Time to stand up

Being nice to global corporations doesn't work.

The decisive political development of the last 30 years was the shift to a financialised and globalised capitalism. It was given a huge nudge by the 1980s "big bang" but this merely exacerbated a trend. Capital went global while democracy stayed rigidly national. Ever since the game for the left has been up. In the words of Zygmunt Bauman, we have power without politics and politics without power.

We were reminded of this on Tuesday when HSBC announced to the world that they would, after all, be keeping their company HQ in London, at least until 2015. It’s a trick this particular bank pulls again and again – along with a host of other global corporates.  It’s a message that says if you don’t regulate us as lightly as possible or tax us as minimally as possible then we will go to somewhere that does. Its called blackmail and it works. Governments fear losing even minimal corporate tax payments and duly oblige.  The tax base gets thinner and the capacity of companies to wreck the economy, because of the light touch regulations they demand, grows. Eventually the economy crashes as it did in 2008 and nothing happens to the banks who once again see their pay and rewards rocket while everyone else pays the tab. I’m so glad you're staying HSBC so we can continue to bail you out. 
So what to do? Well, lots. First we could tell them to get lost and go and re-locate to their neoliberal nirvana. Some might. But look at HSBC, a basket case of a once proud banking institution that is now mired in a money laundering scandal. But would they go? HSBC is run by real people with real lives. They have been based on London for over 25 years. That is people with families, roots and ties. London is a fantastic place to live and work. Would many want to swap that?
We could say instead that these are the rules of a civilised society and we expect you to honour them. We could champion the good companies – like GSK who, on this issue, have been very clear: they will not play the blackmail game and will pay all the taxes they are asked to pay (well done Andrew Witty, the company CEO).
We could look at the German system which anchors companies in places and to people through sunken costs that mean you cant just do a moonlight flit and sail off to a low tax, minimal regulation oasis without a hefty bill. And why don’t we suggest, starting in Europe, that there is a minimum level of corporation tax all companies have to pay to end the race to the bottom. The same with tax havens.  And why not introduce a financial transaction tax, which means no finance sector company can ever escape paying their fair share.
Companies like HSBC are just playground bullies. Being nice to them doesn’t work. They will still nick our dinner money. We have to stand up to them. Progress is the chase and pursuit of irresponsible capitalism to the furthest quarters of the globe – to pin it down, regulate it and make it safe for people and the planet. That is a big daunting task I know – but its either that or being bullied.
PS The government have announced the end of a short-lived ministerial committee set up to tackle long term health issues like obesity, alcohol abuse and growing health inequalities. It was a good idea but ironically wasn’t given any time. Labour and others should demand that it be reinstated or promise to do so themselves. This switch from public services going "upstream" to deal with causes and not just symptoms is crucial to the reform of the state. It is an idea being championed by the brilliant Anna Coote over at the New Economics Foundation. Why spend loads of money fishing someone out of a downstream river when you could have saved money and a life live by stopping them falling in in the first place? Only on this issue it would mean taking on the fast food and alcohol industries. So maybe we shouldn’t be surprised long termism was given such short shift. 
HSBC is always threatening to up sticks and leave the UK (Photo: Getty Images)

Neal Lawson is chair of the pressure group Compass and author of the book All Consuming.

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.