The Arctic Monkeys sing of working class life, but used the Liberty tax scheme. Photo: Getty
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Tax Avoidance: Why it stings more when it's musicians

We expect corporations to dodge their civic responsibilities, but musicians are meant to speak for everyman. They leave Main St when they try to avoid tax on their millions.

Revelations of tax avoidance aren't new. Another is predictably unearthed before the last tips off the conveyor belt. However, there's been a distinct ripple in the works following allegations that a series of high-profile British musicians, including Sheffield's Arctic Monkeys, have been using a scheme called Liberty, storing money offshore in Jersey. Had these been global corporations with byzantine tax arrangements, like Starbucks or Topshop, we might condemn them, but would we feel let down? Probably not. And the belt would keep on trudging along.

Musicians are meant to be different. Throughout history, political unrest or upheaval has been articulated and characterised by movements such as punk, and musicians like The Clash. Music is the product of counterculture and the working class, and those who voice our lives purport to do so with empathy. Or so we thought.

George Michael, who once penned a song about life on benefits, now believes it's perfectly acceptable to let his wealth accumulate in Jersey. "I would feel enormously unhappy about paying 50 per cent tax to another Tory government," says George, like a true Thatcherite individualist, as if we all have a choice. 

Hypocrisy is what stings us hardest. When it is those who celebrate the beneficiaries of taxation who suddenly flaunt how little they pay, it punches like betrayal. Some will label that reactionary, but there's no doubting musicians' foibles evoke a greater sense of disappointment than Starbucks and Topshop. Those brands have never pretended to understand us; they exist in a profit-fuelled world of fierce competition. 

It is true that some of the artists using the Liberty scheme may not have much of an opinion on isolated political policies, but neither do much of the public. Instead, it's their general attitude that cements the unique bond between us and musicians: the rebellious, anti-establishment feeling; the alienation and oppression; the humanity and emotion. Such traits are what we identify with.

Their tales are of the streets we walked; streets that were built by public investment. They were born in NHS hospitals, attended state-funded schools. The Arctic Monkeys flourished as a result of incisive and witty lyrics of social realism that chimed with the everyman. And yet, any reference to civic pride from now on will be warped with bitter irony. It's therefore no surprise that these revelations have disappointed us more than usual, and it just goes to show, their pockets may be a little denser, but the charge of hypocrisy is a much greater burden than a few less zeros on your bank statement.

Photo: Getty Images
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Autumn Statement 2015: George Osborne abandons his target

How will George Osborne close the deficit after his U-Turns? Answer: he won't, of course. 

“Good governments U-Turn, and U-Turn frequently.” That’s Andrew Adonis’ maxim, and George Osborne borrowed heavily from him today, delivering two big U-Turns, on tax credits and on police funding. There will be no cuts to tax credits or to the police.

The Office for Budget Responsibility estimates that, in total, the government gave away £6.2 billion next year, more than half of which is the reverse to tax credits.

Osborne claims that he will still deliver his planned £12bn reduction in welfare. But, as I’ve written before, without cutting tax credits, it’s difficult to see how you can get £12bn out of the welfare bill. Here’s the OBR’s chart of welfare spending:

The government has already promised to protect child benefit and pension spending – in fact, it actually increased pensioner spending today. So all that’s left is tax credits. If the government is not going to cut them, where’s the £12bn come from?

A bit of clever accounting today got Osborne out of his hole. The Universal Credit, once it comes in in full, will replace tax credits anyway, allowing him to describe his U-Turn as a delay, not a full retreat. But the reality – as the Treasury has admitted privately for some time – is that the Universal Credit will never be wholly implemented. The pilot schemes – one of which, in Hammersmith, I have visited myself – are little more than Potemkin set-ups. Iain Duncan Smith’s Universal Credit will never be rolled out in full. The savings from switching from tax credits to Universal Credit will never materialise.

The £12bn is smaller, too, than it was this time last week. Instead of cutting £12bn from the welfare budget by 2017-8, the government will instead cut £12bn by the end of the parliament – a much smaller task.

That’s not to say that the cuts to departmental spending and welfare will be painless – far from it. Employment Support Allowance – what used to be called incapacity benefit and severe disablement benefit – will be cut down to the level of Jobseekers’ Allowance, while the government will erect further hurdles to claimants. Cuts to departmental spending will mean a further reduction in the numbers of public sector workers.  But it will be some way short of the reductions in welfare spending required to hit Osborne’s deficit reduction timetable.

So, where’s the money coming from? The answer is nowhere. What we'll instead get is five more years of the same: increasing household debt, austerity largely concentrated on the poorest, and yet more borrowing. As the last five years proved, the Conservatives don’t need to close the deficit to be re-elected. In fact, it may be that having the need to “finish the job” as a stick to beat Labour with actually helped the Tories in May. They have neither an economic imperative nor a political one to close the deficit. 

Stephen Bush is editor of the Staggers, the New Statesman’s political blog.