cuts

As Tories bicker over a flat tax, here’s why it doesn’t work…

Tory policy chief Oliver Letwin is calling for a ‘flat tax’ rate, according to a Mirror exclusive yesterday.

He was talking in private to a laissez faire think tank, Politeia, and although instantly rebutted by Conservative Party HQ, it has sparked debate about Tory plans to cut tax for the rich, with Ed Balls today arguing the party is ‘champing at the bit’ to slash the top rate to 40%.

But that itself marks a step towards a flat tax, a policy both George Osborne and David Cameron have praised in the past. Left Foot Forward covered the topic last year amid a renewal of right-wing interest in the policy. What is it though?

The policy entails everyone paying the same basic rate – usually touted as around 20 or 30%. But it has two major possible implications.

If it was set at a low rate, it would require enormous further cuts to public services to compensate for tax income plummeting overnight. But if it was set at a high rate, it would require enormous tax rises among the poor to fund an effective tax cut for the rich, i.e. from the 45% top rate down to the 31% that the Institute for Fiscal Studies says would be necessary to maintain current Treasury tax receipts.

So we have two options with the flat tax – Cameron’s ‘permanent austerity’ hailed by neoliberals (an outcome which would hit the poorest hardest), or significant tax rises for low earners, which would also hit the poorest hardest. The flat tax is therefore, as is commonly understood, deeply regressive. Doesn’t take a genius to work it out.

But it’s also verified by several studies. Here’s an analysis of US flat tax plans by income bracket:

Flat tax

Citizens for Tax Justice, based in the US where calls for a flat tax rate are frequent, have therefore determined that the shift would result in ‘enormous tax cuts for the richest five percent of taxpayers’ alongside ‘tax hikes for all other income groups’, while leaving the investment income of the wealthy essentially untaxed.

Moreover, there’s little evidence to suggest it would ‘work’ in the way right-wing advocates say it would. It has only been introduced in some Baltic states and Russia. In the latter, it was hailed as dramatically boosting actual payment of tax, where previously it had been avoided. But according to a London School of Economics report, this coincided with a dramatic boost in tax collecting powers, and sweeping changes to other forms of taxation, a finding confirmed by another 2007 study.

Meanwhile, another key argument for the Flat Tax, ‘simplicity’, has been fundamentally rebutted by a University of Chicago study, which showed that in any complex economy there is no such thing as a ‘simple’ tax system, particularly when companies and individuals can avoid tax at whatever level it is set. The implementation costs for shifting to such a system were also significant.

Even a study by the free market IMF stressed ‘empirical evidence on [flat taxes’] effects is very limited’ although they did find that ‘there is no sign of Laffer [curve]-type behavioural responses generating revenue increases from the tax cut’ – in non-academic terms, cutting tax didn’t stop avoidance or boost productivity and government income.

So with the evidence unclear, or if anything pointing against a flat tax rate, the Tories have a choice to make. They could adopt a policy so right-wing even UKIP have abandoned it, in what would entrench their perception as the party of the rich forever…or they could ‘do the right thing’ for ‘hardworking people’ and drop the ludicrous plans.

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Public services under attack – international austerity and the fight-back

Speaking to the Global Labour Institute’s 2014 International Summer School, Rosa Pavanelli, General Secretary of Public Services International, gave an account of the struggles public service workers are facing. This article draws on her speech to delegates in Tuesday’s opening plenary.

[Republished from my article at Socialist Unity]

Public service jobs used to be considered the gold standard in much of the world. Well paid, good pension, decent holidays and solid trade union rights. In an era of neoliberalism however, these previously ‘most formal of formal workers’ are facing the kinds of attacks previously only associated with the most ruthless companies.

International Struggles

There’s an ideological background to this. Labour market and union ‘reform’ has been factor in almost all post-crash countries. In South Korea, the government has recently initiated the most violent attack on public services – derecognising unions in each sector. Privatisation of the rail industry and the mass firing of union activists have turned the country into what one delegate called ‘a war zone’ for workers.

Public Services International, the Global Union Federation for public service workers, is used to privatisation battles – organising in industries which are often publicly funded and subsidised, but increasingly privately owned.

In the US, the Supreme Court last week ruled that there’s no obligation for care workers to pay union dues to unions collectively bargaining for them. These workers often work alone. They are now even more isolated – especially if their unions become toothless in the face of the court decision.

And internationally, at the last ILO conference, for first time delegates couldn’t reach a conclusion on the centrality of the right to strike – despite convention 87 of the ILO convention deeming it fundamental – because employers were so strongly against. It’s a frightening turn for workers of all sectors, as that is one of the only legal bases unions have on the global scale.

But there is some good news. The UN Women’s organisation recently recognised the role of unions as key to addressing the problems of women.

Moreover, until recently trade unions were previously not allowed to participate in UN discussions on migration. Now, after years of struggling from PSI and others, they can. With migration becoming a vehicle for new kinds of slavery, it’s an important milestone.

For public service workers, the water campaigns in the UN are equally important. In 2010, water was deemed a human right, providing the legal background for the massive 2013 struggles in Europe for water to be publicly owned – many of which won, in Paris and elsewhere.

And in the IMF, Christine Lagarde has recently said austerity is creating more injustice and poses a threat to democracy.

A turning point?

The ruling class, then, is getting scared. We are at critical point of class conflict. In response to a global ruling class, unions must likewise organise internationally, not just in one workplace. The welfare state wasn’t won in one shop floor but by the entire working class.

Multinational capital has a strategy. Unions can’t afford to navel-gaze. Whether in care homes, railway stations or outsourced water plants, public service workers in today’s climate of privatisation, cuts and union-busting know this better than ever.

Josiah Mortimer is reporting on the Global Labour Institute’s third International Summer School for trade unionists at Northern College this week. You can follow all of the conference online on the GLI site, through Union Solidarity International, and on Twitter, using the hashtag #ISS14. This article draws on the plenary ‘The Fall & Rise of Labour?’

Anti-Privatisation Win in York – Uni Pulls out of INTO outsourcing plans

It doesn’t happen a lot, but once in a while there’s some good news for lefties in the UK.

After a brewing underground uproar by students and staff, the University of York has decided not to go ahead with its controversial plans to outsource the recruitment and English-language teaching of international students to part-hedge fund-owned INTO University Partnerships, a multinational firm.

Despite assertions in student media that the plans wouldn’t amount to privatisation (since the university would retain a 50% stake), many saw through it. There have been rowdy Senate meetings, mass leafleting by union activists and strong cases made against the proposals in joint union/management forums.

The idea was worrying from the start. Currently in-house staff would have been transferred to the company, and once the private-sector pressure grew too intense, it was likely that that they would leave and be replaced by people on worse contracts. Even the head of INTO has admitted himself that rates of pay are worse at the organisation.

That’s not the only reason it was always a bad idea. I was contacted by a member staff from another UK university INTO works with when the plans were announced. They warned of the disaster that the INTO contract had been, saying the York plans “threaten the fabric of your university.”

INTO contracts which started at other universities with just student recruitment are now allegedly spreading into other areas of campus management. Outsourcing is a “slippery slope”, I was told. Once you lose the capacity to run services in house, it’s more difficult to take them back under university control when companies fail.

The UCU’s briefing at York noted that at Exeter University, where INTO run international student recruitment, “the university council recently expressed concern that students coming via INTO were now of a lower quality than those recruited by the university” – all to reach targets and make a profit.

That’s not all. “In January this year, UEA pulled out of a joint venture in London having lost £2.5 million over two years and written off a further £3 million that it invested late last year trying to save the project,” the document pointed out. The same thing has happened in many other campuses across the county, including Queen’s Belfast, City University, and Manchester College. In Joint Ventures, profits and losses are shared equally. So where the company messes up, students take the hit too.

“Prevent it and you will inspire others” – that was the message from the concerned member of staff at another partner university. We should be congratulate the UCU branch at York for campaigning to prevent this undemocratic and ideological scheme from going any further. They have shown that the outsourcing tide is not irreversible.

A member of staff who would be affected at York told me when the plans were going through their “faith in the integrity of our leaders on campus [was at an] all-time low.” Now, hopefully, their faith can be a little bit restored.

Universities should be run for students, not for private company profits. The message we can learn from this saga is that, when concerns become ever louder, the university has to take heed of this fact. It’s hard to say it, but hats off to them for listening. Although maybe, just maybe, they feared the anti-privatisation unrest that hit Birmingham and Sussex Universities recently could visit our little Northern city…

Saturday’s TUC march showed unions are needed more than ever

Credit: Steve Cooke

 

Nick Clegg received an unusual York welcome on Saturday.

Over 3000 anti-austerity protesters marched for ‘A Better Way’ through York to greet the Liberal Democrat Spring Conference being held at the Barbican.

As the Deputy Prime Minister spoke in favour of his motion on immigration, hundreds stood outside the building – a building which York’s Lib Dem council closed while it was last in control of the authority – to vent their anger at the cuts to public services, privatisation and other policies which hit the poorest hardest. Needless to say, the marchers’ chants, boos and cries of ‘shame’ reflected this palpable and genuine rage.

It was rage at everything from the Lib Dem’s propping up the Conservatives in government, to the tuition fee betrayal (Clegg’s crocodile tears notwithstanding), the bedroom tax, the back-door sell-off of the NHS to private companies and – judging by the presence of university lecturers and their UCU union – the dismal state of higher education under this government, with course and department closures, real-terms pay cuts and increasing marketisation.

This was a feeling expressed by the many students on the march too – a bloc that reflected the more radical spectrum of the protest. York’s Socialist Students made an effigy of Nick Clegg himself, hanged off the city walls, alongside a ‘Welcome to Traitor’s Gate’ banner. A grim sight for delegates to behold, in a wealthy former-Lib Dem city where they probably expected a friendlier reception amid Labour authority unpopularity. No such luck.

The TUC-organised demo couldn’t have chosen its day to be more symbolic. Saturday marked International Women’s Day. That very morning, delegates were hit with headlines of ‘Osborne’s tax and benefits changes hit women almost four times harder than men’. Not the best way for the previously centre-left party to celebrate IWD. But who wouldn’t have predicted that the three-year freeze in child benefit would have hit women hardest? Or that the cut in the top rate of tax for millionaires mostly helps rich white men?

Speakers at the rally after the march were quick to point this out. All ten speakers were women – a figure that contrasts sharply with the Lib Dems current level of gender representation. The figure hasn’t been picked up upon, but those 10 northern speakers are more than the Lib Dem’s current number of female MPs in the whole of the UK – and certainly more than at the next election after a number of announcedfemale resignations . Most inspiringly, leading the march were strikers (almost entirely women) from Care UK in Doncaster – workers who have just finished a week-long strike against the company to which their jobs were recently handed over to by the council. They’re facing pay cuts of up to 50% in an attempt to boost profits – and they’re fighting back.

Thirty years on from the miners’ strike, it’s a reminder that unions still matter. In fact, the whole protest – amid hundreds of union flags and banners – served to prove that trade unions, in standing up for the hardest-hit by austerity, are actually more needed than ever in the face of the neoliberal onslaught that is this coalition government (and don’t think the austerity will end with Labour, either). Indeed, the TUC collected 52 full carrier bags of food at the demonstration for local food banks under strain from the weight of a cost of living crisis.

Saturday’s march showed that, with over six million members – the majority of whom are now women – and the ability to mobilise thousands in the cause of social justice, unions still pack a punch. But with just 13% of 16-24 year olds members of what are still the largest democratic civil society bodies, perhaps the biggest message was that our generation needs to get organised. Otherwise, the current austerity measures could be ‘permanent’, to use Cameron’s word.

On Sunday, the People’s Assembly Against Austerity are planning to wave Clegg off as he leaves the city. Given the welcome he got, and the goodbye he’ll receive, he may well get the message that York – with its large student population alongside those hit by benefit cuts – isn’t such a big fan of the Lib Dems, after all.

Credit: Steve Cooke

Credit: Steve Cooke

Brighton Greens’ council tax move shows the fight against austerity is on

[Cross-posted from my article over at Left Foot Forward yesterday]

Brighton and Hove’s Green council is taking bold steps to counter austerity. Last week the administration proposed a 4.75 per cent council tax rise to protect vital adult social care services for the city’s elderly and vulnerable residents, as well as funding for the third sector which has been badly hit by national cut-backs.

Brighton-JPEG

After three year of callous cuts from central government, Greens in Brighton have said enough is enough, arguing that radical solutions are needed to circumvent the next round of austerity being forced upon cities up and down the country. Brighton is the second hardest-hit unitary council nationally in terms of the budget reductions the coalition have forced upon it. 

That’s why they are planning to hold a referendum to let local people choose between sweeping cuts to adult social care or give around a pound a week extra.

Less than a fiver a month to protect the elderly seems like a fair ask, despite times of course being hard for Brighton residents. As Green council leader Jason Kitcat has said:

“This is the right time to ask the people what they think is the right approach – do we cut back services or pay extra, £4.53 a month or less for the majority of households, to show we really are a caring society?”

That’s not to downplay the truism that raising taxes is rarely popular, but councils face little choice. Caroline Lucas, throwing her weight behind the move, put it clearly:

“This is an appalling situation, for which the government is alone to blame. A referendum would allow the people of Brighton and Hove…to decide on the best response.”

And it’s not just Greens supporting the campaign to let Brighton decide their services’ future. The local GMB and Unison branches have spoken out in favour of the referendum, with Mark Turner, the city’s GMB branch secretary saying:

“This new budget would protect frontline services in adult social care. Cuts would have absolutely terrible consequences on people’s lives. It is only right that the public have a chance to vote on this proposal.”

The proposal for Brighton&Hove will pass in Council in February, unless opposed by both Labour and Tory councillors. It would then proceed to a ballot on 22 May – the same time as elections for European Parliament, significantly saving on administration costs.

However, the Tories and Labour in Brighton seem to be planning to stop the referendum. The proposal was rejected by the Brighton&Hove Labour Party within fifteen minutes of the announcement. They’ve also called on the minority-run council to step down, and are planning to propose a vote of no confidence, with leader of Brighton and Hove Labour Group, Warren Morgan calling for “a cross-party caretaker administration to run the council till the elections in 400 days.”

Such a care-taker administration can only mean one thing – a Labour-Tory coalition. Essentially Labour is seeking to get into bed with the Conservatives just to spite the Greens.

Meanwhile, the Tories are likely to be wedded to the coalition’s ideological council tax freeze, which is year-on-year shrinking the local state and depriving residents of key services hit by a combination of increasing demand and austerity.

In the face of such opposition, the minority council is in an extremely difficult place. That’s why it’s important that people inside and outside Brighton who support public services back the ‘#BrightonDecides’ campaign.

This Saturday, Young Greens from across the UK are heading to Brighton to campaign in favour of the referendum. We’ve also written to the national press, encouraging all Brighton&Hove councillors, and indeed councils across the country, to give the voters the chance to fight the toxicity of austerity.

Unlike other parties, the Green Party fundamentally opposes austerity – not just in words but in actions too. It’s a brave position, and it’s one that other councils, instead of simply capitulating to permanent austerity, should follow.

University of York plans to part-privatise international student recruitment

The UCU union have revealed that the University of York – without student consultation – is planning to go into a joint venture with for-profit company INTO to recruit international students. Read the excellent York UCU briefing here and share it widely.

This has thus far gone completely under the radar without democratic discussion. Student media are about to break the story, with a comment piece by me plus news articles are to follow in the coming days.

I’ve asked the UCU what their campaign plans are and will be looking at how students can get involved. Let’s bring the Sussex and Birmingham protests to our own university which is faced with back-door privatisation. The neoliberal paradigm ain’t welcome in York…

#No2INTO, anyone?

The loan privatisation protests show student activism is back

Originally published by York Vision

If there’s one thing that has been repeated about the student movement, long after the fires around Conservative HQ began to fade in 2010, it’s the claim that it’s dead.  The protests after the infamous ‘Demolition’ demonstration that November were a sorry shadow of the anger 52,000 marchers felt by Milbank – not to mention the many thousands who couldn’t make it – gradually getting smaller and smaller with the capitulation of the NUS to simple gesture politics.

But the past few days have shown that rumours of the student movement’s death were exaggerated. Underneath the seeming calm, the sense of dispossession was still there – waiting for a spark. In the government’s plans to privatise the Student Loans Company, they may have found it.

The government’s announcement in June that it plans to sell off the student loan book to private investors – literally the entirety of young people’s educational debt – marks a frightening new step in the steady decline of our education system, transformed from a universal public good to a mere business purchase – a corporate opportunity instead of the common provision of knowledge to create more rounded human beings. And it comes in the wake of the disastrous (not to mention shambolic) transfer of the Royal Mail to, overwhelmingly, institutional investors – banks, hedge funds and speculators.

By 2015, higher education could be almost completely privatised – not even our debt will be publicly owned anymore. More than this though, in order to ‘sweeten up’ the deal (since investors don’t want to buy our debt as it stands) the government is expected to reduce or remove the interest rate cap. Put simply, fees could go up, indirectly, yet again. They will have to, since the government can actually borrow more cheaply than any other institution in society. Private companies on the other hand, can’t.

So it was with this growing realisation in mind that hundreds of students marched, rallied, petitioned, leafleted and occupied their campuses on Wednesday in a national effort to block the proposals to flog off our future repayments. Coordinated by the Student Assembly Against Austerity and backed by the Young Greens (the youth branch of the Green Party), at least 25 campuses took part, with two – Birmingham and Sheffield – actually being occupied by students. The spirit of the tuition fee protests may just be coming back.

In Birmingham, students have occupied their Senate House, the historic decision-making centre of the University, to push management to ‘make a public statement against the privatisation of student loans and in defence of the public university’ – alongside other worthy pledges such as reducing the gaping pay inequality in Higher Education and getting the Vice Chancellor to take back his calls for tuition fees to be further increased. Sounds a lot like York.

And in Sheffield, students took over their campus branch of Santander – presumably a potential buyer – in a symbolic move against the loan sell-off. A pretty clear message against bankers, who obviously did much to cause the economic crisis, taking over our debt.

It wasn’t all old school revolutionary 1968 tactics being used however. Protest in the 21st century is dynamic. We had live tweeting, Facebook streams, online news coverage and flickr feeds. We had banner drops, students locking themselves together in ‘debt chains’, and in Cambridge (where police recently tried to recruit students to spy on each other) and Manchester, students lay trapped under red boxes marked ‘debt’ (no prizes for guessing the message). In York we opted for a rally, alongside getting students to sign a petition to local Tory MP Julian Sturdy to condemn the coalition’s plans. As ever, a diversity of tactics is needed.

I talked to a spokesperson for the Student Assembly Against Austerity, Fiona Edwards, who agreed that the student movement is coming back to life. “There is an upturn in struggle within the student movement. Students’ living standards are being hit hard by the Tories’ austerity offensive, and just as with other sections of society, we aren’t prepared to accept this without a fight.

The coalition seems to be trying to down-play the sell-off and push it under the radar. After the Day of Action, it looks less certain they’ll get away with it however. “Wednesday’s day of action has sounded the alarm and raised huge awareness about the next big attack on education”.

This government has made it clear that it intends to push through privatisation before 2015. That means there’s not much time left. And since Labour themselves not only introduced fees but also tripled them (years before Nick Clegg could follow suit), it’s more urgent than ever that we push the government to drop the proposals. Keep your eyes out – the student movement might be back, after all.

The next national Day of Action has now been set as the 3rd of February. Over 100 people and 10 campuses have already pledged to join the action within a couple of hours of the announcement. Find out more here: https://www.facebook.com/events/237473933084637/237497453082285

Josiah Mortimer organised York’s protest and sits on the National Committee of the Young Greens, the youth branch of the Green Party of England and Wales.