How lobbying (probably) works: The Bureau of Investigative Journalism

By The Bureau of Investigative Journalism

Following four months of research the BIJ's financial lobby team gained a rare insight into lobbying's inner workings. But what does lobbying look like? The video shows the wheeling and dealing as it happens. Is it fair? Is it democratic? You decide.

With a £93m lobbying war chest and cosy relationships with regulators and members of parliament this is a powerful force. 

See the data, read the methodology, and pore over the evidence the Bureau has amassed of the size and scale of the financial services lobbying machine...

• Revealed: The £93m City lobby machine 
• Streets paved with gold: The council (City of London) that works for banks 
• Analysis: Political donations by companies hit shareholder returns 
• Government’s new lobbying proposals slated by MPs
• How the Bureau calculated the size of the finance lobby
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Rip-off News round-up. Our pick of the last week's media (Thu 9th August)

Savers warned over sneaky accounts that promise loyal customers a golden return

Savings accounts misleadingly named 'Gold', 'Premium' and 'Royalty' are tricking savers into deals paying  rates of less than one per cent. DAILY MAIL
("We tried naming the accounts 'rubbish', 'rip-off' and 'Duke of York' but nobody signed up," said one bank)

Financial Services watchdog chief Lord Turner had ethics role at £160bn 'terror scandal' bank Standard Chartered

There is no suggestion of wrong doing but Lord Turner's close ties with Standard Chartered are acutely embarrassing for the peer touted as a successor to Bank of England boss Sir Mervyn King. DAILY MAIL
("What? That he can't spot a major international crime happening right under his nose has now made him the clear odds-on favourite to get the Bank of England job," said Ladbrokes)

Surprise as economy boosted by £5 billion payouts by banks for their mis-sold PPI 
The financial regulator forced the banks to refund £13bn of mis-sold payment protection insurance. The first £5bn put back into ordinary citizens' pockets is doing more to boost Britain’s stuttering economy than the government's own initiatives, official and bank data show FINANCIAL TIMES
(The evidence strengthens the "Plan B" case to put more money into our pockets by reversing the government's "Plan A" cuts. When asked for a reaction to this coincidental and unexpected embarrassment a spokesman said "We should have to cut that regulator's budget even further")

Church of England sells News Corp shares in phone-hacking protest
Fears that Rupert Murdoch group has failed to learn corporate governance lessons prompt church to offload £1.9m stake GUARDIAN
(One dissenting bishop said "Bad decision. It's a good investment and they swore on the bible they'd mended their ways," according to a phone message intercepted by News Corp)

Top savings rates plunge as the Government’s £80bn gift to banks to kick-start lending hits savers

Last week the Government gave banks access to billions of pounds (again!) to lend to homeowners and small businesses. But savers are losing out as banks take advantage of cheap money and cut savings rates further. DAILY MAIL


RBS boss admits banks became 'detached from society'
Mr Hester added that while the banks had now largely fixed all their structural faults, they still had to return to putting customers first. BBC NEWS

Greek bank boss sent savings abroad months before his bank headed for insolvency

Dozens of wealthy Greeks, among them politicians, bankers and shipowners, have bought high-end properties in London in the past three years as they seek shelter from the country's deepening crisis. It's left millions of ordinary Greeks squeezed by tough austerity measures. CNN NEWS
(...but on the bright side it's kept property prices high in London and first time British buyers off the property ladder. We call it trickle-across)

Standard Chartered Bank accused of scheming with Iran to hide transactions

British bank named in scathing report by US regulators which claims the bank helped Iranian clients skirt US financial sanctions. GUARDIAN

Unpaid "slave labour" work schemes ruled lawful by High Court, but withdrawing benefits for not participating is unlawful
The judge says the government-backed schemes are lawful. But the rules for withdrawing benefits for those not participating were unlawfully applied. Way now open for tens of thousands of people docked benefits to be reimbursed. GUARDIAN
("This country has a long tradition of forcing people to work for nothing, and a shorter one of not bothering to turn up. Both are lawful" said the judge)

Lloyds online fraud chief admits £2.4m fraud

Jessica Harper took money over four years while head of fraud and security for digital banking at Lloyds Banking Group GUARDIAN

("No anti-fraud system is perfect. This is one fraud that just slipped through," said Ms Harper as she was led away)

Banks sell children sold short on their savings deals with gimmicks rather than robust rates

Instead of accounts that beat inflation, banks routinely provide savings accounts paying risible interest as low as 0.2  per cent after tax - but regularly feature free gifts such as tacky and insultingly worthless piggy banks. DAILY MAIL
(...and in other news the Federation Of Piggy Bank Manufacturers announced today their members will be offering high street savings accounts with every piggy bank)

Cap water prices and charge more to use a hosepipe: Former regulator says water reform must focus on price

A study by ex-Ofwat chief Sir Ian Byatt calls for a price cap to keep hikes in water bills at inflation or below. As part of the suggested reforms the industry needs to look at introducing a special tariff instead of imposing a hosepipe ban. DAILY MAIL

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Tax Dodging - how the 1% avoid and evade tax

Most of us have scant opportunity to dodge tax. Receiving salaries from our employers we are subject to Pay As You Earn (PAYE). The taxman takes his share of our earnings before we get a sniff of the money. 

We are never in a position to be tempted by tax advisors who see no profit in tempting us. Pretty much our only tax-dodging opportunity is paying our plumbers cash to evade VAT. Like children gazing through a toyshop window, tax dodging is something we see but can’t touch. 

But for those whose income is not pre-strained by HMRC – businesses and businessmen, the independently wealthy living on unearned income (dividends and capital gains), freelancers and contractors on screen and in suits – temptations to avoid tax together with the tempters and temptresses who will indulge you for a fee abound.

Our complaints about tax dodging are twofold:

1)      The nation is deprived of much needed revenues, which are made up by increasing taxes on the rest of us (increase VAT; abolish 10% band; freeze allowances) and by cutting services (NHS; Police; Armed Forces; Education; Research) and by delaying and cancelling investment (airplanes for our aircraft carrier; transport infrastructure; schools; hospitals).

2)      Much of the tax dodging is completely legal. This is characteristic of a Britain that chases the 99% of ordinary Britons mercilessly, while indulgently leaving legal loopholes for the 1% who can afford to pay for expensive advice. Loopholes that are by no means limited to tax avoidance.

By far the most popular tax dodge is to simply hide your money. A former Chief Economist of McKinsey, the global consultancy firm, estimates between US$21 trillion and US$32 trillion (1 trillion = 1,000billion) is deposited in hidden bank and investment accounts. According to the Economist newspaper the UK & Channel Islands is the biggest hidey-hole of hidden cash in Europe after Switzerland. And a recent investigation by the Bureau of Investigative Journalism uncovered a sustained lobbying campaign in the UK by British dependencies such as the Cayman Islands to protect their privateer status.

Hiding your money is like going on holiday. There are many tempting destinations, the only question is how best to get there. When hiding your money, how do you get the money from your legitimate account into your secret account without leaving a trail for the taxman to follow? Perhaps this explains why such ludicrous prices are paid for such dreadful art (as well as some good stuff)

• Say I have $100,000 in my high-street bank account that needs to go into hiding.
• I buy some Brit Art for $100,000 - perhaps half a glass of water, a neon light turning on and off, and a few small balls of squished blue-tac - from a dealer based in a tax haven (who therefore doesn’t have to account for the money received).
• Hey Presto! My high-street bank account is empty, I have an invoice to show HMRC explaining my 'expenditure', a few new consumable items for my office, and my Cayman account is replenished.

[Please let us have any other suggestions for other ways to make your money disappear into the offshore realm by adding them below to the Comments of this post, or email us at taxdodge@rippedoffbritons.com]

Hiding money like this is sort of illegal. “Sort of” because HMRC has bent over backwards to reach agreements with havens, including Switzerland, that legitimise hidden money while keeping the dodgers’ identities hidden.

More balefully fascinating than these disappearing tricks are the crude steps taken to dodge tax in full view of the taxman. It is not necessary for these dodges to be legal, they simply have to evade being illegal. Obey the letter of the law, or find the gaps. Saint Paul could have been the patron saint of tax advisors: “where there is no law there is no transgression” (Romans chapter 4, verse 15). As such, the steps of the taxation tango are designed to be circuitous and confusing. This does not imply they are elegant and sophisticated, but more brutish and short lived.

Short lived because deals like this are like mayflies. They are created to be legal, they enable you to dodge tax for a year or so, they are spotted by HMRC, they are made illegal and they expire. The tax advisers then create another short lived dodge earning them another round of fees. That’s how the tax advisers keep themselves profitably employed.

Tax dodges are there for a purpose: to allow the elite to dodge taxes everyone else has to pay. When scruffy contracting computer programmers cottoned on to setting up one-man companies to enjoy the dodges of the elite HMRC specifically introduced IR35 legislation to cut them out.

Tax dodges are not there for the likes of 99% of us. David Gauke, Exchequer Secretary to the Treasury, in his speech “Where next for tackling tax avoidance?” said:

“Tax avoidance is not a recent problem. In the fourth century AD, the Roman Emperor Valens had to make it illegal for individuals to sell themselves into slavery to avoid tax.”

You can be pretty sure it wasn’t the rich selling themselves into slavery, surrendering their freedom and their legal protections including from crucifixion (only permitted for slaves and foreigners). It would have been the last resort of the desperately poor. Gauke unintentionally (we assume) reminds us that even in the fourth century AD tax dodging by the 99% was not allowed.

We at Ripped-Off Britons are compiling a list of tax dodging tactics, which will continue to grow over the months and years. We will attempt to explain how the dodges work in simple terms.

For clarity and comment we are keeping each dodge in a separate post. Here are brief descriptions of our first ones (click through to see each dodge explained in simple terms):

The "K2 Scheme", for which David Cameron the Prime Minister condemned Jimmy Carr a comedian:

The dodge: Disguise employment income as a loan.

The benefit: Potential to reduce tax rate from 50% to 0.8%

The "Eclipse35" scheme, which uses beneficial tax treatment intended for investors in the film industry:

The dodge: Create a tax credit for interest paid on a loan.

The benefit: In the example case, GBP117 million tax credit shared between 289 individuals (on average just over GBP 400,000 each).

Cross tax-year & non-residence dodge:

The dodge: Create a capital loss just before 5th April, cancelled by an equivalent profit just after 5th April.

The benefit: Capital loss used to cancel out a capital gain in the earlier tax year. By becoming non-resident the capital gain in the later year is not taxable.

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Tax Dodge: Take your wages as a "loan"

The completely legal K2 tax dodging scheme, for which David Cameron the Prime Minister condemned the comedian Jimmy Carr, goes something like this:
  

·         The tax dodger signs an employment contract with an offshore company not subject to UK tax. There is a thriving industry that will set up an offshore company for you – we could give you a link, but we won’t. Ask your accountant if you can afford one.
 
·         The offshore company invoices the dodger’s clients for his services. For example, when a joker tells jokes on TV the offshore company will invoice the tv company. Being in a well chosen tax haven, the company pays no tax on this receipt of money.
 
·         The dodger takes money out of the offshore company in the following forms:

o   Minimal amount as salary

o   Maximal amount as a loan

·         He pays tax on the minimum salary.

·         For the loan, the Inland Revenue has an assumed interest rate. In July 2012 this is deemed to be interest at 4%.The Inland Revenue assumes that the taxpayer is receiving only the interest as taxable income.

·         The dodger pays tax on the interest only:  20% on 4% = 0.8% tax.

An example in real money of a K2 arrangement could be like this:

·         take a salary equal to your personal allowance, £8,105 at zero tax

·         take a loan from the company of £859,250.

·         The taxman deems that you pay interest on this at 4% = £34,370 (which happens to be the 20% band limit). You are taxed on this interest.

·         Pay tax on this £34,370 (notional interest) at 20%.

Which means using a K2 type dodge, on the “loan” of £859,250 you would pay £6,874 tax.   

An effective tax rate of 0.8% instead of the 50% income tax rate were the “loan” to be recognised as salary. 

HMRC makes no requirement on how quickly the loan should be paid back - so why bother.

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Tax Dodge: Capital gain and loss straddling tax year

PriceWaterhouseCoopers (PwC) contrived a tax avoidance plan, which the Court of Appeal threw out in July 2012. The plan depended on PwC’s client becoming non-resident in the UK by moving to Spain for five years, thereby no longer being liable to Capital Gains Tax in the UK. 

The way the tax plan worked goes something like this: Mr.H., by his commercial astuteness, incurred a taxable capital gain in excess of £10m in the tax year 2002-03. 

To explain in words:

·         On 31^st December 2002 H incurs a £10m capital gain that he wants to dodge in the tax year 2002-03. So he consults PwC on how to legally reduce his tax liability.

·         In February 2003, with the end of the tax year approaching, PwC sell him a plan:

o   On 29^th March 2003, H moves to Spain. He remains outside the UK for tax purposes for the next 5 years.

o   H enters into four transactions with a bank.

o   On 4^th April 2003 two of the transactions are completed resulting in H owing the bank £10m. This is in the tax year 2002-03

o   On 7^th April 2003 the remaining two of the transactions are completed resulting in the bank owing H £10m. This is in the tax year 2003-04

·         Overall, Mr H and the bank owe each other the same amount, and so are quits.

·         But Mr.H’s £10m loss is in tax year 2002-03, and so PwC claimed he could write it off against his original £10m capital gain made in December 2002

·         And Mr.H’s £10m gain in tax year 2003-04 is when he was ‘non resident for tax purposes’, and so PwC claimed he was not liable to capital gains tax.

Being "non-resident for tax purposes" doesn't mean giving up pub lunches and grey skies entirely. So long as you aren't in the UK more than 183 days in a tax year, nor for an average of more than 91 days over 4 years, then you are non-resident as far as HMRC is concerned. Which is fine for those who can afford a second home overseas and don't have to turn up to in a UK office or factory every day.

In the end the courts ruled against this. But an accountancy firm as illustrious as PwC thought it was worth a pop plus appeals.

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Rip-off News round-up. Our pick of the last week's media (Thu 2nd August)

British Bankers Association was 'warned weekly' about Libor manipulation, says former rate-compiler

The British Bankers Association (BBA) was given weekly warnings in 2008 that the process of setting the Libor interest rates was being distorted. BBC NEWS

(On each occasion the BBA acted with the determination it is famed for. It did nothing)

London 2012 Olympics empty seats row: Locog calls in the army (again) 

Our soldiers are brought in to fill empty seats. Logoc refuses to rule out seeking G4S volunteers if problem persists. GUARDIAN

(Yes, you heard that right. G4S's reward for cocking up could be thousands of free seats at London 2012. But will they turn up?..)

Government offers banks £80bn 'carrot' of cheap money in latest bid to unfreeze lending

The Funding for Lending scheme (FLS) lends only to banks at low interest rates, on the condition they pass it on in the form of cheaper loans and mortgages. But much of the new lending may end up in the pockets of already credit-rich and equity-rich borrowers, such as buy-to-let landlords. DAILY MAIL

("The only way to get us out of this mess is to get the banks to offer the sort of cheap credit that got us into this mess" said a highly qualified expert Treasury spokesman)

 

The Premier League helped to fund the public prosecution of a man accused of importing cut-price satellite decoder cards
Several pubs have been pursued for finding cheaper ways to show games to their customers. It raises questions about how UK prosecutors are funded and the impartiality of their decisions. FINANCIAL TIMES

(...questions no pub quiz in Britain would even bother asking. The answer's too easy.)


British Gas urged to cut prices after 'shocking' rise in profits

Experts claim price rises for residential customers account for 23% increase in British Gas's profits in first six months of year. GUARDIAN
(Is it cheaper for us to burn our own money yet?)

Don't buy milk from Morrisons, Aldi, Lidl or Londis, say dairy farmers

Milk farmers say supermarkets are driving them to bankruptcy after cut to 'farm gate' price from 30p to 25p a litre GUARDIAN

(Supermarkets can't abide loosening the firm grip of their warm hands on the udders of our farmers)

FSA will force banks to ensure customers that sign up to "added extras" current accounts can actually claim the extras 

Banks have been caught selling insurance, within these fee-paying packaged accounts, to people who can never claim on it. Insurance products include worldwide travel insurance, international mobile phone insurance, comprehensive AA breakdown cover, and home emergency cover. GUARDIAN
(...but still no sign of insurance against being ripped off by banks salesmen. Now that's something we know we ALL need)

Thousands of juniors start jobs in NHS 'killing season' 
Thousands of junior doctors will start new jobs on 1st August, known in medical circles as Black Wednesday, because death rates rise by six per cent. TELEGRAPH

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Opinion: Bailed-out banks facilitate $21tn offshore cash hoard

By Nick Mathiason, Bureau of Investigative Journalism

Investigative economist James Henry exhaustively trawled through financial information held by the IMF, World Bank, Bank for International Settlements, central banks and national treasuries to come up with the most definitive report ever written on the super-rich and offshore wealth.

Henry’s Price of Offshore Revisited report, commissioned by Tax Justice Network (TJN), shows:

• between $21 trillion and $32 trillion of financial assets is owned by High Net Worth Individuals in tax havens. This does not include real estate, art or jewels.
• a conservative 3% return on that $21tn taxed at 30% would generate $189bn – a figure easily eclipsing what OECD industrialised nations spend on overseas development aid.
• the top 50 private banks collectively managed more than $12.1tn in cross-border invested assets for private clients, including their trusts. This is up from $5.4tn in 2005.
• fewer than 10 million members of the global super-rich have amassed a $21tn offshore fortune. Of these, less than 100,000 people worldwide own $9.8tn of wealth held offshore.

Accompanying the Price of Offshore Revisited is a separate paper [co-written by this author]. It reveals that data used by individual countries to assess the gap between rich and poor is inaccurate. And as a result, inequality is far more extreme than policymakers realise.

This is because economists calculating inequality fail to include the vast majority of offshore cash in their findings. So the wealthy are far better off than the studies suggest.

In Inequality: you don’t know the half of it, eight of the world’s leading economists were asked whether offshore wealth was largely excluded from inequality studies. Ranging from the World Bank’s acting chief economist to academics at the Paris School of Economics and the Brookings Institute in the US, they all confirmed this was the case.

This is because the wealthy do not disclose their true incomes. They also rarely participate in surveys. Academics do compensate for non-participation but they admit, official data vastly underestimates the true picture.

Trickle up
Combined, the two papers published by Tax Justice Network end any notion that trickle down economics – the Thatcher/Reagan doctrine that suggests tax breaks for the rich benefits all society – works.

We already know that in the US between 1980 and 2010, incomes of the top 1% doubled and the top 0.1% tripled while the bottom 90% saw their incomes fall 5%. But the TJN studies show this wealth disparity would be statistically even worse if offshore cash is included in official studies.

Perhaps most tellingly, the reports bring into sharp focus how global banks – so-called ‘pirate banks’ – have enabled the super-rich to avoid unimaginable sums of tax while at the same time enjoying taxpayers cash through government bank bailouts. A true double whammy of dark proportions.

Some of these banks have been labelled ‘too big to fail’ following the financial crisis. But after the Libor scandal, HSBC’s key role in laundering Mexican drug cash and the subprime bank disaster, there is compelling evidence to suggest they are also ‘too big to be true’.

Which brings us to an issue that is fast troubling global financial regulators: the so-called ‘London disease’. It has not gone unnoticed that many of the financial scandals in recent years have a Square Mile connection. Never mind Libor, it was the London offices of AIG, Lehman Brothers and Bernie Madoff that helped destroy them. The JP Morgan and UBS rogue traders who lost billions were both London based.

The UK is also arguably the centre of the offshore world. It is one of the biggest private bank centres and Britain’s non-domicile tax rules allow the global super-rich to legally avoid taxes on their overseas income while residing here. In addition, many of the UK’s overseas territories and crown dependencies such as Jersey, Isle of Man, the Cayman Islands and the British Virgin Islands are major offshore centres. This perhaps explains why the British government, for all its rhetoric, has failed to clamp down on the shadow financial system.

It has taken the painstaking work of TJN’s Henry to bring to light the true price of offshore. That the IMF, World Bank or OECD has not done this work is troubling especially as their lack of effective oversight contributed to the economic crisis that has caused significant hardship for hundreds of millions of people.

A good way to atone is to start deploying their thousands of economists to implement measures that will introduce transparency to the financial system instead of policies that facilitate secret offshore hoarding by a tiny elite.

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David Cameron wants to turn the UK into a tax haven

$21 trillion (£13tn) worth of assets are being 'hidden' by a global super-rich to avoid tax. The recent report by the Tax Justice Network, penned by James Henry (a former chief economist at the consultancy McKinsey), got widespread coverage. George Osborne says it’s time to put a stop to it. David Cameron says it’s time we got a slice of that cake (actually, a bigger slice than we already have). We invited Richard Murphy to explain:

By Richard Murphy

Adviser to the Tax Justice Network and the TUC on taxation and economic issues. He is also the director of Tax Research LLP.

David Cameron seems to want to turn the UK into a haven for tax avoiders. At least we now know where we stand. In wooing French tax exiles, Cameron makes a mockery of democracy.

He promised to 'roll out the red carpet' to French businesses while attending the G20 summit in Mexico, saying in June 2012,

"If the French go ahead with a 75% top rate of tax we will roll out the red carpet and welcome more French businesses to Britain and they will pay taxes in Britain and that will pay for our health service, and our schools and everything else."

But hang on a minute. His chancellor said in March, "I regard tax evasion and indeed aggressive tax avoidance as morally repugnant". What's more, George Osborne pronounced himself "shocked" at the amount of tax avoidance in the UK. And yet, here's his boss saying the door's open to all and sundry French tax avoiders who want to set up camp in the UK.

As for the businesses these tax exiles own, let me assure Cameron that they will stay put in France, because that's where their markets are and in the days of the internet the business owner does not have to live over the shop – something Cameron and Osborne have not yet noticed. So we won't win there. And that's inevitable – look at the world's tax havens and you'll see that nothing but the pretence of money shuffling occurs in those places.

As a result Cameron's words are on this occasion, as on so many others, literally meaningless. In that case it is what Cameron's words imply that matters. Let me note a few more of them in that case:

"Every country sets its own tax rates, but I think in a world of global capital, in a world where we're competing with each other, in a world where we want to send a message that we want you to build businesses, grow businesses and invest, I think it's wrong to have completely uncompetitive top rates of tax."

Now that's really interesting, because this is the language of tax havens. It's places like Jersey, Cayman and the British Virgin islands who usually talk the language of tax competition that underpins Cameron's comments.

And, of course, it's tax havens such as Switzerland that exist to roll out the red carpet for tax exiles. They all do it by offering low tax rates – something the UK is also capable of doing through its generous tax residence rules and domicile rules. Perhaps it's no surprise that Philip Stevens of the Financial Times recently quoted a German official saying that the UK opting out of a European banking union would turn us into a "Greater Guernsey". Could it be that with these comments Cameron has confirmed that "tax haven UK" is the new plan that he and George are hatching?

Cameron is already trying to pick over the carcass of France. No doubt he'll do the same for Spain and Italy too, while Greek ship owners have always had a special place in British tax planning with their abuse of our domicile rule.

That domicile rule ensures that all those not born in the UK enjoy favourable tax treatment if they live here. It's an unfair prejudice and socially divisive. What more could you do to show how dedicated the UK is to increasing inequality by helping the wealthiest immigrants get richer while the rest head ever closer to the economic misery of poverty? And we know that house price inequality caused by wealthy immigrants to the south-east and London makes housing inaccessible to the vast majority in those areas.

That's what Cameron seems to want for us, speaking on the same day The Times, which has conducted its own investigation into tax avoidance, said:

"The British tax system is unfair. It charges the vast majority of people the basic rate of income tax, and expects them to pay. It asks a minority to pay higher rates of tax, and then invites them to avoid it."

That's right. And The Times has demanded that the tax system be changed. But if Cameron has his way he'll keep all the prejudice, bias, discrimination and abuse in place, and all for the purpose of undermining our international allies and EU partners in their efforts to balance their books and restore economic wellbeing.

Except it's even worse than that. What he's also said is he'll seek to undermine a decision that the people of France have democratically chosen. That's what tax havens do – they hold democracy in contempt. This all bodes ill for equality and for our hopes of diversifying the UK economy away from a finance industry dedicated to servicing transient wealth that holds the long-term residents of the UK in contempt.

All we can say in that case is thanks Dave: at least you've set out your true agenda.

This article first appeared in the Guardian.

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Rip-off News round-up. Our pick of the last week's media (Thu 26th July)

$21trillion (£13tn) worth of assets 'hidden' by tax dodging global super-rich 
A global super-rich elite had at least $21 trillion hidden in secret tax havens by the end of 2010, according to a major study by a former chief economist at the consultancy McKinsey. BBC NEWS

(Taxmen around the world want to know where it's hidden - and so do some former spouses)

UK economy on its knees as shock growth figures show disastrous 0.7% plunge in output
Figures fuel criticism that Chancellor George Osborne's austerity measures are choking off the recovery. The UK's economy is 0.3 per cent smaller than when the coalition came to power in the second quarter of 2010 DAILY MAIL
(We can't afford to see another job lost. Well, maybe one, Mr Osborne)

Four in ten Britons will cut back on food
In the coming months four in ten Britons will be forced to cut their food budget as households experience the tightest squeeze in living standards since the 1920s, says Which? TELEGRAPH

Payday lenders agree new rules, but they are only voluntary
Four trade bodies - representing 90% of the lenders - have committed to make fees and charges clearer and to give more protection to those in difficulty. But the rules are only voluntary, and one consumer group has described the new code as merely rebranding. BBC NEWS
(Meanwhile in some wonderful parallel universe somewhere they've made the repayment of gouging loans voluntary too.)

Renewable energy: Onshore wind subsidy to be cut by 10%
The Treasury is thought to have favoured a larger 25% cut in the taxpayer subsidy of green energy investment. BBC NEWS

(If you are a tree-hugging leftie, the cut is bad news. But a cut in the cut is good news! Yay! Or is it? Confused? The Big Six energy cartel isn't: they'll continue making whopping profits while the taxpayer (subsidy) or the customer (higher bills) bear all the risk and costs of green investment.)

First annual results of Measuring National Wellbeing Programme show teenagers and pensioners have key to happiness 
This is part of the government's attempts to develop an alternative measure of national performance to GDP. The Office for National Statistics published its first report on how happiness and anxiety levels vary according to factors including sex and ethnic group. Ministers deny it's a sneaky way to take people's minds off poor GDP performance. GUARDIAN
(What's the key, we asked the teenagers and pensioners? It's the pleasure of haranguing the rest of us for wrecking the economy and making them pay for it)

Paying a plumber cash in hand morally wrong, says Tory minister Gauke

Cameron, Clegg and Boris Johnson all admit paying tradesmen cash in hand. If it’s proven you’re doing it to dodge the VAT you can be prosecuted. But David Gauke, exchequer secretary, denied having paid cash himself to a tradesman to gain a discount. "I've never said to a tradesman: 'If I pay you cash, can I get a discount?'" he told BBC's Newsnight. GUARDIAN

("...I prefer to use hand signals instead" he added)

Trade minister and former HSBC boss Lord Green admits 'regret' over HSBC being caught by US Senate laundering money for rogue states, terrorists and drug lords.
But he refused to provide details of his involvement. DAILY MAIL

'Lack of evidence' that popular sports products work

Review of Lucozade Sport: "the quality of the evidence is poor, the size of the effect is often miniscule and it certainly doesn't apply to the population at large who are buying these products."

Review of Maxnutrition food supplement: "absolutely fringe evidence and I think that that is almost totally irrelevant, even at the top level of athletics". BBC NEWS
("But we recognise the psychological boost it gives to companies that take real pleasure in selling this rubbish to us")

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Don’t be ripped off by a Parliamentary Inquiry into bankers. Only a full Judicial Inquiry will do

By Ann Pettifor 

Fellow of the New Economics Foundation.

[Click here to sign the e-Petition.]

Power corrupts, and financial market power has corrupted financial and other markets. It has done worse. It has corrupted politics. That is why Britain will be ripped off by a Parliamentary Inquiry into banking. It will go nowhere, lack both credibility and teeth, and will inevitably be discredited. Above all, it is most unlikely to rein in bankers.

That is why we launched our  e-Petition the very day the Barclays LIBOR scandal broke on 27^thJune, and why we are still calling on Britons (and all UK residents) to sign this Peoples’ Petition herefor a full Judicial Inquiry into...  

“the fraud, wrongdoing and ethics of British banks, their management and their staff, and the role of the British Bankers Association. The terms of reference of this inquiry should also include the manipulation of interest rates on about £225 trillion of assets. The inquiry must have full powers to compel witnesses to appear on oath, and to obtain all forms of evidence.”

Within a few days, over 10,000 had already signed the petition, and very soon others – including Ed Miliband and the Labour Party – joined in the call. 

But the last thing the Coalition Government wanted was another Judicial Inquiry - these are ok for stuff like media wrong-doing, but not when trillions of pounds are involved.  Since doing nothing was clearly not an option, given the scale of public outrage, they decided to set up (drumroll)….. a Parliamentary Commission on Banking Standards – and to exclude from its membership those MPs on the Select Committee who had been most incisive in questioning Bob Diamond. A Commission whose members include Lord Lawson, Chancellor during the Big Bang deregulation of the City, alongside several other bank-linked members and pure career politicians.

Why are we asking you to show you reject a Parliamentary Inquiry, and sign our Petition?  Simply because Britain’s political establishment has effectively, over a sustained period, accepted and legitimised bankers’ wrongdoing and fraud, so that its members are precisely the wrong ones to be entrusted with scrutinising and recommending changes to the ethics and culture of banking. 

Our politicians are tasked with overseeing and regulating the banking system in the interests of the British people and the British economy as a whole. Instead they (like their colleagues in many countries) turned a blind eye to the City’s greed and fraud – and allowed the banking system both to fail Britain economically, and to be corrupted.

Bankers’ greed, dishonesty and ineptitude led to the disastrous financial crisis of 2007-9 when banks had to be nationalised, and more than £1 trillion of taxpayer-backed funds pumped into the banking system to maintain its solvency. And taxpayer generosity did not stop at that point.  Yet despite the City’s catastrophic failures, Westminster’s politicians – from all parties with just a few notable exceptions – have behaved with embarrassing timidity or grovelling deference towards Britain’s bankers.

Until that is, the American Department of Justice revealed its investigations into Barclays on 27^th June.

Neither Labour’s Alastair Darling nor Conservative George Osborne nor Danny Alexander of the LibDems dared rein in the bankers after the Great Contraction. Instead Westminster appointed the Vickers’ Commission with a limited remit. Vickers’ weak advice to ‘ring-fence’ bank activities was promptly rejected and watered down by our parliamentary representatives – thanks to bank lobbying.

If they could not be trusted to rein in British bankers then, then how can we trust them now that the Barclays and HSBC frauds have finally surfaced, to be followed by many others as the LIBOR and other scandals unfold?  

They think that we, the people, are foolish enough to believe they have changed their stripes, and stiffened their spines.

They think we’re too blind to the arcane proceedings of a Parliamentary Inquiry to know a) the difference and b) that we’re being fobbed and ripped off.

 

We’re not. We want an independent, tough Judicial Inquiryinto the misconduct and ethics of Britain’s banks, precisely to ensure that it is not caught in the sticky web of mutual self-interest woven by the politicians and bankers.

For too long, our politicians have been heavily lobbied and seduced by bankers. Moreover, many influential MPs, ex-Ministers and Peers, whether Conservative, LibDem or Labour Party,  are either ex-bankers, have links to bankers and are, or have been backed by bankers. The Conservative Party received half of its 2010 election year funding from City financiers.

The £93million City lobbying machine has ensured over time that the major political parties turned a blind eye to City wrongdoing, and backed a consensus for ‘light touch regulation’.

The Conservative Party launched the era of de-regulation way back in 1971. ‘Liberalising’ finance was led by Conservative Chancellor Anthony Barber (later, Chairman of Standard Chartered Bank) who introduced de-regulatory measures as “Competition and Credit Control” (dubbed ‘all competition and no control’ by many economists). Competition and Credit Control began the long process of de-regulating the City of London, symbolized in the “Big Bang” when Nigel Lawson was Chancellor.

De-regulation was, alas, warmly embraced by New Labour.  Chancellor Gordon Brown in a 2005 speech to the CBI on 27^th November 2005 argued in favour of:

“ not just a light touch but a limited touch.  ….a new model of regulation (the risk based approach) ..(for)  financial services and.. the administration of tax. And more than that, we should not only apply the concept of risk to the enforcement of regulation, but also to the design and indeed to the decision as to whether to regulate at all.” (Our emphasis)

Political decisions to de-regulate finance loosened official control over the sector to such an extent that officials of the FSA, the Bank of England and the Treasury have proved impotent in countermanding the arrogance of the bankers’ cartel – the British Bankers Association – and the wrongdoing of individual banks and bankers. 

The overseers and regulators of the system likewise – jointly and severally – failed the British people.  They declined to set or to uphold rigorous regulatory standards; and acted with undue obeisance towards politicians effectively seduced by the lures of the finance sector.

The financial services industry became bloated, corrupt, appallingly led and managed, and devoid of any ethical values or principle, or of any concept of social purpose. In consequence, the industry has severely damaged Britain’s economy. 

To ascertain the truth, to assign responsibility and recommend serious far-reaching reforms, we still need an independent, Judicial Inquiry, free from the sticky links that bind bankers and Parliamentarians. Nothing less will do. A Parliamentary whitewash won’t wash.

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