Red Pepper » Know your enemy

Canary Wharf: the dark tower

admin — Wed, 05 Jun 2013 21:15:09 +0000

Canary Wharf is London’s second finance hub, after the City itself, and its futuristic assortment of gleaming glass towers is home to some of the world’s largest multinationals and highest-paid executives. Canary Wharf’s streets are ‘chartered’: the land belongs to the Canary Wharf Group, in turn majority-owned by US-based finance giants Morgan Stanley and Glick Family Investments. As the group’s website states, ‘Canary Wharf is not just a place, it is a company.’
For residents of London’s Isle of Dogs, which surrounds Canary Wharf, the development represents a complete break with the past. Ushered into the industrial age as the West India Docks in 1802, the site once thrived as part of the world’s largest port, which at its 1960s peak employed more than 20,000 local people.
By the 1970s, however, changes in shipping technology and a decline in British manufacturing conspired to seal the docks’ fate, and redevelopment proposals were drawn up. One plan, proposed collectively by community groups, docklands boroughs and the Greater London Council, was for a public sector-led regeneration offering affordable housing, improved transport links and new industries catering to local skills. But the newly-elected Thatcher government already had its own plan: to turn the site into an ‘enterprise zone’ with major tax incentives for private developers to create a financial centre to rival the City.
Massive petitions from community groups were dismissed by parliament, and Canary Wharf was given the all-clear. As the bulldozers moved in, a damning report by the Joint Docklands Action Group offered a grim prediction. The site, it said, would become ‘a mausoleum for a vanished community and a monument to speculators’ greed’. In the heady days before the crash, such talk had long since been forgotten, and the Canary Wharf Group boasted its success in filling the office space and ‘creating’ 100,000-plus jobs. But even a cursory glance at what goes on in those offices, and who they employ, tells a different story.
The translucent shaft that holds HSBC’s global headquarters recently presided over some of the most opaque executive dickery witnessed in 21st-century Britain, with the bank caught laundering hundreds of millions of pounds for drug cartels. Not to be outdone by their neighbours, Barclays’ Canary Wharf spivs rigged the Libor rate (the benchmark for short-term interest rates) in an infamous example of the insider dealing that pervades modern finance. They also established a prolific and secret tax avoidance factory, organising tax avoidance on an ‘industrial scale’, according to former Tory chancellor Lord Lawson, that raked in £9.5 billion at the expense of UK taxpayers before being shut down earlier this year.
And Barclays is just the tip of the skyscraper. Fellow ‘Wharfer’ KPMG – one of the ‘big four’ accountancy firms – holds the record for the world’s biggest ever fine for criminal tax fraud, a cool $456 million back in 2005. The other three – Deloitte, PricewaterhouseCoopers and Ernst & Young – are also represented on the estate.
And then there’s the financial meltdown. Strolling back in time through a 2007 Canary Wharf would be like patrolling an identity parade of the crisis’s culprits, featuring Lehman Brothers, Merrill Lynch and insurers AIG, along with the credit-ratings agencies paid to provide the smoke and mirrors.
Long before the crash, Canary Wharf had helped propel the Thatcher-inspired shift in Britain’s economy towards speculative high finance. As a result, we are more vulnerable than ever to financial crises, while our politicians refuse to act for fear of displeasing their beloved cash cow.
Another major impact of a finance‑dominated economy for ordinary Brits has been the shocking rise in income inequality since the 1980s.
Nowhere in Europe is more emblematic of social inequality than the borough of Tower Hamlets, where Canary Wharf’s totems to ‘trickle-down’ economics overlook an area with the capital’s second-highest rate of homelessness and unemployment, and where four in ten children live in poverty. Government-imposed austerity – itself a response to the calamitous failings of the borough’s millionaire bankers – has only exacerbated this reality. Local government cuts are now prompting Tower Hamlets council to sell off council housing to private developers. Meanwhile, the speculators in the towers overhead are already busy trying to engineer the next bubble.
Occupy London Tours offers free alternative tours of London that explore how executives in the City, Mayfair and Canary Wharf helped cause the crisis.

Take action at Canary Wharf on 14 June with They Owe Us

EDF’s abuse of power

admin — Mon, 15 Apr 2013 15:56:59 +0000

French-headquartered EDF is the world’s second-largest electric utility company, with operations spanning Europe, Africa, the USA and Asia. EDF’s main revenue stream comes from generating electricity through nuclear power, which accounts for 74.5 per cent of its production. Renewable energy makes up just 0.1 per cent of its portfolio. Founded in 1946, it was a state-owned company until floating on the stock market in 2003. It had an annual turnover of £65.2 billion in 2010 and 5.7 million customer accounts in the UK, where revenues rose 6.4 per cent to £8.4 billion in 2012. It is the country’s largest electricity generator and distribution network operator.
EDF Energy’s parent organisation, EDF Group, operates the largest civil nuclear fleet of power stations in the world, with existing and planned facilities in France, the UK, the US and China. EDF Energy owns and operates 15 nuclear plants at eight nuclear power stations in the UK.
Even by the low standards of the ‘big six’ (the six largest energy companies in the UK, which supply 99 per cent of homes), EDF compares badly. Energy regulator Ofgem reported that it was the most complained about of the big six last year. It received 8,072 complaints for each 100,000 customers in the last three months of 2012 – more than double the 4,001 logged for the next most complained-about firm, Npower. The total complaints numbered 440,317 – more than 1,200 per day.
EDF also performs poorly on carbon emissions – it has the second lowest portfolio of renewables of the big six, spending just £1.6 billion on renewable energy since 2006.
2011 was a bad year for EDF. A French court fined the company £1.3 million and sent two of its staff to jail for spying on Greenpeace anti-nuclear campaigners. Two private security company employees hired by EDF were also jailed and Greenpeace was awarded £430,000 in damages.
In the same year, Freedom of Information requests by Green MP Caroline Lucas revealed that EDF, alongside other companies such as Npower and Centrica, had at least 50 employees working within the government on energy issues over a four-year period, including drafting energy policy. The Department for Energy and Climate Change declared 195 ministerial meetings with energy companies and their lobby groups compared to just 17 with green campaign groups. This gives them a huge amount of influence over day-to-day government decisions and access to confidential information.
Also in 2011 the company’s website was brought down three times by Anonymous. The attacks cost EDF an estimated £140,000. Then, in October 2012, its new flagship combined cycle gas turbine power station at West Burton, in Nottinghamshire, was targeted by ‘No Dash for Gas’ climate activists, who shut it down for a week. The new plant will emit approximately 4.5 million tonnes of CO2 per year when operating at full capacity – more than the annual emissions of Paraguay.
Sixteen activists occupied two 80-metre chimneys at West Burton for seven days to protest at plans to build up to 40 new gas-fired power stations and make gas the UK’s primary fuel for the next 30 years. This dangerous and dirty pursuit would crash the UK’s carbon emission reduction targets, breaching legally binding undertakings, and raise fuel poverty and reliance on imported fuel.
The No Dash for Gas activists pleaded guilty to aggravated trespass in February and await sentence on 6 June. In the meantime, EDF slapped an unprecedented civil suit for £5 million on the protesters. This was seen as an attempt to bankrupt protesters and stifle future dissent. EDF’s profits last year alone were £1.7 billion – their £5 million damages claim amounts to just one day’s profits.
The tactic, labelled ‘reputational suicide’ by PR sustainability guru Brendan May, proved a disaster for EDF. In an embarrassing climbdown, the company decided to drop the lawsuit after 64,000 people signed a petition against the action, Naomi Klein recorded a video declaring ‘I Am No Dash For Gas’ and high profile figures such as actors Mark Ruffalo and Lucy Lawless, Noam Chomsky and Margaret Atwood pledged support. Though EDF dropped the damages claim, it still insisted on an injunction preventing the 21 activists from entering EDF power stations in the future. A protest at the company’s AGM has been announced for 1 May.
No Dash for Gas: www.nodashforgas.org.uk. Illustration by Martin Rowson

Getting rich on disability denial

admin — Tue, 19 Feb 2013 10:00:43 +0000

When the Tory work and pensions undersecretary Lord David Freud set out his vision of welfare reform for disabled people he used a number of references to back up his plans. No fewer than 170 of these references came from a group of academics based at or connected to Cardiff University’s Centre for Psychosocial and Disability Research.
This centre, originally led by the ex‑chief medical officer at the Department for Work and Pensions, Sir Mansel Alyward, was funded by the US-based insurance giant Unum to the tune of £1.6 million from 2004 to 2009. The objective was to add academic credibility to the ‘biopsychosocial model’ that has underpinned disability benefits reform since the early 1990s – a model used as part of the government’s disability benefits crackdown by the private company Atos in identifying who is deemed to be ‘fit for work’ and hence ineligible for disability support.
So what is the biopsychosocial model? In this context, its key postulate is that an emphasis on medical causes and effects has failed to provide an adequate basis for disability benefits policy, and therefore much greater emphasis should be placed on the psychological attitudes and beliefs of individuals. It posits that disability – and the ability to work in particular – is not just a medically definable, physical matter but one that has a social and psychological dimension too. And it is used to underpin the assertion that to a very large extent the growth in the cost of disability benefits must surely be the result of people faking those disabilities.
A whole set of workshops run by Unum with such charming titles as ‘Malingering and illness deception’ should leave us in no doubt about where this approach is coming from. A glance at popular media would appear to substantiate such a view. However, the headline figures of those considered ‘fit for work’ by Atos always miss the successful appeals at tribunal, which significantly reduce those figures (and incidentally cost the taxpayer £50-80 million per year). Who is gaining from this system?
Unum’s second vice-president John LoCascio was brought into UK government circles as early as 1992 to ‘manage’ incapacity benefit claims. He was also responsible for bringing in ‘health assessors’ and training them by Unum criteria in biopsychosocial views of individual capacity. Back in the US this approach led to the company (which currently provides disability insurance for 25 million workers, half the US market) systematically refusing to pay out on huge numbers of insurance claims. One of its working practices that received widespread negative attention involved rewarding employees with ‘hungry vulture awards’ for their success in closing claims.
Unum’s behaviour resulted in it being accused of being ‘an outlaw company – it is a company that for years has operated in an illegal fashion’ by California insurance commissioner John Garamendi in 2005, when it was charged with more than 25 violations of state law and fined $8 million. These charges followed a financial and regulatory settlement in the previous year with 48 US states following investigations of Unum’s alleged abuses.
Nevertheless this same basic approach was to prove useful in helping with the UK’s welfare reform and in overriding the basis of medical opinion as the deciding factor on a whole set of conditions. And the more the government bought into disability denial with its contracted private companies such as Atos and supporting academics, the more Unum stood to benefit from increased market returns on its insurance business as disabled people saw their minimal welfare support diminishing.
The company was quick to seize its opportunities. As early as 1997, with the roll out of the all work test to assess fitness for work for benefit purposes, in which John LoCascio had played a major part, Unum launched an expensive advertising campaign. One ad ran: ‘April 13, unlucky for some. Because tomorrow the new rules on state incapacity benefit announced in the 1993 autumn budget come into effect. Which means that if you fall ill and have to rely on state incapacity benefit, you could be in serious trouble.’
Unlucky for some, lucky for Unum.

G4S: Private muscle for hire

admin — Mon, 03 Dec 2012 12:00:20 +0000

G4S’s recent Olympics debacle was little more than a sub-plot in the story of a company that has always courted controversy, from minor problems such as the failure to fulfil contracts to much more serious allegations ranging from manslaughter to sexual misconduct. Despite this, G4S has continued to grow, winning public contracts in the UK and abroad.
The British/Danish-owned company is currently estimated to be worth £1 billion and operates in more than 120 countries. Its 625,000 workers make it the world’s third‑largest private sector employer. It carries out a host of security-based tasks for the military, private businesses, airports and seaports, as well as running prisons and immigration services.
It is at the forefront of the drive towards the privatisation of such services worldwide. As John Grayson, an independent researcher and campaigner with the South Yorkshire Migration and Asylum Action Group wrote recently, ‘The contracting out of these services to private companies erodes the already very limited forms of accountability and furthermore fundamentally corrupts the political system by undermining any notion of a public good.’
This privatisation is achieved through a network of lobby groups and strategic appointments. In the first year of the coalition government G4S met with ministers no fewer than 17 times. It currently runs six of the country’s 14 private prisons and is bidding for more. Company employees assisting in such bids include former home secretary John Reid and a number of former senior civil servants.
The company is also heavily involved in the imprisonment and deportation of refugees and asylum seekers. It runs three detention centres, including the Pease Pottage centre, which holds children and families. In July 2010 the immigration removal centre Brook House, which was run by G4S, was described as ‘fundamentally unsafe’ by prisons inspector Dame Anne Owers. She found there had been 105 assaults, mostly against staff, and 35 incidents of self-harm by detainees over a six-month period. There had been serious problems with bullying, violence and drugs.
In 2010 the company received more than 775 complaints in relation to its detention and deportation of immigrants, including allegations of assault and racism. Twenty-five were upheld, a high number considering they were only subject to internal investigation. In 2011, the prisons inspector found conditions in a G4S-run immigration centre to be ‘objectionable, distressing [and] inhumane’.
Most worrying was the case of Jimmy Mubenga. In 2010, the Angolan detainee died after being restrained by G4S guards, three of whom were arrested on suspicion of manslaughter. G4S has since lost the deportation contract, but charges were dropped against the security guards and no one has been held officially accountable for Jimmy Mubenga’s death.
Globally the company profits from the wars in Iraq and Afghanistan. On its website it boasts that ‘G4S has an unparalleled heritage in Iraq, providing protective security, stabilisation and post-conflict reconstruction services to government and commercial organisations since 2003.’
In Afghanistan in 2009 a number of allegations were made against G4S subsidiary ArmorGroup, which was contracted to protect the US embassy. These included abuse by supervisors, who engaged in sexual misconduct and lewd behaviour; the sacking of a manager following his attempts to fix problems; withholding information from the US Congress about employees who went to brothels in Kabul known to house trafficked women; and misleading the US government by claiming experience and assets the company did not have.
The company also operates throughout the occupied territories in Israel/Palestine. It provides equipment and maintenance services for checkpoints, roadblocks and the separation wall. The equipment provided to the police and military includes body scanners and x-ray machines. In the private sector it provides thousands of armed guards to businesses operating in a number of settlements. G4S also provides a number of Israeli prisons with equipment and personnel.
In the UK the company is bidding to take over many police functions. The Cambridgeshire, Hertfordshire and Bedfordshire police authorities are all discussing using it to provide ‘backroom’ services, outsourcing 1,191 staff with a total spend of £77 million across the three forces. G4S already provides functions to several forces, including Lincolnshire police.
Police can look forward to some of the treatment metered out to other staff around the world, including union busting (USA) and poverty pay rates (Malawi and South Korea). Meanwhile, chief executive Nick Buckles received an annual salary and shares worth £2.4 million and a possible annual bonus of £1.2 million last year.
Illustration of Nick Buckles by Ben Jennings

The bankers’ friend

admin — Fri, 19 Aug 2011 23:09:01 +0000

Since November 2008, United Kingdom Financial Investments (UKFI) has been the holding company responsible for managing the government stakes in banks acquired as a result of the financial crisis ‘bailout’. Created by the Treasury, UKFI’s first chief executive was John Kingman, probably the most successful career civil servant of his generation, having become second permanent secretary in the Treasury before the age of 40.
UKFI initially occupied offices in the Treasury buildings, and its operational budget was negotiated with the Treasury. Yet from the very beginning, Kingman’s message as chief executive was that it operated at ‘arm’s length’ from the government. That was the theme of an op-ed piece in the Financial Times placed by Kingman and UKFI’s first chairman early in its life, and again in Kingman’s own account to the House of Commons Treasury select committee of the relationship between government and UKFI.
Note that what were being kept at arm’s length here were public institutions in Whitehall. UKFI was anything but at arm’s length from the City. The first two chairmen were both retired City grandees who had subsequently made reputations as City-friendly non-executives of major public companies.
The first, before he departed to chair RBS, was Sir Philip Hampton, an ex-finance director of Lloyds Bank turned non-executive chair of Sainsbury’s. He was succeeded by Glen Moreno, an investment banker who became chief executive of Fidelity International and then retired to become non-executive chair of Pearson. Moreno’s seat is now occupied by Sir David Cooksey, founder of one of the leading private equity houses in Europe.
The senior full time staff is drawn from a similar pool. John Kingman announced his departure to Rothschild in the summer of 2009, to make some serious money. Robin Budenberg, his successor, spent most of his career with UBS, the Swiss investment bank.
The board consists mainly of banking insiders. With the exception of the Treasury representative, its members have spent several lifetimes in blue chip banks and fund management corporations on both sides of the Atlantic, with CVs including Citigroup, Merrill Lynch, Barclays and Warburg.
It is hardly surprising, given this history, that UKFI’s definition of its responsibilities expresses the values of the financial markets. Public ownership is viewed as a brief transition; the Treasury is a kind of ‘fund manager’ to maximise shareholder value.
The framework document of March 2009, which set out UKFI’s rules of engagement, was crystal clear: ‘The company should … develop and execute an investment strategy for disposing of the investments in an orderly and active way through sale, redemption, buy-back or other means within the context of an overarching objective of protecting and creating value for the taxpayer as shareholder.’
UKFI has lived up to its mandate. It has consistently taken a permissive line on bankers’ bonuses, arguing that they are a necessary ‘incentive’. It took the occasion of Kingman’s departure to announce a further symbolic separation from the public sector, moving from the Treasury to the offices of the old owners of the Titanic. And it has now recommended to the chancellor that the time is ripe to sell off the rescued Northern Rock.
Why was the opportunity to exercise public control over the banking industry lost? With the exception of the Labour backbencher, Chi Onwurah, parliament has been virtually silent on the unaccountable status of UKFI. But this is hardly surprising. UKFI is a New Labour creation. In the 2008 crisis, the Treasury had no plan B. Faced with the job of managing the new holdings it could only turn for help to its friends in the City so assiduously cultivated during the Brown chancellorship. It is hard for the present opposition front bench to criticise what it brought to life.
But UKFI is part of a bigger story still. The City has changed. It no longer wields influence through amateurish old boy networks or clubland lunches. It is a highly skilled lobbying operation, which, even in the depths of a disaster such as the financial crisis, was capable of fashioning powerful instruments of defence against democratic government – like UKFI. n
Michael Moran and Karel Williams are members of the Centre for Research on Socio-Cultural Change (CRESC) at the University of Manchester. The latest CRESC report on the power of the City in the UK can be downloaded free from
www.cresc.ac.uk/publications

No sleep (or soup) for the homeless

admin — Tue, 14 Jun 2011 04:57:43 +0000

Westminster Council plans to use powers recently given to local councils to pass new by-laws banning people from lying down or sleeping in public places, depositing ‘materials used as bedding’ or distributing food for free in a half-mile radius in the Victoria area. Any of these offences will generate a £500 fine. The ‘no free food’ part of the by-law is the culmination of many years of animosity that the council has shown towards soup-run groups.
The by-law is just the latest attempt by Westminster to remove the poor from the borough. The infamous Shirley Porter, the city council leader from 1983 and mayor in 1990, played a significant – and illegal – role in cutting back social housing as a means of increasing the Conservative vote. After a near defeat in the 1986 local elections, Westminster’s Conservatives set about replacing council tenants, students and nurses with owner occupiers, who they assumed would vote Conservative. They targeted marginal wards, selling off council flats as they became vacant – a policy that paid off with handsome Tory victories in 1990.
The people they displaced were either housed out of the borough or in asbestos-ridden tower blocks in Labour-controlled areas. Even after the policy had been exposed, and Shirley Porter and her cohorts were being chased by the district auditor for a multi-million pound surcharge, Westminster Council still aimed to sell off 500 council homes a year.
What now is Westminster’s problem with soup runs? These involve small groups of volunteers, often but not always connected to churches, gurdwaras or other religious groups, who feed people on London’s streets. At least 50 groups are engaged in feeding people across London every night. The soup runs, unlike the services funded by the council, feed anyone who turns up, with no restrictions such as immigration status. Research carried out by the London School of Economics in 2009 (partly funded by Westminster) recommended that they should be better coordinated and distributed more evenly across London but recognised their value.
Under the government’s devolution of more power to local authorities, all Westminster has to do to pass a new by-law is ‘consult’ with local residents. The consultation closed on 25 March. The council received 500-plus responses and is currently looking at them to decide what to do next. That they have not pushed straight ahead with a vote can be taken as a victory for campaigners against the by-law. Westminster has a strong Conservative majority, and it is certain the vote will be won if it is put to the council.

If Westminster does decide to ban the distribution of free food, many groups have vowed to continue regardless. The police may not be keen on arresting church-attending pensioners from the suburbs. However, what will happen if the other part of the by-law is passed, criminalising homeless people for lying down or sleeping, is less clear. The area the by-law covers is not clearly demarcated, so it will be difficult to warn homeless people that they may be committing a crime.
There is already the archaic Vagrancy Act 1824, which allows police to arrest people should they be ‘vagrant’ – have accommodation available and refuse to go to it. In 2009 a freedom of information request by The Pavement magazine discovered that 1,220 arrests had been made in London under the Act. With the new by-law Westminster seeks to create an offence purely to make sure that someone can be arrested for sleeping in a public place because they have nowhere else to go.
Westminster has more homeless people then any other borough in London, with 1,600 people sleeping rough in the borough over the course of a year. Yet Homeless Link has estimated that its members, homeless charities, expect a 25 per cent average cut in funding and they will therefore have to reduce the number of homeless people they work with. At the same time, cuts in housing benefit will mean claimants will no longer be able to live in Westminster.
As more people become homeless, many for the second, third or fourth time, many will find their way back to Victoria’s streets, back to the day centres and soup runs. With a rock-solid Conservative majority on the council, only the strength of public opposition can stop them using this by-law to push the poor out.
To join the campaign go to www.housingjustice.org.uk

Discrediting Britain

admin — Mon, 02 May 2011 18:40:21 +0000

In December 2006, a little-known government department became part of a national scandal when Tony Blair told the Serious Fraud Office to drop a corruption investigation into how a British arms company secured a massive Saudi Arabian arms deal in the 1980s. The controversial deal had been insured by the British government through the Export Credits Guarantee Department (ECGD).
Opposition MP Vince Cable said at the time that the decision to drop the case ‘undermined the rule of law and Britain’s reputation’ and made a mockery of Gordon Brown’s fondness for lecturing the developing world on corruption.
Vince Cable is now in charge of the ECGD, answerable as it is to the Department for Business, Innovation and Skills. To date, little has been announced by way of reform.
The ECGD exists to support British exports by providing them with a sort of insurance. It normally supports large companies involved in big projects in the developing world. Over the past 10 years, support for fossil fuels, arms sales and aerospace has accounted for around 75 per cent of its work. Last year one single company, Airbus, received 89 per cent of ECGD support.
From arms sales to dictators through oil and gas pipelines to mega-dams, the ECGD has backed projects that have been implicated in corruption, environmental destruction and human rights abuses. Even worse, when deals go wrong, it is often the developing country that ends up in debt. The ECGD pays out on the ‘insurance’ claim from the British public purse, and the amount paid becomes a debt of the country where the project took place. Today, developing countries owe £2 billion of debt to the ECGD and have repaid £2.9 billion since 2005.
To really get to grips with the problem with the ECGD, you only need to look at some of its past projects. Indonesia currently ‘owes’ it more than £500 million, most of which accrued from the sale of British weapons to the brutal General Suharto in the 1980s and 1990s.
Suharto killed between 500,000 and a million people during his first year in office and conducted a 24-year occupation of East Timor. From 1994, he bought half of his military equipment from the UK, supported by the ECGD. Some of these weapons, including Hawk aircraft, Scorpion tanks and water cannons, were seen in use against civilians, including during the attack on Aceh. Yet the current Indonesian government is still paying for these tools of repression.
As fossil fuels become more difficult to access, export credits are again being used to protect ‘British interests’ throughout the world. That’s why the ECGD supported the Baku-Tbilisi-Ceyhan oil pipeline connecting the Azeri oil field in the Caspian Sea to the Mediterranean, passing through Azerbaijan, Georgia and Turkey.
Building the pipeline included arranging a series of controversial agreements between oil companies and the countries involved, which gave those companies special legal status. In essence, the agreements took priority over all national laws except the constitution, and prevented any new laws, including improvements in environmental or human rights laws, from affecting the companies’ profits. Amnesty International argues that these agreements ‘effectively create a “rights-free corridor” for the pipeline’.
Then there’s the hydro-electric power station in Kenya that cost four times what it should have done and produced only a fraction of the power promised. The Kenyan press called it ‘a stinking scandal’. The government is still paying.
In a recession, export credits are presented as a key way for the British government to support struggling industry and stimulate the economy. But what sort of economy is the ECGD promoting? It could help useful innovation. It could help create jobs in renewable energy sectors. But there isn’t much chance of that when it does not even have a policy on climate change.
While campaigners have given the ECGD a relatively easy ride in recent years, business lobbyists have been pushing back on the already poor standards that do exist. Early in 2010, the Labour government watered ECGD standards down. Smaller investments will no longer be screened for any sort of social or environmental impact – even on issues as significant as child labour and forced labour.
So ‘British interests’ are supported at the expense of human rights abuses, environmental destruction and corruption. If we want to avoid another generation of reckless projects and toxic debts, we need to challenge the ECGD now.

Read a new report and join the campaign at www.jubileedebtcampaign.org.uk/dodgydeals

Atos: tick-box tyranny

admin — Sun, 27 Feb 2011 12:41:47 +0000

Successive governments have fed us the line that they want to help those with disabilities to become ‘more independent’ by giving them the ‘incentive and opportunity’ to work. To help them in this noble aim, they have enlisted a company called Atos.
But this public-private partnership acts less like a professional carer aiding a client and more like a Metropolitan police officer tipping a disabled person out of their wheelchair.
Atos uses a computer system to assess disabled people’s ‘fitness to work’ for the Department for Work and Pensions (DWP). This assessment consists of tick-boxes on a screen, and it doesn’t allow for any medical or qualitative evidence. In fact it often undermines medical evidence.
Claimants complain they are asked irrelevant questions – for example, sufferers of depression are asked if they can load and unload a dishwasher. The system nets the company a massive £500 million from its seven-year contract with the DWP, but as you might expect with this sort of unscientific approach to assessment, the company’s record is terrible. There are 8,000 tribunals hearing ‘fitness to work’ appeals every month across the UK – and 40 per cent of decisions are being reversed.
In November, this poor treatment of claimants was recognised in the House of Commons following the release of Professor Malcolm Harrington’s report on work capability assessments. The report concluded: ‘Atos has damaged the public perception of medical assessments, and has also created a serious risk of maladministration of incapacity benefit checks.’
MPs called on the government to ‘act swiftly so that medical assessments are more localised, humane and sympathetic’. But the system remains unchanged.
Despite its poor record, Atos – a French multinational with offices all over the world – keeps on winning contracts. It has expanded quickly by buying up smaller companies, including KPMG Consulting and Sema Group in the UK.
In total Atos now employs 50,000 staff and operates in 50 countries. The company is deeply involved in military applications: it has contracts with the Chinese, French, Dutch and UK militaries.
Atos eats up tax revenue by ensuring that the firms it takes over lobby for and win government contracts – all the while setting up subsidiaries in tax havens, as Ethical Consumer magazine has revealed.
In Britain, Atos has 6,500 staff and is one of the top 20 suppliers to the state. As well as the DWP contract, it has two substantial IT contracts with the NHS, one with the Ministry of Defence Veterans Agency and one with the Scottish government, delivering more than 100 projects annually. Last year the NHS alone paid the firm more than £36.5 million.
Beyond IT, the company claims to be the biggest provider of medical services in the UK after the NHS, with 2,500 staff on its books. This includes direct provision of healthcare services, including two NHS walk-in centres in Manchester and Canary Wharf in east London, as well as GP and nursing services for NHS Tower Hamlets. It also provides various services to individual NHS trusts.
Atos was also at the forefront of the now defunct ID cards scheme. It advocated the use of automated fingerprint identification software, used by the US Department of Homeland Security among others.
As if all that isn’t enough, the company even provides software and communication technology for oil and gas exploration, and has been selected to provide the Dungeness B nuclear power plant in Kent with a new computer system.
With its tentacles in so many pies, it’s perhaps no surprise that Atos is doing pretty well. In the first quarter of 2010 alone, its revenue hit the 1,231 million-euro mark, while last year the company had revenue in excess of 5 billion euros.
After all, hoovering up taxpayers’ money is a lucrative business.

New radicals

admin — Tue, 30 Nov 2010 17:04:53 +0000

On entering the White House, President Obama promised to turn the US economy around with fiscal stimulus and job creation, alongside a progressive action plan for welfare reform. Most of the US, it seemed, was disillusioned with the Bush ‘tax cuts for the rich’ strategy for economic growth. Just two years later the Democrats face a powerful surge of conservative activism aiming to undermine those plans – and the government itself. Under the umbrella of the Tea Party movement, hundreds of thousands of ordinary Americans have taken to the streets, galvanised for action.
The first Tea Party protests took place across the US on 27 February 2009, with an on-air rant by CNBC commentator Rick Santelli eight days previously credited as a watershed moment. Discontent had been brewing for some time among the conservative middle class, who felt their too-high taxes were paying for the failings of others. A mood of suspicion towards the establishment prevailed.
The spring and summer of that year saw a wave of further protests. Activists united over demands for lower taxes and smaller government, based on a conservative reading of the US constitution. Obama’s Wall Street bailout and healthcare reform came under particular attack. To the Tea Partiers, Obama’s administration and the liberals are ‘the enemy’, bringing unacceptable ‘socialism’ into US politics.
The groups were organised locally and loosely affiliated on the internet. Soon two main lobbyist groups, FreedomWorks and Americans for Prosperity, stepped in to provide the movement with financial backing, education and training.
So is this really an example of a spontaneous, grass-roots uprising? Or is it, as Speaker of the House Nancy Pelosi put it, ‘astroturf [engineered] by some of the wealthiest people in America to keep the focus on tax cuts for the rich instead of for the great middle class’?
The answer is probably somewhere in the middle.
On the one hand, the movement undoubtedly thrives on the energy of its activists. ‘The Tea Party’s approach is similar to the early feminist and civil rights movements – amateur, nubile, and thus somehow more “real”,’ says Tim Stanley, a professor of contemporary US history at Royal Holloway University who has been researching the movement. But it is also rooted firmly in the 21st century: ‘It’s a new type of instant, plugged-in, mobile campaigning.’ It has been reported that the literature of the left, such as Saul Alinsky’s Rules for Radicals, is being studied by Tea Party activists determined to beat the progressives at their own game.
On the other hand, the movement has changed significantly in character since its inception. High-profile supporters have given the Tea Party both celebrity endorsement and Washington expertise. Along with ex-Republican politicians such as FreedomWorks chairman Dick Armey, media personalities such as Fox News host Glenn Beck have celebrated the movement and agitated its members. Sarah Palin has risen above the ridicule she inspired among the liberal establishment during her run for vice-presidency to become darling of the Tea Party – and with it, a renewed political force.
More controversial is the question of the movement’s wealthy financial backers. Cash injections for FreedomWorks have included, among others, $2.96 million from the Sarah Mellon Scaife Foundation, directed by the billionaire Richard Scaife. The Koch brothers, multi-billionaire owners of gas and oil conglomerate Koch Industries, have also spent millions through their organisation Americans for Prosperity. An investigative report by Jane Mayer for the New Yorker concluded that through Tea Party involvement, the Kochs have ‘helped turn their private agenda into a mass movement’.
The movement has also lost some independence through its gradual integration into the Republican machine. During the 2010 election cycle, Republicans learned the value of Tea Party support when more moderate Republican favourites lost out to candidates with Tea Party backing. But it remains to be seen how far this uneasy partnership can go. As Tim Stanley puts it, ‘The GOP [Grand Old Party] is still dominated at an organisational and money level by Martini-sipping, pro-business frat boys who can’t stand the proletarian nature of the Tea Party.’
Regardless of these tensions, the movement embodies a potent political mix. And despite this talk of oil billionaires and hyperactive talk show hosts, the Tea Party should not be understood as a uniquely American phenomenon. FreedomWorks has shown transnational aspirations in holding talks with British conservative campaign group the Taxpayers Alliance, and is reportedly urging right-wing European think-tanks to start activist wings.
It may be time for progressives on both sides of the Atlantic to dig out their dusty old copies of Rules for Radicals.

Back to business as usual

admin — Tue, 24 Aug 2010 17:38:35 +0000

When the post-election dust cleared and George Osborne moved in to the Treasury, one of his first acts was to set up the Office of Budget Responsibility. This latest addition to the roster of economic policy institutions had been trailed in Osborne’s Mais lecture, back in February. He claimed then that the Treasury had supinely provided first Gordon Brown, and then Alistair Darling, with whatever forecasts they wanted to support their political decisions.

So, he announced, from now on, the Treasury’s forecasts would be rigorously vetted by an independent body, the new Office for Budget Responsibility (OBR) – and, as a result, the chancellor’s public credibility would be restored.

Trailed as an innovation on a par with Gordon Brown’s 1997 decision to set up an independent Monetary Policy Committee within the Bank of England, the OBR looked like it could be a potentially useful body.

Two months on, however, Osborne’s cunning plan seemed in tatters. First, after a Treasury leak raised serious questions about the employment forecasts presented in the coalition’s emergency budget, the OBR rushed out some fresh figures conveniently in time for Cameron to head off the critics during prime minister’s question time in the House of Commons.

Shortly after, it was announced that the OBR’s chief, former top Treasury adviser Alan Budd, was going to resign after only three months in post. It also turned out that for all its vaunted independence, the OBR had set up shop within the Treasury, a few doors down from the chancellor.

Was this another political fiasco, on top of the abrupt departure of the first coalition chief secretary David Laws? Had the unexpectedly self-confident Osborne shot himself in the foot?

Well, not really. It turned out that Budd had all along only intended to head the OBR for three months in order to get it established. As for the physical location of the OBR, one might as well argue that the chancellor’s residence at 11 Downing Street meant that the prime minister could easily keep him on a tight leash. Try telling that to Tony Blair.

However, the establishment of the OBR does raise some important issues about how economic policy is made in a capitalist democracy.

Back in 1944, the Polish socialist economist Michal Kalecki famously predicted that as public spending became more and more important, governments would be tempted to engineer a boom towards the end of their term of office in order to get re-elected. Once back in power, they would then slam on the brakes and restore the fiscal balance, only to start spending again as the next election loomed. He called this ‘the political trade cycle’.

To avoid this political manipulation, a fiscal authority completely independent of the government of the day might seem to be a good idea – but it would also make ministerial government largely pointless.

Osborne’s OBR is an attempt to shore up the chancellor’s credibility by at least ensuring that his plans are based on ‘reliable’ forecasts of where the economy is going. But reliable forecasts can’t be made in a capitalist economy.

True, they are based on statistical models of how the economy has behaved in the past. But economists have fundamental disagreements about past economic behaviour, and in any case a capitalist economy is not like a machine that functions on the basis of stable linkages between its components.

As we know only too well from the credit crunch of 2007-08 and the ensuing crisis, the behaviour of financiers, businessmen and other economic actors – even politicians – is fundamentally unpredictable. Someone, therefore, has to make what amounts to a set of reasonable guesses.

The real story about the OBR concerns these guesses. Osborne’s budget projections over the period to 2014 are based on growth of 1.2 per cent this year and 2.6 to 2.8 per cent thereafter, despite falling public spending, notably a halving of investment. Yet an unprecedented private sector recovery will apparently reduce the number of unemployed people claiming benefits, from 1.6 million last year to 1.2 million. To most commentators, this is pie in the sky.

In addition, the profits of the financial sector are supposed to grow at nearly 9 per cent this year and 6 per cent a year thereafter, while house prices go up on average nearly 4 per cent per year. So forget about reining in the City and making housing more affordable: it’s back to business as usual – until the next crisis.

Hugo Radice is a political economist and visiting research fellow at the University of Leeds