The UK government was found guilty by the Court of Appeal yesterday of using it’s Back to Work programmes to procure forced labour for corporations, at the cost of the tax payer. Its response was to rewrite the regulations that same afternoon and declare the programmes legal. This ignorance of the law is just one in a chain of worrying examples of power usurping law in 21st century Britain.

Taxpayer Funded Forced Labour Anyone?

I won’t retell the story of workfare and the court case here, but for the background please see yesterday’s post. What concerns us now is the government’s reaction. The verdict, while on narrow grounds stated that:

a) All workfare programmes other than the Mandatory Work Activity scheme were quashed.

b) As of yesterday, all people on such schemes could leave freely, without sanction

c) All who had faced sanction as a result of refusing such schemes were entitled to full reimbursement of withdrawn benefits.

The government’s response was sheer truculence.

Mark Hoban MP, Minister for Employment at the Department of Work and Pensions, stated in his response to the ruling:

“We are seeking permission to appeal against the Court of Appeal’s judgment and, if permission is granted, we will take our case to the Supreme Court. As we are currently seeking permission to appeal, claimants who have already served a sanction will not be able to appeal on the basis of the Court’s decision until our appeal is heard.

We are considering a range of options to ensure we do not have to repay these sanctions. Today we intend to lay new regulations which will come into force immediately and enable us to continue to refer Jobseekers Allowance claimants to our employment schemes and to provide the best chance for people to find employment.”

True to his word the department did rewrite the regulations by mid afternoon and presented them to parliament for approval the same day.

While the court says the schemes are illegal, all people subject to them are free to leave and all those who’ve had their benefits withdrawn are entitled to recompense – the government simply says no.

If an ordinary person committed actions at work which led to our organisation being taken to court and found guilty we would find ourselves not only out of a job, but potentially facing criminal charges ourselves. Meanwhile, a government minister responsible for the same is permitted the platform to make such counter jurisprudence statements.

This should be deeply worrying to anyone with the faintest interest in justice, freedom and fairness. Sadly, it seems part of a growing trend of one rule for the plebs, and quite another for the powerful.

Taxes Are For the Little People

“We don’t pay taxes. Only the little people pay taxes”

These apparently were the words uttered by so called ‘Queen of Mean’ business woman Leona Helmsley as her long suffering house keeper testified against her for tax evasion. Taking a look at the way tax rules are designed and applied, this may well be a case of ‘never a truer word spoken’.

Recent work by campaign groups such as UK Uncut, the Public Accounts Committee (a House of Commons select committee of MPs charged with ensuring value for money for the tax payer) and brave whistleblowers like Osita Mba has demonstrated that in tax law, it is truly one rule for the powerful and another for the plebs.

The case of Osita Mba is a metaphor for the whole scam. Ostia Mba, whilst working as a tax solicitor at the HMRC (the organisation responsible for ensuring proper tax contributions by persons and corporations) discovered HMRC Chief Executive Dave Hartnett made an off the books sweetheart deal with Goldman Sachs. The deal, made over coffee, saw Hartnett unilaterally relieve Goldman Sachs of their legal obligation to pay £10m of interest on back taxes they’d aggressively avoided paying for five years. Mba wrote to Amyas Morse, the auditor general of the National Audit Office, in March 2011 outlining his concerns over the deal. In response, The HMRC immediately suspended Mr Mba and referred him and his wife’s details to its Criminal Investigations Unit. Mba was not allowed to return to his office to work for over a year and now faced the possibility of sacking or criminal prosecution. This is how the HMRC treat an employee who seeks to ensure that corporations follow the tax rules.

So how did they treat Dave Hartnett, the Chief Executive who rather than recouping due taxes took corporate hospitality and offered sweetheart deals? Despite this clear breach of his duties, and several shambolic appearances before the Public Accounts Committee, he was not forced to resign but allowed to retire with a £1.7m pension pot. He has since taken up a position with recently convicted money launderers HSBC as part of its new anti tax avoidance division. You could not make it up.

In January this year, a session of the Public Accounts Committee made breathtaking viewing. It revealed a sinister collaboration between the HMRC and private interests. It was discovered that companies who were involved in proceedings with the HMRC, that is those companies refusing to pay due taxes, were simultaneously sitting on working groups with the HMRC drafting tax legislation. Furthermore, accountancy firms brought in to support HMRC creating tax rules were publicising this role in their advertising; the firms were responsible for drafting tax breaks, then advising clients to exploit these tax breaks to the maximum. None of these predatory accountancy firms have been taken to court for their role in this tax evasion epidemic.

Contrast this with the way ordinary people on PAYE are treated by the HMRC. Far from being invited in to consult on tax policy, the PAYE tax payer is treated with constant suspicion and brutal repercussions if found to underpay even the most modest sums. To take one example, in 2010 the HMRC discovered it had made a massive PAYE blunder; 4.3 million people were found to have overpaid, 1.4 million people had underpaid , through no fault of their own. The HMRC issued warning letters to all those who had underpaid due the HMRC’s own IT failure, and mandated immediate repayment of the taxes due. This meant some of the poorest in the land receiving up to £3000 tax bills for immediate repayment under threat of sanction.

It is plain to see that went it comes to tax; it is designed by corporations, avoided by corporations, forcibly taken from plebs, and diverted to the powerful.

Fraud by any Other Name, is Still Fraud

On top of this are a whole sea of recent crimes by financial institutions which have met with nothing more than fines, with no one held personally responsible for the crimes. Meanwhile the plebs face swift and uncompromising justice. This leads one to the inescapable conclusion that if you are in jail for theft, you simply didn’t steal enough. If you are in jail for fraud, your lie was not big enough.

When almost the entire banking sector was found to be guilty of deliberately rigging the base interest rate (LIBOR) to maximise their profits (estimated at up to $850 trillion), with the impact of lowering the values of pensions and saving – they got a fine and no one went to prison. When HSBC was found guilty of setting up a whole subsidiary bank in order to launder over $7bn for Mexican drug cartels and making illegal transactions with Iran (breaking US sanctions) – it received a fine worth only a tenth of its annual profit and no one went to prison. When the entire banking sector required a taxpayer bailout or bankruptcy after clearly fraudulent derivatives trading, resulting directly in what looks to be at least a decade of austerity policies for the taxpayer – no one got a fine, no one went to jail, and no one lost their job for their role in the crash.

In the meantime, a 27 year old mum from Stoke on Trent was jailed for 12 months for illegally claiming £38,000 in child tax credits. The owner of a launderette found guilty of money laundering and VAT fraud of £750k went to prison and lost his business. Two property fraudsters who took out fraudulent property loans in Allied Irish Bank and Royal Bank of Scotland received 12 years on prison for their crimes. These three crimes are substantively no different from the crimes of the banks above, only committed by isolated individuals who were not part of criminal networks and for a much smaller value.

Living in a Lawless Land

“Law and order exist for the purpose of establishing justice and when they fail in this purpose they become the dangerously structured dams that block the flow of social progress.”

~ Martin Luther King, Jr.

The breakdown of law and order such that the worst offenders are able to avoid its reaches based on personal wealth or political power is an existential threat to our society. The collaboration between corporate interests and government to redraft laws so as to make legal their destructive practices is to make an ass of the law. Corruption is bad; but legalised, institutionalised corruption is worse. Corruption so deep that it is ceased to be defined as corruption, but simply the way things are done poisons the well of our democracy. Our institutions have created a two tier legal system, and they are busy extending the breadth of their protection. If we cannot have justice, we cannot have social justice. It simply cannot be one rule for the powerful, and another for the plebs.

Take Action

You don’t have to just sit there and feel angry about all this. You can choose to channel that anger into a constructive reply to those destroying our legal system. Below are links to campaigns of interest which you can link up with and be part of the change. It is not hopeless, unless we choose to give up hope. We need you.

UKUncut – stage demonstrations and legal challenges to highlight corporate tax avoiders.

Boycott Workfare – making the stand against workfare

Tax Justice Network – excellent information on tax affairs