PriceWaterhouseCoopers chief Kevin Nicholson denies lying over tax deals

Nicholson stands by previous testimony to MPs, as accountants are accused of mass-marketing tax avoidance schemes

• Simon Goodley
• The Guardian, Monday 8 December 2014 22.42 GMT

Nicholson again denied that the tax services sold by PwC were mass-marketed schemes. Photograph: Chris Robbins / Alamy/Alamy

The head of tax at one of the UK’s top accounting groups was accused of lying to parliament about his firm’s role in devising controversial tax deals for clients in Luxembourg.

Kevin Nicholson, PwC UK’s head of tax, who worked as an HM Revenue and Customs tax inspector in the early 1990s, was in front of the Commons public accounts committee for the second time in two years, following last month’s revelations of aggressive tax avoidance by PwC clients published by the Guardian and more than 20 other international news outlets.

In a series of fractious exchanges on Monday, the committee’s chair, the Labour MP Margaret Hodge, said: “We’ve asked you to come back to see us because we’ve reflected on the evidence that you gave us on 31 January 2013, and tried to relate that to the revelations around the Luxembourg leaks that have been in the press. I think I have a very simple question for you: did you lie when you gave evidence to us?”

Nicholson responded: “I didn’t lie and stand by what I said.”

Hodge’s anger stemmed from Nicholson’s previous evidence that PwC did not “mass market” tax products or sell tax avoidance “schemes” to clients, when set against the new evidence of 548 letters – relating to 343 companies – showing how PwC wrote to Luxembourg tax authorities to agree on how their clients structured their businesses for tax purposes.

“It’s very hard for me to understand that this is anything other than a mass-marketed tax avoidance scheme,” Hodge said. “I think there are three ways in which you lied and I think what you are doing is selling tax avoidance on an industrial scale.”

Nicholson again denied that the tax services sold by PwC were mass-marketed schemes and said that around 80 of the Luxembourg rulings related to UK companies, which were all distinct and had been disclosed to HMRC.

He said: “At the heart of the Luxembourg economy now is an economy that is based around businesses going there to finance [and] to hold investments. The tax structure, the system that they have created, facilitates that happening, along with all the other infrastructure. I’m not here to change the Lux tax regime. If you want to change the Lux tax regime, the politicians could change the Lux tax regime.”

Last month’s analyses of the way multinational companies establish businesses in Luxembourg were based on a leaked cache of hundreds of tax rulings secured by PwC Luxembourg that showed major companies – including drugs group Shire Pharmaceuticals and vacuum cleaner firm Dyson – using complex webs of internal loans and interest payments, which have greatly reduced tax bills.

The exposure of these arrangements – signed off by the grand duchy and all perfectly legal – have triggered an emergency debate in the European parliament focusing on the track record of the new European commission president, Jean-Claude Juncker, who had dominated Luxembourg politics as prime minister between 1995 and 2013. Juncker has sought to brush aside criticisms, insisting: “I am not the architect of the Luxembourg model because this model doesn’t exist.” However, Hodge added: “Since I have uncovered all this, I have questions about if Mr Juncker is fit to be the president of the European commission. I think if this had been around during the period of his appointment, it might well be a different decision.”

Appearing alongside Nicholson was Shire’s head of tax, Fearghus Carruthers, who explained how the group had two full-time employees in Luxembourg, who earn a total of €135,000 (£106,200) a year and handle intra-company loans of around $10bn (£6.4bn).

Hodge said: “It is stretching our credulity in suggesting to us that these two employees, who are also directors of umpteen other companies, are seriously the guys taking the decisions on loans totalling $10bn. Let me put this to you, Mr Carruthers, because it is a very serious matter, because if the decisions in substance aren’t taken in Luxembourg, this isn’t just avoidance; for me, it’s fraud.”

Carruthers responded: “Madam chair, I can assure you that the decision-making in respect of that Luxembourg company is made in Luxembourg.”

The executive was also repeatedly asked to explain the commercial rationale behind Shire establishing companies in Luxembourg and his answers included: “The commercial purpose is to allow us to have a treasury operation in Luxembourg which finances our activities”; and “the commercial purpose is for us to reinvest our cash appropriately and efficiently.”

When asked what Shire could do more efficiently in Luxembourg, Carruthers said: “It is not necessarily a question of comparative efficiency, we could have this lending in and lending out in all sorts of other jurisdictions. It’s just a good location.”

Well-known buyout firms such as Blackstone and Carlyle also appeared in the leaked documents, and Luxembourg investment vehicles are commonplace in such investment firms. A 2008 joint venture between private equity group Apax Partners and Guardian Media Group, which owns the Guardian, used a Luxembourg structure after it invested in the magazine and events group Emap, now called Top Right.

When the leaked documents were published, a GMG spokesman said: “We partnered with a private equity company which regularly used such structures. A Luxembourg entity was used because Apax already had that structure in place. The fact that the parent company is a Luxembourg company does not give rise to any UK corporation tax savings for GMG.”

Last year, PwC made revenues of £2.81bn, of which £714m came from its tax advisory practice. PwC Luxembourg had turnover of €276m for the year to June 2013, up more than 12% on the previous 12 months. Tax advice accounted for 29% of revenues, up from 24% two years ago. The Luxembourg partnership employs about 2,300 staff – equivalent to one in every 240 people resident in the small country. New offices for the fast-growing practice were officially opened last week at a ceremony attended by the duchy’s prime minister, Xavier Bettel.

Taming corporate power: the key political issue of our age

Big business and its lobbyists have taken control of our politics. But there is an alternative. In the first of a new series, here’s how we can take on the fat cats

• 
• • George Monbiot
  • The Guardian, Monday 8 December 2014

Illustration by George Monbiot

Does this sometimes feel like a country under enemy occupation? Do you wonder why the demands of so much of the electorate seldom translate into policy? Why parties of the left seem incapable of offering effective opposition to market fundamentalism, let alone proposing coherent alternatives? Do you wonder why those who want a kind and decent and just world, in which both human beings and other living creatures are protected, so often appear to be opposed by the entire political establishment?

If so, you have encountered corporate power – the corrupting influence that prevents parties from connecting with the public, distorts spending and tax decisions, and limits the scope of democracy. It helps explain the otherwise inexplicable: the creeping privatisation of health and education, hated by the vast majority of voters; the private finance initiative, which has left public services with unpayable debts; the replacement of the civil service with companies distinguished only by incompetence; the failure to re-regulate the banks and collect tax; the war on the natural world; the scrapping of the safeguards that protect us from exploitation; above all, the severe limitation of political choice in a nation crying out for alternatives.

There are many ways in which it operates, but perhaps the most obvious is through our unreformed political funding system, which permits big business and multimillionaires in effect to buy political parties. Once a party is obliged to them, it needs little reminder of where its interests lie. Fear and favour rule.

And if they fail? Well, there are other means. Before the last election, a radical firebrand said this about the lobbying industry: “It is the next big scandal waiting to happen ... an issue that exposes the far-too-cosy relationship between politics, government, business and money ... secret corporate lobbying, like the expenses scandal, goes to the heart of why people are so fed up with politics.” That, of course, was David Cameron, and he’s since ensured that the scandal continues. His Lobbying Act restricts the activities of charities and trade unions but imposes no meaningful restraint on corporations.

Ministers and civil servants know that if they keep faith with corporations in office they will be assured of lucrative directorships in retirement. As head of HMRC, the UK government’s tax-collection agency, Dave Hartnett oversaw some highly controversial deals with companies such as Vodafone and Goldman Sachs, apparently excusing them from much of the tax they seemed to owe. He now works for Deloitte, which advises companies such as Vodafone on their tax affairs. As head of HMRC he met one Deloitte partner 48 times.

Corporations have also been empowered by the globalisation of decision-making. As powers, but not representation, shift to the global level, multinational business and its lobbyists fill the political gap. When everything has been globalised except our consent, we are vulnerable to decisions made outside the democratic sphere.

The key political question of our age, by which you can judge the intent of all political parties, is what to do about corporate power. This is the question, perennially neglected within both politics and the media, that this week’s series of articles will attempt to address. I think there are some obvious first steps.

A sound political funding system would be based on membership fees. Each party would be able to charge the same fixed fee for annual membership (perhaps £30 or £50). It would receive matching funding from the state as a multiple of its membership receipts. No other sources of income would be permitted. As well as getting the dirty money out of politics, this would force political parties to reconnect with the people, to raise their membership. It will cost less than the money wasted on corporate welfare every day.

All lobbying should be transparent. Any meeting between those who are paid to influence opinion (this could include political commentators like me) and ministers, advisers or civil servants should be recorded, and the transcript made publicly available. The corporate lobby groups that pose as thinktanks should be obliged to reveal who funds them before appearing on the broadcast media; and if the identity of one of their funders is relevant to the issue they are discussing, it should be mentioned on air.

Any company supplying public services would be subject to freedom of information laws (with an exception for matters deemed commercially confidential by the information commissioner). Gagging contracts would be made illegal, in the private as well as the public sector (with the same exemption for commercial confidentiality). Ministers and top officials should be forbidden from taking jobs in the sectors they were charged with regulating.

But we should also think of digging deeper. Is it not time we reviewed the remarkable gift we have granted to companies in the form of limited liability? It socialises the risks that would otherwise be carried by a company’s owners and directors, exempting them from the costs of the debts they incur or the disasters they cause, and encouraging them to engage in the kind of reckless behaviour that caused the financial crisis. Should the wealthy authors of the crisis, such as RBS chief Fred Goodwin or Northern Rock’s Matt Ridley, not have incurred a financial penalty of their own?

We should look at how we might democratise the undemocratic institutions of global governance, as I suggested in my book The Age of Consent. This could involve dismantling the World Bank and the IMF, which are governed without a semblance of democracy, and cause more crises than they solve, and replacing them with a body rather like the international clearing union designed by John Maynard Keynes in the 1940s – whose purpose was to prevent excessive trade surpluses and deficits from forming, and therefore international debt from accumulating.

Instead of treaties brokered in opaque meetings (of the kind now working towards atransatlantic trade and investment partnership) between diplomats and transnational capital – which threaten democracy, the sovereignty of parliaments and the principle of equality before the law – we should demand a set of global fair trade rules. Multinational companies should lose their licence to trade if they break them.

Above all, perhaps, we need a directly elected world parliament, whose purpose would be to hold other global bodies to account. In other words, instead of only responding to an agenda set by corporations, we must propose an agenda of our own.

This is not only about politicians, it is also about us. Corporate power has shut down our imagination, persuading us that there is no alternative to market fundamentalism, and that “market” is a reasonable description of a state-endorsed corporate oligarchy.

We have been persuaded that we have power only as consumers, that citizenship is an anachronism, that changing the world is either impossible or best effected by buying a different brand of biscuits. Corporate power now lives within us. Confronting it means shaking off the manacles it has imposed on our minds.

Inequality gets even more entrenched when a person of colour reaches the top

Yasmin Alibhai Brown in The Independent

Black anger is being directed against Barack Obama. Not before time. Millions of African-Americans came out to mark the historical moment of his election in 2008. They praised the Lord, and wept with disbelief and joy. The whole of Africa burst into song. His inauguration was among the most watched global events ever.

In his victory speeches, Obama invoked Abraham Lincoln’s Gettysburg address, and Martin Luther King. Real freedom  would come, he said – so too justice and unity. Today his black supporters can claim, with some justification, that he failed to deliver. Badly. Deplorably.

African-Americans are still more likely to go to prison than to university, to be victimised by police, courts and various state institutions, to be poor and ignored by Washington, to have neo-natal mortality rates twice as high as white babies, to have lower life expectancy, and so on and on.

They are out on the streets again, with brothers and sisters of other races, all across the US – in Washington, New York, Baltimore, Denver, Arizona, everywhere, now shedding tears of rage. ’Tis come to this? How and why? Because five unarmed black males have been killed this year by white police officers.

In July, Eric Garner – father of six, suspected of selling black market cigarettes – was pushed to the ground by a NYPD policeman, and held so tight that he died. A video of the incident records him saying; “I can’t breathe”. In August, Michael Brown perished after he was shot a dozen times by a Darren Wilson  in Ferguson, Missouri. Apparently the teenager had refused orders to walk on the pavement and that led to an altercation. Grand juries decided not to indict the policemen involved.

In November, in Cleveland, Ohio, Tamir Rice was killed by 26-year-old Timothy Loehmann, an officer deemed unfit for duty in 2012. Rice, a schoolboy who loved basketball, had a toy gun in his hands. His family are suing the police. The same month Akai Gurley, 28, was brought down in a darkened stairwell, by police who claim it was an “accidental discharge”. A grand jury will examine this incident.

And finally,  last Tuesday, Rumain Brisbon, who had four children,  was killed by officers in Phoenix, Arizona. Police said they thought the bottle of pills he was holding was a gun. Stevie Wonder wonders how this is possible. I wonder that he wonders.  Living on the hills of fame and fortune, it must be hard to know what is being done to your people way down below.

Seems it is even harder for the President. In February 2012, when Trayvon Martin, 17, was shot dead by a neighbourhood watch co-ordinator in Florida, Obama did at least identify with the pain of the parents and community: “If I had a son, he would look like Trayvon”. (The police officer was, needless to say, acquitted. ) Today Obama makes, makes tepid, middle-management noises about the responsibilities of law enforcers. No fire or fury in his belly any more. Like Colin Powell and Condoleezza Rice, he is now a caretaker of white power.

Obama’s self-belief must be crashing as the accusations build up. Black congressman Charlie Rangel  is  forthright: “Having a black president has not solved the problem at all. ...the colour of one’s skin determines how lives are going to be and whether they live at all.” New York University academic Frank Roberts goes further: “We had hoped he would be Moses; he turned out to be the pharaoh. We have a lame duck president who does not have a moral conscience.” Or as an angry young black man put it: “Obama is a bummer”.

Perhaps it was foolish to expect too much from him.  He has pushed through health care reforms, but that’s it folks. Remember all that loose talk about post-racial America? It actually stopped the fight, disabled the struggle so lethally that today R&B star Alicia Keys is able to say, “We absolutely feel disregarded as human beings.”

It seems inequality gets even more firmly entrenched when a woman or person of colour gets to the very top. Margaret Thatcher didn’t do it for feminism and Theresa May won’t either. We have more MPs and peers of colour than ever before and racism is rising again. Once they get to where they want to, even those who used anti-racism to push in, go strangely quiet, seek approval rather than confrontations.

Obama’s presidency represents the perils of entryism. The rough Texan Lyndon Johnson, who pushed through civil rights legislation, did more for African-Americans than Barack Obama. Johnson didn’t give a damn for the establishment, wasn’t intimidated by white opinion. Here, Ken Livingstone pushed equality policies with courage of a kind we do not see in most black and Asian people in power. My heart cracks as I write this. The truth hurts, but can no longer be dodged or excused.

Bethlehem as you’ve never seen it before

Mary, heavily pregnant, and Joseph arrive in Bethlehem. Christ is born in a stable. The angel Gabriel had foretold this birth of the son of God, come down to save humans from temptations and themselves. The first believers followed the brightest of stars to pay homage. Bethlehem is where it all began.

It’s Christmas again. Millions of Nativity scenes are being re-enacted in infant and primary schools all over the world. Parents film these scenes, and rejoice. But do any of them know what is happening to the actual Bethlehem?

I didn’t until I saw a new film, Open Bethlehem, by a Palestinian woman, Leila Sansour. A Christian, she was born and raised there, and then, like many others, went off to the West. Her father’s death drew her back and she found her home town cowed and shattered by aggressive Israeli anti-terrorism measures.

Huge walls are being built, homes and old businesses confiscated, human rights trampled. An old man died broken-hearted after his beloved shop was bulldozed. Church leaders watch helplessly. Sansour’s poignant film is both a recovery of her own memories and a cry against the lock-up of Jesus’s birthplace.

Good people rightly condemn the persecution of Christians by hardline Muslims and Hindus. But as Israel strangles the life out of Christianity’s holiest site, nobody dares speak out. This woman has. Go to her website, join her campaign. It could be the noblest thing you do this Christmas.

Forget austerity – what we need is a stronger state and more taxation

The income tax system needs reshaping. This is not easy. But nor is reducing the state to its smallest level for 80 years

• 
• • Will Hutton
  • The Observer, Sunday 7 December 2014

The March of the Unemployed from the Thames Embankment to County Hall, Westminster, during the Great Depression. Photograph: Hulton-Deutsch Collection/Corbis

If the Conservative party forms the next government, by 2020 the state will probably be the smallest it has been – in relation to GDP – for 80 years. So declared the Office for Budget Responsibility last Wednesday, in the wake of the autumn statement. By 2020, spending per head of population will have fallen by around a third in 10 years. In some areas – in our cities and our criminal justice system – the reductions will be even more draconian. This is the most dramatic change in state capability that any British government has ever engineered.

The chancellor may complain about the “hyperbolic” tone of some BBC reporting. But surely only in a one-party state would this dramatic plan not be discussed in appropriately dramatic terms. Britain is to become the site of a massive experiment in economic and social libertarianism whose authors have never fessed up to the sheer audacity and scale of what they are doing. They have just dumbly insisted there is no alternative. The autumn statement was the moment the implications became clear.

A financial crisis has been allowed to morph into a crisis of public provision because the government of the day will not lift a finger to compensate for the haemorrhaging of the UK tax base. What the state does is not the subject of a collective decision with concerned weighing of options. Instead, it’s an afterthought, with the greater priorities a reduction in public borrowing and freezing or lowering tax rates.

All the state can spend is what is left after those two greater priorities are met, and if it has to shrink to pre-modern levels then so be it. The market will provide: charity will alleviate suffering; people will get by; the roof will not fall in. Lifting taxation can never be considered to close the gap. It is, it is alleged, both economically self-defeating and immoral.

A cool £54bn has gone missing since 2010. Then the government projected that in 2014/15 its total tax revenues would be £700bn. In fact, they will be £646bn, according to the OBR. Public spending, on the other hand, has behaved almost exactly as forecast. In 2010, the government projected that its spending would be £738bn in this financial year. The Treasury is to be congratulated on its capacities as national book-keeper in chief. The actual figure is £737bn, an accuracy I doubt many private companies could reproduce – or even individual readers of the Observer. It is not runaway public spending that is causing borrowing to stay stubbornly high, thus triggering the extreme shrinkage of the state: it is the hollowing out of the tax base.

There are three principal causes. The first is that the structure of the economic recovery is delivering a reduced tax yield. There are too many low-paying jobs and pay on average is stagnating, so that aggregate income tax revenues are growing much less rapidly than in previous recoveries. We are drinking and smoking less, so there is less revenue from alcohol and tobacco duties. Altogether this accounts for around a third of the shortfall.

Another third is a result of the chancellor wanting to show his tax-cutting credentials as a true Thatcherite man: he has cut corporate tax rates, frozen the business rate, not adjusted council tax bands upwards, not increased petrol duties, lowered the top rate of tax and increased personal allowances. The last element is down to our living with an epidemic of tax avoidance and evasion, as the last G20 summit recognised – and which even Osborne says he deplores. Too many companies and rich individuals are gaming the system.

Put all this together and Britain has lost that £54bn. But matters are made worse by the interaction of Britain’s highly centralised Treasury and a chancellor with Osborne’s instincts. Giles Wilkes, former adviser to Vince Cable, and Stian Westlake, research director at Nesta, write in an important paper, The End of the Treasury, that the Treasury inverts the way that spending and taxing decisions should be made. It starts with a target for borrowing, not differentiating great capital projects such as London’s Crossrail from spending on the NHS. Then it projects tax revenues assuming no changes, and sets aside money for fixed obligations, such as pensions.

Finally, departments fight over the left-overs on a year by year basis, with the Treasury policing spending with a ferocious rigidity. The benefit is that it can control spending to the last billion. The cost is that there is never a weighing up of the benefits of raising taxes against a particular use for public spending, nor any strategic long-term programme of investment.

This is bad enough in ordinary times, but when a chancellor refuses to consider raising taxes as the tax base collapses it is a recipe for disaster. It results in a minimal state, with implications for prisons, schools, courts, policing, legal aid, care, security and defence that are profound. Some of this could be avoided if, as both Labour and the LibDems propose, capital investment was not lumped in with current spending so that virtuous borrowing could be separated out. The country may also get lucky: wages stop stagnating and income tax receipts rise.

But the bigger truth is that if Britain wants the scale of public activity congruent with a civilised society, it has to be paid for. The reaction will be hysterical, but lifting taxes by 3% of GDP to 38.5% to find the missing £54bn will still leave Britain below the crucial 40% benchmark, thus undertaxed by comparison with most advanced countries. The whole system of property taxation needs overhauling. The VAT base can be broadened. Environmental taxes can be extended. Osborne’s proposals to ensure companies pay tax on UK revenues need to be tougher and introduced earlier. The income tax system needs reshaping.

None of this is easy. But neither is reducing the state to its smallest level for 80 years. Reducing spending on schools further is surely short changing our children. How much smaller should the army, navy and air force become? Is the welfare system to return to a system of discretionary poor relief? Do we share the libertarian view that the state is worthless – and there is no co-dependency between public and private? What role do we want the state to have in our civilisation? The right would have it that none of these questions can be asked because all involve an increase in taxation: our only future is a 1930s scale state.

There is a different future, and our politicians of the centre and left have to argue for it, but they must accept it has to be paid for. This has become an existential divide. Politics and political argument have never mattered more.

Breaking The Silence - Land Reform in the UK

George Monbiot in The Guardian

Bring out the violins. The land reform programme announced by the Scottish government is the end of civilised life on earth, if you believe the corporate press. In a country where 432 people own half the private rural land(1), all change is Stalinism. The Telegraph has published a string of dire warnings, insisting, for example, that deer stalking and grouse shooting could come to an end if business rates are introduced for sporting estates(2). Moved to tears yet?

Yes, sporting estates—where the richest people in Britain, or oil sheikhs and oligarchs from elsewhere, shoot grouse and stags—are exempt from business rates: a present from John Major’s government in 1994(3). David Cameron has been just as generous with our money: as he cuts essential services for the poor, he has almost doubled the public subsidy for English grouse moors(4), and frozen the price of shotgun licences(5), at a public cost of £17m a year.

But this is small change. Let’s talk about the real money. The Westminster government claims to champion an entrepreneurial society, of wealth creators and hard-working families, but the real rewards and incentives are for rent. The power and majesty of the state protects the patrimonial class. A looped and windowed democratic cloak barely covers the corrupt old body of the nation. Here peaceful protestors can still be arrested under the 1361 Justices of the Peace Act. Here, the Royal Mines Act 1424 gives the Crown the right to all the gold and silver in Scotland(6). Here the Remembrancer of the City of London sits behind the Speaker’s chair in the House of Commons(7), to protect the entitlements of a Corporation that pre-dates the Norman conquest. This is an essentially feudal nation.

It’s no coincidence that the two most regressive forms of taxation in the UK—council tax banding and the payment of farm subsidies—both favour major owners of property. The capping of council tax bands ensures that the owners of £100 million flats in London pay less than the owners of £200,000 houses in Blackburn(8,9). Farm subsidies, which remain limitless as a result of the Westminster government’s lobbying(10), ensure that every household in Britain hands £245 a year to the richest people in the land(11). The single farm payment system—under which landowners are paid by the hectare—is a reinstatement of a mediaeval levy called feudal aid(12): a tax the vassals had to pay to their lords.

If this is the government of enterprise, not rent, ask yourself why capital gains tax (at 28%) is lower than the top rate of income tax. Ask yourself why principal residences, though their value may rise by millions, are altogether exempt(13). Ask yourself why rural landowners are typically excused capital gains tax, inheritance tax and the first five years of income tax(14). The enterprise society? It’s a con, designed to create an illusion of social mobility.

The Scottish programme for government(15) is the first serious attempt to address the nature of landholding in Britain since David Lloyd George’s budget of 1909. Some of its aims hardly sound radical until you understand the context. For example it will seek to discover who owns the land. Big deal. Yes, in fact, it is. At the moment the owners of only 26% of the land in Scotland have been identified(16).

Walk into any mairie in France or ayuntamiento in Spain and you will be shown the cadastral registers on request, on which all the land and its owners are named. When The Land magazine tried to do the same in Britain(17), it found that there was a full cadastral map available at the local library, which could be photocopied for 70p. But it was made in 1840. Even with expert help, it took the magazine several weeks of fighting official obstruction and obfuscation and cost nearly £1000(18) to find out who owns the 1.4 km2 around its offices in Dorset. It discovered that the old registers had been closed and removed from public view, at the behest of a landed class that wishes to remain as exempt from public scrutiny as it is from taxes. (The landowners are rather more forthcoming when applying for subsidies from the rural payments agency, which possesses a full, though unobtainable, register of their agricultural holdings). What sort of nation is this, in which you cannot discover who owns the ground beneath your feet?

The Scottish government will consider breaking up large land holdings when they impede the prospects of local people(19). It will provide further help to communities to buy the land that surrounds them. Compare its promise of “a fairer, wider and more equitable distribution of land” to the Westminster government’s vision of “greater competitiveness, including by consolidation”(20): which means a continued increase in the size of land holdings. The number of holdings in England is now falling by 2% a year(21), which is possibly the fastest concentration of ownership since the acts of enclosure.

Consider Scotland’s determination to open up the question of property taxes, which might lead to the only system that is fair and comprehensive: land value taxation(22). Compare it to the fleabite of a mansion tax proposed by Ed Miliband, which, though it recoups only a tiny percentage of the unearned income of the richest owners, has so outraged the proprietorial class that some of them (yes Griff Rhys Jones, I’m thinking of you(23)) have threatened to leave the country. Good riddance.

The Scottish government might address the speculative chaos which mangles the countryside while failing to build the houses people need. It might challenge a system in which terrible homes are built at great expense, partly because the price of land has risen from 2% of the cost of a house in the 1930s to 70% today(24). It might take land into public ownership to ensure that new developments are built by and for those who will live there, rather than for the benefit of volume housebuilders. It might prevent mountains from being burnt and overgrazed(25) by a landowning class that cares only about the numbers of deer and grouse it can bag and the bragging rights this earns in London clubs. As Scotland, where feudalism was not legally abolished until 2000(26), becomes a progressive, modern nation, it leaves England stuck in the pre-democratic past.

Scotland is rudely interrupting the constructed silences that stifle political thought in the United Kingdom. This is why the oligarchs who own the media hate everything that is happening there: their interests are being exposed in a way that is currently impossible south of the border.

For centuries, Britain has been a welfare state for patrimonial capital. It’s time we broke it open, and broke the culture of deference that keeps us in our place. Let’s bring the Highland Spring south, and start discussing some dangerous subjects.

References:

1. http://bit.ly/1vi0kuK

2. http://www.telegraph.co.uk/news/uknews/scotland/11262856/Future-bleak-for-grouse-shooting-and-deer-stalking.html

3. http://www.andywightman.com/?p=3975

4. Defra has tried to pass this off as payments for “moorland farmers”, but all owners of grazed or managed moorlands, of which grouse moors are a major component, are eligible. https://www.gov.uk/government/news/cap-boost-for-moorland

5. http://www.theguardian.com/uk-news/2014/apr/22/cameron-blasted-battle-shotgun-licence-fees

6. The Land Reform Review Group, 2014. The Land of Scotland and the Common Good.
http://www.scotland.gov.uk/About/Review/land-reform/events/FinalReport23May2014

7. http://www.monbiot.com/2011/10/31/wealth-destroyers/

8. http://www.theguardian.com/commentisfree/2014/mar/29/why-do-we-pay-more-council-tax-than-knightsbridge-oligarchs

9. This assumes that a house in Blackburn valued at £69,000 in 1991 would cost around £200,000 today. http://www.blackburn.gov.uk/Pages/Council-tax-charges.aspx

10. http://www.monbiot.com/2014/03/03/the-benefits-claimants-the-goverment-loves/

11. Defra, 31st August 2011, by email.

12. http://en.wikipedia.org/wiki/Feudal_aid

13. http://www.theguardian.com/business/2014/sep/22/charge-capital-gains-tax-main-residencies-says-housing-expert

14. http://www.ft.com/cms/s/2/99ae5756-1d89-11df-a893-00144feab49a.html#ixzz3Kexs2dL2

15. http://www.scotland.gov.uk/Publications/2014/11/6336

16. http://www.andywightman.com/?p=3816

17. http://www.thelandmagazine.org.uk/issue/land-issue-14-summer-2013

18. http://www.thelandmagazine.org.uk/issue/land-issue-14-summer-2013

19. http://www.scotland.gov.uk/Publications/2014/11/6336

20. http://archive.defra.gov.uk/foodfarm/policy/capreform/documents/110128-uk-cap-response.pdf

21. Compare the figures, Agriculture in the United Kingdom 2013: http://bit.ly/1vLQSi4
to the figures in the 2011 version: https://www.gov.uk/government/statistics/agriculture-in-the-united-kingdom-2011

22. http://www.theguardian.com/commentisfree/2013/jan/21/i-agree-with-churchill-shirkers-tax

23. http://www.theguardian.com/commentisfree/2014/nov/04/griff-rhys-jones-mansion-tax-soft-option

24. The Land Reform Review Group, 2014. The Land of Scotland and the Common Good. http://www.scotland.gov.uk/About/Review/land-reform/events/FinalReport23May2014

25. http://www.theguardian.com/commentisfree/2014/may/19/vote-yes-rid-scotland-of-feudal-landowners-highlands

26. http://www.scotland.gov.uk/Topics/Justice/law/17975/Abolition

Premier Foods accused over 'pay and stay' practice

By Laura KuenssbergChief correspondent, BBC Newsnight

Premier Foods, one of the UK's biggest manufacturers, has been asking its suppliers for payments to continue doing business with the firm.

One supplier said the practice - known as pay and stay - was like "blackmail".

Newsnight understands the struggling company has received millions of pounds from its suppliers in this way.

Premier Foods said it was confident the scheme did not break any rules under competition law. The government said it was "concerned by recent reports".

The company, which owns brands like Mr Kipling, Ambrosia, Bisto and Oxo, demanded the payments from suppliers across the country.

Newsnight has seen a letter sent by chief executive Gavin Darby, dated 18 November.

'Nominated for de-list'

He wrote: "We are aiming to work with a smaller number of strategic suppliers in the future that can better support and invest in our growth ideas."

He added: "We will now require you to make an investment payment to support our growth.

"I understand that this approach may lead to some questions.

"However, it is important that we take the right steps now to support our future growth."

But when a supplier raised questions in an email about the annual payments, another member of Premier's staff replied.

"We are looking to obtain an investment payment from our entire supply base and unfortunately those who do not participate will be nominated for de-list."

One of the company's more than 1,000 suppliers, Bob Horsley, said he had been "taken aback" to receive the letter.

Scared to speak out

Mr Horsley, who has had a maintenance contract with Ambrosia in Devon for more than 10 years, said: "I think it's like blackmail.

"What they are saying is 'unless you pay this money, you can't do the work'."

He has decided not to pay and risk losing the contract.

"I'm just a layman but I can't see how that is right."

Another businessman said Premier had previously asked for more than £70,000.

"They know you can't afford solicitors to fight them. I'd never pay anyone for work."

Another said: "It's like a gun held to your head."

Many businesses are scared to speak out for fear of losing their contracts.

'Unjust'

Premier Foods has reduced its number of suppliers dramatically in the last 12 months.

In 2013 it made a similar approach to some of its suppliers.

The practice of pay to stay is not unheard of in manufacturing and retail.

After a competition inquiry, tighter rules were issued for the supermarkets under the Groceries' Code.

But that applies to the relationship between supermarkets and suppliers, not manufacturers.

Liesl Smith, from the Federation of Small Businesses, said: "This is the first time that we have ever seen anything so blatant... in this very direct way before.

"We think it is unjust, it is not competitive and it is not helping the supply chain.

"Premier Foods certainly don't value their suppliers, it's crippling small businesses.

"It's not just going to affect the business owners, it will affect staff as well."

'Support crucial'

Premier Foods told Newsnight: "We launched our 'invest for growth' programme in July last year as part of a broader initiative to reduce complexity in support of plans to help turnaround the business.

"This included a commitment to halve the number of our suppliers and develop more strategic partnerships focused on mutual growth.

"The programme requires our suppliers to make an annual investment to help fund our growth plans.

"In return, our suppliers benefit from opportunities to secure a larger slice of our current business.

"They also stand to gain as our business grows in the future."

It added: "In the current challenging environment, the support of all of our suppliers is crucial.

"We have had a positive response from many who are actively engaging in building a new partnership with us, including many small companies."

Newsnight understands many suppliers have paid a total in the low millions so far.

Competition law states that in some cases, pay to stay can be against the law.

Premier Foods is confident its scheme is within the rules.

Labour bid

But concerns about the wider problem have been raised with the regulator, the Competition and Markets Authority, and this week with the government.

Labour tried to amend the law recently to make the practice explicitly illegal.

Toby Perkins, the shadow business minister, said: "Labour pushed to outlaw companies charging to stay on their supplier list.

"But, alongside steps to prevent customer late payment, they were rejected by the government.

"Building a stronger economy relies on free and fair markets, but where unfair practices emerge, government should be willing to take action as today's revelations appear to expose."

A spokesperson for the Department of Business Innovation and Skills said it was a "hugely important issue" that ministers were taking "very seriously".

"We are concerned by recent reports, and are consulting to assess the evidence so we can establish what more we can do.

"We are also consulting on whether the biggest companies should be required to report publically on whether businesses need to pay to be on their supplier lists."

Newsnight understands that the regulator, the Competition and Markets Authority, is reluctant to commit resources to an investigation unless more businesses are willing to come forward.

Cuba’s extraordinary global medical record shames the US blockade

From Ebola to earthquakes, Havana’s doctors have saved millions. Obama must lift this embargo

• 
• • Seumas Milne
  • The Guardian, Wednesday 3 December 2014 20.07 GMT

Illustration: Eva Bee

Four months into the internationally declared Ebola emergency that has devastated west Africa, Cuba leads the world in direct medical support to fight the epidemic. The US and Britain have sent thousands of troops and, along with other countries, promised aid – most of which has yet to materialise. But, as the World Health Organisation has insisted, what’s most urgently needed are health workers. The Caribbean island, with a population of just 11m and official per capita income of $6,000 (£3,824), answered that call before it was made. It was first on the Ebola frontline and has sent the largest contingent of doctors and nurses – 256 are already in the field, with another 200 volunteers on their way.

While western media interest has faded with the receding threat of global infection, hundreds of British health service workers have volunteered to join them. The first 30 arrived in Sierra Leone last week, while troops have been building clinics. But the Cuban doctors have been on the ground in force since October and are there for the long haul.

The need could not be greater. More than 6,000 people have already died. So shaming has the Cuban operation been that British and US politicians have felt obliged to offer congratulations. John Kerry described the contribution of the state the US has been trying to overthrow for half a century “impressive”. The first Cuban doctor to contract Ebola has been treated by British medics, and US officials promised they would “collaborate” with Cuba to fight Ebola.

But it’s not the first time that Cuba has provided the lion’s share of medical relief following a humanitarian disaster. Four years ago, after the devastating earthquake in impoverished Haiti, Cuba sent the largest medical contingent and cared for 40% of the victims. In the aftermath of the Kashmir earthquake of 2005, Cuba sent 2,400 medical workers to Pakistan and treated more than 70% of those affected; they also left behind 32 field hospitals and donated a thousand medical scholarships.

That tradition of emergency relief goes back to the first years of the Cuban revolution. But it is only one part of an extraordinary and mushrooming global medical internationalism. There are now 50,000 Cuban doctors and nurses working in 60 developing countries. As Canadian professor John Kirk puts it: “Cuban medical internationalism has saved millions of lives.” But this unparalleled solidarity has barely registered in the western media.

Cuban doctors have carried out 3m free eye operations in 33 countries, mostly in Latin America and the Caribbean, and largely funded by revolutionary Venezuela. That’s how Mario Teran, the Bolivian sergeant who killed Che Guevara on CIA orders in 1967, had his sight restored 40 years later by Cuban doctors in an operation paid for by Venezuela in the radical Bolivia of Evo Morales. While emergency support has often been funded by Cuba itself, the country’s global medical services are usually paid for by recipient governments and have now become by far Cuba’s largest export, linking revolutionary ideals with economic development. That has depended in turn on the central role of public health and education in Cuba, as Havana has built a low-cost biotech industry along with medical infrastructure and literacy programmes in the developing countries it serves – rather than sucking out doctors and nurses on the western model.

Internationalism was built into Cuba’s DNA. As Guevara’s daughter, Aleida, herself a doctor who served in Africa, says: “We are Afro-Latin Americans and we’ll take our solidarity to the children of that continent.” But what began as an attempt to spread the Cuban revolution in the 60s and became the decisive military intervention in support of Angola against apartheid in the 80s, has now morphed into the world’s most ambitious medical solidarity project.

Its success has depended on the progressive tide that has swept Latin America over the past decade, inspired by socialist Cuba’s example during the years of rightwing military dictatorships. Leftwing and centre-left governments continue to be elected and re-elected across the region, allowing Cuba to reinvent itself as a beacon of international humanitarianism.

But the island is still suffocated by the US trade embargo that has kept it in an economic and political vice for more than half a century. If Barack Obama wants to do something worthwhile in his final years as president he could use Cuba’s role in the Ebola crisis as an opening to start to lift that blockade and wind down the US destabilisation war.

There are certainly straws in the wind. In what looked like an outriding operation for the administration, the New York Times published six editorials over five weeks in October and November praising Cuba’s global medical record, demanding an end to the embargo, attacking US efforts to induce Cuban doctors to defect, and calling for a negotiated exchange of prisoners.

The paper’s campaign ran as the UN general assembly voted for the 23rd time, by 188 votes to 2 (US and Israel), to demand the lifting of the US blockade, originally imposed in retaliation for the nationalisation of American businesses and now justified on human rights grounds – by a state allied to some of the most repressive regimes in the world.

The embargo can only be scrapped by congress, still stymied by the heirs of the corrupt US-backed dictatorship which Fidel Castro and Guevara overthrew. But the US president has executive scope to loosen it substantially and restore diplomatic ties. He could start by releasing the remaining three “Miami Five” Cuban intelligence agents jailed 13 years ago for spying on anti-Cuba activist groups linked to terrorism.

The obvious moment for Obama to call time on the 50-year US campaign against Cuban independence would be at next April’s Summit of the Americas – which Latin American governments had threatened to boycott unless Cuba was invited. The greatest contribution those genuinely concerned about democratic freedoms in Cuba can make is to get the US off the country’s back.

If the blockade really were to be dismantled, it would not only be a vindication of Cuba’s remarkable record of social justice at home and solidarity abroad, backed by the growing confidence of an independent Latin America. It would also be a boon for millions around the world who would benefit from a Cuba unshackled – and a demonstration of what can be achieved when people are put before corporate profit.