NIPSA News: Autumn editiion

NIPSANEWS

BEHIND THE MASK

Northern Ireland Public Service Alliance

AUTUMN 2012

How the economic agenda has been captured in Northern Ireland THE MAGAZINE FOR TRADE UNION ACTIVISTS

NIPSANEWS

NIPSA NEWS EDITORIAL

Published by the Northern Ireland Public Service Alliance, Harkin House, 54 Wellington Park.

Belfast BT9 6DP Telephone: Belfast 028 90 661831 Fax: Belfast 028 90 665847 e-mail: bob.miller@nipsa.org.uk Website: www.nipsa.org.uk General Secretary: Brian Campfield

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NIPSANEWS l AUTUMN 2012

CONTENTS Nothing changes: Financial lobby out in force at party conferences

5

Media manipulation: We look at how undemocratic groups have captured the headlines 6-11

How to bring corporations back into the UK tax system 12-15

Jobless used as tool to keep wages stagnant Combatting pay day loan sharks

Law Desk: Reforms on horizon for tribunal cases Equality: Employers must act or pay heavy penalty Health: New NHS constitution failing staff and patients World Desk: Special interests win again in US election Books to look out for – page 23

16 17 18 19 20

21

VIEWPOINT

Public services under threat from private sector that doesn’t do philanthropy!

ATTEMPTS to open up the public sector in Northern Ireland to predatory private sector interests have taken on an increasing momentum of late. It comes as European Union and HM Treasury financial rules coincide with severe cuts to public spending and threats to basic public services.

The case made by some senior public officials and by most politicians focuses on the challenges faced by public bodies in delivering high-quality community services against the backdrop of substantially reduced budgets. Their favoured response involves inviting the private sector in to deliver services – the cost of which they claim is a burden on public finances.

Northern Ireland, for a variety of reasons, escaped the worst ravages of the Thatcher era as far as wholesale privatisation was concerned although parts of the civil service and a range of local government and ancillary education services were subjected to the compulsory competitive tendering and market testing regimes.

Public transport and cleansing services by and large remained in public ownership despite these threats. Visitors from both Britain and the Republic often express surprise that we still have local councils emptying the bins, providing transport and delivering a water and sewerage service.

At a time when business – especially big business – struggles to find new markets because of the recession, there is no more lucrative and safe investment than in securing public sector work. This is because they know that governments are highly unlikely to default.

Taken with the pressure on public finances the neat solution is to get the job done cheaper by the private sector or hand the services over to private operators.

The list of privatisations in Northern Ireland and those planned is increasing by the day.

The following areas of public provision in Northern Ireland are but examples: n HR Connect has resulted in the privatisation of a range of civil service operations; in Northern Ireland are but examples: n Magherafelt and North Down leisure centres have already been handed over to the private sector to operate; in Northern Ireland are but examples: n Soft services including messengerial functions, in the Department of Social Development are about to be handed over to the private sector; in Northern Ireland are but examples: n The Exploris Aquarium and seal sanctuary, currently operated by Ards Borough

tional establishments, especially in the FE sector.

A report commissioned by NIPSA from academic Allyson Pollock, then of Edinburgh University, concluded that PFI/PPP financing arrangements were poor value for money and tied up the budgets of those sectors. These sectors are then saddled with increasing contractual repayments that cannot be avoided.

When cuts are being made, these PPP/PFI commitments must be honoured and as a result the cuts impact on an ever-decreasing budget allocated to non-PPP/PFI operations.

The arguments to reduce the public sector manifest themselves in some strange ways.

DSD Minister Nelson McCausland has announced an initiative which is designed to effect the transfer of public assets, in particular public-owned land and property, to BRIANCAMPFIELD local communities.

It is being promoted under the guise of NIPSA General Secretary empowering local communities. In effect, it Council, is due to be privatised; will amount to a form of social dumping in Northern Ireland are but examples: and after the initial euphoria communityn The Waterfront Hall in Belfast is another based organisations will find themselves candidate for private sector involvement; struggling to afford to run their facilities. in Northern Ireland are but examples: The next step will be the saviours from n The Home Help service and older peothe private sector taking over more and ple’s facilities are facing an increased threat more formerly public and community assets of privatisation if the Transforming Your and not necessarily to operate them on beCare agenda in the Health and Social Care half of local communities. sector is implemented.

The private sector doesn’t really do phiThe setting up of shared services arrange- lanthropy. It is solely in the business of ments – whether in education, the civil making a profit. Genuine community service, local government or on a public groups with an interest in the long-term service-wide basis – increases the potential welfare of their communities should befor the involvement of large transnational ware. corporations that are prepared to operate All the while the large private corporaany service that will yield a profit. tions benefit from a favourable tax regime In the case of shared services, these are that permits them to boost profits by reducmainly in the finance, IT and personnel ing to disgracefully low levels the amount functions. of tax they pay.

The Housing Executive faces the threat of Starbucks and Facebook are the recent being removed from the public sector. headline makers on this front. Why would The pressure for this arises not from the the large companies which the NI Executive fact that public housing provision isn’t nec- wants to lure to Northern Ireland even want essary. The NIHE has been starved of funds to pay a reduced corporation tax of 12.5% and is prevented from borrowing to fund when they can get away already with paynew house building, maintenance and refur- ing little or nothing at all. bishment schemes.

The people of Northern Ireland are faced It has the wherewithal to borrow on the with having their assets, public services and basis of its assets and rental income but be- community facilities stolen from under their cause any borrowing would count towards noses and this transfer of wealth from the public sector borrowing on a UK basis, the public realm to private sector shareholders Treasury rules block this. is being supervised by many of our local It is being forced into the voluntary sector politicians. where its borrowing will not count as public We need to wake them up to this reality, debt. the reality of privatisation and the AmeriAll this is in addition to the mortgaging canisation of our society. While we underof public spending in Northern Ireland stand the value of public services to our through a series of Private Finance Initiacommunity, the private sector only recogtives and Public Private Partnerships in the nises the price and the profit that can be extracted from them. health service and in a number of educa-

AUTUMN 2012 l NIPSANEWS 3

NEWS

Financial lobby out in force at party conferences ED MILIBAND may have promised to get tough with Britain’s banking industry in his Labour Party conference speech, but Private Eye reveals it was business as usual on the conference circuit for UK’s almighty financial services lobby.

In July, The Bureau of Investigative Journalism revealed that the British financial services industry spent over £92m in 2011 lobbying politicians and regulators.

Today it’s clear that the City’s lobby is as vigorous as ever, at least judging by the Eye’s report on its presence at this year’s Labour and Conservative Party conferences.

Sponsoring conference fringe events is a time-honoured way for lobbyists to gain a toehold in the conference debate: they book high-profile political speakers to draw in the crowds, and then share the platform to air their chosen cause in front of an audience of delegates.

In this way, Private Eye notes the City of London paid Peter Mandelson’s Policy Network to arrange a meeting with shadow Europe minister Emma Reynolds to discuss the eurozone crisis. The session also offered Mark Boleat – identified by the Bureau as Britain’s most powerful financial lobbyist – a chance to warn the audience against regulation that might interfere with the City’s role as a financial centre.

Elsewhere at the Labour conference, business-led lobby group TheCityUK paid the Smith Institute to hold a meeting with the shadow Treasury secretary Cathy Jamieson. The event also offered a platform for TheCityUK’s Chris Cummings to reas-

nance CEO Geoff Cook, who the Eye reports was met with ‘loud applause’ for commenting that British banks are over-regulated and over-taxed.

The financial industry’s lobbying effort spans a range of forums, from meeting politicians in the House of Commons cafeteria to creating networking groups that bring together likeminded individuals in Westminster and the City. And the Bureau’s investigation into the City lobby revealed that such access has helped secured a string of policy victories, including the slashing of UK corporation tax and taxes on banks’ overseas branches. The reform will save the finance industry billions.

Government efforts to clamp down on the more flagrant City lobbying were dealt a seLabour leader Ed Miliband: No change vere blow in July after a powerful commithere then for lobbyists tee of MPs concluded the plan to introduce sure delegates that they could be “proud” of a statutory lobbying register was too limited and should be scrapped. the financial sector. TheCityUK is the fiAnd with no sign of more detailed pronancial sector’s pre-eminent lobbying group, promising its members access to sen- posals, plans to increase transparency in lobby group operations have been quietly ior domestic and international influencers and decision makers – the Bureau revealed relegated to the back burner.

The City lobby’s confident performance in July how it scored a string of lobbying at the Labour and Conservative party conwins for its members. HSBC also funded a Fabian Society event with shadow Treasury ferences suggests its representatives wield increasing influence, despite the party leadminister Rachel Reeves which featured a ers’ calls to reform the banks that the lobbyprime spot for the bank’s head of ‘wealth ists represent. management’, Brendan Cook.

But spare a thought for the Lib Dems, Perhaps less surprisingly, the City lobby however, whose conference was all but was also out in force at the Conservative Party conference in Birmingham. Jersey Fi- bereft of City lobbyists and their sponsorship. Their fringe events took a more ethical nance, which lobbies for the tax haven’s banking sector, paid for an Adam Smith In- bent, with sponsors including Oxfam and stitute meeting with Kwasi Kwarteng. This New Statesman.

Source: www.thebureauinvestigates.com event featured a star turn from Jersey Fi-

Economic growth needed to maintain staffing levels MANY businesses are holding onto more staff than they need but warn that this cannot continue.

One in three firms are maintaining staff levels higher than they need in order to avoid losing skills, but will make redundancies if economic growth does not return soon, according to research by the Chartered Institute of Personnel and Development (CIPD).

Meanwhile, almost two-thirds (62%) of private sector firms feel that they would be forced to cut back on labour if output or service delivery does not pick up in the next year.

The CIPD’s Labour Market Outlook survey concludes that the recent trajectory of the jobs market, which has seen unemployment fall, may change course if economic growth does not pick up.

Gerwyn Davies, labour market adviser at the CIPD, said: “Recent falls in unemployment suggest that the labour market is on a sound footing, but a closer examination reveals that many employers are holding on to more staff than is required by the current level of demand in order to retain their skills.”

Davies said employers were experiencing a make or

break moment. “Unless growth picks up many will find that they cannot hold on to some workers any longer,” he said. “The tenacity with which employers are hanging on to skilled labour is a reflection of the high value they place on it and the damage they fear will be done to their businesses if they are forced to start making more redundancies.”

TUC general secretary Brendan Barber, commenting on the state of the economy, said the outlook was bleak.

“We all know the economy is currently stuck in a rut but it’s now looking less like a blip and more like a much longer slump,” he said.

He added that the UK’s dire economic performance is causing permanent damage and putting thousands of jobs on the line.

“It is not good enough for the chancellor to stand by and rely on the Bank’s monetary policy measures to get us out of this mess.

“With all the main forecasts now pointing towards a lost decade, it’s time for the government to call time on self-defeating austerity and start looking at ways to stimulate the economy,” he said.

AUTUMN 2012 l NIPSANEWS

5

Exposing a populist Tory front NEWSSPECIAL

WHOSE VOICE IS BEING HEARD ABOVE ALL OTHERS IN THE CURRENT FINANCIAL CRISIS? NIPSA NEWS IN A NUMBER OF ARTICLES UNMASKS HOW THE NEWS IS BEING MANIPULATED BY FINANCIAL INSTITUTIONS AND UNDEMOCRATIC BUT VERY POWERFUL LOBBYING GROUPS

THE TaxPayers’ Alliance (TPA) is an organisation that has played a very prominent media role over the last few years as a critic of government spending in general and public sector unions in particular. But who are the Taxpayers’ Alliance?

At NIPSA’s 2012 annual conference, a motion calling for an investigation of their agenda, political affiliation and funding was passed.

NIPSA’s latest research publication fulfils this motion.

Tea Party by the Thames?

The TPA describes itself as “Britain’s independent grassroots campaign for lower taxes” and was launched in 2004, “to speak for ordinary taxpayers”.

The political history of its founders, however, shows it to be rooted in the extreme right Eurosceptic/Libertarian wing of the Conservative Party.

While, when the Conservatives were in Opposition, leading TPA members denied they were a “Tory front”, they have, since 2010, been supportive of the most extreme Tory policies, including the “tax cuts for millionaires” budget of 2012.

The message the TPA delivers surfs a wave of genuine political disillusionment swollen by the global financial crisis and the MPs’ expenses scandal.

This provides a favourable climate in which to promote an 6 NIPSANEWS l AUTUMN 2012

By John McVey

‘anti-politics’ theme, particularly one that focuses on a message of “why should we give them our money?” in taxes.

Feeding on these sentiments an organisation such as the TPA can present itself, as the ‘everyman’, the ‘outsider’, opposed to ‘elites’, in support of all those who simply want to protect their own money from a bureaucratic enemy.

This language has echoes of the US Tea Party movement and its “little person against the system” message. The “ordinary guy” rhetoric, however, provides perfect cover for those who bankroll such campaigns and those who profit most from this “libertarianism” - the private sector beneficiaries of a largely unregulated capitalism.

Ideological public relations

Behind the ‘everyman’ populism, the mission of the TPA is to assist an ideologically driven war on the public sector by contributing to the wave of propaganda that demoralises and undermines the still dominant general belief in public provision.

This mission is assisted by the mainstream media’s cutbacks to ‘costly’ – i.e. rigorous journalism – and the fact that publications owned by traditionally right of centre anti-trade union press barons, will gladly disseminate the TPA’s slickly delivered and, to them, ideologically agreeable sound bites.

Policy & Research Publication

Behind

the Mask

The TaxPayers’ Alliance & the War on Public Provision

The TaxPayers’ Alliance has played a very prominent media role over the last few years as a critic of government spending in general and public sector unions in particular.

But who are the TaxPayers’ Alliance?

NIPSA’s latest publication takes a look “Behind the Mask”

Behind

the Mask

The TaxPayers’Alliance & the War on Public Provision

Behind

the Mask

The TaxPayers’Alliance & the War on Public Provision

October 2012

A short guide

Public Sector Pensions

A Trojan Horse for Regional Pay The misuse of “pay gap” data

Myths & Facts

An asset to use not strip The size of the Public Sector in Northern Ireland

Other booklets and leaflets in the series are available as a PDF download from the NIPSA Website www.

October 2011

February 2012

.org.uk

June 2012

Who funds the TPA?

The TPA makes great play of the issue of public sector financial transparency. The full sources of its funding, however, are unknown with only abbreviated accounts published since 2006 and no publication of their annual income, list of donors etc.

As well as having had a Director who does not live or pay taxes in the UK, what is known is that this supposedly ‘independent, grassroots’, ‘non-partisan’ organisation, the voice of the ‘everyman’ taxpayer in the UK has a considerable number of wealthy backers, many of whom have previously donated to the Conservative Party.

The TPA also has links to significant organisations from the richest, most powerful elements of the American far right such as the Americans for Prosperity Foundation (founded by the billionaire David Koch), the Cato Institute (who attract the funding support of such ‘ordinary’ taxpayers as Chevron, Exxon and Shell) and the Heritage Foundation.

Who benefits?

So who would benefit most in the TPA’s ideal society? The answer, of course, is the private sector – the TPA’s wealthiest funders, benefiting both from a favourable tax regime and the chance to be the new alternative provider of services the state no longer offers as a duty to its citizens.

The trade unions represent a bulwark against such market utopianism as they provide potential resistance to the easy capture of public services by the private interests behind such or-

The latest NIPSA research publication investigates the TPA

ganisations as the TPA. Objectively, the TPA’s current campaign against trade union facility time arrangements has to be seen in this context.

9LM ( F

A duty on broadcasters – look behind the mask

We would expect broadcasters to adhere to their guidelines on ‘balance’, disclosure and transparency when inviting comment from the TPA. This should end the ‘free run’ the TPA have had up until now, properly contextualise any contribution that is being given by them and ensure their input is balanced by alternative voices that challenge their populist facade.

Tax justice to re-build society

A real tax campaign supports progressive taxation and the necessary redistribution through which collective, public provision can be delivered.

It shows genuine concern for all taxpayers by wanting to chase the £120 billion in taxes uncollected, avoided or evaded annually in the UK. Unlike the Taxpayers’ Alliance, trade unions support a real fight for tax justice and accept progressive taxation as “the price we pay for a civilised society”.

Copies of the publication can be obtained via: http://www.nipsa.org.uk/Docs/Publications/2012/Behind-theMask

AUTUMN 2012 l NIPSANEWS 7

Who’s calling the argument NEWSSPECIAL

Northern Ireland’s Fourth Estate has a vital role in upholding quality of economic debate GIVEN the nature of our regional democratic institutions, notably the lack of a formal opposition, the role of the Fourth Estate – or the press in its various electronic and paper forms – in driving critical and informed debate is of particular importance in this part of the world.

The role of the Fourth Estate is normally associated with keeping our formal democratic institutions in check, by providing a relatively accessible and transparent tier of accountability for our politicians and other decision-makers.

Just as important in today’s political climate is journalists’ role in providing searching economic and financial analyses and commentary. After all, the partition of ‘economics’ from the ‘political’ is entirely an ideological construct designed to obfuscate the nature of the world’s dominant capitalist interests for whom the exercise of power in the public and private realms is seamless.

Somewhere between the absence of public interest journalism and the mediating role of global business service giants such as KPMG, a narrow range of economic choices around issues such as corporate tax rates has been served up.

The appearance of a prominent article by the Belfast Telegraph Political editor, Liam Clarke (9.8.2012), with the headline, ‘Top expert warns Northern Ireland economy is facing meltdown’, is a useful illustration of the pliant economic reporting that does a great disservice to the need for informed and critical debate.

The article consisted of an interview with tax consultant Eamonn Donaghy, followed by a piece penned by Donaghy himself.

Using some colourful turns of phrase, Donaghy certainly showed some expertise in seizing the news agenda during the traditional summer ‘silly season’ in an attempt to reinvigorate the corporate lobby for a cut in Northern Ireland’s corporate tax rate.

The Telegraph’s description of Donaghy as a ‘top expert’ is problematic, however, in the absence of a clear and critical descrip-

8 NIPSANEWS l AUTUMN 2012

By Peter Doran with Andrew Charles – Queen’s University Belfast in a personal capacity

tion of his senior role as an ‘industry insider’ with KPMG, one of the ‘Big 4’ global companies (with PWC, Deloitte, and Ernst and Young) who have monopolised the market in the provision of professional services such as auditing (and advocacy) for the world’s leading companies.

It is likely Mr Donaghy is employed to provide tax advice to property developers, investors and the manufacturing and distributive industries.

If his name rings a bell it might just as likely be a recollection of press coverage of his involvement in a personal capacity with three of Belfast’s other ‘leading business advisers’, in the loss-making investment firm JEAP (BBC 8 April 2011). Between the years 2008 and 2010 they ran up losses of £2.8 million after failed investments in property development companies.

Since the start of the financial crisis, the ‘Big 4’ have been accused of taking their eye off the ball and worse, in the years leading up to the meltdown.

Financial blogger, broadcaster and journalist, Ian Fraser, summed up the debacle with this comment: “The ‘Big 4′ firms have become so commercialised and bluntly greedy that they have permitted their own organisations to become rife with conflicts of interest.

“Audits have been devalued and managements are rarely challenged.”

Fraser’s mentor, Prem Sikka, Professor of Accounting at the University of Essex, goes further, observing that auditors collected £2142m in audit fees from FTSE-100 clients in 2002 to 2008 and a further £2159m for consultancy services to their audit clients in 2008.

They advised banks on the formation of special purpose vehicles, tax avoidance schemes, securitisation and structuring of transactions, all of which are central to the crisis.

They then audited the results of their own advice and inevitably said that all was well.

Sikks is a good match for Donaghy when it comes to a turn of phrase. She adds: “Auditors of banks could not tell the difference between a tent on Brighton beach or AAA security. They too easily accepted management valuations and permitted banks to show toxic assets as good and report profits that did not exist. At least $5 trillion of assets and liabilities simply vanished from bank balance sheets. These audited accounts would easily have won the Man Booker Prize for Fiction. Yet no auditing firm has been investigated for its role in the banking debacle.”

That’s the general accusation about the “Big 4”. What about Donaghy’s KPMG in particular?

Well there’s an interesting story there too that might interest Liam Clarke. On 4 January 2007, the Washington Post reported on a scandal over the sale and marketing of abusive tax shelters that had the potential to consign the American arm of KPMG to history.

In August 2005, after frenzied negotiations, KPMG reached a deal with the U.S. attorney’s office in the Southern District of New York, opening its operations to scrutiny by former Securities and Exchange Commission leader Richard C. Breeden and agreeing to pay the Government $456 million to settle.

Its schemes enabled clients to generate at least $11bn in phony tax losses which cost the United States at least $2.5bn in evaded taxes.

Six former KPMG partners and its former deputy chairman were criminally prosecuted for tax fraud conspiracy, relating to the design, marketing, and implementation of fraudulent tax shelters.

There is no suggestion, of course, that Donaghy had any hand in these activities.

the shots in of economics

NEWSSPECIAL

However, given the alleged coprporate activities of his employer Donaghy’s advocacy of a corporate tax cut for wealthy investors should be enough to put the wary reader on guard.

Consider, for example, a number of Donaghy’s points: he recycles the meaningless rhetoric about the ‘absence of a Plan B’ for the economy, thus implying somewhat illogically that a cut in corporation tax is tantamount to ‘a plan’.

This is clearly not the case.

Competitive corporation tax rates can only serve as part of a much more comprehensive and long-term structural plan for economic transformation, notably tangible public investment in education and training and sufficient support for public infrastructure.

But this would imply an unlikely reversal of the Tory Government’s ideologically-driven determination to pursue a pro-cyclical attack on public investment.

Moreover, tax cuts for wealthy investors, where these signal that a government is not prepared to make sufficient investments in education, training and infrastructure can negatively impact on FDI decisions.

And when did you last hear a capitalist offer the following advice to a commercial customer?: “We have got to get this thing agreed in principle and then see what the numbers will look like later on.” T his gem, offered in the context of Donaghy’s call for a reduced rate of corporation tax, is the antithesis of the algorithmic logic that informs dominant capital’s approach to capitalisation and the calculation of future earnings.

Nothing is left to chance.

When it comes to advice proffered to the Northern Ireland public and political class, KPMG’s advice operates by another logic.

Implicit in Donaghy’s argument is that Northern Ireland Plc must compete with the Republic of Ireland’s ability to attract investment.

But why, as recently as 2011, has Taoiseach Enda Kenny denied that the Irish Republic’s low rate of corporation tax

Belfast Telegraph – corporate self interest or analysis?

(12.5%) has been decisive in attracting so many international technology companies set up their European headquarters in Ireland.

As Donagh Brennan argued earlier this year on the website, Politico (20.2.12), any government that has made various tax reliefs the ‘cornerstone’ of its industrial policy for 50 years would be an admission of its failure to develop. “In short, reliance on a low rate of corporation tax is evidence of a failed state: tax relief can be part of the first phase of industrial development, not the cornerstone 50 years later.”

Donaghy invites the reader to ‘Ask yourself this question — why would a company come to Northern Ireland to invest when it can go to the Republic of Ireland and pay half the corporation tax on its profits?’

Together with other economic and political commentators, Donaghy – on behalf of his corporate clients who stand to gain most from a tax cut – invites the reader to engage in a spurious comparison.

A close examination of the Republic of Ireland’s industrial and investment policies shows that they have been failing and offer few lessons for Northern Ireland.

Dr Jim Stewart, lecturer in Finance in Trinity College Dublin, has found that direct investment in the Republic, which is associated with manufacturing and creating jobs, reached a peak in 2003 and has since fallen.

Foreign investment in the form of portfo-

lio and other investment such as the financial assets of banks and financial services in the IFSC continued to rise until 2007 and fell in 2008 reflecting the financial crisis.

Much of this is just capital moving in and out of the country thanks to the Republic’s loose regulatory system, with little in the way of jobs impact.

Northern Ireland’s economic commentariat and political representatives are certainly in need of a big idea.

There is little sign that it will come from the self-interested interventions of KPMG. There is breath taking hypocrisy in the determination of members of the ‘Big 4’ to interpolate transparently ideological positions in the service of commercial logic while queueing up to enjoy the largesse of publicly funded consultancy contracts from the Northern Ireland administration.

It is also disappointing to find that a representative of one of the institutions that stands accused of acting as a midwife at the birth of the global financial mess is rewarded with the description ‘top expert’.

Just as our Executive must urgently invest in building up indigenous expertise in global financial, industrial and ecological strategies (independent of corporate interests articulated through the revolving doors at local branches of giant consultancy firms), so too our fourth estate must take their responsibilities more seriously in the face of challenging times in the local and global political economy.

AUTUMN 2012 l NIPSANEWS 9

Plutocracy’s new Vandals NEWSSPECIAL

We’re getting a better idea of how billionaires and corporations capture government policy, writes George Monbiot

TO SUBVERT means to turn from below. We need a new word, which means to turn from above. The primary threat to the democratic state and its functions comes not from mob rule or leftwing insurrection, but from the very rich and the corporations they run.

These forces have refined their assault on democratic governance.

There is no need – as Sir James Goldsmith, John Aspinall, Lord Lucan and others did in the 1970s – to discuss the possibility of launching a military coup against the British government: the plutocrats have other means of turning it.

Over the past few years I have been trying better to understand how the demands of big business and the very rich are projected into policy-making, and I have come to see the neoliberal thinktanks as central to this process.

These are the groups which claim to champion the free market, but whose proposals often look like a prescription for corporate power.

David Frum, formerly a fellow of one of these thinktanks – the American Enterprise Institute – argues that they “increasingly function as public-relations agencies”.

But in this case we don’t know who the clients are. As the corporate lobbyist Jeff Judson enthuses, they are “virtually immune to retribution … the identity of donors to think tanks is protected from involuntary disclosure.”

A consultant who worked for the billionaire Koch brothers claims that they see the funding of thinktanks “as a way to get things done without getting dirty themselves.”

This much I knew, but over the past few days I’ve learnt a lot more. In Think Tank:

10 NIPSANEWS l AUTUMN 2012

the story of the Adam Smith Institute, the institute’s founder, Madsen Pirie, provides an unintentional but invaluable guide to how power in this country really works.

Soon after it was founded (in 1977), the institute approached “all the top companies”.

About 20 of them responded by sending cheques.

Its most enthusiastic supporter was the coup-plotter Sir James Goldsmith, one of the most unscrupulous asset strippers of that time. Before making one of his donations, Pirie writes, “he listened carefully as we outlined the project, his eyes twinkling at the audacity and scale of it. Then he had his secretary hand us a cheque for £12,000 as we left”.

From the beginning, senior journalists on the Telegraph, Times and Daily Mail volunteered their services. Every Saturday, in a wine bar called the Cork and Bottle, Margaret Thatcher’s researchers and leader writers and columnists from the Times and Telegraph met staff from the Adam Smith Institute and the Institute of Economic Affairs.

Over lunch, they “planned strategy for the week ahead.”

These meetings would “co-ordinate our activities to make us more effective collectively.” The journalists would then turn the institute’s proposals into leader columns while the researchers buttonholed shadow ministers.

Soon, Pirie says, the Mail began running a supportive article on the leader page every time the Adam Smith Institute published something.

The paper’s editor, David English, oversaw these articles himself, and helped the institute to refine its arguments.

As Pirie’s history progresses, all references to funding cease.

NEWSSPECIAL

The Vandals were a German tribe that did not rise to prominence until after the breakdown of the Roman Empire was well underway. They were however, very important in bringing about the complete collapse of the Western empire because of their vicious, and rapacious behavior. Instead of governing, they pillaged.

Instead of promoting trade, they became a nation of pirates. The Vandals reputation is remembered in their name, which as come to mean "willful and malicious destruction".

Apart from tickets donated by British Airways, no sponsors are named beyond the early 1980s.

While the institute claims to campaign on behalf of “the open society”, it is secretive and unaccountable.

Today it flatly refuses to say who funds it.

Pirie describes how his group devised and refined many of the headline policies implemented by Margaret Thatcher and John Major.

He claims (and produces plenty of evidence) either full or partial credit for the privatisation of the railways and other industries, for the contracting out of public services to private companies, for the poll tax, the sale of council houses, the internal markets in education and health, the establishment of private prisons, GP fund-holding and commissioning and, later, for George Osborne’s tax policies.

Pirie also wrote the manifesto of the neoliberal wing of Mrs Thatcher’s government, No Turning Back.

Officially, the authors of the document – which was published by the party – were MPs such as Michael Forsyth, Peter Lilley and Michael Portillo. “Nowhere was there

any mention of, or connection to, myself or the Adam Smith Institute. They paid me my £1,000 and we were all happy.”

Pirie’s report became the central charter of the doctrine we now call Thatcherism, whose praetorian guard called itself the No Turning Back group.

Today’s parliamentary equivalent is the Free Enterprise Group.

Five of its members have just published a similar manifesto, Britannia Unchained.

Echoing the narrative developed by the neoliberal thinktanks, they blame welfare payments and the mindset of the poor for the UK’s appalling record on social mobility, suggest the need for much greater cuts and hint that the answer is the comprehensive demolition of the welfare system.

It is subtler than No Turning Back. There are fewer of the direct demands and terrifying plans: these movements have learnt something in the past 30 years.

It is hard to think how their manifesto could have been better tailored to corporate interests. As if to reinforce the point, the front cover carries a quote from Sir Terry Leahy, until recently the chief executive of Tesco: “The path is clear. We have to be

brave enough to take it.”

Once more the press has taken up the call.

In the approach to publication, the Telegraph commissioned a series of articles called Britain Unleashed, promoting the same dreary agenda of less tax for the rich, less help for the poor and less regulation for business.

Another article in the same paper, published in September by its head of personal finance Ian Cowie, proposes that there be no representation without taxation. People who don’t pay enough income tax shouldn’t be allowed to vote.

I see these people as rightwing vanguardists, mobilising first to break and then to capture a political system that is meant to belong to all of us.

Like Marxist insurrectionaries, they often talk about smashing things, about “creative destruction”, about the breaking of chains and the slipping of leashes.

But in this case they appear to be trying to free the rich from the constraints of democracy.

And at the moment they are winning.

AUTUMN 2012 l NIPSANEWS 11

NEWSSPECIAL

How to beat corporate tax avoidance and hold global capital to account

NUMEROUS journalists have called me asking how we should tackle the whole issue of tax avoidance by multinational corporations who right now seem to be taking the UK for a ride on this issue. We could name Google, Apple, Amazon, Starbucks, Facebook and so many more and the companies in question are paying little or no tax here on what appear to be substantial commercial operations that appear from reports that in many cases they themselves make to be profitable.

My answer to such questioning is that first we have to understand the problem, and second we have to understand the constraints on solutions. I'll deal with them in order.

Tax paid is always paid on the basis of a formula. I'll keep it simple. There are three components to this. First there is the tax base – that's the income or profit charged to tax. The second part is tax allowances and deductions – which can be offset against the income in the tax base.

Personal allowances are the most obvious of these but there are, of course, many more. Third there is the tax rate – the percentage part of the remaining tax base that is to be paid in tax.

Now the problem in the cases we're talking about is not to do with the tax rate: that's always the easy bit. And it may not even be allowances and reliefs: we're not talking odd capital gains arrangements or other deals which result in aberrant corporation tax rates here.

The problem in each of these cases is in the tax base.

We have to remember that the tax base for a company is always based on the profits it reports. And the reported profit in each and every case is that of each individual company within a group, and not for the group as a whole. There is no such thing (at present) as group tax accounting. Whilst it's not quite true we ignore groups for tax we do start from an assumption that they don't exist and then tweak the system to allow for them. Accounting, on the other hand, fundamentally works the other way round: the group accounts are more important than the individual accounts.

This simple differing of the order of priority in accounting and tax explains most of the tax avoidance we're looking at. Groups think globally; that means that their goals are set for the group as a whole, not for any individual company within it. On the other hand, tax works locally: it is collected by a state and from individual companies. Now whilst it is true that when a residence basis of taxation is used – where a state taxes a resident person (or company) on their worldwide income, whether sourced in that country or not – there is in a sense a global scope for a local tax system, but unless a parent company is being considered this is largely irrelevant and most of the abuse we're talking about is not by UK based groups. As such that is not an issue of concern here since the current concern is very largely with US based groups seeming to abuse the UK tax system.

They are, almost without exception, doing this by shifting their tax base out of the UK. There are (and I summarise) four ways 12 NIPSANEWS l SPRING 2012

By Richard Murphy

they're doing this: a) They're legally shifting where they record sales out of the place where they are physically contracted for and supplied or consumed: Google, Amazon, eBay, Facebook and others are all doing this, recording sales in EU tax havens even though the sales were contracted for (in the sense that a UK based sales force did the deals) in the UK to UK clients. b) They're appearing to over pay for services supplied. The example is the Starbucks royalty. It seems high: there appears little commercial logic to a royalty that turns profit into loss in thirteen out of fourteen years. No one would reasonably do this in arm's length markets. The paying company would logically have been bust a long time ago. But it does not seem to have stopped Starbucks. c) They are using intellectual property – an artificial legal property right – to claim that the source of profits in UK markets is derived elsewhere. The whole legal infrastructure of patents, copyright and payments for their use is used to shift profits, often to locations where those patents were never created. d) They use secrecy to hide what they're doing, aided by tax havens and the nature of group accounting which means that no intra-group transactions have to be recorded in group accounts.

It's that double whammy of secrecy that aids and abets this whole process.

The point in each case is that accounting and legal contracts has allowed the tax base to move. It is possible transfer pricing cases within tax rules could challenge some of these issues. That's true for interest rates and transfer prices for goods. It may even be true, but is much harder to do so for royalties – intellectual property is incredibly hard to price. I am not saying transfer pricing rules cannot deal with this: in all likelihood it will not do so effectively.

What transfer pricing finds virtually impossible to deal with is the whole relocation of a sales contracting base from one country using distance selling arrangements and complex contractual arrangements that have, at the very least it is fair to conclude because of the consistency of the outcomes, the intention of reducing their group's tax arrangements. Companies know this and are exploiting it.

I am aware that it is currently being argued that this is the inevitable consequence of EU rules on the right to incorporate wherever a company wishes in support of the free movement of capital throughout the 27 countries. Now, whilst I agree that this right is embedded in EU law, I think it is quite untrue to say that the right to abuse the tax base of any country is also inherent in that right.

There is, for example, a concept within EU law of the abuse of law. This does extend to tax, and even to UK tax, where it has been applied to VAT decisions. This concept, best summarised in what is know as the Halifax case, decided in 2006, makes clear that if a right granted in EU law is abused, even if within the wording of the

law, to deliver an outcome not intended by that law then the abusive use of that law can be overturned even though entirely legal.

The similarity between this and a general anti-tax avoidance principle of the type I propose is, of course, uncanny and not chance.

I think the relocation of profits, artificially, is an abuse of EU law. I admit I have not seen this argued before. But that's not to mean it is not true. The essential quality of an arrangement that is abusive is that it is artificial with intent to secure an outcome not intended in law. The structures being looked at seem to meet that criteria.

That argument, however, does depend on evidence that the EU may think this way about tax – and that's not hard to find. It exists in the EU Code of Conduct on Business Taxation. Issued first in 1997, then under the direction of Dawn Primarolo, now a Labour deputy speaker of the House of Commons this made clear that the EU would be hard on state sponsored tax abuse.

Now I am well aware that this is a Code – not law. But let's also be clear there is good reason for this. The Code has worked because it has been enforced not by law courts but by a Code of Conduct Group of antions representatives that has been rigorous, even if too secretive, in upholding the principles inherent in the Code that no country may promote tax systems designed to undermine those of another state within the EU. Have no doubt this has worked: I have had some interaction with the Code, using it successfully to challenge the tax systems of Jersey, Guernsey and the Isle of Man. Jersey has still to recover: its latest report on how it plans to comply with the demands of the Code will be issued tomorrow, and will reveal they still do not know how to do so.

I make the point for good reason. In 1997 the political willingness to take on this issues, most especially in tax havens, but in other states too (most countries had some changes to make in their tax law to comply) it is fair to say that willingness has declined since then; that I cannot deny. But, the fact that the Code continues in operation and effectiveness in some cases proves that such a structure works, and not only works but has significant backing.

In that case is it reasonable to think that there was never the intention that the conflict between accounting form and tax reporting of transactions should result in the abuse of the tax base of a country, and that if it does there might be abuse of EU law? I suggest so.

I cannot see how it was ever the intent that countries themselves should exploit that law to secure their own advantage and yet, of course, that has happened, and in the process a significant number of companies have been unfairly advantaged, almost entirely at cost to domestically based corporations.

I say all this to answer a point I have seen made time and again in the last few days, which is that first of all the EU intended that tax abuse of the sort perpetrated by many US corporations operating in Europe right now. I don't agree.

And it's not because I don't understand that I don't agree: it is because I do think I understand that I don't agree. I cannot see any way EU law on tax or the right of incorporation can be intended to firstly all the abuse of law and secondly permit breaches of what would not, I think, be in the Code of Conduct if only the political will were present.

So, having explained how abuse takes place and why I think the EU cannot permit it let's talk about what can be done about it.

Some of these I have already summarised in other blogs.

First, very obviously, we need to invest much more heavily in collecting tax. There are only 2,000 or so fully qualified tax inspectors in the UK. That is ridiculously few. And let's recall that total staff in HMRC will have fallen from 100,000 in 2005 to 55,000 in 2015. I can agree some streamlining may have been possible, but if

NEWSSPECIAL

that had been 20,000 staff I would have been amazed. We have 65,000 staff at HMRC now and a crisis in collecting all taxes.

20,000 staff will change that, but more high quality, highly paid staff to challenge abuse by the largest corporations is vital. Nothing less will do if we are to beat this problem. Right now companies and their lawyers are running rings round the Revenue.

Second, having these people will let us uphold existing law. We aren't doing enough on transfer pricing. And we aren't doing enough to challenge the whole structuring of some deals. The law to let us do much of this exists, but we can only do it with people.

Third, we have to be honest about the scale of the problem we face. Not a penny of the abuse the press and parliament are rightly worried about is in the HMRC tax gap figure. That's ludicrous. It suggests that they and their political masters are in denial about what is happening. That cannot be the way to deal with this. An honest assessment of the tax gap and what should be in it is vital.

I'll suggest my own work is the right direction for travel here.

Fourth, the political mood music on corporate tax has to change.

We have reached the absurd point where politicians have joined in the race to bottom in international tax regulation that began in tax havens and was first promoted by lawyers, accountants and bankers. Surely we should expect politicians to stand up for the states we vote them to run? And ye now they don't. We have current politicians in the UK who pride themselves on having abandoned our residence basis of tax so suitable to a country that hosts large numbers of parent companies. Instead they promote the whole notion of turning a blind eye to what happens outside the UK by adopting a territorial basis of tax that only taxes income arising in the UK, and asks few questions of how that income arising is determined. That is, politically, exactly the sentiment that the multinational companies now not paying tax in the UK are exploiting. We have to expect a political change on this point.

Fifth, our politicians have to go to the EU and argue that we must have change on the lines I have outlined above: I believe we can demand that the Code of Conduct be revisited to attract this issue, but more than that, we now must demand that the idea of the abuse of law in these cases must be tested.

The OECD is also a target. The arm's length pricing model of transfer pricing does not work and everyone knows it. The FT has promoted the unitary model of taxation this week that I and others in the Tax Justice Network have long promoted. This allocates group profit to countries using a formula based on where the destination of sales is, where people are employed and where real physical assets are. These are the real and only drivers of economic value. This reform is now essential if we are to demand that global capital is to be accountable locally for tax.

And we must have country by country reporting in accounting as well. We have to know where corporations are and what they do, and how much tax they pay in each and every country in which they trade. Nothing else will also hold companies to account – and force them to change their behaviour under the glare of pubic, investor and regulator (including tax inspector) scrutiny.

I am convinced that the corporate tax base can be captured and taxed. I agree it's not straightforward. And it will not happen without political will. Many of us have campaigned to create that will: I'd suggest it's momentum is becoming unstoppable. Now we need to transform that into action to deliver results. I think what I've suggested here is a plausible way to do that.

AUTUMN 2012 l NIPSANEWS 13

NEWSSPECIAL

A roll call of corporate rogues who are milking the country The scale of unpaid tax now outstrips the entire deficit. Forcing the elite to pay up is a matter of both justice and necessity writes Seamus Milne “ONLY the little people pay taxes," the late American corporate tax evader Leona Helmsley famously declared. That's certainly the spirit of David Cameron and George Osborne's Britain. Five years into the crisis, the British economy has just edged out of its third downturn, but construction is still reeling from government cuts and most people's living standards are falling.

Those at the sharp end are being hit hardest: from cuts to disability and housing benefits, tax credits and the educational maintenance allowance and now increases in council tax while NHS waiting lists are lengthening, food banks are mushrooming across the country and charities report sharp increases in the number of children going hungry. All this to pay for the collapse in corporate investment and tax revenues triggered by the greatest crash since the 30s.

At the other end of the spectrum though, things are going swimmingly. The richest 1,000 people in Britain have seen their wealth increase by £155bn since the crisis began – more than enough to pay off the whole government deficit of £119bn at a stroke. Anyone earning over £1m a year can look forward to a £42,000 tax cut in the spring, while firms have been rewarded with a 2% cut in corporation tax to 24%.

Not that many of them pay anything like that, even now. The scale of tax avoidance by high-street brand multinationals has now become clear, in no small part thanks to campaigning groups such as UK Uncut.

Asda, Google, Apple, eBay, Ikea, Starbucks, Vodafone: all pay minimal tax on massive UK revenues, mostly by diverting profits earned in Britain to their parent companies, or lower tax jurisdictions via royalty and service payments or transfer pricing.

Four US companies – Amazon, Facebook, Google and Starbucks – have paid just £30m tax on sales of £3.1bn over the

14 NIPSANEWS l AUTUMN 2012

last four years, according to a Guardian analysis. Apple is estimated to have avoided over £550m in tax on more than £2bn worth of sales in Britain by channelling business through Ireland, while Starbucks has paid no corporation tax in Britain for the last three years.

The Tory MP and tax lawyer Charlie Elphicke estimates 19 US-owned multinationals are paying an effective tax rate of 3% on British profits, instead of the standard rate of 26%. It's all entirely legal, of course. But taken together with the multiple individual tax scams of the elite, this roll call of corporate infamy has become an intolerable scandal, when taxes are rising and jobs, benefits and pay being cut for the majority.

Not only that, but collecting the taxes that these companies have wriggled out of would go a long way to shrinking the deficit for which working- and middle-class Britain's living standards are being sacrificed. The total tax gap between what's owed and collected has been estimated by Richard Murphy of Tax Research UK at £120bn a year: £25bn in legal tax avoidance, £70bn in fraudulent tax evasion and £25bn in late payments.

Revenue and Customs' own last guess of £35bn has been widely recognised as a serious underestimate. But even allowing for the fact that it would never be possible to close the entire gap, those figures give a sense of what resources could be mobilised with a determined crackdown. Set them, for instance, against the £83bn in cuts planned for this parliament (including £18bn in welfare) – or the £1.2bn estimated annual benefit fraud bill – and you get a sense of what's at stake.

Cameron and Osborne wring their hands at the "moral repugnance" of "aggressive avoidance", but are doing nothing serious about it whatever. They've been toying with a general "anti-abuse" principle. But it would only catch a handful of the kind of personal dodges the comedian Jimmy Carr signed up to, not the massive profit-shuf-

fling corporate giants have been dining off.

Meanwhile, ministers are absurdly slashing the tax inspection workforce, and even introducing a new incentive for British multinationals to move their operations inbusiness to overseas tax havens. The scheme would, accountants KPMG have been advising clients, offer an "effective UK tax rate of 5.5%" from 2014 (and cut British tax revenues into the bargain).

It's not as if there aren't any number of measures that would plug the loopholes and slash tax avoidance and evasion. They include a general anti-avoidance principle (of the kind the Labour MP Michael Meacher has been pushing in a private member's bill) that would outlaw any transaction whose primary purpose was avoidance rather than economic; minimum tax (backed even by the Conservative Elphicke); and countryby-country financial reporting, and unitary taxation, to expose transfer pricing and limit profit-siphoning.

The latter would work better with international agreement. But there is already majority support in the European Union, and it is governments in countries such as Britain – where the City is itself a tax haven – that are resisting reform. When you realise how closely the tax avoidance industry is tied up with government and drawing up tax law, that's perhaps not so surprising.

But when austerity and cuts are sucking demand out of the economy, fuelling poverty and joblessness and actually widening the deficit, the need to step up the pressure for corporations and the wealthy to pay their share as part of a wider recovery strategy couldn't be more obvious.

The target has to shift from "welfare scroungers" to tax dodgers, and the campaign go national. Companies that are milking the country at the expense of the majority are especially vulnerable to brand damage. Forcing them to pay up is a matter of both social justice and economic necessity.

NEWSSPECIAL

Time to tackle tax loopholes

STARBUCKS has paid just £8.6m in UK taxes over the last 14 years according to a special report by Reuters.

The news agency also reports that the Seattle firm has paid no income tax whatsoever in the past three years despite reporting sales of £1.2bn and telling investors that its UK arm is profitable.

Starbucks is the second largest global restaurant or cafe chain behind McDonalds with a market capitalisation of $40bn (£24.8bn). Its nearest competitors are paying multimillion pound tax bills to the Treasury.

But the company has been using entirely legal tax avoidance schemes to report no profits and so escape paying UK tax.

In a lengthy investigation Reuters uncovered the avoidance scheme by comparing company accounts with transcripts of 46 conference calls with investors and analysts. In doing so it revealed the differences between what the company was reporting in its financial accounts and what it was telling analysts in briefings.

The transcripts show Starbucks officials routinely described their UK business as profitable and a model for the US market.

But accounts show it has made almost £150m losses since 2008 in the UK. In response to the report Starbucks’ chief financial officer Troy Alstead said the company strictly follows accounting rules. And

a spokeswoman told the news agency: ‘We seek to be good taxpayers and to pay our fair share of taxes.’

Reuters questioned Alstead on the apparent disconnect between the touted health of the UK operation to investors and its reported losses. He responded by suggesting the UK business was not doing as well as it had in the past. ‘The UK is very troubled, unfortunately. Historically it has performed a little bit better than it does now,’ he said.

He added the corporation is taking ‘very aggressive’ action to improve the British subsidiary’s performance.

porters also revealed how global telecom giant Vodafone, one of Britain’s biggest companies, avoided massive sums in UK tax.

The Bureau found billions of pounds of profits were apparently being allocated to Vodafone branches in Switzerland where hardly any business was being done.

The modest tax bills for US firms has spurred outraged calls for action. Labour MP Margaret Hodge, chair of the public accounts committee, said HMRC should look into Starbucks’ tax affairs.

Richard Murphy of Tax Research UK told the Guardian UK tax law has created an ‘uneven playing field’ that means ‘UK businesses are disadvantaged against foreign Starbucks is the latest multinational combusinesses’. pany in the headlines avoiding tax in the In February 2012 two schemes devised UK.

by Barclays Bank to slash tax bills were The so-called ‘Big Four’ technology companies have been reported as paying no shut down by the Government. The Treasury closed two loopholes that were netting or little tax too. the bank hundreds of millions of pounds.

Amazon, Facebook, Google and Apple George Osborne changed the rules in his have in total paid only £22.5m to the UK 2012 Budget. The new regulations were exchequer, according to analysis by The retroactive, coming into force days before Sunday Times.

Barclays began exploiting the loopholes. A The paper estimates the tech giants’ true Financial Times editorial bridled at this as a tax liability as upwards to £826m. Facebook, which this week launched a develop- ‘step too far’.

The paper said: ‘Instead of trying to undo ment and engineering centre in London, its past mistakes, the government needs to paid just £238,000 tax in 2011 on an estiprevent future ones by fixing a tax system mated liability of £21m.

Last year, too, an undercover sting by The that invites avoidance.’

Source: www.thebureauinvestigates.com Bureau of Investigative Journalism re-

One of many

AUTUMN 2012 l NIPSANEWS 15

NEWSSPECIAL

Average income stagnant for 12 years – and it won’t improve for at least eight years A typical low income family in 2020 is set to have an income 15 per cent lower than in 2008 MILLIONS of the "strivers" targeted by David Cameron face a grim decade of stagnant living standards because of job cuts and low pay rises, the Prime Minister has warned.

The Resolution Foundation says that many low and middle income homes will be no better-off in the year 2020 than they were in 2000 unless they are given special help to boost their prospects.

The think-tank calls for improved childcare, cuts in council tax on smaller homes and incentives for older workers to take jobs.

Mr Cameron told his party's 2012 conference the Tories would support people "who strive to make a better life for themselves and their families".

But the up-hill struggle they could face to achieve that ambition is underlined by the foundation's warning that middle-income households could fail to share in any economic recovery.

"On the UK's current path, come 2020, household incomes across the bottom half of the working age population look likely to be lower than they are today," it says. "A typical low income household in 2020 is set to have an income 15 per cent lower than an equivalent household in 2008, a return to income levels not seen since 1993."

It calculates that two million senior and professional positions are likely to be created during this decade, as well as 400,000 basic service jobs.

However, about 800,000 mid-level administrative and manufacturing posts – the sort of jobs filled by the so-called strivers – are

‘

likely to vanish because of new technology and increasing globalisation.

For those who remain in work, there is little prospect of sustained wage because high unemployment is depressing salary levels. The think-tank estimates that the existence of long dole queues is currently lowering pay rates by about £2,000 a year.

Nor can people on lower incomes rely on tax credits, which have fallen sharply in value in recent years, to boost their living standards.

The think-tank has called for a major drive to boost employment among young parents by improving childcare provision, and among older workers by cutting their National Insurance payments.

It also backs moves to raise wage rates in poorly-paid sectors and to improve school-leavers' qualifications by introducing a compulsory examination for 18-year-olds.

Its findings are contained in a report from the Commission on Living Standards, a group of employers, trade unionists, economists and heads of parents' groups brought together by the thinktank.

Clive Cowdery, the foundation's chairman, said: "There remains far too little debate about whether growth will benefit the broad majority of people. Our work suggests this will not happen automatically but also that, even in a tight fiscal climate, things can be done to ensure the benefits of economic growth are shared by all."

The think-tank estimates that the existence of long dole queues is currently lowering pay rates by about £2,000 a year.

16 NIPSANEWS l AUTUMN 2012

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NEWSSPECIAL

How to fight the payday loan sharks Writing for False Economy, Carl Packman explains the rise and rise of payday loans and how the problem of loan sharks can be challenged WITH the Wonga sponsorship deal of Newcastle United Football Club and David Cameron's former aide, Jonathan Luff, going to work for the controversial lender, payday loans are once again at the top of the news.

But, actually, it is almost a constant presence in our news, enjoying almost universal scorn by the press and politicians alike. Indeed, it is indicative of the scale of the problem that with no one speaking out for the industry, it still manages to grow and grow, making its top staff very successful indeed.

But where are we with the legal loan sharks in the UK today?

Where we are

The payday lending industry is said to be worth, overall in the UK, between £2-4 billion, a rise from £100 million in 2004.

Joanna Elson, the chief executive of the Money Advice Trust, noted at the start of the year that: "Just two years ago, National Debtline was receiving around 150 calls per month from people with payday loans – that figure has now ballooned to 1,100.”

As a type of consumer credit, payday loans are regulated by the Consumer Credit Act 1974. Legislation is currently enforced by the Office for Fair Trading (OFT) but that will change when powers are given to the new Financial Conduct Authority (FCA) in 2013.

Athough consumer credit regulation says that no unsecured loan should exceed £25,000, there is no mechanism to control how much a lender can charge or the rates of interest it sets – which has meant that payday lenders can charge very high amounts.

In 2010, the OFT’s guidance for creditors on irresponsible lending pointed out that: “All assessments of affordability should involve a consideration of the potential for the credit commitment to adversely impact on the borrower’s financial situation, taking account of information that the creditor is aware of at the time the credit is granted.”

However the OFT, who have the powers to revoke credit licenses, have admitted that it hasn't got the capacity to check this for every payday lending shop or internet branch. What it has recently sought is the powers to shut down payday lenders quickly and easily, if they are found in breach of regulations, but only time will tell how success this is.

As many payday lenders rightly argue, their loans are never taken out for a year, and so the APR actually distorts the real cost of a loan. This is not to say, though, that payday loans are not expensive. Compared with, say, authorised overdrafts from a bank, they are extremely costly.

Research by R3 has shown that 60 per cent of people who took out a payday loan have regretted the decision afterwards – because they are so detrimental to a person's finances.

So for this reason, instead of an interest rate cap (which can also be easily avoided by companies, who can recoup their loss by charging more for administrative fees, for example), I call for a cap on the total cost of credit. This would mean that there was a limit to how much a lender can charge for a loan (as well as added fees) and stop excessive profits being made on the back of people who struggle to get to the end of the month.

The government have a lot of work to do on the reasons many people can't afford to get to the end of the month also. Most payday loans are being taken out to buy food or bills and this should give the current administration pause. But we shouldn't just wait on the state alone (particularly not a Tory-led one). There are things we can be doing ourselves, right now.

What we can do

n Join a credit union, from which you can save and borrow money at a comparatively low cost n Write to councillors. Lewisham Council, in London, recently passed a motion calling for an end to “legal loan sharks” through its pledge of promoting credit unions in the borough and other community-based organisations that offer access to affordable Obviously, the system we have at the moment does not fully credit and promote savings work. In principle, it is good that the OFT has the regulations it n Write to Members of Parliament reminding them that the issue is does, and with enough will, its consumer credit department will live, something that their constituents are concerned about and that have the capacity to be tough on wrongdoing firms. any pressure they can put on the government in parliament would What we need, though, is more regulation. be a boon for local communities One of the interventions that is most talked about is an interest n Write to local payday lending shops demanding, as concerned rate cap. citizens, that they commit to giving debt advice to the people they However - the problem with such a cap is that how much interest sell loans to and that it provides information on cheaper alternaa lender can charge is only one problem. The annualised percentage tives in the area rating (APR) of many payday loans can be as high as 4,000+ per n Join existing campaigns to end legal loan sharks such as the one cent, but we ought to be clear that this is reflective of a loan that is organised by Movement for Change. taken out for a year.

Source: False Economy

What we want

AUTUMN 2012 l NIPSANEWS 17

LAWDESK

EQUAL PAY: How can we get our members pay increase?

Q. We are employed by a government department. A number of our members have discovered that people in another unrelated government department are carrying out the same type of work but are being paid more.

The majority of our members are men whereas the majority of the people carrying out the same type of work in the other department are women.

How can we get our members’ pay increased?

A. The equal pay provisions of the Equality Act 2010 deal with the situation where someone is being paid less than another on the basis of their gender.

Specifically, it is unlawful for an employer to pay someone less than another person who is doing “like work” (work that is the same or broadly similar), work which is rated as equivalent under a job evaluation study, and/or work which is found to be of equal value.

However, in order for the lower paid workers to compare themselves against the higher paid workers (of the opposite gender) they must share the same employer. Although the Crown employs all civil servants, since 1995 each government department has had responsibility for fixing terms and conditions of employment. In other words, there isn’t a single source, such as the Treasury or the Minister for the Civil Service, with responsibility for differences in pay.

The inability to bring equal pay claims based on salaries in another government department was confirmed in the decision of Robertson v Department for Environment, Food and Rural Affairs [2005] EWCA Civ 138. In that case, the Court of Appeal held that Mr Robertson, a civil servant, could not claim equal pay with two female civil servants employed in another government department.

With thanks for contributions from Labour Research Dept 18 NIPSANEWS l AUTUMN 2012

Reforms on horizon for tribunal cases THE government intends to adopt Lord Justice Underhill’s recommendations on amending employment tribunal procedure and is consulting on his proposals.

The main part of Underhill’s recommendations involves “effective case management” which includes rules on issues such as: n claims to be put through an initial sift by a judge, with tribunal staff having increased power to reject claims; n a lead case mechanism would automatically bind multiple claims, without the need for a further hearing; n a simplified procedure for withdrawing a claim; n a single preliminary hearing to replace separate case management discussions and prehearing reviews. • judges to have the option, where appropriate, to keep written reasons

short; and n judges to be able to impose time guillotines within a hearing to prevent over-lengthy oral evidence and submissions.

Underhill recommended more flexibility for judges to set aside default judgments and for them to be given greater discretion in deciding when to make restricted reporting orders and anonymity orders.

In terms of the use of deposit orders, Underhill said that judges should be able to order a deposit to be paid in relation to just one or more elements, rather than the entirety, of a claim. He also wants the removal of the cap on the amount of costs that can be imposed, with employment judges having the power to assess what costs are due, without making a referral to a county court. In addition, lay representatives should be able to apply for their costs to be reimbursed by the other side, though this

would be at a lower rate than that which lawyers can claim.

Some employers have been guilty of non-payment of awards. The government is proposing that where compensation has been awarded, interest will be due after 14 rather than 42 days and wants suggestions on how to ensure that awards are paid.

Other issues addressed by the consultation are a new claim form (ET1) and employer response form (ET3); and nonbinding “Presidential” guidance on what tribunal rules mean.

Finally, on alternative dispute resolution, a new rule would give tribunals and judges a mandate to use the other methods of dispute resolution at appropriate stages of the tribunal process. www.bis.gov.uk/Consultations/employment-tribunalrules-review-justice-underhill

Reasons for resigning in dismissal case

The Employment Appeal Tribunal (EAT) has ruled that in a constructive dismissal claim a fundamental breach of contract must be a reason, but need not be the “principal reason” for an employee resigning.

Following a disagreement with her employer over rotas, Ms Logan was called in for a disciplinary meeting. But before the meeting went ahead, Logan went off sick.

Subsequently, a dispute arose over the amount Logan was being paid while she was off sick. Logan claimed that, as per the staff handbook, she should be paid contractual sick pay of four weeks’ full pay, four weeks’ half pay. Instead the employer refused and incorrectly paid her the much smaller amount of statutory sick pay.

Logan then raised a grievance about the missing sick pay and over being subjected to bullying.

The employer rejected Logan’s grievances, as well as her appeal, and a letter containing the decision to reject her appeal was sent to Logan. A week later, Logan responded by resigning. Her resignation letter complained of the way her

grievance had been handled rather than mentioning the unpaid sick pay again.

Logan brought a claim in the tribunal arguing that she had been constructively dismissed.

The tribunal decided that the “principal reason” for Logan resigning was the alleged bullying (which the tribunal found had not in fact occurred). In other words, the tribunal did not find that the failure to pay sick pay — something that was a fundamental breach of contract — was the reason for Logan’s resignation. On this basis the tribunal rejected her claims. Logan appealed.

The EAT, applying the Meikle v Nottinghamshire County Council [2005] ICR 1 judgment, decided that the tribunal had made a mistake by trying to identify the “principal reason” for Logan’s resignation. It concluded that it was sufficient that Logan had resigned at least in part, in response to the employer’s fundamental breach of contract (the failure to pay contractual sick pay) and had, therefore, been constructively dismissed.

Logan v Celyn House Ltd UKEAT/0069/12/JOJ

Employers must act on equality

THE gender pay gap is now 15 per cent. Is the Supreme Court’s decision that out-of-time equal pay claims can proceed as breach of contract claims in the High Court a step too far for employers?

The ruling goes to the heart of employers’ risk management strategies and budgets for equal pay claims. Not only will employees now have much longer to bring their claims (six years as opposed to six months), but crucially it appears to open the gates to ‘forum shopping’ for opportunistic employees.

According to the Supreme Court, the reasons a claimant has failed to bring the claim in time at a tribunal are irrelevant to assessing whether that claim can be “more conveniently disposed of” by an Employment Tribunal under section 2(3) of the Equal Pay Act 1970.

This is controversial. Tactically, claimants can rely on letting the six-month tribunal time limit pass, whether or not they have acted reasonably in doing so. Yet employees bringing sex discrimination claims have to claim within three months of termination of employment, and time can only be extended to the amount the tribunal considers just.

What is the justification for this difference?

There is still a lot of secrecy surrounding pay. It is not uncommon for individuals to find out, after termination of employment or a TUPE transfer, that former colleagues in similar roles have been paid differently or been successful with equal pay claims. But a time limit of six years means employers may face claims long after employment has ended, making gathering evidence difficult - particularly where decision-makers and alleged comparators have left employment.

The fear is that the floodgates will open - in particular, claims piggy-backing on successful tribunal claims made “in-time” by peers or claimants using confidential information gained through the disclosure process in tribunal sex discrimination actions to gauge future High Court equal pay success.

One factor that deters claimants from the High Court is the cost involved. Whereas in the tribunal each side pays its own legal costs, in the High Court the losing party also bears the winner’s costs. Equal pay cases are notoriously cumbersome, complex and long, meaning both sides’ costs are usually substantial.

However, these could be the very reasons why employees choose the High Court. In the public sector class action equal pay claims are common and often ‘no win, no fee’ arrangements apply. So employees will have nothing to lose by bringing High Court actions - they do not bear the costs risk and potential exposure for the employer is significantly increased.

Similarly, although the battleground for the surge in equal pay claims in recent years has been the public sector, they are becoming increasingly popular in the private sector. A complex High Court claim from a high-earning female employee brought nearly six years after she left employment may prove a powerful negotiating tool.

The Government has stated that it does not intend to introduce the controversial mandatory gender pay reporting provisions in the Equality Act. Although that is welcome news for many employers, this ruling shows that tackling equal pay issues before claims arise must always be the best policy.

Poor health prevents older people working

DISABILITY and poor health are preventing nearly half a million people approaching retirement from working, a figure that will only increase as the state pension age starts to rise, according to a TUC analysis.

The TUC research, based on official labour market data, found that the employment rates for those approaching the current state pension age are low, with just 54% of men aged 60-64 and 62% of women aged 56-60 in work.

According to the TUC, this demonstrates the failings of the government’s assumption that putting up the state pension age will automatically increase working lives. It argues that, on the contrary, the figures show that many older people are unfit or will find it hard to find work.

Nearly two in five of those approaching the state pension age are economically inactive (someone who has not sought work in the last four

weeks), with long-term sickness and disability cited as the main reason for them not working.

People formerly working in skilled trades, heavy industry and lowskilled jobs are most likely to be inactive due to disability or ill-health, while managers and senior officials are far more likely to be inactive because of early retirement.

Nearly 100,000 more people are currently inactive due to long-term sickness and disability (470,325 on the latest official figures) compared to those who took early retirement (375,368).

Around a quarter of a million of all economically inactive older people emphasise that they want to work. In a benefits system that gets meaner and tougher each year, even 66-yearolds who have worked for decades before stopping work will be treated as work-shy scroungers.

EQUALITYDESK

Get serious about equal pay, or pay a heavy price

A LANDMARK ruling by the Supreme Court on equal pay should send shockwaves through virtually every human resources department in the country, the employment law specialist Bibby Consulting & Support has warned.

In what has been described as the most radical reform since the introduction of equal pay legislation in 1970, the judges upheld the right of female ex-employees of Birmingham City Council who had worked as cleaners, cooks and carers to have their equal pay claims heard by the High Court.

About 5000 female employees at the council had already been awarded compensation for their equal pay claims but the ex-employees had fallen foul of the six-month time limit imposed by employment tribunals to make their case - so they went to the High Court which allows six years to bring a claim.

The equal pay claim related to bonuses received by their male comparators that were not paid to the women, meaning the men earned on average £10,000 to £13,000 more.

The council's stance was that the women's case should not be heard because they had left the council and had not launched their claims through the accepted channels within the statutorily prescribed period after leaving.

However, the Supreme Court did not accept this argument.

According to the women's lawyers, the case is likely to cost Birmingham City Council £2m and open the way for another 1000 cases of former council workers who say they were also underpaid.

But the bigger impact of the ruling could be felt in businesses throughout the land, said Bibby Consulting & Support's Managing Director Michael Slade.

"This decision makes it important that employers ensure all staff receive equal pay for equal work regardless of gender," he said. "Getting this right is particularly important because ex-employees may now have cause to refer to the civil court system for recompense if they are out of time for bringing a claim via an employment tribunal.

"The blunt message here is - get serious about equality and equal opportunities or expect to pay a heavy price."

AUTUMN 2012 l NIPSANEWS 19

HEALTHANDSAFETY

Five ways the revised NHS Constitution fails staff, patients & taxpayers.

THE new NHS Constitution is supposed to enshrine a set of rights for the NHS Patient and NHS Staff Member. In many ways it does neither.

The document fails patients, staff and taxpayers.

The Department of Health apparently want feedback on their document. I propose we give it to them. The document lacks these 5 main qualities. n Rights of Free at Point of Use healthcare needs to be clarified n Rights under Freedom of Info Act need to be extended to private provider. n Rights of transparency in planned job losses need to be spelled out. n Rights of public meetings need to be extended to private providers. n Rights of wage protection for staff members is completely omitted.

1. Regarding the right to "Free at the Point of Use" healthcare the Constitution does not use the phrase even once. Instead it says: "Access to NHS services is based on clinical need, not an individual’s ability to pay. NHS services are free of charge, except in limited circumstances sanctioned by Parliament." Unless the last phrase in this only mention of the cost of patient care is better clarified there is scope for a loose interpretation to be applied.

2. There is only a cursory mention of the Freedom on Information Act. Private companies running NHS services are currently exempt from complying with FOIA regulations. The constitution says: "Information we receive, including personal information, may be published or disclosed in accordance with the access to information regimes (primarily the Freedom of Information Act 2000 (FOIA)" The Constitution needs to explicitly guarantee the rights

By Dr Eoin Clarke

of patients and taxpayers to assess the data relating to the care provided and money spent. This must include private companies.

3. The Constitution mentions the word "Responsbility" 48 times in the document, Almost always it is demanding that staff & patients act responsibly. No where in the document does it state that NHS bosses have a responsibility to be honest with staff about job cuts. Recently Circle, Serco and Virgin included planned job cuts in their business plans that won them 3 separate contracts totaling £1.6bn but the NHS chiefs hid the planned job losses from staff in Suffolk, Surrey or Huntingdon. The constitution needs to include staffs right to be informed of proposed job losses 180 days in advance.

4. There is not one mention of "meetings" or the right for public meetings to be held even once in the document. Patients, Staff and Taxpayers should have a right every 4 weeks to question the health bosses (public and private) running their services. Currently, Virgin Care are exempt from holding Community Health meetings in Surrey even though they now run the entire community health services there. At the moment, meetings are held only about 10 times a year, and all too often their time and location is very poorly advertised.

5. The document does not mention the word "Wage" or "Salary" even once. There are no rights in this document to prevent staff being down banded (which can cost up to £8k a year) or having their allowances and pay cut. The omission of this entire topic is ominous and does not bode well for staff.

Source: Dr Eoin Clarke: http://eoin-clarke.blogspot.co.uk/ The Green Benches

Cancer compensation scheme is announced

The NIBTS exists to fully supply the needs of all hospitals and clinical units in the province with safe and effective blood and blood products and other related services. The discharge of this function includes a commitment to the care and welfare of our voluntary donors.

The Northern Ireland Blood Transfusion Service, established in 1946, is an independent, Special Agency of the DHSSPS. It is responsible for the collection, testing and distribution of over 64,000 blood donations each year. The Service operates three mobile units at around 250 locations throughout the province. Including headquarters, located on the site of the Belfast City Hospital, a total of almost 1,000 donation sessions are held each year.

Where to donate: visit – http://www.nibts.org/wheretodonate.html

20 NIPSANEWS l AUTUMN 2012

THE government has finally announced a compensation scheme for all newly diagnosed victims of mesothelioma — the asbestos induced cancer of the lining of the lungs and other organs — that kills over 2,300 people every year.

Over 10% of victims currently receive no civil compensation — due to difficulties tracing their employers’ insurers. Employer’s liability insurance has been a statutory requirement since 1972, but prior to 1999 there wasn’t a central database recording which insurance firm indemnified which employer.

The new scheme will mean sufferers who cannot trace the employer and/or insurer responsible for the consequences of their exposure to asbestos, stand to benefit.

Once the new Employers Liability Insurance Bureau (ELIB) is up and running, all employers’ liability insurers will be made liable for a portion of the compensation due — amounting to around £25 to £30 million a year in total. As a result, the ELIB will provide around 3,000 mesothelioma sufferers with access to compensation. Unfortunately, the amount of compensation due per person may be reduced when a new tariff system is introduced.

Regrettably, the new ELIB scheme does not cover victims of other asbestos-related conditions, such as asbestosis. TUC general secretary Brendan Barber, while welcoming the new scheme, said that it “will provide no help to workers who develop other cancers or life-threatening diseases, and who find themselves with no means of claiming compensation”.

The special interests won again

THE US election that was supposed to be too close to call turned out not to be so close after all. In my opinion, Obama won for two reasons: (1) Obama is non-threatening and inclusive, whereas Romney exuded a “us vs. them” impression that many found threatening, and (2) the election was not close enough for the electronic voting machines to steal.

As readers know, I don’t think that either candidate is a good choice or that either offers a choice. Washington is controlled by powerful interest groups, not by elections. What the two parties fight over is not alternative political visions and different legislative agendas, but which party gets to be the whore for Wall Street, the military-security complex, Israel Lobby, agribusiness, and energy, mining, and timber interests.

Being the whore is important, because whores are rewarded for the services that they render. To win the White House or a presidential appointment is a career-making event as it makes a person sought after by rich and powerful interest groups. In Congress the majority party can provide more services and is thus more valuable than the minority party. One of our recent presidents who was not rich ended up with $36 million shortly after leaving office, as did former UK prime minister Tony Blair, who served Washington far better than he served his own country.

Wars are profitable for the military/security complex. Israel rewards its servants and punishes its enemies. Staffing environmental regulatory agencies with energy, mining, and timber executives is regarded by those interests as very friendly behaviour.

Many Americans understand this and do not bother to vote as they know that whichever candidate or party wins, the interest groups prevail.

Ronald Reagan was the last president who stood up to interest groups, or, rather, to some of them.

Wall Street did not want his tax rate reductions, as Wall Street thought the result would be higher inflation and interest rates and the ruination of their stock and bond portfolios. The military/security complex did not want Reagan negotiating with Gorbachev to end the cold war.

What is curious is that voters don’t understand how politics really works. They get carried away with the political rhetoric and do not see the hypocrisy that is staring them in the face. Proud patriotic macho American men voted for Romney who went to Israel and, swearing allegiance

By Paul Craig Roberts

to his liege lord, grovelled at the feet of Netanyahu. Obama plays on the heart strings of his supporters by relating a story of a child with leukemia now protected by Obamacare, while he continues to murder thousands of children and their parents with drones and other military actions in seven countries. Obama was able to elicit cheers from supporters as he described the onward and upward path of America toward greater moral accomplishments, while his actual record is that of a tyrant who codified into law the destruction of the US Constitution and the civil liberties of the American people.

The election was about nothing except who gets to serve the interest groups. The wars were not an issue in the election. Washington’s provoking of Iran, Russia, and China by surrounding them with military bases was not an issue.

The unconstitutional powers asserted by the executive branch to detain citizens indefinitely without due process and to assassinate them on suspicion alone were not an issue in the election.

The sacrifice of the natural environment to timber, mining, and energy interests was not an issue, except to promise more sacrifice of the environment to short-term profits. Out of one side of the mouth came the nonsense promise of restoring the middle class while from the other side of the mouth issued defenses of the offshoring of their jobs and careers as free trade.

The inability to acknowledge and to debate real issues is a threat not only to the United States but also to the entire world. Washington’s reckless pursuit of hegemony driven by an insane neoconservative ideology is leading to military confrontation with Russia and China.

Eleven years of gratuitous wars with more on the way and an economic policy that protects financial institutions from their mistakes have burdened the US with massive budget deficits that are being monetized. The US dollar’s loss of the reserve currency role and hyperinflation are plausible consequences of disastrous economic policy.

How is it possible that “the world’s only superpower” can hold a presidential election without any discussion of these very real and serious problems being part of it? How can anyone be excited or made hopeful about such an outcome?

Paul Craig Roberts is a former Assistant Secretary of the US Treasury and Associate Editor of the Wall Street Journal. His latest book, Wirtschaft am Abgrund (Economies In Collapse) has just been published.

WORLDDESK

Bullying rife in public service, report says

ONE in two public servants has witnessed bullying in the workplace according to a "warts and all" review of the NSW public sector.

The review found almost half 48 per cent of people surveyed had witnessed bullying at work.

Almost a third - 29 per cent - said they had been bullied in the past 12 months and 6 per cent had formally complained about bullying behaviour.

Premier Barry O'Farrell welcomed the report, released by the new Public Service Commissioner Graeme Head.

"This is the first time any government has had a thorough look at the NSW public sector - warts and all," Mr O'Farrell said.

Mr O'Farrell said that the report found a highly educated workforce, but a culture of bullying that needed to be addressed.

"It also highlights areas that need to be improved including workplace bullying, the focus on accountability, financial management expertise and workforce planning," he said.

Mr Head said the inaugural State of the NSW Public Sector Report was the most comprehensive review of the state's public sector and the first independent review of the public sector's performance.

More than 60,000, or 16 per cent of NSW government employees responded to the survey, which asked people about their views on core public sector values of trust, service, accountability and integrity.

"It is likely that a proportion of what people perceive as bullying arises from the absence of good performance management practices and organisational culture," Mr Head said.

WorkCover NSW describes workplace bullying as "repeated, unreasonable behaviour directed towards a worker or a group of workers that creates a risk to health and safety".

AUTUMN 2012 l NIPSANEWS 21

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Harry Belafonte and politics by other means

BOOKNEWS

By Michael Anderson

FOR Harry Belafonte, entertainment has been a continuation of politics by other means. “I wasn’t an artist who’d become an activist”, he writes in his autobiography, My Song. “I was an activist who’d become an artist.”

Despite spending fifteen years as a major nightclub and concert attraction, in a career as rapid – he was nicknamed “the Cinderella Gentleman” – as it was triumphant (by 1956 his records competed for the top spot in the charts with those of Elvis Presley, as critics debated if the future of popular music would be calypso or rock ’n’ roll), Belafonte judges the heart of his life to lie in his support for social justice.

From the time of his lengthy association with Martin Luther King, Jr (spanning the last eighteen years of King’s life, from Montgomery to Memphis), through his connection with “We Are the World”, Belafonte has raised millions of dollars for social causes; his personal contributions are surely in the hundreds of thousands. (Belafonte does not give a total, a rare instance of modesty in his book.)

“How obsessive this was – a kind of insanity”, he muses; indeed, so central are politics to Belafonte that his attitudes approach caricature. “Songs weren’t just entertainment”, he writes. “They could move people to action. They had political power.” (How many listeners realized that his hit, “Banana Boat Song”, was not only “my musical signature, but more than that, it was a cry from the heart of poor workers”?) An invitation to substitute for Johnny Carson on the Tonight Show was an opportunity “to reach America with a message of tolerance and understanding”. When he won late-career applause in Europe, “I was admired for my activism as much as for my performing”. Even the basis of his second marriage was that “we shared the same politics”; it broke down after forty-eight years because “We substituted politics for passion, then confused the two”.

A cry from the heart of poor workers Belafonte confesses that this monomaniacal preoccupation was driven by “a search for self. Who was I?”. Although he shows a conspicuous aversion to introspection – an obvious deficit for an autobiographer, exacerbated by the sludgy

prose of Belafonte’s collaborator, Michael Shnayerson, a contributing editor at Vanity Fair – the facts of his life are suggestive. Harold George Bellanfanti, Jr was born on March 1, 1927 to Jamaican émigrés to New York, and his early life was marked by his father’s desertion, his mother’s frantic struggle to ease an inescapable poverty, and young Harry’s brittle sense of self. His name shifted as his mother evaded creditors: “Bellanfanti became Belanfonte, and then, after a variation or two, Belafonte”. His activism seems to have been inculcated in equal parts by his mother, whom he remembers compelling him to “accompany her to one political gathering after another”, and his anger, the emotion he holds paramount and defiantly refuses to surrender. It manifests itself throughout the book in repellently snide comments about friends and colleagues such as Sidney Poitier, Sammy Davis, Jr, even King’s widow. Like so many professional humanitarians, Belafonte seems distinctly unfond of human beings.

Abandoned by his own father, Belafonte seems to have sought substitutes in his political passions. Following King’s assassination, he successively embraced Fidel Castro, Nelson Mandela, even, briefly, Hugo Chávez. However, the decisive influence was the first, Paul Robeson, “the extraordinary actor, singer and activist whose path I’d tried to follow my whole adult life”, and whose imprint has proved indelible. His coy refusal to acknowledge Robeson’s affiliation with the Communist Party is but the most egregious example of Belafonte’s sovereign disregard for historical accuracy. He serves as an embodiment of Robeson’s brand of Popular Front cultural Marxism, in particular its willed internationalism: Belafonte’s concert repertoire ranged from American folk songs to those of the Caribbean, England and Ireland, even “Hava Nageela”. (“Different voices, but a shared humanity; this was my platform, my politics, my authenticity.”) His current project is an attempt to record and distribute songs created by union members, an effort he hopes will replicate the ethos of “Woody Guthrie and the Great Depression”. His highest compliment is to declare someone a “socialist”, an accolade he grants, absurdly, to Eleanor Roosevelt and Martin Luther King.

Belafonte’s greatest cultural significance is one with which he is clearly uneasy. He was white America’s first acknowledged black male sex symbol. It is a measure of a halfcentury’s progression that such an accomplishment sounds faintly inexplicable, if not downright absurd. Yet as late in the Civil Rights era as 1968, a sponsor objected to a spontaneous moment during a Petula Clark television programme when the singer touched Belafonte’s arm during a duet. The sponsor thought the gesture would offend some viewers and demanded a retake. Clark, to her enduring glory, refused. Belafonte says he abandoned Hollywood because of the risible neutering of his roles in Island in the Sun and The World, the Flesh and the Devil. On the other hand, he found the attention given to his sex appeal “slightly alarming”; characteristically, he cannot resist overburdening a human response with ideological freight: “If you liked Harry Belafonte, you were making a political statement”. However much focus Belafonte has gained from his politics, they have certainly narrowed his vision.

Harry Belafonte, with Michael Shnayerson MY SONG A memoir of art, race and defiance 469pp. Canongate. Paperback, £14.99.

978 0 85786 586 1

AUTUMN 2012 l NIPSANEWS 23