Anni Dewani has been failed by South Africa

She died alone and terrified in one of the bleakest parts of the country, and after the collapse of Shrien Dewani’s trial her family still has no answers

• 
• • Margie Orford in The Guardian

Anni Dewani, a young woman shot dead in Cape Town, has haunted South Africa for four years. After the collapse of the trial of her husband, Shrien Dewani, accused of masterminding her murder, she will continue to do so. Not only because she was young, beautiful and just married; not only because her heartbroken, desperate parents have been taken into so many South African hearts; but also because the country, its police force and its justice system failed her so completely.

Anni and Shrien honeymooned in South Africa after an extravagant wedding in India in 2010. After going on safari they came to Cape Town and, on Saturday 13 November, went out for dinner. On their return their taxi was hijacked. The taxi driver, Zolo Tongo, and Shrien claimed they were forced out of the car and that the hijackers drove off with Anni. Her body was found in the abandoned vehicle at dawn the next day. She had been shot at close range in the neck.

Shrien was apparently a victim of the criminal violence that plagues South Africa. The police, goaded as they were by the press frenzy, were under huge pressure to find the killers because hijacking and murder are so commonplace, but there were anomalies from the start. Gugulethu, where the hijacking occurred, is notorious for its murder rate. Why would Tongo take them there at night? Shrien, allegedly forced through a window, did not have a scratch on him, and neither did Tongo.

Whispers of disbelief quickly began to swirl. Shrien looked less and less innocent as detectives and journalists picked apart the sequence of events described, and the statements he had made. The police, however, allowed him to return to England before the inconsistent aspects of the case – and his possible involvement in his wife’s murder – were properly investigated.

Tongo was soon arrested. He pleaded guilty to being party to the murder but, in return for a reduction of sentence, said he would tell the truth and claimed that Shrien had asked him to organise the killing. The hitmen, Mziwamadoda Qwabe and Xolile Mngeni, were subsequently arrested, tried and jailed. Monde Mbolombo, the receptionist at the luxury Cape Grace hotel where the Dewanis were staying, said that he had put Tongo in contact with the hitmen. In exchange for immunity from prosecution – now under review due to the case collapsing – he agreed to testify against Shrien.

The idea of hiring people to commit murder is not that shocking in South Africa. Firearms are cheap and easy to find, as are hitmen. In 2006 a young woman, Dina Rodrigues, went to a taxi rank in Cape Town and hired four strangers to murder the baby daughter of her boyfriend’s ex-girlfriend. She paid a similar amount to that which Tongo claimed Shrien paid.

It is notable that Anni’s murder took place just four months after South Africa had successfully hosted the football World Cup, when the country was under intense scrutiny because of its record of violent crime. This coloured the investigation from the start.

The then-commissioner of police, Bheki Cele, is reported to have said: “A monkey came all the way from London to have his wife murdered here. Shrien thought we South Africans were stupid.” There seemed to be a great sense of relief that responsibility for this awful murder, a public relations disaster for South Africa, lay elsewhere.

Shrien was charged and four years later returned to stand trial. Everyone seemed to have a view on his innocence or guilt. It was revealed early on that perfect wedding photographs masked Anni’s doubts about marrying Shrien. There were sensational revelations about Shrien’s bisexuality and his involvement, both online and offline, in sadomasochistic sex with male prostitutes. “At last,” people thought, “a clear motive!”

Shrien’s sexual orientation and sexual practices clearly indicated a double life. But when put forward by the lacklustre prosecution as the reason for the murder, the judge, Janet Traverso, ruled this testimony irrelevant and the state’s case unravelled rapidly. This may not have been a popular move, but prejudice about a gay lifestyle should not subvert the need for hard evidence.

During the trial it became apparent that the investigation had been botched, and that much of the police work had been shockingly incompetent: lost paperwork, incomplete statements and unreliable ballistics reports.

Traverso chastised the National Prosecuting Authority. “You have had four years to prepare,” she told them when she dismissed the case. The evidence of the main witnesses was “riddled with contradictions” and fell “far below the threshold” of what a reasonable court could convict on.

Anni’s family, the Hindochas, have said that they – and by implication Anni – have been failed by South Africa’s justice system. They are right. Their daughter came here on her honeymoon and died alone and terrified in one of the bleakest parts of the country. Her grieving relatives have sought answers, as have South Africans.

In a country with such high levels of violence, there are so many who have failed to receive a robust investigation followed by the satisfaction of justice. As the Hindochas stood tearfully outside the courtroom after the verdict, there would have been so many South Africans sharing the family’s anguish at not knowing how or why a loved one died.

OECD report rejects trickle-down economics

Revealed: how the wealth gap holds back economic growth

OECD report rejects trickle-down economics, noting ‘sizeable and statistically negative impact’ of income inequality

• Larry Elliott, economic editor
• The Guardian, Tuesday 9 December 2014

OECD secretary-general Angel Gurría said that 'addressing high and growing inequality is critical to promote strong and sustained growth'. Photograph: Eric Piermont/AFP/Getty Images

The west’s leading economic thinktank on Tuesday dismissed the concept of trickle-down economics as it found that the UK economy would have been more than 20% bigger had the gap between rich and poor not widened since the 1980s.

Publishing its first clear evidence of the strong link between inequality and growth, the Paris-based Organisation for Economic Cooperation and Development proposed higher taxes on the rich and policies aimed at improving the lot of the bottom 40% of the population, identified by Ed Miliband as the “squeezed middle”.

Trickle-down economics was a central policy for Margaret Thatcher and Ronald Reagan in the 1980s, with the Conservatives in the UK and the Republicans in the US confident that all groups would benefit from policies designed to weaken trade unions and encourage wealth creation.

The OECD said that the richest 10% of the population now earned 9.5 times the income of the poorest 10%, up from seven times in the 1980s. However, the result had been slower, not faster, growth.

It concluded that “income inequality has a sizeable and statistically negative impact on growth, and that redistributive policies achieving greater equality in disposable income has no adverse growth consequences.

“Moreover, it [the data collected from the thinktank’s 34 rich country members] suggests it is inequality at the bottom of the distribution that hampers growth.”

According to the OECD, rising inequality in the two decades after 1985 shaved nine percentage points off UK growth between 1990 and 2000. The economy expanded by 40% during the 1990s and 2000s but would have grown by almost 50% had inequality not risen. Reducing income inequality in Britain to the level of France would increase growth by nearly 0.3 percentage points over a 25-year period, with a cumulated gain in GDP at the end of the period in excess of 7%.

“These findings have relevant implications for policymakers concerned about slow growth and rising inequality,” the paper said.

“On the one hand it points to the importance of carefully assessing the potential consequences of pro-growth policies on inequality: focusing exclusively on growth and assuming that its benefits will automatically trickle down to the different segments of the population may undermine growth in the long run, in as much as inequality actually increases.

“On the other hand, it indicates that policies that help limiting or – ideally – reversing the long-run rise in inequality would not only make societies less unfair, but also richer.”

Rising inequality is estimated to have knocked more than 10 percentage points off growth in Mexico and New Zealand, nearly nine points in the UK, Finland and Norway, and between six and seven points in the United States, Italy and Sweden.

The thinktank said governments should consider rejigging tax systems to make sure wealthier individuals pay their fair share. It suggested higher top rates of income tax, scrapping tax breaks that tend to benefit higher earners and reassessing the role of all forms of taxes on property and wealth.

However, the OECD said, its research showed “it is even more important to focus on inequality at the bottom of the income distribution. Government transfers have an important role to play in guaranteeing that low-income households do not fall further back in the income distribution”.

The authors said: “It is not just poverty (ie the incomes of the lowest 10% of the population) that inhibits growth … policymakers need to be concerned about the bottom 40% more generally – including the vulnerable lower-middle classes at risk of failing to benefit from the recovery and future growth. Anti-poverty programmes will not be enough.”

Angel Gurría, the OECD’s secretary general, said: “This compelling evidence proves that addressing high and growing inequality is critical to promote strong and sustained growth and needs to be at the centre of the policy debate. Countries that promote equal opportunity for all from an early age are those that will grow and prosper.”

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