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How tax cuts for the rich have cost the country dear

George Osborne's reduction in the top rate of tax from 50p to 45p has left an £8.6bn black hole. 

When it comes to austerity, the Conservatives have often argued that “there is no alternative”. When he was Chancellor, George Osborne inflicted painful spending cuts on our country, our communities and our public services.

Now, of course, Osborne has sought to reinvent himself as a small 'l' liberal and a newspaper editor. Yet the choices he made - and they were choices - still have a lasting impact. The prime advocate of the “no alternative” doctrine may have left Parliament, but the effect of his cuts will be felt for generations.

Yet the brutal approach to public spending of the Conservative years needn’t have happened, and it needn’t continue. As many of us have been saying in the decade since the global financial crisis, there is an alternative. One that values public services and those who provide them, and that places the biggest burden on the shoulders of those who can bear it most.

One of the best examples of this is on taxation. While hospital porters, school support staff and care workers have been forced to pay – in lost jobs and slashed wages – for the mistakes of the financial sector, the wealthiest in our society got a tax cut. The government claimed that reducing the top rate of income tax from 50p to 45p in 2013 wouldn’t cost the government money. In fact, analysis carried out by UNISON shows that between 2013/14 and 2017/18 the income tax cuts for those earning over a million pounds a year alone have saved the nation’s super-wealthy on average £554,000 each. Those tax cuts have also cost the British taxpayer £8.6bn over those five years.

That’s £8.6bn that could have been spent avoiding the harshest of cuts to the NHS, schools and local government. And £8.6bn that could have been spent raising wages for those dedicated public servants who work for our communities. Put another way, tax cuts for the richest 15,000 taxpayers in the country could have bought them a couple of top of the range sports cars, a big house in the country or perhaps even a helicopter. Yet at the same time, the same government has cut wages in real terms for those who teach our children, care for our loved ones and empty our bins.

The money lost could have paid for an extra 20,000 nurses, 10,000 extra police community support officers (PCSOs), 10,000 extra police officers, and 20,000 newly qualified teachers - every year for the whole five years. Or it could have paid for 60,000 bursaries for nurses, midwives and other health professionals, 10,000 extra nurses, 10,000 extra PCSOs and 10,000 newly qualified teachers - every year for five years. Or it could have helped solved our nation’s social care crisis, by putting £1.7bn a year into social care. Instead, that money was squandered on those who need it least, including - shamefully - those who caused the financial crisis in the first place.

The income tax cut for the wealthy is one of the most emblematic budget changes of recent years, but it’s far from the only tax giveaway. The government has also slashed corporation tax while consistently failing to act on large-scale industrial levels of tax avoidance, which has once again been brought to our nation’s attention, this time by the Paradise Papers.

The truth is, we were never “all in it together”. There was an alternative that was avoided in favour of austerity, which was a political choice serving one group in society over another. Now, Chancellor Philip Hammond says the government has heard the calls for change, heeded the lessons of the recent general election, and plans to change course. The acknowledgement that another way is possible is to be welcomed, but only if the government makes the unlikely but necessary decision to walk that other road.

The age of austerity has devastated our country at a time when we need to be ready for the challenges of a future defined by automation and rapid technological advancement. Investment in public services - and most importantly of all, in those who provide them, is needed more now than ever. The way to better services comes not through more cuts but through real investment.

Governments should not be afraid to make the case for higher taxes to pay for the investment in pay, services and infrastructure our country needs. A higher rate of income tax for those who can most afford it would be a sensible and rational start.

Dave Prentis is the general secretary of UNISON

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Labour’s renationalisation plans look nothing like the 1970s

The Corbynistas are examining models such as Robin Hood Energy in Nottingham, Oldham credit union and John Lewis. 

A community energy company in Nottingham, a credit union in Oldham and, yes, Britain's most popular purveyor of wine coolers. No, this is not another diatribe about about consumer rip-offs. Quite the opposite – this esoteric range of innovative companies represent just a few of those which have come to the attention of the Labour leadership as they plot how to turn the abstract of one of their most popular ideas into a living, neo-liberal-shattering reality.

I am talking about nationalisation – or, more broadly, public ownership, which was the subject of a special conference this month staged by a Labour Party which has pledged to take back control of energy, water, rail and mail.

The form of nationalisation being talked about today at the top of the Labour Party looks very different to the model of state-owned and state-run services that existed in the 1970s, and the accompanying memories of delayed trains, leaves on the line and British rail fruitcake that was as hard as stone.

In John McDonnell and Jeremy Corbyn’s conference on "alternative models of ownership", the three firms mentioned were Robin Hood Energy in Nottingham, Oldham credit union and, of course, John Lewis. Each represents a different model of public ownership – as, of course, does the straightforward takeover of the East Coast rail line by the Labour government when National Express handed back the franchise in 2009.

Robin Hood is the first not-for-profit energy company set up a by a local authority in 70 years. It was created by Nottingham city council and counts Corbyn himself among its customers. It embodies the "municipal socialism" which innovative local politicians are delivering in an age of austerity and its tariffs delivers annual bills of £1,000 or slightly less for a typical household.

Credit unions share many of the values of community companies, even though they operate in a different manner, and are owned entirely by their customers, who are all members. The credit union model has been championed by Labour MPs for decades. 

Since the financial crisis, credit unions have worked with local authorities, and their supporters see them as ethical alternatives to the scourge of payday loans. The Oldham credit union, highlighted by McDonnell in a speech to councillors in 2016, offers loans from £50 upwards, no set-up costs and typically charges interest of around £75 on a £250 loan repaid over 18 months.

Credit unions have been transformed from what was once seen as a "poor man's bank" to serious and tech-savvy lenders where profits are still returned to customers as dividends.

Then there is John Lewis. The "never-knowingly undersold" department store is owned by its 84,000 staff, or "partners". The Tories have long cooed over its pledge to be a "successful business powered by its people and principles" while Labour approves of its policy of doling out bonuses to ordinary staff, rather than just those at the top. Last year John Lewis awarded a partnership bonus of £89.4m to its staff, which trade website Employee Benefits judged as worth more than three weeks' pay per person (although still less than previous top-ups).

To those of us on the left, it is a painful irony that when John Lewis finally made an entry into politics himself – in the shape of former managing director Andy Street – it was to seize the Birmingham mayoralty ahead of Labour's Sion Simon last year. (John Lewis the company remains apolitical.)

Another model attracting interest is Transport for London, currently controlled by Labour mayor Sadiq Khan. TfL may be a unique structure, but nevertheless trains feature heavily in the thinking of shadow ministers, whether Corbynista or soft left. They know that rail represents their best chance of quick nationalisation with public support, and have begun to spell out how it could be delivered.

Yes, the rhetoric is blunt, promising to take back control of our lines, but the plan is far more gradual. Rather than risk the cost and litigation of passing a law to cancel existing franchises, Labour would ask the Department for Transport to simply bring routes back in-house as each of the private sector deals expires over the next decade.

If Corbyn were to be a single-term prime minister, then a public-owned rail system would be one of the legacies he craves.

His scathing verdict on the health of privatised industries is well known but this month he put the case for the opposite when he addressed the Conference on Alternative Models of Ownership. Profits extracted from public services have been used to "line the pockets of shareholders" he declared. Services are better run when they are controlled by customers and workers, he added. "It is those people not share price speculators who are the real experts."

It is telling, however, that Labour's radical election manifesto did not mention nationalisation once. The phrase "public ownership" is used 10 times though. Perhaps it is a sign that while the leadership may have dumped New Labour "spin", it is not averse to softening its rhetoric when necessary.

So don't look to the past when considering what nationalisation and taking back control of public services might mean if Corbyn made it to Downing Street. The economic models of the 1970s are no more likely to make a comeback then the culinary trends for Blue Nun and creme brûlée.

Instead, if you want to know what public ownership might look like, then cast your gaze to Nottingham, Oldham and dozens more community companies around our country.

Peter Edwards was press secretary to a shadow chancellor, editor of LabourList and a parliamentary candidate in 2015 and 2017.