In David Cameron’s interview in the Sunday Telegraph, he tells us that he believes in fairness. Or at least, he believes that it’s important that what he does as Prime Minister should be perceived as fair.
“When you’re taking the country through difficult times and difficult decisions you’ve got to take the country with you. That means permanently trying to make the argument that what you’re doing is fair and seen to be fair.”
David Cameron and George Osborne have repeatedly tried to claim that their social policies of taxing the poor and enabling the rich to evade taxes, cutting benefits for disabled people, forcing long-term unemployed into unpaid workfare for superstores, ought really to be described as “fair” – that it’s not fair for “the socialists” to have an exclusive claim on fairness.
“We need to try to give people a sense that we have a vision at the end of this, of a fairer, better economy; a fairer, better society, where if you work hard and do the right thing you get rewarded.”
There’s a problem with this. Cameron’s ideology requires him to believe that if the third sector is slashed to the bone and public sector services are guillotined, private enterprise will step in and find a profit.
The current government is attacking the welfare system by cutting £18 billion from welfare, while giving away more than £25 billion in corporate tax breaks over the same period. It is emphasising the cost of fraud when £1.5 billion is lost in this way, but turning a blind eye to £120 billion of tax lost through evasion, avoidance and non-collection. PCS
David Cameron is the 21st graduate of Eton College to become Prime Minister. At Oxford he was part of the Bullingdon Club, which has from 1780 til the present day, taken in the sons of the very wealthy aristocrats – and the sons of those so wealthy that aristocratic sons would forgive them for not smelling of blue blood – and alow them to indulge themselves in the joys, such as they are, of getting beastly drunk in Town premises and then riotously demolishing the premises. David Cameron and George Osborne are apparently now both claimed to have merely watched the riotous on-goings, not partaking in the fist-fights, drug-taking, vandalism, and racist abuse which their chums enjoyed:
On a different occasion with Osborne also present, [one of Osborne's contemporaries] remembers one Bullingdon member “trying to snort lines of coke from the top of an open-top bus and the bus was speeding along so it kept blowing away. I said to him: ‘You’re stupid. It’s blowing away,’ and his response was: ‘I can afford it.’”
On another occasion, Osborne and the Bullingdon went for a meal at a Michelin-starred restaurant in Berkshire where, coincidentally, the comedian Lenny Henry and his then wife, Dawn French, were having dinner. The source said: “A couple of the boys started getting obnoxious and talking about their family wealth and Lenny Henry said: ‘Actually, sod off.’ There was a slight altercation when a member put a cigar out on someone else’s lapel and it turned into a fist fight and furniture was broken. It was horrible, horrible. We used to smash everything up then pay a cheque saying: ‘It’s OK, we can pay for it’.”
(One of the interesting questions about Nick Clegg is whether his family was super-wealthy for him to be nominated to the Bullingdon Club if he had gone to Oxford instead of Cambridge. [Update - edited]
At the age of 16, in a drunken fit of loutishness, he and a friend destroyed Germany’s premier collection of cacti (Daily Mail, 21st June 2009) so he clearly has The Daily Mail reported in 2009 that Nick Clegg had torched two greenhouses hosting Germany’s premier collection of cacti, but this report turned out to be based on Clegg’s anecdote, not on independent testimony: it’s not clear whether at Oxford he would have had the right attitude to be a Bullingdon member, but after all, he didn’t go to Eton and his father is merely immensely rich, perhaps not super-rich.)
David Cameron’s “vision for a fairer Britain” needs to be read in the light of this history: his idea of the “Big Society”, slashing funding from public services and voluntary organisations so that services will be cut, is the vision of a wealthy man who has no real notion of poverty. We needn’t assume that (for example) the UK’s tax revenues as a percentage of GDP will go up. Cameron will keep the 50% rate of income tax for the highest earners (and 20% for the lowest earners) but he will also keep the 20% VAT rate.
VAT is a tax on spending – a flat rate, regressive tax, that affects poorer households and individuals far more heavily than it does the wealthy. It’s one of the consequences of EU membership (introduced in 1973 when the UK joined the European Economic Community) but it’s a consequence that the most anti-European of Tories show no interest in combating: it used to vary between 8% and 25% depending on whether you were buying (for example) books or petrol, and food and children’s clothes were zero-rated. In 1979, Margaret Thatcher set VAT to a flat rate of 15%, and in 1991 John Major raised it again to 17.5%. After the Labour victory in 1997 the lower rate was reduced to 5%, and was extended to cover essentials such as sanitary towels and tampons, children’s car seats, contraceptives, and smoking cessation products. In December 2008, VAT was reduced to 15%, to encourage consumer spending during the recession. But George Osborne returned VAT to its John Major rate of 17.5% on 1st January 2010, and last January raised VAT again to the highest-ever rate of 20%.
From a Save the Child policy briefing from April 2010:
Once all taxes and benefits are taken into account, the 20% richest households have an average annual income of £52,371 compared to £14,297 for the poorest 20%. Increasing VAT will simply widen inequalities and entrench the unfairness that exists in the tax system. Statistics show that indirect taxes such as VAT take a higher proportion of income from those on low incomes, reversing the positive impact of direct taxes. It is also worth noting that data from the Office for National Statistics shows that, on average, the wealthiest households contain fewer children than poorer and middle income households, meaning that the unfairness of the tax system is weighted against children. Why VAT must not go up, April 2010
If Cameron actually wanted to make the UK a fairer society, he’d cut VAT and raise income tax. If he wanted to increase social mobility, he’d be focussing on tax fraud by the richest, not benefit fraud by the poorest.
Cameron’s idea of empowering the poor and putting curbs on the rich is classically Tory: he says
“Let’s empower the shareholders by having a straight, shareholder vote on top pay packages. We’ve got to deal with the merry-go-round where there’s too many cases of remuneration committee members, sitting on each other’s boards, patting each other’s backs, and handing out each other’s pay rises. We need to get to grips with that.”
It takes some sheltered vision of “fairness” to think that the real unfairness in today’s Britain can be resolved by legislation allowing shareholders a vote on top executive pay and bonuses. In the US, a Bill currently under debate would give shareholders a “say on pay”, but also
Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act requires companies to disclose the CEO to Worker pay for their average employee. Aiming to address workplace inequality, this law will help workers know where they stand within their organization. In the eyes of shareholders this law makes it much easier to detect the so-called run-away CEO.
But Cameron’s “vision of a fairer Britain” does not include any new rights for the people who work for a living. His idea of “wealth creators” is strictly limited to people who are already very wealthy. The notion that the 99% are wealth creators – that our labour, our spending, our contribution to the economy – matters more to a healthy economy that the tiny fraction of people at the top – that’s just outside of his scheme of things.