Time for Fair Taxes: Ask your MP to support crackdown on tax avoidance

We should all pay our fair share of taxes. In an age of austerity and spending cuts, tax avoidance is morally unacceptable: It effectively amounts to robbing from the poor.

Email your MP today, to ask them to support the introduction of a new measure (the ‘General Anti-Avoidance Rule’) which will crackdown on tax avoidance.

In the UK there is a multi-billion pound industry whose aim is to find clever ways for its wealthy customers to avoid paying tax. The industry is legal, thriving, and denies UK tax-payers at least £25 billion each year. That is more than the amount the Government is trying to cut from the benefits bill – so tax avoidance amounts to robbing people in poverty. This is why we are campaigning for Fair Taxes.

With the Budget coming up in March, there is an opportunity approaching for Parliament in Westminster to put in place a ‘General Anti-Avoidance Rule’ (GAAR). Put simply, this would prevent wealthy individuals and companies from using contrived financial structures to shield themselves from their tax bills.

Please take two minutes to email your MP now and ask them to support calls for a GAAR.

Church report calls for a radical reassessment of the purposes of economic activity

A new Church of Scotland report will call for a radical reassessment of the purposes of economic activity which puts the interests of the poor first.

Written against a background of debate and unrest, a special Church inquiry has been considering the modern economy and the social and moral vision that underpins economics.  The report has been produced by a commission of experts and leading thinkers called together by the Church of Scotland, and which is issuing a clear and urgent call to change our social and economic life.  The report has four main priorities that it sees as being fundamental for a just and ethical economics system:

• Reducing inequality, as there is now compelling evidence that more equal societies have better well-being, better health and stronger social cohesion.

• Ending poverty, for the shame of poverty, at home and overseas, is the greatest moral issue of our time.

• Ensuring sustainability, in our globalised world there is an imperative to understand and act on issues of environmental sustainability.

• Promoting mutuality, because economic relationships do not sit apart from human relationships.  Wealth creation at the expense of others’ well-being is destructive and inhuman.

Right Reverend David Arnott,  Moderator of the General Assembly of the Church of Scotland, will present a copy of an interim report during his visit to the Scottish Parliament offering MSPs and others a final opportunity to make comment before the final version goes before the General Assembly in May.

Mr Arnott said:  “Economics is not, and can never be, a morally neutral or ethics free zone.  Humanity does not exist for the market but the market for humanity.  Any morally legitimate vision of economics and economic activity, whether domestic or international, must be a vision of social economics, embedded in a vision of society which respects and values the needs and contributions of all its members”.

The Church of Scotland has long argued for and championed those affected by poverty, whether it is in low-income families or priority areas within society.  Since becoming Convener of the Church and Society Council, Reverend Ian Galloway, has said that making poverty history is the “central moral challenge of our generation.  The eradication of poverty cannot remain a job for the powerful must become a calling for us all.”

The Commission has been chaired by Professor Charles Munn OBE, former Chief Executive of the Chartered Institute of Bankers in Scotland.  The other 12 Commissioners have been selected from a range of backgrounds, with expertise in many spheres including politics, business and theology and which has included people who have had a direct personal experience of life in poverty.

Prof Munn said:  “The Special Commission has spent the last two years consulting widely, exploring the fundamental ethical and moral questions underlying economic activity.  The credit crunch has been a wake-up call.  We cannot just go back to business as usual, and the need to take a proper look at what we are doing with economics has become more rather than less relevant. The question of economics is never far from the top of the agenda.  Some in our society are making huge financial gains, while for too many this winter the stark choice is whether to heat or to eat, as they cannot afford to every day.”

With thanks to the Church of Scotland

The Right Use of Money: Time for Fair Prices

‘Money makes the world go round’ as the song goes.  But seemingly more so for some than for others… 

Not only do we now live in one of the most unequal societies in the ‘developed’ world – in terms of the distribution of money between rich and poor – but far too many experience the double injustice: Those with the least money frequently pay the most.

As my good friend, John Taylor, CEO of the US Community Reinvestment Coalition memorably said a few years ago, ‘we need to make capitalism work for the poor.’  But sadly, at present, capitalism (or ‘free markets’ more precisely) simply aren’t working for the poor.  Left to their own devices, ‘free markets’ frequently offer those with little money inferior products (or no products at all), at much increased prices. 

Increased prices for their gas or electricity (for those required to pay via pre-payment meters); increased prices for their food (corner shops charging inflated prices for poor quality products); increased prices for insurance (if they can get any at all), and worst of all – inflated prices for accessing money in the first place.  In recent years we have witnessed an explosion of payday lending in the UK, mirroring what happened in the US: Companies aggressively marketing instant loans at APRs in excess of 2,000, with predictable consequences in terms of increased levels of debt

Last year Save the Children put a figure on the ‘Poverty Premium’ of nearly £1,300 a year for the average family on low incomes.  £1,300 a year (or £22 a week) is a huge extra bill to shell out when you haven’t got much to start with. 

So is it time to make capitalism work for the poor.  But what would this look like?

Firstly, fair access.  Whatever the arguments are about the ‘right use of money’, in a modern western economy, it is hard to argue the case that it is possible to function as a citizen (or consumer) without any access to money.  And yet, there is still no universal service obligation on the financial services industry (as there is, for example, for the water industry). And I’m not meaning here second rate ‘Basic Bank Accounts’, but a universal obligation to provide access to the full range of financial services – insurance, and yes, credit.   Banks may be under pressure to strengthen their balance sheets, but surely not at the expense of refusing to serve 10 or 20 percent of the UK population?

And secondly, fair prices.  Much of the ‘logic’ of the way markets have developed in recent years is to move towards ‘risk (or cost) pricing’ and away from shared risk.  Some of the assumptions behind this are extremely dodgy:  The majority of high cost lenders claim that their premium prices are based on the ‘risk’ of lending to low income customers… any yet, when customers pay week after week, year after year, the cost doesn’t go down.  But fundamentally, is it socially (or morally) acceptable to operate ‘cost’ pricing models which force the poorest to pay most?  How can companies square all their talk in recent years of corporate social responsibility, with charging their poorest customers the most?

And if individual businesses are unwilling to offer products to low income consumers at fair prices (not least by claiming they can’t do so if their competitors don’t), then is there not a role for market intervention?

Yet, in spite of all the heroic efforts of Stella Creasy MP, the Centre for Responsible Credit (and a host of others), the Government appears to remain steadfast in opposed to any form of price cap or regulation – which interferes with the ‘free’ operation of markets – whatever the social costs of failing to do so.

A season of darkness and a winter of despair: The need for Church Action on Poverty has never been greater

New Year’s Message 2012

2012 marks the thirtieth anniversary of the founding of Church Action on Poverty, and the need has never been greater.  May 2012 be the year in which society starts to be run again for the benefit of all its members and not just for the benefit of the rich.

It was the best of times,
it was the worst of times …
it was the Season of Light,
it was the season of Darkness,
it was the spring of hope,
it was the winter of despair.

Dicken’s classic novel A Tale of Two Cities, may be a story of the French revolution, but never more relevant than to our current age.  As we enter 2012, the prospects for society at large, and for those struggling on its margins in particular, are bleak.  We face an economic crisis, unprecedented in any of our lifetimes:  For many it will indeed be a season of darkness and a winter of despair.

The economic crisis is unprecedented

Make no mistake.  The economic crisis we all face as we enter 2012 is unprecedented.  But those who are already struggling to make ends meet will suffer most.  For them, there is no belt left to tighten.

A simple but harsh choice: To heat or to eat?

Last year there were an estimated 25,700 excess winter deaths in England in Wales.  As a result of the massively increases in food and fuel prices, matters are likely to be much worse this winter.  Over 6 million households are now facing fuel poverty. For many thousands this winter, it will – quite literally – be a matter of life and death.

A lost decade

We are in the middle of the most prolonged squeeze on household incomes in modern times. Average household incomes – already stagnant for the past decade – will fall by more than 7% over the next three years.  For many this will mean an exercise in belt tightening and cutting discretionary spending – but for those who are already struggling to make ends meet, there is no discretionary spending to cut.

Goodbye Woolworths, hello Moneyshop

Consumer spending – a key driver of the UK economy – is now a busted flush.   For the past decade, we have all been living beyond our means.  [i]Some may say that this is no bad thing.  But as consumer spending goes west, so will many of the businesses that are reliant on it.  As Mary Portas revealed, it spells the end of many a High Street.  For communities already on the edge, it spells a descent into even deeper financial exclusion.  Only the Pound shops, Charity shops and Payday Lenders remain.

And then there are the spending cuts…

We are not all in this together: The cuts hit the poorest hardest

We are now facing an unprecedented six years of cuts in public spending, as a consequence of dramatically lower growth forecasts announced by the Office of Budget Responsibility at the end of November.   In spite of the Coalition’s commitment to protect the poorest and most vulnerable, the Institute for Fiscal Studies has demonstrated that the impact of these cuts will clearly fall disproportionately on the poorest.

An analysis by Church Urban Fund, shows that the impact of tax/benefit and spending measures announced up to March 2011 (ie not including the impact of the latest Spending Review) will fall more than twice as hard as on the poorest as on the richest 10%.

The 1% and the 99%: For whose benefit is the economy being run?

The Occupy movement’s focus on the 99% and the 1% is no mere rhetorical flourish.  The UK is now more unequal  – in terms of the gap between rich and poor – than at any time for at least the past 50 years[ii].  And, as the OECD reported in early December, the income gap is rising faster in UK than any other developed nation.

Inequality and the Common Good

As the Catholic Bishops Conference said as far back as 1997: “There may come a point at which the scale of the gap between the very wealthy and those at the bottom of the range of income begins to undermine the common good. This is the point at which society starts to be run for the benefit of the rich not for all its members.”

May 2012 be the year in which society starts to be run again, for the benefit of the Common Good.

Building a Just Society: Church Action on Poverty’s vision for 2012 and beyond

Church Action on Poverty will not be sitting on our laurels in our thirtieth year.  The need has never been greater to ‘go upstream’:  To challenge the structures and systems which throw so many into the stream of poverty – whilst allowing others to enjoy untold wealth.

In 2012, Church Action on Poverty will be launching an ambitious programme for the next 10 years: We will be seeking to secure the resources to build a movement rooted in local churches and communities across the UK, to challenge injustice, tackle inequality and bring about positive change on issues which affect them most, locally and nationally.

• Narrowing the gap between rich and poor:  Giving a voice to those not heard and holding those in power to account
• Developing socially and financially resilient communities.
• Mobilising the power of faith groups to challenge inequalities in income, power and life chances, and to contrast this with our understanding of what a ‘Good Society’ should be.
• Seeing the organisation’s role within a broader movement for change, by forming partnerships and alliances with a range of organisations
• Developing a sustainable financial model, including achieving greater engagement with individuals and Churches during our 30^th year, and through diversifying our income sources.

I hope you will join us!

Niall Cooper
National Coordinator
December 2011

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[i] As far back as 2002, consumer spending was only sustained by borrowing against the value of an over-inflated housing market (to the tune of a staggering £300bn over five years to 2007).  

[ii] The 1% doubled their share of national income between 1970 and 2005, from 7% – 14%.  That trend has continued in spite of economic crisis. Executive pay increased by a staggering 49% last year, whilst the bottom 10% of earners saw their pay barely increase at all.   The ‘average’  chief executive of one of Britain’s top 100 companies now ‘earns’ £4.2 million – 145 times as much as the average worker.  The rich have seen their tax rates fall over past 30 years, both in headline terms, and as a result of huge levels of tax avoidance.  Corporate tax avoidance is now estimated to cost the taxpayer anything from £35 billion – £100 billion a year:  A sum large enough to outweigh the total cost of planned spending cuts.

Take Courage: Public still favours closing the gap…

The latest British Social Attitudes survey, released today, is not all as gloomy as the media coverage merits.. Large majorities continue to be in favour of tackling child poverty and closing the gap between rich and poor…

If you read only the headlines about the latest British Social Attitudes report, you might be forgiven for being gloomy indeed:  ‘Britons lose sympathy for unemployed’ (Telegraph); ‘Britain gets a little more selfish’ (New Statesman); ‘Britons less willing to pay taxes to help others’ (BBC).  But reading further into the report, the picture is a little more mixed:

• 82% consider it ‘very important’ to reduce child poverty in Britain.
  79% say central government should be reponsible for reducing child poverty.
  75% agree that teh income gap between rich and poor is too large.

Given the constant tirade of tabloid headlines demonising the poor and those on benefits as lazy, cheats and chavs, it is hardly surprising that attitudes to unemployment benefits are hardening.  As Owen Jones eloquently explains, this is all par for the course with the demonization of the working class.

And given the constant cacaphony of distorted claims that it is somehow ‘big government’ which has caused our current economic crisis (rather than, say, the banks) – and the growing cynicism about the political process per se, it is hardly surprising either, that the public are less inclined to look to government for solutions to the big issues of the day – be they climate change, inequality or poverty.

The question for politicians, faith leaders and anyone else who might wish to be called a ‘leader’ in today’s society is however – is your role simply to follow public opinion – or to lead it?

As Richard Murphy would put it, now is the time for Courageous politicians, a Courageous State and (I would add) Courageous Church leadership.

Coopers Cheery Christmas reading

Four Cheers for Christmas! Here are four recommended reads to add to your shopping list for Santa this Christmas.  If you’re looking for a theme, it is more like In the Bleak Midwinter than Tis the Season to be Merry this year I’m afraid.

The Cost of Inequality, Three decades of the super-rich and the economy.
Stuart Lansley, £17.99
Essential reading for anyone who wants to understand the reasons behind the astonishing growth in inequality in the UK and US over the past 30 years – and why it helped to bring about the unprecedented economic crisis we are all now facing.   Readable, well-argued and a devastating critique of neo-liberal laissez-faire economics that has allowed the growth of a new generation of super-rich ‘Robber Barrons’ by economist and financial journalist Stuart Lansley.

Crisis and Recovery: Ethics, economics and justice
Rowan Williams and Larry Elliot (eds), £12.84
The financial crisis is about more than money: it is also about morality, casting an uncomfortable light on the links bewteen the activities of bankers and the wellbing of society as a whole.  A series of fascinating contributions from a range of perspectives, including Robert Skidelsky, Jon Cruddas, Phillip Blond, Zac Goldsmith and Will Hutton.  Note to authors: Do no women have anything to say about ethics and economics?

Chavs: The demonization of the working class
Owen Jones, £14.99
The stereotyping and hatred of the working class in Britain, documented so clearly by Owen Jones in this important book, should cause all to flinch. Chavs is a damning indictment of the media and political establishment, and an illuminating, disturbing portrait of inequality and class hatred in modern Britain. According to Polly Toynbee it is ‘Superb and angry’: One guaranteed to get you going over your Christmas crackers.

Treasure Islands: Tax Havens and the Men who Stole the World
Nicholas Shaxson, £14.99
Shaxson brilliantly exposes the growing role of Tax Havens in the global economy, as key to the tax dodging activities of multi-million (or billion) dollar/pound corporations.  A great introduction for anyone interested in the subject – and why we recently launched our new Tax Gap campaign.  According to Richard Murphy, Director of Tax Research UK (and no mean expert on these matters himself): ‘Treasure Islands is the best book on tax havens, ever. It shines a light in some very dark places. It reads like a thriller. The shocking thing is, it’s all true. The world’s suppliers of corruption services – the bankers, lawyers and accountants working from tax havens – won’t want you to read this book. Which is exactly why you should’

Please note:  Copies of all books can frequently be found cheaper on-line – but beware buying them from shameful on-line retailers who ship orders via Jersey to avoid paying VAT. A tax loophole our Tax Gap campaign has helped to close – but not till April 2012… You have been warned!

Happy reading!

Austerity with no end in sight

Families and communities already facing an unprecedented collapse in living standards are now faced with further grim news of increasing unemployment, a deteriorating economy and a further two years of pain:  It truly is a picture of austerity with no end in sight.

Today’s announcements from the Chancellor and Office of Budget Responsibility show yet again the real cost of the economic crisis is being born by those who are already struggling to make ends meet.

Unprecedented collapse in living standards

Even before today’s announcements, the Institute for Fiscal Studies has been forecasting that real average household incomes would be 7% lower in 2012-13 than it was in 2009-10, and to remain below its 2009-10 level until at least 2015-16. This “unprecedented collapse in living standards” is chiefly due to high inflation and weak earnings growth over this period.

The consequence of this, according to the IFS, was predicted to be an increase of 300,000 in child poverty by 2015, with a further 700,000 adults also slipping below the poverty line.

A price worth paying? Two more years of pain; more cuts, more unemployment and more child poverty…

Today’s announcements from the Chancellor and the Office of Budget Responsibility make for grim reading, and serve only to matters far worse:

• Unemployment will rise from 8.1% this year, to 8.7% next year:  The ‘Claimant count’ (the narrowest definition of unemployment) will go up by 300,000 to 1.8 million.
• 710,000 public-sector jobs lost by 2017 – over 300,000 more than previously forecast
• Public sector pay rises will be capped at 1% for a further two years, on top of the current two year pay freeze:  Public sector workers – whose wages for the most part are already very low – are now facing real terms cuts in their incomes for four years in a row.
• A further £2.3 billion is to be cut from child and working tax credits and from public sector pay by 2015.  More than three quarters of the cuts to tax credits will fall on those in the poorest half of the population.
• In addition, the Chancellor has reversed a £110 above inflation rise in the child element of the child tax credit which he announced last year, explicitly in order to stop child poverty rising for at least two years. The clear message: Rising child poverty is a price worth paying for fiscal rectitude.
• Overall £30billion further cuts in public spending, with the pain extended by at least a further two years, until after the next election (2015).

According to James Plunkett of the Resolution Foundation, we are now well on our way to ‘two lost decades: The new OBR forecasts mean typical wages will be no higher in real terms in 2016 than they were in 2001.

On the plus side (if there is a plus side):

If there is a ‘postive side’ to today’s announcements, it is largely that threatened cuts to benefits and pensions have failed to materialise:  Benefits and pensions will not fall in real terms next year

• Working age benefits will be uprated by 5.2% in line with September’s inflation rate
• The basic state pension to rise in line with inflation by £5.30 a week

In recognition of the damaging impact of escalating unemployment amongst the more than 1 million young people now not in work, education or training – and of the fact that childcare costs are a real barrier to work , two welcome (and well trailed) measures were also included in the Chancellor’s package:

• A £1bn scheme to subsidise work placements for the young unemployed (as well trailed in the press over the past few days)
• The doubling of free childcare places for two-year-olds in low income families to 260,000 in England.

The landscape is fundamentally transformed.

Welcome as these measures are, they cannot conceal the overall message. As James Landale, BBC Deputy Political Editor: “The landscape is fundamentally transformed. A government that promised to eliminate the budget deficit by the next election has admitted that it will fail. It now says it needs another two years to meet its deficit target. And what’s more, to do that, it needs to inflict yet more pain – a squeeze on tax credits and further pay restraint for the public sector. There will be more spending cuts in the years after the election.”

Or as Sally Copley, Save the Children’s Head of Poverty, commented: “Today’s announcements are dire news for the poorest families – both in and out of work – who have seen core benefits they depend on cut in real terms. For many families the scrapped £110 increase in Child Tax Credit could mean the difference between putting food on the table for their children or having them go hungry. Children from low income families, whose parents rely on working tax credits to make work pay will be worse off as a result of the Chancellor’s announcements. Child poverty in the UK is predicted to escalate in the coming years and the Chancellor ‘s decisions today will only exacerbate the situation.”