Downloading PDF. Please wait... Issue 2170

Paying for the recession: Save cash, cut the rich

This article is over 14 years, 10 months old
All the main parties agree on cutting services vital to ordinary people. But it is the top of society that is the most wasteful, writes Simon Basketter
Issue 2170
 (Pic:» Tim Sanders )
(Pic: » Tim Sanders)

Socialist Worker offers a guide to painlessly raising huge amounts of money and cutting costs.

The companies

Despite Labour cutting tax on profits repeatedly, a House of Commons enquiry found that more than one in four of Britain’s biggest companies do not pay any corporation tax, at all!

No one knows how much money is lost in tax avoidance scams. However in 2007, the International Monetary Fund ranked London alongside Switzerland, Bermuda and the Cayman Islands as an “offshore financial centre”.

Richard Branson’s Virgin Group is based in the Caribbean to avoid tax, yet we give £500 million a year to subsidise Virgin Rail.

One official estimate is that £25 billion is avoided in tax every year using offshore banking. Most analysis suggest it is more likely to be at least £100 billion.

This money could double the funding for the NHS, or give every worker in the country £4,000. It could be used to abolish income tax for everyone who earns less than £34,000 a year.

That is without putting tax on profits up, but simply making corporations pay the current low rate.

The super rich

In 2006, the latest figures available, the 54 billionaires living in Britain paid £14.7 million in tax on their £126 billion combined fortunes. That is an average tax rate of just over 0.1 percent.

The chief executives

The highest-paid boss last year was Bart Becht, chief executive of Reckitt Benckiser, who received about £37 million. He receives the same pay as 1,374 workers at his company combined.

The ten most highly paid executives earned a combined £170 million last year – up from £140 million in 2007. Five years ago, the top ten banked £70 million.

Nearly a quarter of chief executives received total 2008 pay packages in excess of £5 million. The average boss now gets 128 times what a worker earns.

National insurance

National insurance contributions paid on weekly incomes in excess of £770 are taxed at just 1 percent. Making the rich pay the same rate of national insurance as the rest of us would raise around £8.5 billion a year.


The education minister Ed Balls wants to cut £2 billion from the education budget, by merging schools and cutting teachers’ pay. But the simple solution would be to stop the privatisation of education and stop academies.

The cost of planning and setting up new schools has soared by 50 percent because the government insists on using privatisation scams and management consultants.

Half of all councils say that they have seen costs rise, and expect to spend £36 million over the £78 million they each budgeted for.

Importantly this isn’t on bricks to build classrooms, but on outside consultants developing building plans and drawing up contracts before building starts.

Haringey council in north London spent £23.8 million – the cost of a quite a good new school – on consultants, before any schools were built.


The NHS could hire an extra 14,000 nurses with the money it is spending on management consultants.

Health bosses admit forking out more than £350 million a year on management consultants. That’s enough to build a fully-equipped 418-bed hospital or pay for 18,000 heart transplants.

The estimated cost of the government’s NHS privatisation schemes is £20 billion. That’s over a third of the health budget.

Stop the war

The cost of New Labour’s wars in Afghanistan and Iraq in the last financial year was more than £4.5 billion.

The total cost so far of Britain’s military engagements in Iraq and Afghanistan since 2001 is around £14 billion.

On top on of that the actual defence budget is £38 billion a year.

Two new aircraft carriers currently under construction will cost over £5 billion. That doesn’t include £10 billion to run and maintain them. Add on another £10 billion to buy the warplanes and missiles to go on them.

The true cost of upgrading Britain’s Trident nuclear missile system is £97 billion (the government initially claimed it would be £20 billion). Even if they don’t burn money on new weapons of mass destruction, just keeping the old ones from falling apart costs £95 million a year.

Off with their heads

One rather quick way of raising cash would be to take it back off the monarchy.

On top of the enormous wealth they have, we foot the bill for the royals at over £180 million a year.

It costs £6.2 million for their holidays alone. The upkeep of the castles and palaces costs £15 million. And of course, the queen doesn’t pay any council tax on any of her 12 houses.

ID cards

ID cards will cost at least £5 billion. The government has already spent £379 million on compulsory ID cards for immigrants.

Two contracts worth a total of £283 million have already been awarded to Thales and IBM for the construction of the technology to support the national identity register the cards will be based on.


We could stop paying the £109 million we let MPs trouser in expenses on top of their rather generous pay of £64,766 a year each.

It’s not an enormous amount but we could cut the £6 million subsidy we pay so the MPs can get cheap food.

We probably can’t get back the £2 million we spent refurbishing the MPs wine cellar, but at the very least the next 39,000 people to lose their jobs could be given a bottle from its rather fine selection.

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