Thatcher’s Legacy: The Something-for-Nothing Culture

Photo: Byzantine_K, Creative Commons

Photo: Byzantine_K, Creative Commons

‘The something-for-nothing culture’ is a phrase used by the Right to bash those who live in areas with job shortages, or whose pay does not lift them out of poverty, or who have disabilities and who claim benefits to which they’re legally entitled. It’s a favourite of Iain Duncan-Smith’s – he of the Universal Credit shambles and the bedroom tax. Slandering the poor goes down well not only at Tory Party conferences, but also in newspapers owned by super-rich press barons – i.e. most papers – and, judging by continuing support for the Conservatives, by many of their readers.

It’s a bit rich, not simply because the phrase generally comes out of the mouths of a privileged minority who ooze entitlement from every pore, but because, starting with Margaret Thatcher, neoliberal governments (Tory, New Labour and Condem) have created a something-for-nothing culture of their own for the better off and especially for the rich.

While she preached against inflation, Thatcher’s deregulation of The City fuelled inflation in share and property values, benefitting the better off. Freeing up credit for buying houses inflated their price, as did restricting the creation of new social housing. An increase in the price of assets like houses may make their owners better off on paper in terms of financial wealth – potential claims on goods and services others have produced for sale, but it does not reflect any additional wealth creation, so ultimately the increase must come at the expense of others, including those unable to afford to buy such assets. Sometimes house-owners who benefit from such gains feel a bit guilty about it – quite rightly – though many seem to think it’s a reward for some kind of contribution they’ve made, or a mark of respectability, and hence OK. But it’s something-for-nothing.

As Shelter, the UK charity for the homeless, put it: “If food prices had risen at the same rate as house prices over the last 40 years, a chicken would cost £51.18. Four pints of milk would be £10.45, and a loaf of bread would set you back £4.36. We wouldn’t accept this with food. So why accept it with housing? Unless something changes, a generation will struggle to afford a home of their own.”

And that’s exactly what’s happening. London’s housing market is the most extreme example of the neoliberal something-for-nothing culture. The rich and super-rich are buying up properties merely as financial investments – not to live in and use, but to rent out to others and to enjoy the windfalls in capital gains. Hence it’s improperty.

Similarly with shares: over the last 30 years share prices have risen, not because of economic growth but simply because demand for shares grew with the rise of big institutional ‘investors’, driven by increasing numbers of people taking out private pensions and financial ‘investments’, while the supply of shares was fairly static. Rising share prices in turn drew in more buyers, seeking to enjoy these gains, which only pushed the prices still higher. Buying existing shares in a company just transfers money to those who previously held them; it need not result in any real investment by the company, so shareholders’ dividends and speculative gains were something-for-nothing. Likewise with the privatization of public utilities. Those people who bought the new shares and sold them off to big companies got windfalls. In the process they put public utilities beyond effective public control and handed them over to private companies who took advantage of the monopoly power they afforded and soaked customers.

Photo: Byzantine_K, Creative Commons

Photo: Byzantine_K, Creative Commons

Then there was the great hand-out to the rich in the form of tax cuts and letting tax dodging rip. Thatcher cut the top rate of income tax wfrom 83% to 60%, and increased VAT, which relatively has a bigger impact on low incomes, from 8% to 15%. But that’s not all. Corporation tax has been cut from 52% in 1980 to 21% now. ‘Business-friendly’ means ‘business-compliant’: willing to give business whatever free-ride it wants – or is prepared to pay for in party funding. Remember, at the last election, the Conservative Party got 50% of its funding from the financial sector. Among the important policy changes won by finance lobbyists in Whitehall and Westminster in 2012 were:

  • The slashing of UK corporation tax and taxes on banks’ overseas branches, after a lobbying barrage by the City of London Corporation, the British Bankers’ Association (BBA) and the Association of British Insurers. The reform will save the finance industry billions.
  • The neutering of a national not-for-profit pension scheme launching in October that was supposed to benefit millions of low paid and temporary workers.
  • The killing of government plans for a new corporate super-watchdog to police quoted companies.

UK tax expert Richard Murphy estimates tax avoidance (not illegal[1]) at £25billion and tax evasion (illegal) at £70 billion, or combined £260 million per day; that’s 260 times estimated benefit fraud. Many major multinationals each employ hundreds of lawyers and accountants to work out ever more ingenious ways of avoiding tax. Yet in 2009, the UK’s tax authority, Her Majesty’s Revenue and Customs (HMRC), employed only 600 workers to check the affairs of 700 companies, and only about 100 of those dealt with tax avoidance. In 2011, its budget was cut by £3 billion. But then, back in 2005, Gordon Brown, the Chancellor of the Exchequer had obsequiously reassured the Confederation of British Industry that the government would apply ‘not just a light touch, but a limited touch’ to financial regulation, and to tax too. He went to reassure his audience that he rejected the old assumption that business, unregulated, will invariably act irresponsibly. [Was he just remarkably gullible or bought off?] HMRC were then making job cuts of 25,000. This was completely false economy, for in 2008 its so-called ‘large business service recovered 92 times its costs’, while ‘the “special investigations section” fighting the most complex avoidance cases had yielded 450 times its costs.’

Photo: Mariscat, Creative Commons

Photo: Mariscat, Creative Commons

We’ve seen this kind of thing before:

“Where the labourers and artisans are accustomed to work for low wages, and to retain but a small part of the fruits of their labour, it is difficult for them, even in a free government, to better their condition, or conspire among themselves to heighten their wages. But even where they are accustomed to a more plentiful way of life, it is easy for the rich, in an arbitrary government, to conspire against them, and throw the whole burthen of the taxes on their shoulders.”

(David Hume, 1752)

It’s time to throw the ‘something-for-nothing’ tag back at the Tories and their funders and supporters.

[1] To say it’s not illegal, doesn’t necessarily mean it’s legal: it includes avoidance schemes that haven’t yet been assessed in a court of law. (See my book, chapter 16).2014-09-24 15.41.59


Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s