Bigwigs vs the electorate; Miliband takes a stand

By Nathan Lee, Politics and Finance writer 

Ed Miliband in The London Economic

Why building more houses and reducing fuel poverty isn’t bad for the economy.

Ed Miliband’s ‘attack on business’ has been criticised by a swathe of private firms and business bodies; but although they make the headlines, they’re not the electorate, they’re not the vulnerable and they’re not the ones that need protecting.

CityAM, The Telegraph (surprise, surprise) and other centre-right, business-orientated publications have sensationalised Miliband’s left leanings in his Labour conference speech as being “a recipe for disaster” and “an extraordinary assault on the market”. Their sentiments are backed by business groups and prominent corporates, such as Centrica, who carry substantial media weight and see their interests at stake.

But isn’t it about time someone stood up for the people not making the headlines? Thanks to a cold winter, Centrica’s profits rose nine per cent to £1.58 billion for the 12-month period ending 30 June 2013, dropping some 4.5 million homes into fuel poverty. These firms have big voices but icy-cold corporate hearts, and Miliband looks resolute in the face of their media bullying.

The other headline-making policy moves emerging from the Labour Conference very much sing to the same tune. Big business aren’t the priority, Ed Balls announced, and building homes is more important than inflating the market, once again, to unsustainable levels. If Labour gets its way in 2015 we could see a traditional ‘Robin Hood’ leader guide the country to equality and away from the damaging levels of capitalism that has compromised our economic integrity. But unless the electorate turns out, they will be a victim of their own success.

Small business

The primary concern of big business is the headline rates of tax (corporation tax, VAT etc), whereas business rates are more important at the smaller end. Under Conservative plans the UK’s headline rate of corporation tax will drop to 20 per cent in 2015, potentially attracting overseas business but undoubtedly starving the Treasury of hundreds of millions of pounds.

Competitive tax rates attract companies which don’t like paying tax. Having Google, Amazon and the likes establish headquarters in the country sounds like great news, but these firms are among the most notorious tax evaders in the world. SMEs account for 99.9 per cent of all private sector businesses in the UK and most operate with far more integrity that the large corporates. We must ask who is really propping up the economy?

Housing Crisis

The next time you take a walk through Chelsea or Kensington remember to take a torch. Some of the capital’s most expenses districts look like they’re preparing for the Blitz with house lights off and properties left empty.

That’s because the houses, inflated to unsustainable levels, are filled with overseas buyers interested in securing their assets rather than securing a place to live. Britain, and its capital alike, are facing a housing crisis of epic proportions, and the only way to quell levels of inflation is to build.

Labour will build 200,000 homes a year by 2020, which will go some way to offsetting a housing crisis which is being created by the Tories, who are building at a lacklustre pace. Thanks to a swarm of overseas investment and a lack of properties, it now takes the average family 22 years to save for a typical deposit on a home, compared with three years in 1997.

Fuel Poverty

The Labour leader has also pledged gas and electricity bills would not go up for 20 months if he wins the 2015 election, writing to the big six suppliers warning that without changes, taxpayer-funded guarantees to energy firms might not be sustainable.

The ‘big six’ – British Gas, EDF, E.On, npower, Scottish Power, SSE – made total net profits of £2.22 billion in 2010, £3.87 billion in 2011 and £3.74 billion in 2012, yet continued to hike up energy prices up by substantial amounts. British Gas owner Centrica has threatened to quit the UK over Labour’s price freeze plan. They can throw their weight around as much as they like, but their high school bullying shouldn’t distort our perception of reality; they won’t budge.

Hollande Test

Miliband will be warned not to follow in the footsteps of François Hollande, who has taxed the living daylights out of the French rich, prompting many of them to move overseas, often to London. But once again, we must question how much value these people are to the economy, and whether they deserve to be taxed proportionately.

Billionaires add little economic value to the economy. They consume proportionally the same amount as wealthy people and inflate asset values, such as housing, to unsustainable levels. It’s because we attract billionaires that we have a housing crisis, particularly in London, and with most of their assets secured in the BVI or Cayman Islands, the fiscal impact of superrich people is minimal.

Electorate

We are the 99 per cent, but only 65 per cent of us vote. As good as Miliband’s intentions are, I question whether he will ultimately be a victim of his own success. Targeting small businesses (99 per cent of private sector), people struggling with their fuel bills (4.5 million homes) and those of us looking for a place to live is admirable, but the sad reality is that not enough people vote to make this a viable political goal.

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