- Created: Friday, 19 April 2019 10:18
- Written by Mark Moncada
British law conceals, protects and rewards the operations of tax havens and the perpetrators of major financial crimes, while at the same time vilifying, hunting down and imprisoning some of the poorest people in society for so-called benefit fraud. Two realities exist in Britain side by side. In 2017, the country was home to 73% of all millionaire bankers across Europe, while at the same time demand for foodbanks has surged as the working class is driven ever deeper into poverty. Mark Moncada reports.
Reality of the rich
For the ruling class, the interests of the international markets, the financial services sector and the City of London are the unquestionable priorities. As such, any regulation and scrutiny of its operations needs to be minimal. Over a 10-year period, beginning with the global financial crash of 2008, there were no successful criminal prosecutions of any bank in Britain and just under £2.5bn imposed in non-criminal fines. ‘By contrast,’ The Financial Times reports, ‘the US authorities brought nearly 20 successful criminal actions against New York and London-based banks and extracted more than £25bn in both criminal and non-criminal fines.’ Legal mechanisms to make it easier to hold large companies to account for money laundering and fraud do not exist in Britain.
Yet in March 2019 the government argued that implementing a law to force the Crown Dependencies (Jersey, Guernsey, and the Isle of Man) to create a public register of owners of companies on the islands would undermine their cooperation in tackling money laundering and other financial crimes. Oxfam has stated that the Dependencies are ‘at the heart of a global network of tax avoidance that costs poorer countries and regions $170bn a year’. As we have previously reported, around half of the world’s tax havens are connected to the City of London. Its offshore network includes these three Dependencies. ‘In 2007 [they] held around $1 trillion assets. They channel very large amounts of finance into the City of London. In the second quarter of 2009, the UK received $332bn net financing from them.’ The government therefore must prevent any potential restrictions and allow bankers to do what they want in order to make as much money as possible. This leads to the situation where in 2017, 3,567 bankers in Britain were paid more than €1m a year. There are nine times more millionaire bankers in Britain than in Germany and 15 times more than in France. Pay for the highest-income workers in Britain rose nearly 6% between April and September last year, compared with 3.7% for the rest of the workforce, marking a return to pre-crisis top salary growth in the financial sector. One asset manager took €40.9m, of which their bonus was €38.3m – 2,000 times the amount paid to a newly qualified nurse. Ironic, given that Britain bailed out the banks to the tune of £1.2 trillion, then slashed public services, including the NHS, blaming public spending and the public sector deficit as a threat to stability.
Reality of the poor
Figures released in March show that 53% of Universal Credit (UC) claimants had payments reduced because they were in rent or utility arrears. In just six months between April and September 2018, the Trussell Trust network provided 658,048 food parcels to people in crisis, a 13% increase on the same period in 2017. A third of referrals to the Trust’s foodbanks are because of delays in UC payments.
Newcastle, where ‘full service’ UC was rolled out in May 2016, is a typical example of a city run by a Labour council which ruthlessly enacts government-imposed cuts. By 2022, Newcastle Labour council will have voted to cut £327m of local services. Not one Labour councillor in the city has voted against this. This year, Pat Ritchie, the chief executive of the council, received a 4.5% pay rise of £7,000 to £168,923. Council workers who hadn’t yet lost their jobs got just 2%. On 6 March 2019, the council voted to cut over £24,000 to the Supporting Independence Scheme. This is a housing support lifeline for people leaving hostels, prisons, physical and mental health hospitals, domestic violence refuges, care homes and asylum housing, and for people affected by benefit cuts and reforms such as UC. In 2017-18, the scheme supported 331 families with 607 children and 40 pregnant women. More people will be forced to stay in institutions, or forced out onto the streets or out of the country. A council impact report on the cut has admitted that if this service goes it will increase homelessness because it is one of the few services that provide practical support rather than just advice.
In January 2018 there were 13,324 people on UC in Newcastle. The five-week wait for the first payment is forcing more people into rent arrears. Councils need to be notified of receipt of UC in order for families to qualify for free school meals: delays mean children don’t get fed. Cuts to working age benefits in the city will reduce income by over £129m a year by 2022-23. New-castle’s West End foodbank is the biggest in the country, providing emergency food parcels to around 50,000 people a year. In the 2017 summer holidays demand swelled by 20% because there was no access to free school meals. The former chief executive of the West End foodbank stated, ‘Benefit change or benefit delay are responsible for 60% of the people we feed…15% are on zero-hour contracts. They are the working poor.’
In November 2018, UN Special Rapporteur on extreme poverty and human rights, Philip Alston, visited the foodbank during a tour of British cities. He reported that 14 million people in Britain, a fifth of the population, live in poverty. 1.5 million are destitute. Absolute child poverty has risen, with a third of all children in Britain now living below the poverty line – the vast majority in families that are working.
The reality is stark. We have to organise to change it.
Fight Racism! Fight Imperialism! 269 April/May 2019