Labour propose tax avoidance crackdown, Tories balk

Despite recent backlash from big business and finance firms and lobbies, Labour are pushing ahead with a leftward shift to crack down on corporate abuses, according to The Financial Times. In addition to charging that Conservatives have “totally failed” to take sufficient action on tax avoidance loopholes generally, Labour wants to target British tax havens:

On Friday [February 6, 2015], Ed Miliband, Labour’s leader, announced plans to put the UK’s offshore financial centres on a tax haven blacklist if they did not comply with a new transparency measures. But the plan was attacked as unworkable by [Chancellor] Osborne, who seized on it as further evidence that the Labour leader was “unfit to be prime minister”.

 
Grand_Cayman_IslandWell, I don’t know about that, Mr. Osborne, but it seems like trying to do something about the problem of offshore UK/crown tax havens (full story➚) is better than doing nothing. This is, after all, creating a lot of problems for other countries (see previous link), and British governments have repeatedly pledged to the international community to rein them in — and has singularly failed to do so.

It will be interesting to see if Labour are willing to hold fast to their new position on corporate abuses — fully reasonable and sufficiently moderated positions, in my view — until the May elections or if they bend to pressure to be blindly (and fearfully) “pro-business,” as they arguably were in much of the “New Labour” years.

I say “interesting,” because I have a strong suspicion that the outcome of the internal Labour debate — between its working-class/progressive base and its City of London finance types — could prefigure the coming 2016 debates (if we have any) in the U.S. Democratic Party about whether to run on “middle class economics” or in Wall Street’s pocket.

There are certainly a lot of very clear parallels here, given the similarly outsized roles “The City” and Wall Street have taken on in both countries’ economies and politics, along with the controversial transformations of the New Democrats and New Labour led by Bill Clinton and Tony Blair respectively in the 1990s. While it may have worked in the short run, it has caused a great deal of problems for both parties in the longer run.

Moreover, in both countries, the center-left parties find themselves quickly abandoned by their respective financial districts for the conservatives — the natural home of Big Finance — when the winds change. Meanwhile, the under-served natural economic base of Labour and the Democrats drifts angrily, staying home on election day or seeking solace in fringe parties.

There is, of course, one other linkage of interest here. The tax evasion/avoidance problem — combined with various recent banking scandals — have given a new meaning to the phrase “special relationship” between the United States and the United Kingdom, given how often City and Wall Street firms seem to be tangled up in it together.

More anti-EU plans from Cameron after another UKIP win

Following the earlier first-place nationwide triumph this year by the right-wing/anti-European “UK Independence Party” (UKIP) in the 2014 European Union elections, mainstream British politics suffered another serious blow last night, as the first elected UKIP member of the UK parliament was elected in a special election. As with his response to the EU election result, Prime Minister David Cameron yet again handled the situation by immediately ratcheting up rhetoric and policy plans against the European Union (and immigrants), according to the (pro-Conservative) Telegraph:

David Cameron will unveil tough plans to restrict immigration from the European Union within weeks to stop another Ukip MP being elected following Thursday night’s by-election [in Clacton].

Douglas Carswell, a former Conservative, yesterday became the first MP elected to Parliament for Nigel Farage’s UK Independence Party following a huge swing in support.

Conservatives warned that the decision by traditional Tory supporters to vote for Ukip would allow Ed Miliband to become Prime Minister if repeated in the general election in 209 days.

Labour narrowly won a second by-election by just 617 votes [over the UKIP candidate] and Mr Miliband is also now facing a major challenge from UKIP in [Labour’s] traditional northern heartlands.

 
The party elite’s right-wing also trumpeted the defeat as a sign that the Conservatives must double-down on anti-immigrant, anti-EU policies and even break up the coalition government with the far more moderate and internationalist Liberal Democrats. While not going that far, Cameron and the ruling government did continue to recast the party toward the euroskeptic position:

The Prime Minister said: “If you vote Ukip, you’re in danger of getting a Labour government with Ed Miliband as prime minister, Ed Balls as chancellor and you’ll get no action on immigration, no European referendum, and obviously – most importantly – you won’t get a continuation of the plan that is delivering success for our economy and security for our people.”
[…]
Brandon Lewis, a communities minister, said that the Tories will put immigration “at the heart” of the renegotiation with the EU to be held before an in-out referendum scheduled for 2017.

He said: “What people are worried about though is migration from the EU, and the Prime Minister made very clear last week that has got to be one of the key things at the heart of renegotiation that we will have before that referendum which we will deliver in 2017.”

 
And after its own close shave in the other by-election, the Labour Party leader also made rumblings of rethinking Labour’s immigration policy:

Mr Miliband conceded that Labour now needs to address “specific concerns” about immigration and denied that he was “complacent”.

 
Miliband is undoubtedly keeping in the back of his mind the situation in France and elsewhere, where traditional far-left, working class communities have gradually abandoned the leftist parties in favor of ultra-right-wing nationalist parties that vow to halt immigration and restore protectionist industrial policies that once helped those workers. Labour is significantly more economically centrist than it once was.
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