The late Anthony Wedgewood Benn once said that the Labour Party is not a socialist party but is a party with socialists in it. I guess I would subscribe to this comment.
Since our inception we have been a melting pot of different ideas hence being a broad church.
The only time socialism was mentioned in our ordinances was when a certain Tony Blair advocated a change of Clause 4 from what it had been since 1917 when Sydney Webb drafted the original " To secure for the workers by hand or by brain the full fruits of their industry and the most equitable distribution thereof that may be possible upon the basis of the common ownership of the means of production, distribution and exchange, and the best obtainable system of popular administration and control of each industry or service" to what it is today.
I do think at times political parties need to look at themselves and to work out what is their purpose and indeed last year it was suggested by one of the then Labour leadership candidates that perhaps we needed to look again at our aims and values in light of changing times.
When that was suggested it spurred me into writing a new clause 4 which I promptly deposited with a certain person.
However it is not the most important thing on the agenda.
One of my big criticisms of the Party was that it lacked a grassroots organisation where there could be a cross fertilization of ideas on how we could rebuild a collapsing society.
No doubt whatever ideas I had put forward to the Party ended up in the shredder.
Under previous leaders we were very top down and we adopted a clunking first approach that the leader is all knowing.
Although I campaigned in 2015 in my limited way for Labour in support of the local candidate I was under no illusions having informed the party back in 2014 that we were not going to win, again my thoughts at that time were put in the shredder, and after the defeat in 2015 I wrote a long explanation on why we were defeated again - that was put into the shredder.
We have a leadership now whom I believe are willing to listen to the shop floor because they don't have the answers to everything but together we can come to that point where the answers are in front of us.
Finally we came into being to be the voice of working class opinion in the legislature and the great challenge for us today is to reconnect with the working class and to understand their needs, their wants, their hopes and their desires and if we can do that I believe we will form the next government.
However if we display an arrogance, which I believe we did under previous leaders then I am sorry to say we will be defeated in 2020 or whenever the next general election occurs, because a party that doesn't listen to the people doesn't deserve to be in government.
Thanks to our regular contributor Ferederick James
From what I have observed of the people over the last 30 years I have come to the conclusion that by and large they are very conservative, with a small c, and they are not hugely ideological for they are more concerned with the practicalities of life, so I would argue that whilst our aim is to see a Labour Government espousing democratic socialist values and principles our policies that will take us into government must not be couched in terms of ideology but must be couched in terms of practicalities.
Labour promoting practical solutions to practical problems that should be our mantra.
Is housing the homeless an ideological thing or a practical thing? Is securing full employment an ideological thing or a practical thing? Is ending the need for food banks an ideological thing or a practical thing? The list is endless.
Whilst I admit there is a democratic socialist ideology behind every practical solution that's where in my view it should stay; for the moment it gets in front of the solution that's where I think we could frighten the people away.
People are easily frightened of change so the trick is not to frighten the people.
I am not talking about ditching our ideology because that is our foundation; what I am talking about is that when we talk to the people we should not talk about the ideology but about the solution to the problems they face in their daily lives but we won't get the solution until we understand the problem.
Yes it is our ideology that gives rise to the solution and when we talk about the solution then the ideology that has given rise to the solution must stay behind it.
For the moment it gets in front of the solution then we could be in danger of scaring people away.
It's about choosing the correct strategy and understanding the psychology of the voter which I do not believe we have been very good at in recent years.
Thanks to Frederick James
Frederick James bit the bullet and watched events televised from the House of Commons Thursday when it was Queen Elizabeth I 90th birthday.
He reports how he watched Labour Party leader Jeremy Corbyn follow the loyal address given by the PM [David Cameron] adding he was struck however by how few Parliamentarians were present in the Chamber.
As he notes usually on such occasions the HoC would have something like a full house.
Mr James thinks the tone of Mr Corbyn's speech was just about right for the occasion and asks if you agree?
Jeremy Corbyn (Leader of Her Majesties Most Loyal Opposition)
Frederick James: Dear friends and comrades today in Parliament John McDonnell [Labour shadow chancellor] on an opposition day debate on Tax Avoidance and Evasion. It was thoughtful, considerate and masterly and showed why we badly need John McDonnell as our Chancellor of the Exchequer and why we need a Corbyn led Labour Government.
Here is a transcript of his speech sorry for the lateness as he kept getting interupted by Tories. I have summised it as best I can,
I beg to move
That this House notes with concern the revelations contained within the Panama Papers and recognises the widespread public view that individuals and companies should pay their fair share of tax; and calls upon the Government to implement Labour’s Tax Transparency Enforcement Programme which includes: an immediate public inquiry into the revelations in the Panama Papers, HMRC being properly resourced to investigate tax avoidance and evasion, greater public sector transparency to ensure foreign companies wanting to tender for public sector contracts publicly list their beneficial owners, consultation on proposals for foreign companies wanting to own UK property to have their beneficial owners listed publicly, working with banks to provide further information over beneficial ownership for all companies and whom they work for, the swift implementation of full public country-by-country reporting with a fair turnover threshold as well as ensuring robust protection for whistle blowers in this area, ensuring stricter minimum standards of transparency of company and trust ownership for Crown Dependencies and Overseas Territories, consideration of the development of the Ramsey Principle by courts, implementation of an immediate review into the registry of trusts, and the strengthening and extension of the General Anti-Avoidance Rule to cover offshore abuses.
I see that the Chancellor [George Osborne] is absent again today. Much as I look forward to seeing the various members of his Treasury team, is there a specific reason why he is not here for this important debate?
I am happy to give way. [Interruption.] Is it critical? In respect of his attendance at the International Monetary Fund, he might look at yesterday’s IMF report that downgraded the growth expectations for our economy and think again about the policies he is pursuing, which fail to invest in the infrastructure, skills and new technology that our economy needs to compete in the world market. Perhaps we will send him a letter and he can say hello to the Chamber some time when he happens to be passing through.
We need to move the debate about tax avoidance and evasion on to the issue of the fairness and effectiveness of our tax system, and we need to do so as constructively as we can. The leak of documents from Panama lawyers Mossack Fonseca has provoked an extraordinary public discussion, and an entire hidden world has been brought into the light. What it reveals is profoundly unsettling.
We now know that Mossack Fonseca sat at the centre of a vast web of tax evasion and tax avoidance. The world’s super-rich commissioned its services to hide their income and wealth from the public gaze. Some of them had plainly criminal intentions. Money from the Brink’s-Mat robbery was allegedly laundered through a shell company set up by Mossack Fonseca, while the Mexican drug baron Rafael Caro Quintero held his property through a shell company established by Mossack Fomseca.
Mossack Fonseca exploited the presence of loopholes and entire jurisdictions that favour secrecy and minimal taxation. We can expect further news over the next few weeks and months, as the investigative work continues. Yesterday the Panama headquarters of Mossack Fonseca was raided, but 10 days on since the initial leak, I believe that its UK offices in Hitchin—not far away—have not been, despite the raising of concerns by the firm’s founder about the lack of due diligence performed by the UK office in relation to a company in its charge, and a clear legal precedent for the UK authorities to intervene.
There may be more revelations to come, set to tarnish individual reputations. I put this mildly: the Prime Minister has done himself no favours over the last 10 days. A lesson for the future is that, when asked a straight question, one should answer straightforwardly and straight away. The Prime Minister could and should have come clean about his relationship with Blairmore Holdings far earlier.
Even today, we have not seen the Prime Minister’s full tax return or that of the Chancellor, and it is important that that should happen. The Prime Minister established the principle, which I advocated three months ago, that the Prime Minister, the Chancellor, the Leader of the Opposition and the shadow Chancellor should publish their tax returns—not summaries; their full tax returns—but that has not happened.
However, what confronts us today is an issue far bigger than any individual. At the centre of the allegations is a single issue. The fundamental problem is not tax avoidance by this individual or that company; those are symptoms of the disease. The fundamental issue is the corruption of democracy itself. At the core of our parliamentary system is the idea that those who levy taxes on the people are accountable to the people. If those who make decisions about our taxation system are believed to be avoiding paying their own taxes, that undermines the whole credibility of our system.
The common understanding is also that those who live here and benefit from public services will make a proportionate contribution towards them. The level of taxation may vary—sometimes it is higher, sometimes lower—but because we have a shared sense of fairness, we expect those with the broadest shoulders to carry the greatest burden in taxes. Over the last 30 years, however, we have witnessed the growth of wealth inequality on such a scale that it has undermined that basic principle of democracy.
Great hoards of assets, in property and in financial wealth, have been built up. According to the best available measures, the levels of income inequality in Britain today are climbing as high as they were at the time of the first world war. The share of income going to the super-rich has risen almost inexorably for three decades. We are returning to the levels of inequality that were experienced before universal suffrage—before women had the vote, and before the development of universal free education and healthcare—in a world that existed before the gains of democracy brought obscene levels of wealth inequality under control, and created a more humane society for the majority.
The world of the Rockefellers and the robber barons is the one to which we are returning: a world in which there is immense, almost unimaginable wealth for a gilded elite, but insecurity for growing numbers. Much of that wealth is now held offshore in secretive, unaccountable tax havens. According to the most recent estimate, $21 trillion dollars, equivalent to a third of global GDP, is hidden from taxation systems in global tax havens. It is estimated that, if taxed fairly, that wealth would raise $188 billion a year in extra taxation.
This is not about a few families seeking to “minimise their tax bill”, as was claimed by the hon. Member for Gainsborough (Sir Edward Leigh). It is systematic. An offshore world is operating parallel with the world in which the rest of us live. This is not an accident. The offshore world is being constructed, piece by piece, by multinational corporations and the super-rich, aided by shady offshore operations such as Mossack Fonseca, and—we must be honest about this—supposedly reputable accountancy firms here in London are also playing their part.
According to the Public Accounts Committee, PwC has aided tax avoidance “on an industrial scale”. Deloitte has advised big businesses on avoiding tax in African countries. Ernst and Young act as tax advisers to Facebook, Apple and Google and just last month KPMG had one of its tax-avoidance schemes declared illegal by the High Court. Together, the big four accountancy firms in this country earn at least £2 billion annually from their tax operations.
But it is not just them. Banks headquartered and operating in London have been particularly proficient in directing their funds through Mossack Fonseca shell companies. HSBC and its affiliates created more offshore companies through Mossack Fonseca—over 2,300 in total—than any other bank. Coutts, a subsidiary of RBS, created over 500 offshore companies through its subsidiary in Jersey. Supposedly reputable companies are aiding and abetting the systematic abuse of our tax system.
We should be clear: the City of London is being viewed by many as a tax haven in the middle of a dense network of havens created for the super-rich to avoid the taxes the rest of us must pay.
We have to find a better way in our taxation system to benefit those at the lower end of the scale. At the moment, although we are happy with the rise in tax thresholds, there needs to be a way to compensate for that more equitably. Again, it is not us saying this; it is the IFS and many other independent assessors. They are saying that this is not the most effective way of redistributing wealth in this country.
It is an alien world for the majority of us. It is a world of offshore trusts and legal trickery that would put Byzantium to shame; a world in which it is perfectly normal to buy property in London through a company registered in the British Virgin Islands, managed by lawyers in Panama with offices in Bermuda; a world in which citizenship and attachment to a country are something to pick and to choose depending on price. The scandal of the “non-doms” continues, in which a few super-rich can pay a notional fee instead of the taxes that would otherwise be due from them as residents.
Tucked away in this year’s Budget was an extraordinary clause that wrote off selected non-doms’ entire capital gains tax bill on any gains made before April 2017—a giveaway to the wealthy. This is not the world that most of us live in. Most of us pay our taxes. Contrary to the shocking opinion of the right hon. Member for Rutland and Melton (Sir Alan Duncan), that is not because we live in a country of “low achievers”, as he described them. We do so because we understand that a decent society depends on the contributions all of us make. Without the payment of taxes, we cannot run the public services that are essential to a decent society.
We do not have access to the specialist services that Mossack Fonseca and other companies provide. We cannot negotiate with HMRC about when and how much to pay in tax. However, for the global elite, tax avoidance is as much a part of their world as the yachts and the mansions. This world is a corrosive influence on our democracy. The more the super-rich can escape the burden of taxation, the more it falls on the rest of us in society.
It is morally wrong that a billionaire oligarch should be paying proportionately less in taxes than the migrant cleaner of his mansion. It is a disgrace that an immense global corporation such as Google should pay no corporation tax for nearly a decade, while small businesses are chased for tiny amounts. It is an affront to the basic principles of our democracy that large corporations should be able to negotiate sweetheart deals with HMRC.
It is a disgrace that an immense global corporation such as Google should pay no corporation tax for a decade, while small businesses are chased for tiny amounts. It is an affront to the basic principles of our democracy that large corporations should be able to negotiate sweetheart deals with HMRC. It is also a corrosion of democracy when a revolving door apparently exists between HMRC, which is charged with collecting taxes, and major accountancy firms whose business depends on minimising taxes. HMRC’s last director went to work for Deloitte, and now we find that the executive director appointed by HMRC to oversee its inquiry into the Panama leaks is a former adviser to tax havens who believes that tax is a form of “legalised extortion”. The structures of Government are being bent out of shape by tax avoidance. Decisions are warped around the need to protect the interests and wealth of the super-rich and of giant corporations. Democracy becomes corroded.
On party donations, the Conservatives receive more than half their election campaign funding from hedge funds. In public view, here in London, its party leadership has made loud and repeated noises about tax avoidance, yet its MEPs in Brussels have voted six times, on instructions from the Treasury, to block the EU-wide measures against tax avoidance. As we have heard in evidence this week, the Prime Minister lobbied the EU Commission in 2013 to remove offshore trusts from new tighter EU regulations on avoidance. The Conservatives’ own record reveals that people no longer trust them on this issue. Not only have they impeded efforts to clamp down on tax avoidance, but these schemes directly implicate senior figures in the Conservative party. Several Conservative party donors, three former Conservative MPs and six Members of the House of Lords are among those with connections to companies on the books of the offshore law firm Mossack Fonseca.
As the super-rich flee their obligations to society, the burden of taxation is pushed elsewhere. As I have said, independent assessments of the tax and benefit changes introduced since May 2015 show that the poorest 10% are forecast to see their incomes fall by more than 20% by 2020, with 80% of the burden falling on women. It is the poorest and those least able to carry the burden who will suffer the most under this Government. An economic system that allows tax avoidance on this scale is one in which the inventor and the entrepreneur come second to the owner of wealth, the worker comes second to the plutocrat and the taxpayer come second to the tax dodger. It is a system in which inherited wealth and privilege, rather than talent and effort, are rewarded.
There has been criticism of the last Labour Government, and I was not enamoured of all their economic policies, but they did take measures against avoidance. Their measures on corporation tax avoidance are forecast—not by me, but by the Financial Times—to raise 10 times as much revenue as the present Chancellor’s schemes.
The Panama leaks must act as a spur to decisive action. In response to the leaks, the Government have stepped up their rhetoric on tax evasion but much of what has been announced falls short of what is needed or repeats existing announcements. I remind Ministers that page 223 of the Office for Budget Responsibility report that accompanied this year’s Budget outlined a disclosure scheme for companies operating in Jersey, Guernsey and the Isle of Man. The report said that owing to HMRC’s consistent underfunding, it did not have the resources to follow up on the links of the scheme. I again offer some words of advice to those on the Government Front Bench: fewer press releases and more action. It is time to move on and to close down tax havens and clean up this muck of avoidance.
Let us take this step by step. We need an immediate and full public inquiry into the Panama leaks. The Government’s proposed taskforce will report to members of the Government, the Chancellor and the Home Secretary, who are members of a party funded by donors featured in the Panama papers. To have any credibility, the inquiry must be fully independent. We must shine a light on, and start to prise apart, the corrupt networks that operate through tax havens. Part of that will involve creating a proper register of MPs’ interests. Members of this House should not be able to hide behind spurious claims of privacy. We want HMRC to be properly resourced to chase down the tax avoiders, with a new specialist unit dedicated to the task. Foreign firms bidding for Government contracts here should be required to name their owners. Full, public, country-by-country reporting of earnings and ownership by companies and trusts is a necessity if fair amounts of taxation are to be charged.The measures announced by the EU this week do not go nearly far enough, requiring only partial reporting by companies. The turnover threshold is far too high, and Labour MEPs in Europe will be pushing to get that figure reduced much lower to make it more difficult for large corporations to dodge paying their fair share of tax. Banks need to reveal the beneficial ownership of companies and trusts they work with. That means creating a public register of ownership of companies and trusts, and not only of companies, as the Government are currently enforcing. The Prime Minister has a role to play in this, as it was he who lobbied for the exclusion of trusts from the proposed EU measures. Labour will work alongside leading tax experts to lead a review into publishing a public register of the trusts too often used to avoid paying tax and reduce transparency in our tax system.
We must ensure that Crown dependencies and overseas territories enforce far stricter minimum standards of transparency for company and trust ownership. The Government’s current programme for reform is being laughed at by the tax havens. As my right hon. Friend the Leader of the Opposition said today, it was only this week, after signing a new deal on beneficial ownership, that the Cayman Islands Premier Alden McLaughlin celebrated a victory over the UK, saying:
“This is what we wanted, this is what we have been pushing for three years”.
The truth is that the Government are playing into the hands of those who want to abuse the tax system.
We need serious action on enforcement. We need not central registers but, as Christian Aid and others are calling for, full public registers accessible to all, including journalists and other businesses, if we are going to curb the activities exposed in the Panama papers. This package of measures is Labour’s tax transparency and enforcement programme. We believe that it offers a sound basis to take the first necessary steps against avoidance and towards openness and transparency. We are presenting it today as we want to see immediate effective action.
This is a test of leadership. The leadership of the Conservative party could take this opportunity to correct the series of errors that it has made. It could join us today in taking effective steps towards dealing seriously with avoidance. People want to see the Conservatives take these steps. Otherwise, they will rightly stand accused of siding with the wrong people and of being the party of the tax avoiders. Incidentally, it was not long ago that the Chancellor of the Exchequer appeared on television to give advice on the “pretty clever financial products”, as he described them, that would allow the wealthy to dodge inheritance tax.
Some of the Conservative party’s Back Benchers believe that tax avoidance is a sign of success. The party’s donors are named in the Panama papers, and the Prime Minister himself is a direct beneficiary of a scheme set up in an offshore tax haven through his prior ownership of Blairmore Holdings shares.
The Panama leaks have presented a stark political choice. Do we continue to allow a system of corruption and avoidance, or do we now take the action necessary to restore fairness to our taxation system and to correct the abuse of democracy? That is the challenge, and the choice, ahead of us. I urge the Government and all Members of this House to join us in a serious programme of work to tackle the abuse of our tax system. The Government can make a start by supporting our motion today and adopting Labour’s tax transparency enforcement programme. I commend this motion to the House.
[House of Commons debate Wednesday April 13, 2016]
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