Tag Archives: greed

Life on Hannan World (Part 13)

I can barely believe it. A little over 24 hours after I wrote the last “Life on Hannan World” blog, up pops Dissembling Dan with another. This time, it’s about taxation and flat taxes in particular.

Talk of flat taxes will always get right-wingers and self-styled libertarians moist. They (the followers of obscure economic theories) love the idea of everyone paying the same rate of tax. They believe that everyone (sic) will benefit from a flat tax system. Of course, it’s a lie and they know it, and no matter how plausible they make their argument sound, the simple truth is that only the rich will benefit from such a tax system.

So what’s prompted the Lyin’ King to write a piece in defence of flat taxes? This article in the Daily Mirror, which reports Oliver Letwin’s remarks about simplifying the tax system. Inevitably the issue of flat taxes is mentioned. But that’s not the reason why The Cat is interested in Hannan’s blog. It’s the fact that he actually claims flat taxes would benefit the poor (sic). Have a look at this title:

Lower, flatter, simpler taxes will help everyone – especially the poor

Gloriously misleading and, quite frankly, nuts. I once had some right-wing libertarian tell me, apparently straight faced, that the poor were “richer” at the end of the 19th century than at the beginning.  The clue is in the word “poor”. If you are poor, then you aren’t, by definition, “rich”. But it’s the way he claims flat taxes will “help” the poor that get me. It’s not as if he knows what it’s like to be poor and, at any rate, Hannan usually approaches the poor through fictional characters. Even the photo he uses to accompany his blog reveals more about his attitude to dissent that he’d care to admit.

Hannan claims, among other things, that a flat tax system would eliminate tax avoidance. But is that all? Well, no.

The real benefit of the flat tax, though, is not in stopping top-end avoidance. It’s in cutting the cost of compliance for everyone else. I have yet to come across a small business in my constituency that doesn’t need an accountant. Nor have I met a single person who has read and understood the tax code in its entirety.

Did you see that? He says the “real benefit of the flat tax” is apparently about “cutting the cost of compliance for everyone else”. The problem with taxation in Britain is this: the system is regressive. Britain has possibly the most regressive taxes in the world. Where else in the world would one have found a window tax, for example? Only in Britain, which is still run like a technologically advanced Norman kingdom. Council Tax, for example, is a regressive local tax that is not based on a person’s ability to pay; it is levied on outdated property values. Therefore, in theory, a person on an income of £12,000 per annum living next door to someone on  £53,000 a year, and living in a similarly banded property, pays the same amount in Council Tax. Got that?

Hannan claims:

Flat taxes make tax avoidance both purposeless and impossible.

Oh? And where’s the proof? There isn’t any. It’s hypothetical.

The only way the Lyin’ King can proclaim the supposed ‘benefits’ of a flat tax system is by having a pop at his greatest foe: socialists.

You’d think that socialists would approve. Instead of the super-wealthy exploiting exemptions, moving their assets abroad, emigrating or simply retiring earlier, they’d be paying a higher share of our national revenue. The state could then either spend more in absolute terms or cut taxes for everyone.

Why on earth would socialists approve of a flat tax system? It’s absurd. Only greedy capitalists adore the idea notion. The last time this country had a flat tax was in the late 1980s and early 1990s. It was called the Poll Tax.

First, almost no one is pushing for a completely flat rate – supporters of the idea recognise that, in a welfare state, there needs to be an exemption before you start paying tax at all, ideally set at around £12,000 a year. Second, a flat tax will, in a short time, make middle- and low-earners considerably better off as the rich pay more and the tax burden on the rest of us falls commensurately.

“£12,000 a year’? I wonder if Wonder Boy knows what it’s like to live on £12,000 a year? But it’s this idea that, somehow, the rich will magically pay more tax that’s a real sticking point here. If everyone is paying near enough the same rate of tax, then it’s only logical that those at the lower end of the income scale will suffer. That’s the people on £12,000 or slightly more, Dan. Have you got that?

At the end of his piece, he lets fly at UK Uncut. Why? Because he doesn’t like the way they chase down tax avoiders. He’d rather they didn’t exist.

I sometimes wonder whether UK Uncut types are happier nursing their grudges, warming themselves with the glow of righteous anger, than on fixing the problem. Or, to put it another way, whether they are keener on attacking the rich than on stimulating the economy. That, of course, is their prerogative. But what a pity to see the government humouring them.

What the Lyin’ King deliberately misses is that UK Uncut is a pressure group and is thus not in a position to “fix” the problem. They aren’t the ones who devise tax codes, nor are they in a position to implement economic policy. That’s the job of the government. The same government that Hannan supports. He whines that UK Uncut is “keener on attacking the rich than on stimulating the economy”. Why shouldn’t they attack the rich? Why shouldn’t they attack greed? Now Dan would tell you that greed is “natural”. But then, so is violence. Yet we have laws on the statute books to punish the violent, but we don’t punish the greedy.

Hannan’s claim that a flat tax system would create parity between incomes is misleading. The rich would dearly love to see a flat tax because it would mean they actually pay less, not more tax. He stands up for the powerful in society and regards the weak as parasites, draining the life force of the nation. If he talks about the poor, he regards them in the abstract. Tories can only see the world through the prisms of wealth, privilege and power. Anything else is of no consequence. The flat tax is a dangerous fantasy.

 

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My Conversation With Thames Water

Or, to be more precise, my conversation with Thames Water’s Customer Insight and Resolution Team. Come again? “Customer Insight and Resolution”? Meaningless corporate speak, just like the reply I received from Thames Water regarding my complaint about their tax avoidance and proposal to increase charges. My replies appear in italics.

Water services

Dear Mr Hell

Thank you for your e-mail of 27 August 2013.

Tax

Recent press coverage of our tax liabilities has not adequately explained how infrastructure investment is actively incentivised by the Government through the longstanding policy of granting capital allowances to provide tax relief. This approach ultimately permits corporation tax to be deferred, not avoided.

This is largely impenetrable corporate-speak. However I shall do my best to translate: what you’re saying is that the government has effectively handed you a license to rip off customers and avoid paying your fair share of tax. Infrastructure investment should be made by those with the money… that’s your shareholders. They (supposedly) invest in your company. I do not. I have no shares in your company. Investors are supposed to invest. They’re supposed to ‘take the rough with the smooth’. Shareholding is a risky business and the value of shares can increase and decrease from moment to moment. One of the risks is the cost of keeping the business going. That means investment, but it seems as though your rentier capitalist shareholders don’t want to shoulder their responsibilities. But your point that tax is “deferred” sounds rather misleading. Either you pay tax or you don’t. I believe it is the latter.

Recent press coverage has created the impression that we’ve deliberately sought to escape paying our fair share of taxes, which is simply not the case.

Excuses, excuses. It’s easy to blame the press for your company’s greed. Thames Water has avoided paying corporation tax and I would suggest that it has done so deliberately. It certainly didn’t happen by accident. This year, Ofwat described the sums of money avoided by your company as “morally questionable”. Now you’re not going to tell me that the regulator is misrepresenting Thames Water are you? Here’s what the chair of Ofwat said:

 “In the complex offshore ownership of some [water] companies, a good number use high coupon shareholder loans to improve equity returns from the regulated entity and apparently to reduce tax liability. This is not for Ofwat, but may be morally questionable in a vital public service.

 We have not yet found a regulated water company that fully complies with the UK corporate governance code or satisfactorily explains why not”.

We haven’t been required to pay much corporation tax in recent years because the Government’s tax system provides for tax relief on capital investment, effectively deferring when it’s paid. The tax is deferred, not avoided, and there is currently nearly £1bn of deferred tax on our balance sheet, which will be paid in future years.

You’re repeating yourself here to some extent. I’d like for you to point me in the direction of the relevant HMRC framework. But it’s convenient that there’s an HMRC mechanism that allows you to avoid paying tax, when people like me have no choice but to pay the full amount. But hey, didn’t Thames Water receive a massive tax rebate of £5 million last year? That’s more than I could ever hope to receive in two lifetimes!

The HMRC mechanism for providing tax relief on future investment is known as capital allowances. The aim is to encourage firms like us to invest in modernising vital plant and machinery by providing tax relief on the investment. These allowances are granted automatically by HMRC to companies making relevant expenditure.

Interesting, yet you still increase water charges. There is no excuse and furthermore, it isn’t as if I can change water supplier. Thames Water has its customers over a proverbial barrel and it knows this.

Our Shareholders

The water industry is set up to make a profit so that we can carry out much-needed improvements to our water mains, sewers and other facilities. We also need to borrow a lot of money to help fund this work. In the same way you’d expect a bank to pay you interest on your savings, it’s only fair that we pay a return – or dividend – to shareholders for letting Thames Water use their money.

Rubbish. Water is seen as an easy way to make money. Everyone needs it to survive. Your analogy with interest paid on a savings account is over-simplistic and dishonest. If you could charge people for air, no doubt you’d do that too. Ordinary savings accounts offer little more than 3% these days. The truth of the matter is that Thames Water wouldn’t bother with improvements if the regulator didn’t force it to act. Most companies ask their shareholders to invest and at the risk of repeating myself, your shareholders clearly don’t take their responsibilities seriously and are more concerned with making vast sums of money at our expense.

By any meaningful benchmark, our directors are not overpaid.  They run a multi-million pound investment programme, delivering essential improvements of benefit to both customers and the environment.

What is a “meaningful benchmark”? You also keep repeating the word “investment” as if it were some sort of word of power. If shareholders invest in your company, then they should be required to pay up. Besides, as I indicated earlier, the regulator forces you to carry out improvements. Otherwise, Thames Water wouldn’t bother. And yes, your directors are paid handsomely…obscenely so I’d say. Indeed last year, your CEO, Martin Baggs salary was £425,00 and who knows how much his bonus will be next year? Last year it was £418,000, this year it was £274,000. That’s considerably more than the directors of the old water boards earned. You know something? In all the jobs that I’ve done in my 36 year working life I have never once received a bonus. Your company is practically allowed to print its own money.

Thames water is one of Britain’s top 100 international companies.  Globally we employ over 18,000 people serving 70 million customers in over 20 countries.  As such we are a significant contributor to the success of UK Plc.

Is this supposed to impress me? It’s PR guff. Then you close the paragraph with “UK plc”. The United Kingdom is not a “public limited company”, it’s a nation-state that allows companies like yours to cream off profits and increase charges arbitrarily. It’s what is commonly referred to these days as “spiv capitalism”.

Managing water and sewerage for our 13 million customers in London and the Thames Valley is a complex business that continues to require major investment.  To ensure that it is effectively managed, we have to offer remuneration that attracts and retains staff capable of leading this important work

So what am I supposed to do? Applaud you? Bow, scrape and tug my forelock? No. I am not alone when it comes to being appalled by Thames Water’s behavior. You increase water charges, while millions of gallons of water are lost in leaks every year – so much for your infrastructure improvements.  But it’s the way your company has told people like me that I have to pay for your bad debts. They’re your debts, you pay for them. I notice that you’ve not bothered to address this point. Why?

I hope this information is of use.  However, if you have any questions, please feel free to call me on 0845-6410033, extension 61594.

I’m not phoning an 0845 number, which is expensive when using a Virgin Media fixed line. That’s the final insult.

Yours sincerely

Chanèl Dziuban

Case Manager

Customer Insight & Resolution

Readers, I don’t expect a reply. But what a patronizing load of twaddle. Thames Water continues to increase its charges and tells us that we have to pay off their bad debts, while they laugh all the way to the bank. Its CEO is paid handsomely and receives a massive bonus each year. And it wants more of our money? Go to hell.

Here’s what Tony Montana would say:

Renationalize water NOW!

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Selling War

Is your economy in the khazi? Are you poll ratings low? Have no policies? Well, why not start a war? It worked for others, now it can work for you.

Just look at some of our testimonials!

“War makes me go all gooey inside” – Tony Blair.

“Think of the money” – George W Bush.

“I live for the deaths of others” – Henry Kissinger

“Thanks to my Falklands campaign, I won a landslide election. I highly recommend it to others” – Margaret Thatcher

Remember, all you have to do is tell the public that so-and-so is “killing his own people” with weapons of mass destruction and Bob’s your uncle.

Worried about what the UN might say? Well, there’s no need. Who pays much attention to them anyway? Go ahead and make war. Remember that JP Morgan, Raytheon, Blackwater and Bechtel are there to support you.

If the public don’t believe you or pick holes in your argument, you can always call them “appeasers” and use the example of Hitler as your defence.

War: helping greedy psychopaths to make lots of money for centuries.

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Another Reason to Hate Virgin Media

Usain Bolt should be ashamed of himself.

Not only does Virgin Media make loads of money through a variety of hidden charges (late payment charge, non- Direct Debit charge and so on), they also don’t recognize unions.

I remember reading how Virgin Media had derecognized the Communication Workers Union (CWU) last year.

Since Virgin Media made the outrageous declaration before Christmas, the union and its reps at the company have been out all over the country, despite the snow and ice, distributing leaflets, explaining the situation and encouraging staff to join the union. CWU has also launched a special offer for new members at a discounted rate of £4.99 a month for their first year.

This has resulted in a boost in membership as staff at Virgin Media increasingly realise the benefit of an independent, democratically accountable trade union over a staff forum set up by the company.

Union Home reported that:

Virgin Media bombarded its staff with company propaganda in letters, emails and website messages, at compulsory briefings with company directors and even phonecalls from managers to employees who had not yet voted. How did they know? Was this not an anonymous process? And if managers knew who had voted, did they also know which way they voted? These were some of the concerns being passed to us by employees. The company did allow us a short statement on their intranet (described as ‘very difficult to find’ by one employee). We’re told that managers are receiving a break-down of the voting results to see who got the ‘right’ result for the company. What they will do with the information is anyone’s guess.

This is the modus operandi of a union-busting company. They disseminate anti-union propaganda among the workforce and coerce them into accepting inferior pay and working conditions through a combination of lies, smears, bullying and intimidation.  They even held a referendum… it was rigged.

For years, Richard Branson has cultivated a media image as a cuddly capitalist who looks after his workers.  But capitalists rarely care for their workers and Branson, who throws a strop when people refuse to bend over for him, has been employing union-busters for years.

Here’s Branson pleading with workers to throw away their rights. Note the easy smarm. Note the oily charm.

This article from The Daily Mirror shows just how ruthless and grasping Virgin Media is.

A broadband bill has gone viral online after a man was charged an extra £10 – for being DEAD.

Furious Jim Boyden posted a photograph of his late father-in-law’s Virgin Media bill on Facebook after the company added a fine for late payment.

The image was accompanied by a message to Virgin which apologised for his father-in-law having “the unheard of nerve to be dead and therefore being unable to pay you.”

The picture, posted on Monday, has now been shared by more than 84,000 times.

The bill breakdown shows “D.D Denied-Payer deceased” next to a charge of £63.89, referring to the fact that the dead man’s bank had declined the payment.

As a result, Virgin Media added a “late payment charge” of £10 to the bill.

This blog from Nicholas Shaxson tells us that Virgin Enterprises, the company that sells the Virgin brand to other companies, so they can pose as fully-fledged Virgin companies, moved its operations from London to Geneva.

How important is this kind of abusive tax practice to the Virgin empire? Well, it’s hard to know exactly, but in 2002 Branson was quoted in this way:

“Virgin’s offshore status has been crucial to its development: it allowed money to move from business to business without massive tax liabilities. “If we had not done it the way that we did, Virgin would be half the size that it is today,” argues Branson.”

So overall the rich get richer, the poor get poorer markets get distorted, and there is no net benefit to the world of any kind. Quite the opposite.

People like Branson get awards all the time. No doubt he’s a good businessman in some ways. But this stuff counts as a serious, serious black mark against his name, during these times of national strife.

What is interesting about this is the comments under the Telegraph story – readers are generally a right-wing bunch, but most of the ones, at least at the top, are unremittingly hostile to Branson’s move. Perhaps that comes more from feelings of patriotism than anything else, but still, it’s interesting.

Even if they’ve relocated to Geneva, isn’t it time Virgin’s offices were occupied?

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Frack Off!

Nigel (Lord) Lawson: he’s a crazy fracker. Pic courtesy The Telegraph

This week the government announced that it was going to bribe local communities to accept shale gas drilling rigs.  Chancellor of the Exchequer,  George ‘Gidiot’ Osborne also announced generous tax breaks for shale gas companies.

Since last year, the Tories, mostly without exception, have declared their passion for shale gas hydraulic fracturing – fracking – which they claim will transform Britain’s sluggish economy and reduce household energy bills. To justify their intentions they point to the United States, where the practice is well-developed. In their desire to press ahead with fracking, they’ve dismissed every single concern without addressing them properly. Why? Because the Tories are greedy. But I don’t need to tell you that.  You know that already, dear reader.

Former  Chancellor, Nigel (Lord) Lawson was on Radio 4’s Any Questions last night, telling anyone who would listen that he was an “energy expert”. I kid you not. Lawson is also a noted climate change sceptic. He was heckled by large sections of the audience and rightly so. In 2003, Lawson founded The Global Warming Policy Foundation to produce evidence-free reports that condone the excessive use of oil and other petroleum-based products. “Carry on polluting” is their message.  The Carbon Brief says:

Lawson has links to the oil industry via his chairmanship of the company Central Europe Trust, which he declares on the Register of Lords’ Interests. CET states on its website that it co-manages private equity funds and consults on mergers and acquisitions for companies including BP, Royal Dutch Shell and Texaco. Lawson has also been president of the British Institute of Energy Economics, sponsored by Royal Dutch Shell, the BG Group and BP.

Kerching! Lawson, like the rest of the Tories, is practically wetting himself at the prospect of raking in more money at the expense of the environment.

This morning I discovered that there were a number of companies involved in shale gas extraction that had donated money to the Conservative Party. One of these companies is the Switzerland-based Vitol, who have donated over £550,000 through their chief executive, Ian Taylor.

Vitol admitted it had bought and sold Iranian fuel oil. The Swiss-based company said: “A Bahraini subsidiary company purchased a spot cargo of fuel oil from a non-Iranian counterparty in July 2012. The fuel oil delivered … was of Iranian origin. Vitol Group companies no longer purchase any product of Iranian origin.”

Dan Hannan, writing in the Telegraph, paints any opposition to fracking as a Green Party plot. He tells us:

What, then, is the problem? Some campaigners talk of water pollution; others, a touch histrionically, of earthquakes. If either was a remotely serious prospect, we’d know by now. There has been a great deal of fracking in the United States, but not a single instance of groundwater being contaminated. As for earthquakes, well, yes, technically any tremor qualifies as an earthquake, but the kind caused by fracking is, according to the most comprehensive report to date, “about the same as the impact caused by dropping a bottle of milk”. The process has been pronounced safe by the Royal Academy of Engineering and by the Royal Society.

Lawson said pretty much the same thing last night. First, the US is a much bigger country. Second, there have been plenty of reported cases of groundwater contamination, which have been dismissed in this US Federal government study. Yet concerns still remain. Third, shale gas exploration was cited as the cause of a couple of earth tremors in the Blackpool area.

A recent report, cited in The Guardian, tells us.

Prof Emily Brodsky, who led a study of earthquakes at a geothermal power plant in California, said: “For scientists to make themselves useful in this field we need to be able to tell operators how many gallons of water they can pump into the ground in a particular location and how many earthquakes that will produce.”

It is already known that pumping large quantities of water underground can induce minor earthquakes near to geothermal power generation and fracking sites. However, the new evidence reveals the potential for much larger earthquakes, of magnitude 4 or 5, related to the weakening of pre-existing undergrounds faults through increased fluid pressure.

The water injection appears to prime cracks in the rock, making them vulnerable to triggering by tremors from earthquakes thousands of miles away. Nicholas van der Elst, the lead author on one of three studies published on Thursday in the journal Science, said: “These fluids are driving faults to their tipping point.”

Prof Brodsky said they found a clear correlation between the amount of water extracted and injected into the ground, and the number of earthquakes.

The potential for earthquakes and earth tremors are harder to sweep aside. Yet they still try.

This government can give us a referendum on the future of Britain’s membership of the European Union, but when it comes to the potential damage that could be done to local communities through fracking, a referendum isn’t forthcoming.

Doubts have also been expressed over the quantity of shale gas in Britain. With the Right making frequent and unfounded comparisons with the United States, one suspects that this rush to frack is nothing less than than a combination of blind faith and barely disguised cupidity. Friends of the Earth claim that there is no hard evidence that shale gas will reduce our energy bills.  Indeed, the energy companies are far too greedy to drop their prices.

The government won’t admit it, but the only way they can proceed with fracking is to force it down people’s throats… like they did with neoliberalism.

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Housing associations are greedy money making machines.

Crown Estate tenants protest at the sale of their homes to Peabody

One the face of it, housing associations (HA’s) – also known as Registered Social Landlords or RSL’s –  seem to be doing a great job. They house people in need (but only if you’re on the council house waiting list in the first place) and they provide properties at affordable rents… allegedly. However the truth is the HA’s often immerse themselves in activities that are far removed from their ostensible remit. Some HA’s like A2 Dominion, Peabody and Notting Hill Housing Trust appear to be run for the purpose of making vast sums of money, while tenants are used as cash cows and forced to endure ever-increasing rents and declining services.  Many, if not all, HA’s have been seduced by the idea of growth, which, as all of us knows, is finite. Nothing can keep growing forever.

Many HA’s were founded with noble aims: the alleviation of poverty, providing housing for those with low incomes and so on. Since Thatcher’s disastrous Right to Buy (RTB) policy in the 1980s, the HA’s have been left to fill the yawning gap caused by the sale of housing stock, which was never replaced because councils were forbidden from using the capital receipts from RTB sales to build new properties for social rent.

But this was part of the Tory strategy to destroy left-wing politics in Britain for good for they believed that by encouraging people to buy their own homes, they would break the Labour Party and rule unopposed for millenia. That was the strategy, but the problem with this idea was that it relied on all new homeowners being able to keep up the mortgage payments. Many couldn’t.

By 1989, it was beginning to look as though the plan had failed as thousands of people lost their homes in the wake of Black Monday. But still more people applied for mortgages and when the sovereign debt crisis began over 5 years ago, sub prime mortgages were blamed, yet the current government seems to think that stimulating another property boom is the solution to the crisis.

By the 1990s, the HAs were beginning to adopt more market-led business models. This has invariably led to a conflict between their social functions and their commercial interests.

Housing Associations have long been seen as vehicles for increasing home ownership and they are being encouraged to promote shared equity schemes and to tie themselves closer to wider business interests by getting involved in unsubsidised development for profit.

http://www.geos.ed.ac.uk/homes/sglynn/neoliberalism.pdf

Rather than operate as purely social landlords, HA’s have become increasingly involved in property development and land speculation. They have also been moving increasingly towards market rents, thereby contributing to the lack of affordable rented property in the capital.

The Peabody Trust was founded in 1862 by an Act of Parliament. The Trust was bequeathed a large sum of money for its day by American financier, George W. Peabody, for the alleviation of poverty in London. The notion of growth did not figure in the original intentions of The Trust, but like so many other charities,  it came to regard itself as a major player in the marketplace.

Since the late 1990s, Peabody has been increasingly involving itself in large-scale council estate stock transfers; snapping up swathes of housing in Islington and Hackney for a song. It has bought land and developed on it; the properties that have been built are, more often than not, available for market rent or shared ownership only. Last year, it received every Crown property in a mass transfer, much to the tenants’ dismay.

The Peabody Trust gained hundreds of new tenants when it purchased a number of housing estates from the Crown Estate Commissioners. Stock transfers often involve a change in tenant status given the differing legislative rules about which landlords can provide which types of tenancy. In this case, the issue was whether the former Crown Estate tenants were secure or assured tenants.

The High Court held that Peabody’s new tenants were assured tenants, like the vast majority of other tenants of registered providers of social housing.

This is pretty typical of HA’s: move swathes of tenants to a less secure form of tenancy and pretend that you’re doing them a massive favour, when all the while, you’re eroding their rights as tenants. Peabody did this a few years ago with its assured tenants: it tried to trick them into signing forms that agreed to change the terms of their tenancies. Many tenants refused to sign. In the case of the Crown Estates, the tenants had secure tenancy status and were downgraded to an inferior status once the transfer was complete.  The Assured tenancy was introduced by the Thatcher government as a means of further eroding the public rented sector. Before the introduction of these tenancies, tenants had their rents protected under the provisions  of the Rent Act (1977).

Last year, Peabody announced that it was launching a £200m capital bond after spending that amount on the Crown Properties stock transfer. It is interesting how HA’s like Peabody can play the bond markets but it can’t operate a decent maintenance service for its tenants. In the last 3 years, it has gone through as many as 3 maintenance contractors after closing down its in-house maintenance service to “save” money.

HA’s, contrary to what they tell us, are in the business of making money and if this means trampling on their tenants’ rights, then this is what they’ll do. These days, HA’s are more likely interested in offering homes for so-called “market rents” or shared-ownership than providing social housing for affordable rents. Yet, it is social rents that fund  their projects. HA’s, like the privatized utility companies, can go to a bank and borrow money against the guaranteed income from rents. Strangely enough, even though tenants who rent their homes are seen as cash cows, they  are still seen as “too needy” by the landlord, who would much prefer it if they were renting at market levels or tied to them as leaseholders.

Shared ownership is one way an HA can increase rents, since they aren’t protected by law. Some rents are increased by as much as 500%, which are often loaded with service charges. This article from The Evening Standard says,

Mr Howard paid £79,000 for his share of the £195,000 two-bedroom flat, which carried a monthly rent and service charge of £347 until it shot up to £433 in April.

The couple’s problems began shortly after they moved in. They included:

Rubbish not collected for five weeks because of poor access to the bin sheds.

A lift out of service for 11 days.

A broken front door which had no handle and remained unsecured for nearly two weeks.

Mr Howard said: “We could not do any repairs ourselves because we were mostly tenants. When we complained, Newlon were invariably rude and unhelpful and treated us as though we were the problem.”

Things became much worse when they asked about selling their share of the flat, thinking the trust would buy it.

“When we suggested this, Newlon refused point blank, claiming they had no money to do so,” said Mr Howard.

As long as they get your money, they’re not actually interested in what happens to the flat or, for that matter, the estate. Cyclical maintenance schemes are also costly. Tenants do not have to contribute towards the cost of these programmes but leaseholders are often saddled with bills that go into their thousands.

The other issue with shared-ownership is negative equity. From The Independent,

Negative equity, in which the money owed on the mortgage is more than the value of the property, has affected many owners who bought properties before the market took a nosedive in 2007.

This hasn’t just affected shared ownership, but typically had an impact on new-build properties. Shared-owners have also been left reeling from rising rents, mounting costs for repairs or maintenance to communal areas and inflexible contract terms in their agreements with housing associations, which run the schemes.

Shared-ownership also raises questions as to who owns the property. Let’s put it this way: if you live in such a property, the HA has more rights than you do. If you have paid off your mortgage, you are still required to pay rent, which means that you will not, nor will you ever, own the property outright. Indeed, the HA can still evict you if you fail to meet your rent payments.

The shared ownership idea was dreamt up by HA’s with the idea of raising vast sums of money. It has nothing at all to do with alleviating poverty or providing housing to those in need. HA’s develop partnerships with lending companies. In some cases, the lender is the HA.

Chief executives of HA’s tend to earn the kind of salaries that would make most bank managers green with envy. Peabody’s Steven Howlett, for example, earns in excess of £197,000 per annum (a 7% increase on last year’s salary). Others earn much more.  While chief execs are earning 6 figure incomes, they slash their staff’s pay. The Morning Star reports,

Greedy housing association bosses were caught with their snouts in the trough today when union Unite slammed their “nauseating” pay rises while their staff are expected to suffer wage cuts.

Unite lambasted One Housing chief executive Mick Sweeney, who has had a £31,000 rise in pay and bonuses taking his income to £176,000 a year.

Meanwhile hundreds of his staff face 35 per cent pay cuts.

Look Ahead chief executive Victoria Stark increased her own pay packet £19,200 to £168,300 not including pension contributions.

Inside Housing has produced a list of Chief Executives pay. Topping the list  of high earners is David Bennett of the Sanctuary Group who receives £287,000 per annum. Sanctuary, like many HA’s, is a registered charity. This means that they don’t pay tax on the money they make, so if you run an HA, then you’re onto a good thing.

To run an HA, you don’t need any qualifications nor do you have to have an unblemished criminal record. You can set up an HA by getting 5 more people and convincing the relevant authorities that you have the best interests of the community at heart. After that, you can print your own money.

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Filed under Housing, Society & culture

Ethics, morality and the right’s economic arguments

Gordon Gekko: patron saint of greedy bastards everywhere

“Greed is good” was the quote attributed to the character Gordon Gekko in the film Wall Street. But he never said those words, this is what he said,

Greed, for lack of a better word, is good. Greed is right. Greed works. Greed clarifies, cuts through, and captures, the essence of the evolutionary spirit. Greed, in all of its forms; greed for life, for money, for love, knowledge, has marked the upward surge of mankind and greed, you mark my words, will not only save Teldar Paper, but that other malfunctioning corporation called the U.S.A

As you can see, the sentiment that “greed is good” is contained within the speech. Perhaps the most revealing part of that speech is the phrase “evolutionary spirit”. In other words, the form of capitalism that is currently  being practised is a form of social Darwinism.

Greed is a highly-regarded character flaw among the neoliberals who currently dominate economic discourses. They will tell us that those who salt their vast sums of money away into off-shore accounts are “wealth-creators”, not tax-dodgers who pay their employees peanuts and who continue to rake in vast profits while paying no corporation tax.  As we know already, this newly-coined phrase “wealth-creator” is indicative of an ongoing effort on the part of a group of pathological liars to convince us that it is in our best interests to cut our throats for the benefit of these parasites and, indeed, the nation. These wealth-creators create wealth but only for themselves. You and I will see not a penny of it.

It says a great deal about the morality of the right when they tell us that greed is “natural” and that it should be encouraged. Hayek, whose word is holy writ among neoliberals and the mendacious, self-delusional ‘classical liberals’, rationalized greed as something inherent in our make-up, which therefore meant that the small state should do all it can to facilitate it. No planning. No regulations. Just pure unabashed greed would benefit us all, he alluded.

We don’t praise or celebrate murder nor do we sanction murder as a good thing unless it has been given license, as in the case of war for example, where murder is regarded as a good thing, because it is in the “national interest”. People get medals for murder.  The greedy are rewarded with bigger tax cuts and knighthoods for their ‘risk taking’. The aftermath of the Iraq invasion showed us how both murder and the clever justification for greed could be used as a means of social control and a means to cart loot out of the country under the effective guise of the “free market”. “It isn’t greed” they’d tell us. “This is freedom”!

But why should we praise anyone who is permitted to give full expression to their greed? We don’t praise murderers unless, of course, they wear medals. Should we also allow those who burgle their neighbours to carry on because they’re showing ‘entrepreneurial spirit’? That’s another slippery concept: entrepreneurialism.  What is it? Is Grant Shapps an entrepreneur? Some, his fellow Tories, would think so. I say that he’s a crook and a parasite.

The trickle down theory has been thoroughly discredited. Even George Bush Sr had his doubts when he called it “voodoo economics”. Yet this government and its Lib Dem human shield persist with this notion that only greed can save us from our economic woes. Instead of clamping down on the cheats, they are given ever greater license to rip us off.

I find it bizarre that some of these greedy people would describe themselves as Christians but doesn’t the Tenth Commandment advise against greed? I do believe it does.

What Hayek and his acolytes propose is nothing less than a form of economic natural selection. Those that have money will survive and carry on exploiting others, while those without will either die or will otherwise be enslaved by the greedy.

Greed is no more natural to us than spree-killing. We don’t tolerate spree-killers, why should we tolerate greedy capitalists?

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Filed under Cultism, economic illiteracy, Economics, laissez faire capitalism, neoliberalism, robber baron capitalism, Spiv capitalism