Category: Blog

We saw a nastier, more contemptuous and arrogant side to the Conservative Party at the council meeting on Wednesday. It was emanating from the councillors of the wealthiest wards in Hale and Bowdon. 

There was the flippant throwaway line that employers would not want to employ Labour supporters; and yes it was a joke, and we can take a joke. They didn’t expect a PCSO to get through the gates of the wealthy.

Trade unionists are derided and even pedestrians and children must not be allowed to slow down the Bentleys of Bowdon. They can deny the low-paid any protection, but do not even think of reining in the levels of pay at the top of the organisation.

The Tories may have reformed from the party that set soldiers onto protesters in Peter’s Field for the Peterloo Massacre. But it’s in their DNA and when it shows through and you’re reminded of just who these people are.

Mike Cordingley

 

I’m fairly certain that Liam Fox is not a regular reader of this blog but I was struck by the similarity of thinking between last week’s piece on taxes and today’s call for the Chancellor:

“Although the coalition agreement may require the chancellor to raise personal tax allowances, he should use the proceeds of spending reductions to cut employers’ national insurance contributions across the board.”

Just because Liam Fox is a standard bearer for the right doesn’t mean Labour should dismiss this call. Cutting the employer’s contribution reduces the cost of employment. The employer can either increase the workforce, invest or bank the reduced costs to increase profits. Corporation Tax will take a share of the increased profit, but if it’s increased workforce or investment, these have to be good for the economy. I’d love Ed Balls to join Liam Fox in finding cause; (as long as we resist emphatically any call for relaxation of employment regulation).

Another press article catching my eye was this piece on the culture that prevails amongst the Banking elite:

These are extremely well-educated and multilingual professionals. Many are in mixed marriages with kids who have lived on two or three continents. These people don’t belong anywhere and don’t feel beholden to any national project. They want to pay as little in tax as they can, and they want to be safe.

This chimes with my own view that pursuing these people around the world to tax their income is likely to prove ultimately futile. In Dickens’s ‘Great Expectations’ the clerk, John Wemmick places great importance on ‘Portable Property’. The electronic age has given the means to move and dissipate ‘Portable Property’ around the world in the blink of an eye. The most that the tax-collectors can aspire to is to be a nuisance to these super-rich; unless, of course we tackle ‘Fixed Property’ (Land and Buildings).

Master Sgt. Jerry Morrison, U.S. Air Force, Public domain, via Wikimedia Commons 

Wikimedia Link

“In this world nothing can be said to be certain, except death and taxes.”

Benjamin Franklin 1789

Without tax revenue the state would not be able to provide the services a civilised society needs to function; there’d be no army, no schools, no nhs, no roads, no waste collection etc etc etc.

But the sad predicament we face now is that following the global financial meltdown, the tax take isn’t sufficient to pay for the services provided today and we’re having to borrow more. And as we borrow more, the interest payments take up an increasing and alarming proportion of the spend.

This spiralling debt will inevitably fall on future generations to be repaid. It will be our children and grandchildren that pay in the decades to come for the services we use today. But they’ll still make that repayment through the taxes taken from our grandchildren’s production of goods and services. Nothing can be said to be certain except that it’ll be taxes that pay off the debt in the end.

The debate between the political parties has inevitably centred on the level of public spending;

• reduce the spend and you stop adding to the debt.
• But reduce too quickly, and the economy grinds to a halt because you reduce the size of the market for those goods and services

That debate will continue with regard to the rate of deficit reduction and it’s right to do so. Interestingly though, and perhaps due to the inevitability of taxes, little discussion takes place around the tax structure itself. There’s been well publicised targeting of notorious tax avoiders, the Philip Greens and Vodaphones of this world. It’s been personalised and theatrical but not deeply objective in it’s solutions to getting more tax out of the current generation.

It’s remarkable how many taxes we have. There isn’t an exact number because it gets blurred around the edges as to what constitutes a tax.

Tax	Description	Comments
Income Tax	‘What it says on the Tin’. A tax on the income from earnings, pensions and interest accrued from savings. Deducted at source from workers, negotiated via accountants and solicitors from the ‘owners’.	Not perfect in its administration but essentially appropriate.
Employee’s National Insurance Contribution	A tax on wages up to £844 per week @ 12% and 2% thereafter. The cleaner gets another 12p taken out of every extra pound they earn. The chief executive of Royal Bank of Scotland gets 2p taken out of every extra pound they earn.	There is an argument for abolition and merging with income tax but requires removal of 2% rate and for standard rate to apply throughout
Employer’s National Insurance Contribution	A tax on jobs and the wages page to workers. The more staff a company takes on, the more national insurance the business pays	Abolish – The last things we ought to be taxing are jobs.
Corporation Tax	A tax on profits for businesses	Essentially Correct
Capital Gains Tax	A tax on profits for individuals (not including main home. Although establishing which property is your main home is a subject prone to manipulation, notoriously by MPs of ill-repute.	Essentially Correct
VAT	A tax on spending	Abolish or reduce significantly
Inheritance Tax	A tax on estate at death. Ridiculed throughout the 20th Century by the aristocracy and treated by them as a voluntary tax incurred by the foolish and those who failed to see it as an enjoyable sport in it’s avoidance.	Requires massive tightening of rules
Road Tax	A tax on ownership of a motorised vehicle	Abolish
Fuel Duty	A tax on the fuel used	Essentially Correct although international agreement should be sought for air travel to be included
Alcohol and Tobacco Duties	A tax on habits disapproved of	Essentially Correct
University Student Fees	A hypothecated tax on receiving higher education	Abolish
Council Tax	A tax on the value of the home you live in based on it’s value in 1991 and capped at £320,000.01. Your home might be a £5m mansion, but the council tax will be the same as a house worth a penny over £320k.	Requires removal of band G ceiling so that the most expensive properties pay a proportional progressive rate
Street Car Parking Charges	A levy on parking usually in town centres	There is an argument for removing this where town centre is in decline or direct competition from out of town centre such as the Trafford Centre
Business Rates	A tax collected by Councils and handed over to Government based on the business property	Essentially Correct

There’s many more duties, levies license charges etc. than shown in the above list, but even a perfunctory scan across the taxation landscape highlights that as a society we’re taxing many activitiess that we want to take place, and failing to tax practices that we want to discourage.

In an economy that is desperate for jobs and spending, isn’t it ludicrous that we slap taxes on the vital stimulants for growth? Most startling of all is the jobs tax of employer’s national insurance contribution. I want Labour to be radical and support it’s abolition. It would be a break with the Beveridge Covenant that the welfare state should be the shared responsibility of worker and business. But wealth in the modern world has shifted to the speculators, asset strippers and financial traders or the traditional landed aristocracy and new property tycoons. None of this wealth is a huge employer of labour – and instead we hit the businesses who are.

I’d love to get rid of VAT as well. We want to encourage spending. It’s a regressive tax where the poor pay a larger proportion of their income. It’s costly to administer. The main argument for it existing seems to be that on the whole, people become blind to it. And we pay a huge amount of tax this way. In France it accounts for over 50% of their tax-take. It’s the definitive stealth tax.

In a thriving economy the case for University Fees is strong, but right now, when we need to be doing our utmost to provide the best trained workforce, it’s madness to be imposing such high fees.

I’m not going to argue that removing VAT and abolishing the employer’s element of national insurance would be self-financing, although, there would inevitably be a considerable boost.

So we would have to shift the burden elsewhere. We certainly need to chase tax evasion harder to reduce the £70bn estimated to be lost each year through effectively fraudulent tax returns, but we’re never going to reduce evasion to zero.

I am attracted to Vince Cable’s mansion tax. I would also argue strongly for a Land Tax, it’s doing the economy no good to have speculators sitting on land that is not being released for housing, agriculture, leisure etc. It’s interesting that so much of the land in the UK is still owned by the aristocracy (nearly a third of the total) and it’s very much concentrated into the hands of those on the Sunday Times Rich List.

There’s a number of advantages to the taxation of both mansions and land:

• They’re not portable, they can’t be smuggled out of the country to Monaco.
• There’s an obvious correlation between ownership and wealth (it’s not hitting the poor by taxing mansions)
• Non compliance can be dealt with by simply going through the courts to take ownership of a proportion of an estate; it then becomes an asset on the national balance sheet to be counted against the national debt and we would also be entitled to rental income.
• It would suppress land values, enabling more economic growth

The extent to which you can switch partially or wholly from VAT and the job tax to Land / Mansion is a debatable point, but the principle is clear. Taxes may be inevitable, but the tax structure in place to deal with this recession is different from that needed in the years of plenty.

Mike Cordingley

Photo by The New York Public Library on Unsplash

I’ve received the following letter from Trafford. As councillors, we will submit roads and paths from Gorse Hill Ward for consideration but with the best will in the world, we can’t guarantee knowledge of every street and road is up to date (particularly as Trafford Park makes up a good proportion of the ward).

As you can see below we’re being invited to do it again this year. We were very successful last year and we hope to be again. Please submit roads that you feel should be considered for resurfacing. And note that we need to get these in by 20th February.

“Typical Torontorian Pothole(s)” by Michael, CC BY 2.0

The second major debate at last week’s council was Labour’s motion calling for Trafford to withdraw proposals to replace paid librarians with volunteers.

Our Motion

The Council values the tremendous cultural and community benefit of all our Libraries in Trafford and calls on the Council to ensure no Library is closed in the Borough.

Trafford Council also fully supports and pays tribute to all volunteers who work so hard in supporting our communities and individuals. However, the Council is opposed to the Conservative Executive proposal to replace professional paid Library Staff in some of the Council’s Libraries with volunteers.

The Council fully supports the statement within the open letter, sent by volunteers, and representatives of the voluntary sector in Old Trafford, to the Leader, All Councillors and Chief Executive which stated :-

”Old Trafford has a magnificent tradition of volunteering and community activism. Resident volunteers in this neighbourhood have established many innovative and successful voluntary projects, and we are rightly proud of our countless achievements. However we are also quite clear about our role and purpose of the community and voluntary sector in Old Trafford: it is to complement and enhance the work of statutory services, to improve the quality of life for individuals and communities in our local area. Our role is definitely not to enable employers to make our friends, colleagues and neighbours redundant and replace them with unpaid volunteers”.

In light of the above the Council calls on the Executive to withdraw their plans to replace paid professional staff with volunteers at Old Trafford and Hale Libraries, and any other Library within Trafford.

The debate

Old Trafford Councillor Whit Stennett proposed the motion. He poignantly described the sense of grievance felt in Old Trafford and Hale at being picked on for the initiative. He underlined the value attached to the libraries at the heart of their respective communities. Why should Old Trafford Library be selected when it serves such diverse and often disadvantaged users?

The reason the council has given for selection is that there is more community activity going on in these neighbourhoods.

I pointed out in my support for Labour’s motion that if the vitality of the Old Trafford community was the primary factor in its selection, there was a real risk that it would put communitities off getting involved. Why come forward to be active in your community if the consequence was that services provided by Council were withdrawn?

It is punishing success.

And we’ve already heard lots of criticism from volunteers throughout Trafford protesting that they volunteer to enhance and supplement the work of the paid professionals, not replace them. We know that community involvement in Trafford is well below average; it would be criminal to make it worse.

Examples from afar

The Council is highlighting that other local authorities have volunteer run libraries but when you look at the specifics, these are often tiny libraries open for a few hours a week and usually additional to the the normal libraries, for example, Carrbrook in Tameside, Woodberry Down in Hackney. Too often, attempts at getting volunteers to run council libraries end in failure.

Breach of Compact

Damningly for the Council, the recognition that volunteering to replace staff is counterproductive and should not happen is already enshrined in an agreement signed by the council in 2008 together with the body representing Trafford’s voluntary sector (VCAT) and known as the Trafford Compact.

Clause 12 of the Code of Practice for Volunteering states:

12. Volunteers should not be recruited to fill the place of paid staff. This could be seen as exploitation of the volunteer and a deprival of someone’s livelihood.

The Council signed the Compact because it wanted a better working relationship with the voluntary and community sector in Trafford. At the very time when the voluntary sector is valued most, the council chooses to ignore the very foundation upon which the relationship is built on.

And how did the Tories respond to the charge?

They simply ignored any reference to the Compact. Despite it being raised repeatedly, they just blanked it out. It might as well not exist.

This matters. Trafford scores exceptionally lowly on the environment for a thriving third sector. It’s blindingly obvious the third sector will not thrive if trust breaks down. It’s a worsening situation. It’s not enough for Tory Councillors to go around saying that job’s easy and that they could do it. Could they provide a 40 hr a week service? Could they deal with difficult customers? They are insulting the staff if they think it’s just putting books back on the shelves.

It’s appallingly insulting to staff and Trafford needs to get it’s act together quickly. The Tories have been so crass in the manner they’ve approached this, that it’s hard not to suspect that they know it won’t happen. They must realise that it won’t be long into the operation before residents question why their council tax pays for other libraries to have paid professional staff when they have to provide volunteers. Is it a way of knocking the issue into the long grass until after the election? That won’t do. And if political expediency means that trust between the voluntary sector and the Council deteriorates further, they’re doubly culpable.

We lost the vote

BBC News Report

Salford’s decision to go for an elected mayor should give us all cause for concern. It was pretty clear from all the vox-pop interviews the media undertook in the aftermath of this shock result that this was that most contrary of creatures, a negative yes vote.

Journalists could not find a single person within the loose unholy alliance of Conservatives, English Defence League, Tax Payers Alliance and BNP who had led this campaign, who would give a positive reason for having an elected mayor. The only reason given was they felt a non-labour party person might be elected. Karen Garrido, the Tory group leader suggested it might end Labour’s 40 year rule in the city. It might, it might not…

Garrido misses the point that the option to change parties is open to voters everytime we have local elections.

If the leader of Salford Conservatives has given up trying to win Conservative votes across the city, then it seems unlikely it will be a Conservative Party Mayor in May. Her hope seems to be that some charismatic person will come forward without party affiliations, but broadly in tune with Conservative thinking. That is an incredibly dangerous hope with truly awful precedents. She hopes for a meritocrat, when she’s just as likely to get Kilroy-Silk or Silvio Burlusconi.. or worse.

Did she never ask why the BNP and EDL were so much in favour?

It was portrayed as a chance to cut council tax when in fact budget setting remains with Salford council. So the best the Conservatives are hoping for is a right-wing mayor and a Labour Council. This seems to be an act of political sabotage and at best, irresponsible. Far better to have promoted the mayor for the positives – if there are any, rather than misleading information.

Nevertheless, the vote was a clear majority in favour of a mayor for whatever reason. And that should worry us in the Labour Party. We should learn from this.

However, this is in no way a handy and convenient method of removing a hard to shift council of a different persuassion. The Tories currently run Trafford and have done for 8 years. We do intend to defeat them, but we’ll do it through the election of Labour Councillors, not through manufactoring a referendum on a subject few care about. We will not sink to the depths of the Tories in Salford.

Salford is too close to Trafford for it not to matter. I sincerely hope they can make the mayoral system work for Salford. My fear is that there will come a point at some time in the future when the mayor and council are in such opposition to each other, that Salford suffers more than it can bear. When that time comes we should all remember the Garridos and the English Defence League etc who brought this about.

Mike Cordingley