package set to total £1.3bn

Around 7 million people are set to share up to £1.3bn in compensation after 13 high street banks and credit card companies agreed to offer redress for mis-sold credit card and identity theft protection. They contracted card insurer CPP to sell the policies. The watchdog criticised them for promising customers up to £100,000 of insurance cover for their cards - something they did not need because they were already covered by their banks. GUARDIAN

Average earners 'will be £1,500-a-year worse off' under the new flat-rate state pension

Someone earning £26,000-a-year with a full employment record could lose out to the tune of £29-a-week when the new single-tier state pension is introduced, the TUC has claimed. The report says that anyone with a long working history is likely to lose out, sometimes by as much as £2,000 a year. The second state pension will be abolished when the new single-tier pension begins in April 2016. But the government said the changes will make most people better off. The Trade Unions support the principle of the single-tier pension, but want it to be raised from the current notional level of £144 a week. DAILY MAIL

Worst UK pension annuity providers named: Scottish Widows, Clerical Medical and Royal & Sun Alliance

Britain's worst pension providers have been named for the first time in official tables that reveal how some insurers are paying annuities 30% below the best deals on the market. Scottish Widows and Clerical Medical, part of the government-backed Lloyds Banking Group, have emerged as the worst providers of retirement incomes for the mainstream market. Many savers in pension schemes are unaware and not told that when they retire, they can shop around with the pot of money they have accumulated. GUARDIAN

Hovis bakery workers vote to strike over zero-hours contracts

The Bakers, Food and Allied Workers Union (BFAWU), whose members make up 230 of the 357 employees at the Hovis bakery, said agency workers had been brought in almost immediately after the redundancy of nearly 30 workers in April. It said those workers were on contracts which did not specify set working hours and gave limited guarantees on conditions. GUARDIAN

SSE halts cold-calling after record fine

Scottish & Southern Energy has axed all cold calling by telephone sales staff just months after being fined £10.5 million by regulators for "prolonged" mis-selling. Will Morris, SSE's group MD, said: "Nobody likes receiving a sales call out of the blue and so we are stopping it. It doesn't matter that other energy companies still do it, or other industries for that matter, cold calling is not something that a company like SSE - committed to providing an excellent customer experience - should be doing any longer." TELEGRAPH

Male bonuses double those of women

Male managers' average extra payments were £6,442 last year compared with £3,029 for women. The CMI said their salaries were already almost 25% higher than women's. Its study, of 43,000 managers, showed that men would earn £141,000 more in bonuses over a lifetime. At more senior levels, the pay gap for both basic and bonuses, increased. Women directors' average bonus is £36,270, while men receive £63,700. Mark Crail, from salary specialists XpertHR who assisted the study, said "While women are generally getting lower bonuses than men, especially at senior levels, they may be entering occupations where there is less of a culture of bonus payments. The question for employers is why that's the case." BBC NEWS

The cost of bringing up a child has risen to £148,000

The report, co-funded by the Joseph Rowntree Foundation charity, says costs have risen by 4% over the last year. At the same time, it says the value of benefit payments fell in real terms. But the government said it was helping families by cutting income tax for 25 million people. BBC NEWS

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Graphs at a glance: how Britain withdrew from manufacturing industries, and financial services failed to take up the slack

This fascinating graph from a report by the Open University and Manchester University, Rebalancing the Economy (Or Buyer's Remorse), illustrates the decline of manufacturing in Britain:

More interesting than the 24% coming from "low-cost" countries (India, Turkey, Eastern Europe) in 2010, is the 40% coming from "high-cost" Western Europe. It is this 40%, not captured by cheaper labour costs,  that shows Britain's decision to voluntarily withdraw from manufacturing. When banks are in trouble the government pours out limitless rescue money - when manufacturing needs support the public purse is tightly shut. Using goods and services from overseas is an inevitable and generally positive result of globalisation. But, as the report observes: 

"It is of course true that we live in a world in which the manufacturing sectors of all high income countries are increasingly dependent on imported components and assemblies. But in the UK, the propensity to import is much higher, no doubt because of the reliance on foreign owned assemblers operating in global systems: in British machinery and vehicles 50% of intermediate purchases are imported as against just 30% in Germany where the propensity to import is much lower"

For those lefties who want to blame the Tories for the withering of manufacturing, the following graph from the same report exposes the Labour governments dismal record under Tony Blair. As the report states: 

"the British economy boomed from 2002-07 but there was no cyclical upturn in British manufacturing output as there had been in the general economic recoveries of the late 80s and 90s."

OECD Figures

The impact is evident in this graph from a TUC report of Gross Value Add (GVA), which shows:

"trends in the share of each industry in total gross value added (GVA) between 1997 and 2009. The largest shifts over this period are the share of production industries (basically manufacturing plus the extractive industries), which falls from around 23 per cent to 15 per cent of GVA over the period, and financial and insurance (which rises from five per cent in 2001 to 10 per cent in 2009)"

And for those righties who claim Britain's financial services, with its stonking growth in profits, grew to take up the slack from declining manufacturing employment, this data from the Rebalancing the Economy (Or Buyer's Remorse) report exposes the lie. Financial Services employment has grown very little. 

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Graphs at a glance: how Britain withdrew from manufacturing industries, and financial services failed to take up the slack

This fascinating graph from a report by the Open University and Manchester University, Rebalancing the Economy (Or Buyer's Remorse), illustrates the decline of manufacturing in Britain:

More interesting than the 24% coming from "low-cost" countries (India, Turkey, Eastern Europe) in 2010, is the 40% coming from "high-cost" Western Europe. It is this 40%, not captured by cheaper labour costs,  that shows Britain's decision to voluntarily withdraw from manufacturing. When banks are in trouble the government pours out limitless rescue money - when manufacturing needs support the public purse is tightly shut. Using goods and services from overseas is an inevitable and generally positive result of globalisation. But, as the report observes: 

"It is of course true that we live in a world in which the manufacturing sectors of all high income countries are increasingly dependent on imported components and assemblies. But in the UK, the propensity to import is much higher, no doubt because of the reliance on foreign owned assemblers operating in global systems: in British machinery and vehicles 50% of intermediate purchases are imported as against just 30% in Germany where the propensity to import is much lower"

For those lefties who want to blame the Tories for the withering of manufacturing, the following graph from the same report exposes the Labour governments dismal record under Tony Blair. As the report states: 

"the British economy boomed from 2002-07 but there was no cyclical upturn in British manufacturing output as there had been in the general economic recoveries of the late 80s and 90s."

OECD Figures

The impact is evident in this graph from a TUC report of Gross Value Add (GVA), which shows:

"trends in the share of each industry in total gross value added (GVA) between 1997 and 2009. The largest shifts over this period are the share of production industries (basically manufacturing plus the extractive industries), which falls from around 23 per cent to 15 per cent of GVA over the period, and financial and insurance (which rises from five per cent in 2001 to 10 per cent in 2009)"

And for those righties who claim Britain's financial services, with its stonking growth in profits, grew to take up the slack from declining manufacturing employment, this data from the Rebalancing the Economy (Or Buyer's Remorse) report exposes the lie. Financial Services employment has grown very little. 

Read More

Debt-fuelled consumers and expensive houses drive British recovery

 

SOURCE REUTERS: Debt-fuelled consumers and expensive houses drive British recovery

Economists are now cautiously optimistic about Britain's growth prospects, but they warn that the recovery looks dangerously reliant on consumer demand and is a far cry from the export-led growth that the government, in the shape of finance minister George Osborne, had previously aimed for. The most recent gains in British economic activity appear to be linked to two factors that helped cause the last global financial crisis - debt-fuelled consumer spending and higher house prices. Households have been able to raise spending in the face of falling real take-home income by cutting into savings and easier access to credit.

SOURCE GUARDIAN: No, this is not the road to recovery. It's the road to Wongaland
Before becoming chancellor, George Osborne provided a sound analysis of the British economy. In his Mais Lecture of February 2010, he said: "The overhang of private debt in our banking system and our households weighs heavy on future prosperity." But far from pursuing a "new economic model" based on investment, savings and exports, it's back to the old inflate-the-housing-market-and-boost-consumption meme – but this time with a high-debt, low-wage economy. That is the road to Wongaland.


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How companies use inter-country ruses to dodge tax

Companies dodge tax like rats dodge peckish weasels. Which at first glance is not unreasonable. But when it comes to tax the weasel has been hamstrung by tax legislation carefully designed by governments around the world to be feeble and loophole ridden. 

Governments simultaneously collude and compete with one another to provide gaps that expensively advised companies can drive their earnings through. Providing highways and byways for companies like Amazon, Google and Starbucks to shift UK profits to low tax countries thereby comprehensively dodging UK tax. 

One such gaping loophole is to finance a company with debt instead of equity. An example of this is provided in a report by Richard Murphy, the tax campaigner, on the devices used by Npower to dodge paying tax in the UK. 

Npower is one of the ‘big six’ energy providers in the UK, and is a subsidiary of the German company RWE Ag. As a wholly owned subsidiary, you may have thought that RWE puts money into Npower, and takes a return in the form of dividends paid from Npower’s profits in the UK. Profits on which tax has been paid to the UK Treasury. 

However, in April 2013 the NPower CEO admitted to a House of Commons committee that his company had paid no Corporation Tax in 2009, 2010, or 2011. According to Richard Murphy’s report one way Npower avoids tax is by executing a manoeuvre involving a ladder of snakes linking the tax laws of the UK, Malta, and Germany.

a)      *UK is pretty blind when it comes to deducting interest payments from profits. (Not just for companies, but even from ordinary Britons doing ‘buy to let’, who are able to deduct mortgage interest from their rental income before paying income tax).

b)      **Malta has a sensible corporation tax rate of 35%. However, when profits are paid as dividends to someone outside Malta the effective tax rate is reduced to between 5% and 10%. A pretty transparent device for providing tax dodging services, while still taxing its own local Maltese companies at 35%.

c)      ***Germany does not impose tax on dividends received from an overseas subsidiary.

It’s not just the UK that gets stiffed by the jigsaw puzzle of inter-country tax rules. According to a report by Bloomberg the troika of Ireland, Netherlands and Bermuda provided a ready route for Google to minimise its taxes:

"Google Inc. cut its taxes [payable in the USA] by $3.1 billion in the last three years using a technique that moves most of its foreign profits through Ireland and the Netherlands to Bermuda. Google’s income shifting helped reduce its overseas tax rate to 2.4 percent, the lowest of the top five U.S. technology companies by market capitalization."

As HMRC tell us ordinary Britons every year, "Tax doesn't have to be taxing". A classic double-entendre:

• Meaning 1 for ordinary Britons: It isn't hard, just pay your tax.
• Meaning 2 for multinationals who can pay tax consultants: You don't need to be taxed.

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Rip-off News round-up. Our pick of the last week's media (Thu 15th August)

UK wages decline among worst in Europe

UK average hourly wages have fallen 5.5% since mid-2010, adjusted for inflation. In 2009, the average public-sector worker earned about £16.60 per hour, which dropped to about £15.80 in 2011, the IFS said. Meanwhile, hourly pay for private-sector workers in 2009 was just over £15.10 and dropped to about £13.60 in 2011. Across the European Union as a whole, average wages fell 0.7%. Only Greek, Portuguese and Dutch workers have had a steeper decline in hourly wages, the figures showed. The GMB union said "Employers paying low wages get taxpayer subsidies in the form of tax credits to assemble a workforce for them to make decent profit margins." BBC NEWS

Serious Fraud Office admits losing thousands of documents linked to BAE investigation

The Anti-fraud unit says last year it accidentally sent 32,000 pages obtained as part of investigation into defence firm to the wrong person. 3% of the documents have not yet been recovered. The documents had been compiled during a six-year investigation into allegations that BAE had paid bribes around the world to secure lucrative arms contracts. GUARDIAN

US fast-food workers in vanguard of growing protests at 'starvation' wages

Dozens of profitable Wall Street-listed fast food and retail chains are being rocked by unprecedented workforce- and consumer-led protests. The one-day protests struck not only McDonald's, Wendy's and KFC but also more expensive retail stores such as Nike, Macy's and Victoria's Secret. Last month McDonald's made headlines after it published a guide budget for employees living on the minimum wage – a gesture that backfired after the firm's own calculations showed survival on what it paid was only possible with a second job or if you live without a food budget or heating. GUARDIAN

Official youth unemployment nudges 1m as think-tank claims it's more like 1.3m - and HALF have never done a day's work

The so-called claimant count fell by 29,200 in July - the ninth consecutive monthly drop - to 1.4million, the lowest since February 2009. Total unemployment, including those not eligible for benefit, fell by 4,000 in the quarter to June to 2.5million. But unemployment among 16 to 24-year-olds increased by 15,000 to reach 973,000, while the number of people out of work for more than two years rose by 10,000 to 474,000, the highest since 1997. DAILY MAIL

Gas and electricity bills could rise by £140 before winter (despite energy companies making £3.3bn profits since last election)

Labour said the figures show that David Cameron has not done enough to crack down on profiteering by gas and electric firms. According to Ofgem’s latest Electricity and Gas Supply Market Indicators, the typical domestic dual fuel bill now stands at £1,420 a year, compared to £1,105 in May 2010 when David Cameron became Prime Minister. DAILY MAIL

Annuities are 'biggest gamble of your life'

Britain's biggest insurers are accused of ripping off hundreds of thousands of pensioners who take the "biggest gamble of their life" buying an annuity. The industry has been criticised for using a range of hidden fees and charges to generate even higher revenues. Some 400,000 pensioners buy an annuity every year. Some insurers are making nearly £30,000 from a £100,000 pension pot. TELEGRAPH

Millions lose out as only one savings account matches inflation rate

The scale of the squeeze on Britain's savers was laid bare tonight as it emerged only one savings account in the whole of the country is offering a high enough interest rate to match the rising cost of living. Last year some 227 out of 1,092 products on the market were offering inflation-matching or beating rates. Bank of England Governor Mark Carney admitted last week that interest rates could remain at rock bottom until 2016 in a bid to kick-start the economic recovery. TELEGRAPH

Rail fares 'to rise by 4.1%' in England as unions protest

The rules allow fares to go up by an average of inflation - as measured by the retail prices index (RPI) for July - plus 1%. Train companies are also allowed to vary regulated fares by up to 5% above the average 4.1% rise, but fares that go up by more than the average must be balanced by others that rise by less or fall. Train operating companies in Scotland have their prices capped at the rate of inflation, while there is no rise planned in Northern Ireland and the Welsh government has yet to decide. Meanwhile, the TUC organised demonstrations at almost 50 stations around the country. BBC NEWS

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"Go home or face arrest"... Ever wondered what's on the other side of that van?

SOURCE INTERNATIONAL BUSINESS TIMES: UK Tax Avoidance: Top 10 Giant Companies Dodging Corporation Tax

GUARDIAN: 'Go home' campaign creating climate of fear, say rights groups
Critics say the Home Office campaign targeting illegal immigrants will generate hostility and intolerance.The "Go home" van scheme, which was trialled for one week, has been widely criticised by religious groups, trade unions and politicians across the political spectrum. The business secretary, Vince Cable, labelled it an offensive stunt and the Ukip leader, Nigel Farage, described the tone as "nasty, unpleasant, Big Brother". Earlier this week the campaign group Liberty drove a van round the same six boroughs with a billboard on the side reading: "Stirring up tension and division in the UK illegally? Home Office think again."

OUR RELATED STORIES:

Liebrary: Do tax deals with tax havens deal with tax dodging? Here's how the UK's hoped for £3.2billion tax haul from the UK- Switzerland deal disappeared

Liebrary: Is Corporation Tax being cut to make us more competitive? Or is there another reason?

In numbers (+ a cool animation): The trillions in global tax evasion and money laundering

Tax Dodging in Britain is a government regulated sport

BROWSE ALL OUR TAXATION STORIES AND CARTOONS

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Graphs at a glance: see which government departments spend more than half their total staffing budget on consultants: it's outsourcing in all but name

If you thought the only way to outsource public services was to hand them over wholesale to Capita and G4S you'd be wrong. For some years government departments' use of consultants and interim staff has de-facto outsourced central government functions to a staggering degree. 

This has actually been most stunning in the period before the current Conservative-Liberal coalition government, a time when Labour were in power. Maybe the current coalition government no longer needs to hire so many consultants for hospitals, schools and prisons. After all the hospitals, schools and prisons themselves are being handed over wholesale to the consultants, not to advise on but to own and extract profits from. Even if the new owners do hire consultants, they aren't on the government's books.

Data below is from the National Audit Office's (NAO's) report "Central government's use of consultants and interims". Here we found a truly gob-smacking graph showing the cost of consultants was 40% or more of total staff costs in the Departments of Transport, Education, Energy, and the Home Office. 

What is a minister to do? Given the choice of public servants serving the public, or a consultant hand-picked, hired, paid, bonussed, and under threat of being fired by the minister himself?

Is it a coincidence that the departments most enthusiastically shovelling public money into private purses, Transport; Energy; Education; Health, are the heaviest users of consultants?

 
(The NAO report explained that "Figures provided for HM Treasury are based on gross spending on consultants in 2009-10. In 2009-10 HM Treasury recovered over 90 per cent of its gross spending by re-charging financial institutions. HM Treasury net consultancy costs as a percentage of total staff costs in 2009-10 were approximately 7 per cent").

Interim staff (also subject to hire and fire by their political masters) are not included in the above figures. Interims and Consultants are intended to fill gaps in the capability of the government departments themselves.To fill these gaps you would have thought they would be high-fliers steeped in decades of the deep experience lacking in the civil service? Actually, the official Cabinet Office guidance shows precisely how much experience they need:

• Junior Consultant: minimum of 2 years experience
• Consultant: minimum of 3 years experience
• Senior Consultant: minimum of 5 years experience

Of course a twenty-something Consultant wielding his 3 years of experience costs much more than the senior public servant he pushes around. So the Department of Education's 50% of money would have employed far less than a numerical equivalent 50% of consultants. 

In its annual report for 2012, the National Audit Office took credit for saving £335 million in 2012 from the cost of government employed consultants and interim staff. This was by far the largest saving claimed by the NAO, bigger even than its claim for saving £253 million from notoriously incompetent Ministry of Defence procurement. While consultancy spending by government has declined since 2010, ominously the Management Consultancies Association remains optimistic for the future:

"As expected, the consulting industry as a whole saw an increase in public sector work following two years of dramatic decline. The MCA [Management Consultancies Association] says that future spending levels in the public sectors are likely to be influenced by the outcome of the forthcoming spending review and the state of the economy at the time of the 2015 General Election. The fee income from public sector work remains 21 per cent lower than before 2010. "

At least the MCA reports a 21% drop in public sector fee income. Does a 21% cut sound a lot? Do the maths: 21% lower than 2010 still means more than £600 million a year spent on consultants. And the MCA is confident it is going back up!

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