Newspaper Ownership

The revelation of The Telegraph’s lack of coverage of HSBC’s illicit tax evasion business in Switzerland did not come as a surprise. The ownership of a national newspaper is attractive to multi-millionaires with assets to protect and other business interests to promote. Rupert Murdoch (Times, Sun) the Barclay Brothers (Telegraph), Lord Rothermere (Mail) and Richard Desmond (Express) don’t own their newspapers for philanthropic reasons or even for the profits they generate. They own them for the influence it gives – influence to protect their other commercial interests and to promote and project their political views. This projection isn’t even primarily at their readers. It is directed at the established political parties and the governments they form. This is clearly undemocratic. But what is to be done?

One solution would be to require every national newspaper to be owned by their readers on a one-member-one vote basis and to limit their dependency on commercial advertising. This is the model employed by the Morning Star and it works well. It has enabled the Morning Star to secure a readership well beyond that of card carrying members of the Communist Party. The Morning Star still faces a struggle for survival, largely as a consequence of being shunned by the other mass media, including the BBC. The model, nevertheless, has been shown to work and the resulting loyalty of its reads is far above that of any other national newspaper.

What of newspapers that don’t wish to re-structure as reader co-operatives or to limit their dependency on advertisers? Should they be shut down? Would that not be undemocratic?

In the internet age, the contribution made to democracy by large, privately owned newspapers is questionable. Shutting them down might well be justified in some situations – as it was, for example, in Cuba after the revolution, although the actual course of events there was more complex, having been triggered by an exodus of newspaper owners and editors to Miami and the election in their absence of new editors by newspaper workers. In less revolutionary times, the continued publication of newspapers not owned by readers could be tolerated if they were subject to a non-linear tax, not on the newspaper’s profits, which are often small or even negative, but on their annual revenue, circulation and advertising and losses. At least the benefits accruing to the owners would then be taxed and, if supplemented by a requirement that owners must themselves be resident and domiciled in the UK, at least some measure of fairness would be established. This idea is briefly discussed in the pamphlet From Each According to Their Means from the Economics Commission of the Communist Party that I mentioned last week, with a proposal for how the non-linear tax could be constructed dealt with in the supporting paper underpinning the pamphlet.

THE HOUSING CRISIS

House prices in Croydon in 2013 were 7.57 times average local earnings, more than twice the same affordability ratio in 1997. Yet the Bank of England has instructed banks to lend no more than 4.5 times annual salary. This means first time buyers in Croydon with average local earnings will have to save three times their annual salary to find the deposit. They will then face interest repayments that would consume more than half their pre-tax salary when interest rates exceed 11% – as they are likely to do when the government’s policy of quantitative easing ends.

Looking for a home in an adjacent borough won’t help. The affordability ratios in Sutton, Bromley and Merton are 8.56, 9.99 and 11.29 respectively – and their house prices tend to be higher.

The government’s solution is the Help-to-Buy scheme. This enables first time buyers to put down a deposit of ‘only’ 5% on homes costing up to £600,000. That’s great for wealthy first time buyers (and the banks) but not much use to the rest of us. In order to buy a two bedroom flat in Croydon costing, say, £220,000, an income of £49,000 and, even with the government scheme, a deposit of £11,000 is required. Meanwhile the Help-to-Buy scheme is helping to fuel mushrooming house prices.

What are the alternatives facing young people desperate for housing? There is little prospect of a council house: the stock is still being eroded by Right-to-Buy and waiting lists are long and have tough criteria that are tending to get tougher. In Croydon 5,015 were on the list at March 2014, a significant proportion of who were officially classified as homeless[1]. The despicable bedroom tax is symptomatic of the shortage of council houses. Then there is shared ownership and the private rented sector. The former is a useful compromise between renting and buying but monthly outgoings can be high. The latter is largely unregulated, expensive and offers almost no security of tenure. Finally, for those with secure family backgrounds, there is living with Mum and Dad. Currently a quarter of all 20 to 34 year old working adults in England – 1.97 million people – are living with their parents[2]. Hardly ideal!

Labour and the Tories continue to make claims about the number of affordable houses that will be built if they are elected, but the private sector makes more money from building larger and luxury homes. Their claims are spurious and, even if fulfilled, would not be sufficient to house our growing population. So how would Communists do things differently? As Marxists we see housing as something that should be cherished for its use value, not its exchange value. For us a house is a home, not a slice of capital on which to speculate in the hope of passing on some capital to our heirs. Our strategy as communists would therefore be to resume the building of council houses for those who want them, and for others who value a sense of ownership and security, we would seek to uncouple ownership from speculation, thereby make homes more affordable. This could be achieved by land nationalisation, but much the same effect could be achieved, at least initially, with a Land Value Tax (LVT). LVT ensures that the community at large benefits from increasing land values – the primary cause of increasing house prices. This is as it should be. The gains home owners accumulate don’t come out of thin air: they represent transfers of wealth from those who don’t own houses to those who do. If not eaten up in care home fees, these unearned gains end up as inherited wealth – inherited in many cases by the same people who couldn’t afford to buy their own home when they were younger.

If you wish to find out more about LVT, have a look at the pamphlet From Each According to their Means I mentioned last week[3] .

[1] Freedom of Information Request https://docs.google.com/document/d/1T1dlZ0QH2zhW5jyW1A4ZG1RS_RqhW5aIGVPhkoA-0n8/edit?pli=1

[2] http://england.shelter.org.uk/news/july_2014/

[3] Available for £2.50 including post from the Communist Party, 23 Coombe Road, Croydon CR0 1BD, http://www.communist-party.org.uk

Businesses don’t vote!

The Public Accounts Committee (PAC) concluded this week that PWC, otherwise known as PricewaterhouseCoopers, was guilty of promoting tax avoidance schemes on an “industrial scale”. The seriousness of this finding is difficult to over-estimate:  PWC is one of our ‘Big Four’ business consultancy, accountancy and auditing firms. Their businesses have been constructed on the back of statutory audit, essentially a monopoly granted by government to ensure the truthfulness and fairness of the published accounts. Audited accounts are the bedrock on which business is taxed, albeit after a multiplicity of adjustments required by our tax legislation.

The PAC’s finding is a timely one, coming at time when the Tory press had been railing against Miliband’s modest criticism of tax avoidance by big business. These press attacks, claiming that (horror of horrors), Labour is ‘anti-business’ have been made to look pretty silly. Miliband’s response, that Labour will move within six months of being elected against tax havens in Crown dependencies, is welcome. Perhaps he has been reading the recent discussion document from the Economics Commission of the Communist Party on how our tax regime should be reformed[1]. If so, he will now know how to respond to the malign influence of PWC and the other ‘Big Four’ accountancy firms in the UK. The Commission proposed:

  • A ban on the revolving door between HM Revenue and Customs and these firms and on them working on government tax policy
  • An end to secondments between the Civil Service and the Big Four
  • A ban on government contracts going to any firm that devises aggressive tax avoidance strategies – no more running with the hare and the hounds.
  • Legislation to abolish limited liability partnerships, the form employed by the Big Four to conceal what they are up to.
  • Complete separation between the auditing and consultancy businesses – divestment, not token walls
  • A statutory requirement to publish accounts to the same level of disclosure required of companies

Endorsing these recommendations would be seen as a declaration of war on the Big Four and would trigger a further onslaught on Labour in the Tory press. But perhaps Labour is at last waking up to the fact that, short of capitulation to a Tory agenda, they are going to receive such an onslaught whatever they promise. Most encouraging of all, perhaps it has at last dawned on Labour that businesses don’t vote – people do.

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[1] From Each According to their Means, £2.50 including postage from the Communist Party, 23 Coombe Road, Croydon CR0 1BD  or from http://www.communist-party.org.uk/shop.html