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The following report has been produced by the PCS trade union in response to the latest proposal to cut posts. The report provides an analysis and data on a major income deficit (£123 Billion a year) which in the current financial climate you would think a responsible government should be addressing. Instead they are targeting Benefit Fraud (£1.5bn a year).

Report begins:

The financial crisis was not caused by excessive public spending. That is vital to bear in mind when we hear all around us that the ‘deficit’ must be cut.

This is not a spending crisis this is an income crisis.

In the above chart the ‘deficit’ is the gap or difference between what the government spends (the top line in the chart) and what it receives in income (shown on the bottom line of the chart). That deficit for this year was originally estimated to be £178 Billion. That original estimate has now been revised using more up to date figures and is now estimated to be £156 Billion. A difference between the two estimates of £22 Billion.

The lack of tax revenue did not cause the current financial crisis. The reason for that substantial fall in government income you can see on the chart in 2008 was as a result of the downturn in economic activity – the recession sparked by the near collapse of the worlds banking system. Bailing out the banks in the UK cost £1.3 Trillion, which is 1,300 Billion pounds. The recession increased unemployment and hit tax revenues.

 What the Con Dem government don’t want to talk about is the Tax Gap.

That is the difference between what the government would receive in tax if everyone paid what they should pay and what it actually receives. The difference between what it should receive and what it actually receives is the tax gap; estimates from the PCS union indicate the gap to be £123 Billion, which is 123,000 million pounds.

I repeat that figure again because members are being bombarded by anti-public services propaganda every day.

Tax Gap £123 Billion

PCS asked Richard Murphy a Chartered Accountant and a Tax expert to research and calculate the size of the tax gap. That research has now been published and the tax gap is estimated at £123 Billion, which is 123,000 million pounds per year.

That £123 Billion is made up of three amounts:

·         £25 Billion avoided.

·         £70 Billion evaded.

·         £28 Billion not collected.

The difference between tax avoidance and tax evasion is as Denis Healy once said “the thickness of a prison wall”. Tax is avoided by exploiting loopholes in tax law. 

The TUC pamphlet “The missing Billions” estimates that £25 Billion each year is avoided by corporations and rich individuals. The pamphlet gives examples of some of the measures used to avoid tax.

One well known example is the tax avoidance used by rich individuals running private equity firms who by classifying their income as capital gains pay 22% less tax than they would otherwise pay if they declared it as income and were subject to income tax at the top rate. Hence one multi-millionaire private equity partner admitted that he paid less tax than his cleaner. The reason for this was, at the time, Capital Gains Tax stood at a rate of 18% whereas the top rate of income tax stood at 40%, a difference of 22%. In his budget speech on 22 June George Osborne said,

“Some of the richest people in this country have been able to pay less tax than the people who clean for them.

That is not fair – and it stems from the avoidance activity that has exploited the wider gap between the rate of Capital Gains Tax and the top rates of income tax.

These practices are costing other taxpayers over £1 Billion every year”

And he raised Capital Gains Tax from 18% to 28%. Great you may think. However, what he did not point out was that the top rate of income tax is now 50%, so with Capital Gains Tax now at 28% the gap between the two is still 22%. Those richest people in the country will still be exploiting that loophole.

£70 Billion Tax evaded

The Richard Murphy report estimates tax evaded to be £70 Billion. The report shows why the official HMRC estimate of tax avoided and evaded totalling £40 Billion is way too low particularly for tax evaded. This is because HMRC concentrates its efforts on those who do make tax returns and ignore the significant elements in society who evade the system altogether. By definition tax evasion is a criminal offence and (surprise, surprise) those evading tax do not tell HMRC about their activities. By relying on data supplied to HMRC they are missing the evasion that is completely outside the tax system.

However, for indirect taxes such as VAT, HMRC employs a ‘top-down’ approach. The gap is estimated by comparing the net theoretical tax yield, which involves assessing the total amount of expenditure in the economy that is liable to VAT, with actual VAT receipts. The difference is the VAT gap. This approach is rational because it seeks to establish the likely tax due independent of data submitted to HMRC. This ‘top- down’ method is the approach adopted by Richard Murphy in his report.

An example of tax evasion was demonstrated in a recent criminal case where an organised gang were convicted of defrauding HMRC of £4.5 Million. They submitted refund claims in the names of fictitious migrant labourers claiming they had overpaid income tax. Now at this point you may think that there is a bit of a flaw in this cunning plan. Given that the details provided to HMRC are for people who don’t actually exist, and haven’t actually paid any income tax, how can they get a refund on tax they haven’t paid? Not a problem. HMRC made the repayments without checking, the gang got £4.5 million from HMRC. This is because HMRC adopted the attitude of ‘pay now, check later’. The judge Christopher Hardy in sentencing the gang also raised concerns about HMRC’s system, “Trust has become a very risky and unwise basis in this day and age with which to disperse millions of pounds of public money”

We agree with the judge. Hence one of the recommendations in the Richard Murphy report is that HMRC should engage staff to check tax repayments before they are made. This isn’t rocket science.

£28 Billion Tax not collected

This is not an estimate. It is the published figure from HMRC as at 31 March 2010 for monies that have been declared or assessed but not paid to HMRC. That debt does not come in by magic and HMRC employs part of its workforce in the Debt Management and Banking section. A section that has also been cut, in the HMRC drive to close offices and reduce its staffing.

Richard Murphys report and PCS say:-

·         More staff should be employed to tackle tax avoidance.

·         More staff should be employed to tackle tax evasion.

·         More staff should be employed to recover tax not collected.

·         We want tax justice. We all have to pay our tax. The banks, the big corporations, the super rich and the criminals should pay their tax too.

End.

Future Shape Social Care – flawed

The Barnet Future Shape programme is embarking on a policy of mass privatisation. The Council employed consultants two years ago to look at the future of Public Services; the programme was called Future Shape. Two years on and with a national media profile, future shape now known as easyCouncil has finally revealed its true purpose….. A ‘Commissioning Council’

Did Barnet really need to spend £2.5million taxpayer’s money to come up with an ideology from the 80’s i.e. Compulsory Competitive Tendering (CCT)?

This was Thatcher’s lowest-bid compulsory competitive tendering and her environment minister Nicholas Ridley’s vision of ‘enabling’ councils, which would meet just once a year to hand out the contracts to multinationals. Despite what anyone says it is the multinationals that are going to benefit at the expense of the customer and the tax payer!

A number of Future Shape projects are taking place. Members will be aware that the Trade Unions have registered complaints with our Employers about the secrecy in which the Option Appraisals are being carried out.

The first Project in Adult Social Services has been shrouded in secrecy; the Trade Unions with the support of Professor Dexter Whitfield have produced a report outlining serious flaws in the Adult Social Care Options Appraisal.

To read the Full report click here

To view newsletter click here

Barnet Council’s Future Shape programme is currently examining options for the provision of a wide range of services. The Council is excluding in-house provision in principle and is constructing barriers to a genuine assessment of the potential of this option. Staff have raised a number of questions in meetings and presentations on the future of Council services. Some arise from statements made by senior officers in staff presentations and reports. They require a response and explanation.

1. Can in-house services innovate on the scale required by Future Shape?

The Council has failed to engage with staff and trade unions to explore their ideas and proposals for innovation and service improvement, despite being urged to do so (Barnet UNISON Briefing No 5, 2008). The council has spent £2.5m on Future Shape consultants but what has been achieved? These scarce resources would have been more effectively spent on developing and improving services with staff and trade unions. It could be started today. However, the Council continues to engage consultants claiming they are ‘independent’ and that Council staff do not have the required skills to carry out the work. This is not the case. None of the current projects – the Regulation bundle (planning, environmental health, trading standards), Adults, Hendon Crematoria and Cemetery, Transport, Support Services and Customer Services, develop the One Barnet concept. They simply adopt the outsource contract model. The opportunity to develop a more innovative approach will be lost.

 

To view the full report click here

Our Councils decision to take a massive pay increase whilst at the same time telling staff, residents to be ready for cuts in jobs and services has reached local, regional and national attention.

http://www.barnet-today.co.uk/tn/news.cfm?id=25444&headline=

http://www.barnet-today.co.uk/tn/news.cfm?id=25439&headline=

http://www.times-series.co.uk/news/8270489.Coleman_defends_new_council_allowance_pay_packets/

http://www.bbc.co.uk/news/uk-england-london-10635391

http://www.thejc.com/blogpost/barnet-councillors-should-be-ashamed

Now was not the time to implement the awards there is and always was an alternative.

 

 

Last Thursday I attended the launch of the Barnet Anti Academies Alliance. Guest speaker Alisdair Smith (from Anti-Academy Alliance) spoke passionately about the need to organise in those schools looking to become Academies next term.

It was clear from the discussion in the meeting that staff have not been consulted. It was agreed that we need to build a campaign to have an open and transparent debate before any decisions are made.

Staff, parents, governors all need to take part in the debate.

Barnet Council are promoting Academies and Free schools without any reference to any evidence and without an educational impact assessment having been published.

Two Community Schools East Barnet and Ravenscroft School are looking to become Academies.

I attended a Joint Trade Union meeting at Ravenscroft with the Head and later the staff. It was clear from the questions being asked by staff that they had not understood the implications fo becoming an Academy.

There are still many  unanswered questions.

We asked the Head to recommend that no decisions are made until the new term begins. However the Head was clear that it will be the Governors decision on Thursday 22 July.

One of the Governors is Cabinet member Cllr Brian Coleman. The Council passed a motion supporting the move to Academies.

If Ravenscroft decides to go ahead and become an Academy whilst the staff are away on leave the Trade Unions may have to look at declare a dispute.

No school should make a decision of this importance without having the facts before them. Even the financial gains must be clear before the School make sthe decision. Once a school becomes aan Academy there is not going back that is in the Bill.

“Would you buy a house, car without having the details in black and white?”