Owen Jones’s ‘Agenda for Hope’: We want a fairer society – and here’s how we can achieve it

ImageThe alarm goes off. It’s dark outside, and Mary wakes to get ready for work at the checkout of a local supermarket. Like most of Britain’s poor, she has a job that leaves her and her children trapped below the poverty line. She finds herself competing with colleagues for overtime, just to earn a few more pounds to spend on her kids. Even though her employer makes hundreds of millions of pounds of profit a year, it is the taxpayer who has to step in and subsidise those poverty wages to give Mary a chance to pay the bills and feed her children. Mary had a rough night’s sleep because it’s nearly time to pay the rent. She would love nothing more than a secure, affordable home for her family but, like 5 million others, she’s stuck on a council housing waiting list. Because her rent is so extortionate, the taxpayer has to step in again, to make sure her landlord gets the rip-off sum he demands. On her way downstairs, Mary knocks on the door of her 19-year-old son, Michael. He is one of nearly a million unemployed young people. Michael sends in CV after CV, to supermarkets and call centres, and often does not even get a response. The odds are that being unemployed at such a young age will leave him with a lower wage, and an increased risk of being out of work, for the rest of his life. As she approaches the front door, Mary glimpses another reason for her sleepless night: an unopened energy bill lying on her kitchen table. As the bills have soared, so the hot meals she eats have declined in number. And so Mary leaves for a gruelling shift at the supermarket, working hard to earn her poverty. Mary isn’t a real person, but there are millions of people in this country who share aspects of their lives with someone like her. We all have to pay, literally, as poverty-paying bosses and rip-off landlords milk our welfare state. The Government and much of the media have answers for people like Mary. “Instead of being angry at your situation,” Mary is told, “be angry at unemployed people, immigrants, public sector workers, or disabled claimants instead.” It is an Agenda of Fear. The bankers who plunged Britain into disaster, the politicians in the pockets of the wealthiest, the rich tax-dodgers, the poverty-paying bosses and rip-off landlords – all are let off the hook. The Agenda of Fear makes sure that the real solutions to the problems faced by someone like Mary – and the nation as a whole – are never even discussed.

But we desperately need an Agenda of Hope. It is a series of policies that the next Government must implement if it is going to transform our country. They are not plucked out of nowhere. Polls show the British people overwhelmingly support a minimum wage that is a living wage, public ownership of our utilities, letting councils build houses, and tax justice. These are common-sense, mainstream ideas that are ignored by our political and media elite. When on Saturday Ed Balls suggested restoring the 50p tax on the top 1 per cent of earners, he provoked near-hysteria among the political and media elite, and yet the polls show the British people support going even further. These Agenda for Hope policies are suggestions that draw inspiration from tax justice crusaders such as chartered accountant Richard Murphy and UKUncut; the pioneering New Economics Foundation, with its work on a new industrial policy and banks that work for people; and new union-backed think-tank Class, which is hammering away at an alternative. The gentleman’s agreement of British politics, which ensures that our national political debate is kept on the terms of the wealthy and powerful, has to end. But our history shows that change is never given: it has to be demanded. The polls show that some of these demands are backed even by Conservative voters. And no wonder. This isn’t about left or right. It’s about building a country run in the interests of those who keep it ticking, not run in the interests of the elite. That’s what an Agenda of Hope can offer.

Agenda for hope: Owen Jones’s nine-point manifesto

1) A statutory living wage, with immediate effect, for large businesses and the  public sector, and phased  in for small and medium  businesses over a five-year Parliament. This would save billions spent on social security each year by reducing subsidies to low-paying bosses, as well as stimulating the economy, creating jobs because of higher demand, stopping pay being undercut by cheap labour, and tackling the scandal of most of Britain’s poor being in work. An honest days’ pay for an honest days’ work would finally be enshrined in law. 2) Resolve the housing crisis by regulating private rents and lifting the cap on councils to let them build hundreds of thousands of houses and in doing so, create jobs, bring in rent revenues, stimulate the economy and reduce taxpayers’ subsidies to landlords. 3) A 50 per cent tax on all earnings above £100,000 – or the top 2 per cent of earners – to fund an emergency jobs and training programme for young unemployed people, including the creation of a national scheme to insulate homes and businesses across Britain, dragging millions of out of fuel poverty, reducing fuel bills, and helping to save the environment. All such jobs will be paid the living wage, supported with paid apprenticeships rather than unpaid “workfare” schemes. 4) An all-out campaign to recoup the £25bn worth of tax avoided by the wealthiest each year, clamping down on all possible loopholes with a General Anti-Tax Avoidance Bill, as well as booting out the accountancy firms from the Treasury who help draw up tax laws, then advise their clients on how to get around them. 5) Publicly run, accountable local banks. Transform the bailed-out banks into regional public investment banks, with elected taxpayers’ representatives sitting on boards to ensure they are accountable. Give the banks a specific mandate to help small businesses and encourage the green industries of the future in each region. 6) An industrial strategy to create the “green jobs” and renewable energy industries of the future. It would be focused on regions that have been damaged by deindustrialisation, creating secure, skilled, dignified jobs, and reducing unemployment and social security spending, based on an active state that intervenes in the economy, learning from the experiences of countries such as Germany. 7) Publicly owned rail and energy, democratically run by consumers and workers. As each rail franchise expires, bring them back into the public sector, with elected representatives of passengers and workers to sit on the new management boards, ending our fragmented, inefficient, expensive railway system. Build a publicly owned energy network by swapping shares in privately run companies for bonds, and again put elected consumers’ representatives on the boards. Democratic public ownership instead of privatisation could be a model for public services like the NHS, too. 8) A new charter of workers’ rights fit for the 21st century. End all zero-hour contracts, with new provisions for flexible working to help workers. Allow all unions access to workplaces so they can organise, levelling the playing field and giving them a chance to improve wages and living standards. Increase turnout and improve democratic legitimacy in union ballots by allowing workplace-based balloting and online voting. 9) A universal childcare system that would pay for itself as parents who are unable to work are able to do so, and which would take on the inequalities between richer and poorer children that begin from day one.

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Just some ill informed rubbish about George Osborne

According to Osborne, anyone who expresses concern about these reforms is guilty of spouting “ill-informed rubbish” and “shrill, headline-seeking
nonsense”. This includes Crisis, Shelter, the National Housing Federation, the Children’s Society, Citizens Advice, Disability Rights UK,
Mencap, Scope, the National Autistic Society, the Royal National Institute of Blind People, Disability Alliance and naturally, that shrill cesspit of
communism, the Church of England.

Osborne watched Chelsea play Manchester United on Monday. He saw John Terry, Frank Lampard, Fernando Torres, Robin Van Persie, Wayne Rooney and Eden Hazard do their stuff.
The combined wages of these six players are a staggering £1,035,000 per week. These six players – on their wages alone, never mind other sources of income ,were handed a tax break of roughly £2.5m next year by the very Chancellor applauding them vacuously.

That is roughly 110 teachers; it is roughly 120 nurses; it is roughly 15,000 “spare bedroom subsidies”.

And such premiership royalty are in very good company. While the Chancellor waffled on about how “we are all in this together”, it was announced that the Queen was receiving a 16 per cent boost to her Government grant. Not to sound unpatriotic, but being “in this together” would seem to imply we all have to make sacrifices. It is utterly obscene, at a time of economic stagnation during which the state is imposing untold misery on millions of those who can least afford it, for the person at the very top of the pile to be getting a £5m raise. That is roughly 220 teachers; it is roughly 240 nurses; it is roughly 30,000 “spare bedroom subsidies” in exchange for the extra reward given to the UK council tenant with the most spare bedrooms in the country
I am led to believe that the Tories don’t care if they get any growth in the economy as long as they can make their ideological changes so deep as to be irreversible.

Party on George

Party on George

UK – VAT 40 years old today a brief history…

Value Added Tax (VAT) is a tax on consumption levied in the United Kingdom by the national government. It was introduced in 1973 and is the third largest source of government revenue after income tax and National Insurance. It is administered and collected by HM Revenue and Customs.

VAT is levied on most goods and services provided by registered businesses in the UK and some goods and services imported from outside the European Union. There are complex regulations for goods and services imported from within the EU. The default VAT rate is the standard rate, 20% since 4 January 2011. Some goods and services are subject to VAT at a reduced rate of 5% (such as domestic fuel) or 0% (such as most food and children’s clothing). Others are exempt from VAT or outside the system altogether. Under EU law, the standard rate of VAT in any EU state cannot be lower than 15%. Each state may have up to two reduced rates of at least 5% for restricted list of goods
and services. The European Council must approve any temporary reduction of VAT in the public interest. VAT is an indirect tax because the tax is paid to the government by the seller (the business) rather than the person who ultimately bears the economic burden of the tax (the consumer). It is also a regressive tax: the poorest people spend a higher proportion of their disposable income on VAT than the richest people.

History Prior to 1973:

The UK had a consumption tax called “Purchase Tax” which was levied at different rates depending on the goods’ luxuriousness. On 1 January 1973 the UK joined the European Economic Community and as a consequence “Purchase Tax” was replaced by “Value Added Tax” on 1 April 1973. The then Conservative Chancellor Lord Barber set a single VAT rate (10%) on most goods and services. In July 1974, Labour Chancellor Denis Healey
reduced the standard rate of VAT from 10% to 8% but introduced a new higher rate of 12.5% for petrol and some luxury goods. In November 1974 Healey doubled the higher rate of VAT to 25%. Healey reduced the higher rate back to 12.5% in April 1976. Conservative Chancellor Geoffrey Howe increased the standard rate of VAT from 8% to 15% and abolished the higher rate in June 1979. The rate remained unchanged until 1991, when Conservative Chancellor Norman Lamont increased it from 15% to 17.5%. The additional revenue was used to pay for a reduction in the hugely unpopular community charge. During the 1992 general election the Conservatives promised not to extend the scope of VAT, but, in March 1993, Lamont announced that domestic fuel and power, which had previously been zero-rated, would have VAT levied at 8% from April 1994 and the full 17.5% from April 1995. The planned introduction of VAT on domestic fuel
and power went ahead in April 1994, but the
increase from 8% to 17.5% in April 1995 was
scuppered in December 1994, after the
government lost the vote in parliament.
In its 1997 general election manifesto, the Labour Party pledged to reduce VAT on
domestic fuel and power to 5%. After gaining power, the new Labour Chancellor
Gordon Brown announced in June 1997 that the lower rate of VAT on domestic fuel and
power would be reduced from 8% to 5% with effect from 1 September 1997. In November 1997, Brown announced that the VAT on installation of energy saving materials would be reduced from 17.5% to 8% from 1 July 1998. Brown subsequently reduced VAT
from 17.5% to 8% on sanitary protection products (from 1 January 2001); children’s
car seats (from 1 April 2001); conversion and renovation of certain residential properties (from 12 May 2001);
contraceptives (from 1 July 2006); and smoking cessation products (from 1 July
2007)

In response to the late-2000s recession, Labour Chancellor Alistair Darling announced in November 2008 that the standard rate of VAT would be reduced from 17.5% to 15% with effect from 1 December 2008. In December 2009, Darling announced that the standard rate of VAT would return to 17.5% with effect from 1 January 2010. In the run up to the 2010 general election there were reports that the Conservatives would raise VAT if they gained power. The party denied the reports. Following the election in May 2010, the Conservatives formed a coalition government with the Liberal Democrats and in June 2010 Conservative Chancellor George Osborne announced that the standard rate of VAT would increase from 17.5% to 20% with effect from 4 January 2011.

Operation:
All businesses that provide “taxable” goods and services and whose taxable turnover exceeds the threshold must register for VAT. The threshold has been £77,000 since April 2012. It is by far the highest VAT registration threshold in the world. Businesses may choose to register even if their turnover is less than that amount. All registered businesses must charge VAT on the full sale price of the goods or services that they provide unless exempted or outside the VAT system. The default VAT rate is the standard rate, currently 20%. Some goods and services are charged lower rates
(reduced or zero). Registered businesses must pay over to HMRC the VAT they have charged on their goods or service (known as output tax) but they may offset this with the VAT they have incurred on goods or services they have purchased (known as input tax).

A separate scheme, called The Flat Rate Scheme is also run by HMRC. This scheme allows a VAT registered business with a turnover of less than £150,000 per annum to pay a fixed percentage of its turnover to HMRC every 3 months. The scheme is designed to reduce red tape for small business and allow new companies to keep some of the VAT they charge to their customers.

Businesses that sell exempt goods or supplies, such as banks, may not register for VAT or reclaim VAT that they have incurred on purchases. Businesses that sell some exempt goods or supplies may not be able to reclaim the VAT on all of their purchases. However, businesses that sell zero-rated goods or supplies, such as food producers or bookseller, may reclaim all the VAT they have incurred on purchases.

Rates:
There are currently three rates of VAT:
standard (20%), reduced (5%) and zero
(0%).In addition some goods and
services are exempt from VAT or outside the
VAT system.[1]
The following are the rates applicable to
some common goods and services:
Standard Rated
Alcoholic
drinks
Biscuits
(chocolate
covered only)
Bottled water
(inc. mineral
water)
Calendars &
diaries
Carbonated
(fizzy) drinks
CDs, DVDs &
tapes
Cereal bars
Chocolate
Clothes &
footwear (not
for children
under 14)
Confectionery/
sweets
Delivery
charges
(postage &
packaging)
Electrical
goods
Electricity,
gas, heating
oil & solid fuel
(business)
Food & drinks
supplied for
consumption
on the
premises (at
restaurants,
cafes etc)
Hot take-away
food & drinks
(inc. burgers,
hot dogs,
toasted
sandwiches)
Ice cream
Fruit juice &
other cold
drinks (not
milk)
Nuts (shelled,
roasted/
salted)
Potato crisps
Prams &
pushchairs
Road fuel
(petrol/diesel)
Salt (non-
culinary)
Stationery
Taxi fares
Tolls for
bridges,
tunnels &
roads
(privately
operated)
Water
(industrial)

Reduced Rated:

Children’s car
seats
Electricity,
gas, heating
oil & solid
fuel
(domestic/
residential/
charity non-
business)
Energy
saving
materials
(permanently
installed in
residential/
charity
premises)
Maternity
pads
Mobility aids
for the
elderly
Sanitary
protection
products
Smoking
cessation
products

Zero Rated:

Aircraft (sale
charter)
Bicycle &
motorcycle
helmets
Biscuits (not
chocolate
covered)
Books, maps
& charts (no
ebooks)
Bread, rolls,
baps & pita
bread
Brochures,
leaflets &
pamphlets
Building
services for
disabled
people
Cakes
(including,
Jaffa Cakes)
Canned &
frozen food
(not ice
cream)
Cereals
Chilled/froze
ready meals,
convenience
foods
Clothes &
footwear (for
children
under 14
only)
Construction
& sale of new
domestic
buildings
Cooking oil
Donated
goods sold a
charity shop
Eggs
Equipment
for disabled
people (inc.
blind/partiall
sighted)
Fish (inc. liv
fish)
Fruit &
vegetables
Live animals
for human
consumptio
Meat &
poultry
Milk, butter,
cheese
Newspapers,
magazines &
journals
Nuts & pulse
(raw for
human
consumptio
Prescription
medicine
Protective
boots &
helmets
(industrial)
Public
transport
fares (bus,
train & tube)
Salt
(culinary)
Sandwiches
(cold)
Sewerage
(domestic &
industrial)
Shipbuilding
(15 tonnes o
over)
Tea, coffee &
cocoa
Transport in
vehicle, boat
or aircraft
(not fewer
than ten
passengers)
Water
(household)

Revenue

VAT revenue since 1978/79 as a percentage
of total government revenue:[27]
Year VAT
(£bn)
% Year VAT
(£bn)
1978/79 4.9 7.02% 1988/89 27.2 13.
1979/80 8.0 9.41% 1989/90 29.6 14.
1980/81 11.1 11.00% 1990/91 30.9 13.
1981/82 11.9 9.95% 1991/92 35.3 15.
1982/83 13.8 10.63% 1992/93 37.2 16.
1983/84 15.3 11.09% 1993/94 39.2 16.
1984/85 18.6 12.59% 1994/95 41.7 16.
1985/86 19.4 12.29% 1995/96 43.1 15.
1986/87 21.3 12.94% 1996/97 46.6 16.
1987/88 24.2 13.53% 1997/98 50.6 16.
Estimated Avoidance:

Evasion and fraud

The UK government loses billions in revenue each year due to VAT avoidance, evasion and fraud. In 2006 the loss was estimated to be between £13bn and £18bn, equivalent to £1 for every £6 of VAT due. The bulk of the lost revenue, about £1 in every £8 of VAT due, is due to evasion.[29] Evasion, which is illegal, occurs when registered businesses pay over to HMRC less than they should. This can be done by understating sales or overstating purchases. Evasion also occurs when businesses do not charge VAT on goods and services they provide even though they are legally obliged to. Cash-in-hand jobs by tradesmen may indicate VAT evasion.

In recent years carousel fraud (also known as missing trader fraud) has increased. Criminal gangs trade goods, such as mobile phones, across EU countries. They do not have to pay VAT, as imports from the EU are exempt. The fraud occurs when the criminals sell the goods with VAT in the UK but fail to pass the VAT to HMRC. The goods are often repeatedly shipped round EU countries by criminal gang networks, hence the “carousel” name. According to the HMRC, between £1.1bn and £1.9bn tax revenue was lost in 2004/05 due to carousel fraud.

The European Union Emission Trading Scheme has been plagued by carousel fraud. A loophole in VAT law – the Low Value Consignment Relief (LVCR) – means that goods imported from outside the EU and costing less than a set amount are not subject to VAT. When the LVCR was introduced in 1983 it was set at about £5 but gradually rose to £18. In March 2011 the government announced that the LVCR would reduce from £18 to £15 from 1November 2011.The LVCR has allowed online retailers of DVDs and CDs to avoid VAT by importing the goods from the Channel Islands, which are not part of the EU.
Major retailers involved in this tax avoidance include Amazon, Asda, HMV, Play.com, Tesco, W H Smith and Woolworths. The tax avoided each year due to LVCR was estimated to be £85m in 2005, £110m in 2008, £130m in 2010 and£140m in 2011.
The government has announced plans to close the loophole

Criticism:

Opponents of VAT claim VAT is regressive and is paid by all consumers whether they be rich or poor, young or old The poorest also spend a higher proportion of their disposable income on VAT than richest.

An Office for National Statistics report showed that in 2009/10 the poorest 20% spent 8.7% of their gross income on VAT whereas the richest 20% spent only 4.0% of their gross income on VAT. Similarly, the poorest 20% spent 9.7% of their disposable income on VAT whereas the richest 20% spent only 5.2% of their disposable income on VAT. Supporters of VAT claim VAT is progressive as consumers who spend more pay more VAT. The zero rating of food and allowing businesses to reclaim input VAT means that the government in effect subsidises the food industry. Critics also argue that VAT is double taxation as consumers pay for goods and services using income that has already
been taxed. It is also argued that VAT is an inefficient tax due to the numerous
exemptions and concessions.
It could also be argued that, compared to its predecessor Purchase Tax, VAT has encouraged the “throwaway society”.Purchase Tax imposed high rates on
new goods (especially luxury goods) but did not apply to repair services.VAT has
increased the cost of repairs and encouraged consumers to replace goods rather than
have them repaired.VAT also covers second- hand goods (which Purchase Tax did not)
and has discouraged the re-use of goods through the second-hand market.

The payday lender that charged 16,734,509.4%

The Guardian Money

Most of us know that payday loans can be a horrifically expensive way to borrow money, with the likes of Wonga.com charging interest rates of 4,000% APR or more. But if you thought that was as bad as it gets, take a look at the loan agreement sent to Adam Richardson and the stated APR: a mind-boggling 16,734,509.4%.

That is not a misprint. His contract really does state that the annualised interest rate on his loan is in excess of 16 million per cent.

Richardson, 25, freely admits he was desperate for cash at the time to fund his “excessive” alcohol and cannabis usage. Having exhausted other sources of money, he went online and took out an £80 loan from a company called Capital Finance One (not to be confused with credit card giant Capital One).

His contract shows he agreed to borrow the money for 10 days and then pay back a total of £111.20, with various charges coming into play if he missed the repayment date.

Cases such as Richardson’s will intensify calls for a cap on the total cost of credit, to prevent some of the problems that campaigners say payday lending causes.

Earlier this month the Office of Fair Trading gave the leading 50 payday lenders 12 weeks to change their business practices, after it uncovered widespread evidence of irresponsible lending and breaches of the law.

Stella Creasy, the Labour MP who has been lobbying for better regulation of the sector, says: “It’s a great example of the fact that we are one of the few countries in the world where you can charge what you like to lend people money – with all the consequences that come as a result.”

Richardson forwarded a copy of his agreement to Guardian Money because, he says, he wants people to be aware that while media reports often refer to payday lenders charging four-figure rates, below the radar there are less high-profile lenders whose rates are much higher.

He claims that Wonga, the best-known payday lender, with a stated representative APR of 4,214%, “seems almost angelic” compared to the firm he borrowed from (he repaid the loan). Capital Finance One has since changed its name and now trades as CFO Lending from a base in Woodford Green, north-east London – not far from Creasy’s Walthamstow constituency.

It seems almost inconceivable that an APR can reach such a high level, so Guardian Money sent the agreement to an expert in the field, who told us: “I’ve checked, and the APR in your case study’s contract is correct.”

Richardson, who is now “clean and sober”, says he took out the loan in April 2011. He says that at the time “my excessive use of alcohol and cannabis demanded quite a bit of cash. I’d exhausted all the streams of money I had from other sources.”

Richardson adds: “I feel that payday loan companies are targeted primarily at this vulnerable sector of the market.

“They tend to be desperate individuals with little financial security and poor credit histories who are at the point where, due to crisis or addiction, they are not likely to be in a fit state to sign a contract, or even read and understand one.”

The Financial Conduct Authority, the new City watchdog taking over from the Financial Services Authority, will have the power to set an interest rate cap on payday loans, and restrict their duration and the number of times they can be rolled over. But a decision on whether this will be invoked will only be made in 2014, at the earliest.

Payday loan companies have argued that part of the problem is that the APR – the annual percentage rate, which firms are obliged to display – was originally designed to compare the cost of loans or card balances over several years. On its website Wonga says: “The equation not only multiplies the actual period of interest up to a year’s duration, but also compounds it, assuming interest-on-interest many times over. The result is a grossly distorted number that bears no relation to the actual interest involved.”

Russell Hamblin-Boone, chief executive of the Consumer Finance Association (CFA), which represents many payday lenders, told Money: “Clearly we do not condone APRs at this rate, but it is important to distinguish between the price of the loan and the annual interest on it. Nobody will ever pay that annual rate of interest on a short-term loan from a CFA member, as their loans cannot be extended more than three times.”

Money emailed and phoned CFO Lending – which is not a CFA member – for an explanation, but it did not respond. Its website displays a representative APR of 4,414%.

Richardson, who lives in Durham and is a student, declared himself bankrupt in March 2012 after amassing unsecured debts of around £25,000, and says he feels lucky compared with others. “I’m OK-ish today – I’m to be discharged from bankruptcy this Thursday and have some hope for the future. I certainly accept a large amount of responsibility for my side of things and I totally agree I should have restrictions placed on me, but it’s just worrying to know that companies like this exist and seem quite hidden.”

professional help with your personal debts

professional help with your personal debts