Summary: what has happened in the US and what happened with Brexit have much in common. There is a worldwide revolution underway that should work greatly to the advantage of Labour. The right-wing Conservative UK government will not be able to deliver what the poor and middle-class left-behinders are demanding. With a coherent well worked out policy package Labour could do that. Sadly, there is little sign that this is being developed. An outline of what that radical centre-left package might be is given

Labour must recognise that Trump supporters in the US have a great deal in common with Brexit supporters in the UK. The Brexiteers and the triumphant right-wing media have occupied the political sphere in the UK and are using it to impose a worryingly right-wing flavour on what happens next. The left-behinders in the UK will not benefit from a hard Brexit. Labour must therefore reposition itself more clearly to address the concerns of these people who in the past have been strong Labour supporters. It must always emphasise that Labour are leading the way towards a fairer society.

Immigration is important to them because there are many jobs in the UK that are poorly paid with mediocre working conditions. We have a society that people working full-time with available tax credits can still be in poverty. Our schools produce children badly educated and ill-equipped for the 21st-century. The NHS is under appalling pressure because of lack of staff at least in part because training places are not available for the large numbers of student applicants.

Above all it is the economy that hurts them and the way that it has been distorted to their disadvantage. Conservative cuts to social services and the NHS, education and local council facilities are all very obvious to those in poorer areas with little chance or hope of a better future for themselves and their children. Labour must make much more of the reality that a great deal of the unhappiness in the US and in the UK is driven by this inequality and apparent lack of concern by the centre for what is happening in the poorer regions. The present Conservative government leaning increasingly rightwards is unlikely to address these demands despite the fine words of Theresa May when she took over as Prime Minister.

Labour needs to establish a detailed economic and social programme that will convince traditional Labour supporters that it understands what they want and has a plan to deliver it. The plan has to be comprehensive and convincing. It has to be structured so that it is relatively immune to the inevitable attacks from the right-wing media and the right-wing of the Conservative party. Articulating a plan like this is something that right-wing Brexiteers will have great difficulty in doing, particularly as the hard Brexit they seek will be economically damaging particularly to the poor.

Outline of a strong, radical programme for Labour.

The key question is where is the money coming from? The plan must start with radical changes to the current taxation system if the plan is to be credible. The use of the Land Value Tax (LVT) is key to unlocking the £6 trillion held in residential property in the UK and the just under £1 trillion held in commercial property. This property has increased in value by about £330 billion per annum averaged over the last five years. A 20% tax on that growth will generate £66 billion per annum for the Exchequer. Those who are cash-poor can accumulate their LVT until they can afford it or the property is sold.

Addressing widespread corporation tax avoidance is a critical part of making the UK a fairer society. This could either be in the form of an infrastructure charge (see: http://tinyurl.com/h9wjn25) or the Alternative Minimum Corporation Tax suggested by Richard Murphy (see: http://tinyurl.com/ho6yy73). These similar approaches could yield perhaps £17 billion per annum. Together with LVT, such an approach would transform the balance sheet of the UK government.

The minimum wage should be progressively raised to the point where a family with one full-time wage earner is guaranteed to be above the poverty level, without needing help from tax credits. A program to require significant improvements to the minimum working conditions must be developed together with the ability of the state to enforce those regulations.

We must invest significantly in our education system and look carefully at countries that manage to produce much better outcomes than the UK. For example, in Finland attainment is very good indeed on an international scale. Yet in Finland children spent less time in class, have no homework and no interminable exam package. They are much less stressed and worried that our children are and we must think very carefully about how this can all be improved. At the tertiary level, Tony Blair dismantled the network of technology colleges. Universities were encouraged to accept many more students for university degrees further devaluing the importance of technical and vocational qualifications. We are very short now of skilled people in industry, construction and many other areas. This was not the case 10 years ago. The Technical College network need to be reinstated and the universities encouraged to emphasise qualifications in areas that are important for the UK and discourage those in areas where their effect on job prospects of the students is slight. Fees should be substantially reduced and indeed could be eliminated for subjects such as STEM and medicine.

A major programme of housebuilding must be introduced with the emphasis on building substantial numbers of low-cost, genuinely affordable houses. For a variety of reasons (see: http://outsidethebubble.net/2016/09/27/a-fairer-deal-solving-the-housing-crisis/) it is probably essential to use prefabricated construction methods partly to produce houses at the rate we need while maintaining top-quality and keeping prices down.

Money needs to be put into infrastructure development, not vanity projects like HS 2, but into programs to improve rail, road and other infrastructure components. Part of that money should be dedicated to improving infrastructure in regions that are particularly affected by being in the British rustbelt. In particular these regions should be a priority for the introduction of good quality high-speed Internet connections made available through wide coverage council Wi-Fi systems.

Yet it is undoubtedly immigration that needs to be faced up to. As long as Labour fails to address seriously the concern of so many natural Labour supporters about immigration they will simply not be convinced by the other parts of this package. Short-term immigration by students should be removed from the count. The great majority of jobs taken by foreign-born workers are in skilled occupations and sectors even though these workers are often qualified for significantly better jobs. The need for these workers would be reduced substantially by a program to train British students in these areas. It is ridiculous that we have a shortage of nurses, for example, when 100,000 applicants have to compete for about 20,000 places and our hospital managers spend time overseas trying to recruit medical staff that Third World countries can ill afford to lose.

Making the least well-paid full-time jobs in the UK able to take an employee and their family out of poverty would be the most effective way to help people move away from benefits. All these programs would allow net immigration into the UK to be reduced substantially. However we must realise that half the immigrants to the UK are from outside the EU and present policies and demands from within the country have failed to reduce that despite repeated promises by the Conservatives. Labour must work tirelessly to counteract the Conservative message that it is immigration that makes our regions so impoverished as they impact health, education and social care provision. The country simply cannot function without a significant number of immigrants and at some level it doesn’t really matter where they come from.

Surprisingly, the success of Trump makes a more radical approach to the running of an economy more appealing. Many European countries have elections in the near future (Czech Republic, France, Germany, Luxembourg, Netherlands, Norway). We must expect that within the EU there will be increasing pressures from the same constituents that delivered Brexit and Trump. The realisation that the financial crash of 2008 has badly affected the prospects of many poor and middle-class families around the world is likely to be widespread. Concern about immigration is also widespread and it may be that if the EU starts to look more seriously at the problems generated by unrestricted internal movement. Indeed its reform might provide the basis of the new relationship to be negotiated between the UK at the EU after Brexit.

This is the time to produce a comprehensive plan that is articulate and clear, with all the sums properly worked out and a clear idea in what order it is to be implemented. Labour has a great opportunity in a time of revolution and must do what it can to drive itself forward.

Summary: The rejection of CETA by the regional government of Wallonia has demonstrated just how difficult it is to establish a multinational trade deal with the EU. It has also rejected TTIP, and TiSA is also in trouble. The idea that the UK with its complex and rather mixed history with many parts of the EU will do better than Canada is preposterous.

The regional government of Wallonia has rejected the Canadian-EU trade agreement (CETA) for reasons that appear to be technical but actually are substantially due to local politics. The Belgian Socialist party once had a significant membership of the Belgian Parliament but it has declined and no longer has seats there. It is still moderately strong in Wallonia but is now challenged by a rapidly growing Communist Party. The key thing here is that CETA is being resisted for local political problems as much as for technical issues.

Any trade agreement negotiated by the UK with the EU will also need to be ratified by over 30 national and sub- national legislatures across Europe. Each of these legislatures has subtle national problems that we are mostly unaware of. The ability of any party in any of these legislatures to scupper a trade agreement for entirely local political reasons will be a continuing barrier. There are also increasingly widespread and popular movements against trade deals such as CETA, TiSA (less well-known: The Trade in Services Agreement that is currently being negotiated by 23 members of the World Trade Organisation)  and TTIP (The Transatlantic Trade and Investment Partnership which is effectively now dead because of such opposition).

The Brexit cheerleaders are confident that everyone in Europe is essentially well disposed towards the UK. Have we all forgotten President De Gaulle originally saying “Non” when Britain first tried to join the EU? Unfortunately there are plenty of groups within the EU who have been snubbed or insulted by leading Brexiteers such as Boris Johnson and others, as well as having many years of a complex history with the UK.

The people that the EU will be forced to deal with as part of the Brexit negotiations have for many years propagated myths about the EU that coloured the British view of the EU. For many within the EU, it is an aspirational project with long-term goals of integration and cooperation that are viewed very favourably. Those in the UK that have consistently distorted and misrepresented the EU have built up a significant backlog of resentment. The view from within the EU is that Britain has never really committed itself to Europe. The chance of the UK negotiating a satisfactory trade agreement with the EU now seems completely negligible.

The choice is simple: stay in the EU to give access to the single market and accept free movement, or get out of the EU and accept that the WTO trade rules are what we will have. Our economy in so many ways will be damaged by this. Jobs will be lost, growth will almost certainly reverse and many of our key services such as the NHS, social care and education will be further eroded. The referendum result has articulated a widespread dissatisfaction with the political establishment and that has been registered if not accepted. However the narrow vote to Leave was at least in part a consequence of extraordinary lies propagated by the Brexiteers. The deal that the British people are likely to be offered by this government will be so different from what was promised that it has to be put again to the people.

Summary: Multinational corporations have too many options of avoiding paying corporation tax. So let’s forget about it and introduce an infrastructure charge based on the proportion of audited profits worldwide. This is an updated version of an earlier post (23/09/16) on this site giving estimates of the likely yield of such a charge. Again updated (20/10/16) to reference Richard Murphy’s Alternative Minimum Corporation Tax proposals. GDP figures updated 13/03/17. Further updated on 3/04/17 in light of Google’s undeclared turnover in the UK.

Multinational corporations have an extraordinary range of options for moving profits away from where they are actually made to where they can be taxed minimally. An OECD report today said five countries reduced their tax rates for corporate profits in 2015 and another four announce planned reductions for the future. There is widespread anger about the unbelievably low rates of taxation for some of the largest companies in the world such as Apple, Vodafone, Starbucks and Google. These low rates keep profits high and benefit the wealthy. At the same time VAT rates throughout the OECD are gradually rising, from 17.6% in 2008 to a record high of 19.2% in 2015. VAT rates disproportionately hit the poor.

The capacity of corporations to manipulate their accounts so that they pay essentially no tax is limitless. They employ accountants and lawyers of great skill who are always several steps ahead of governments. Governments are extraordinarily slow at agreeing anything so little happens and profits continue to accumulate. What is needed is a completely different system that is relatively immune to corporate fiddles, is fair and returns the proper amount to each nation.

Every company no matter how big has to produce reliable accounts. They all have shareholders and the legal penalties in most jurisdictions for falsifying these accounts are very serious indeed. We can start with these accounts as being something reliable and dependable and relatively honest. The second piece of information that we can get fairly easily is what fraction of each company’s turnover takes place in the UK (or indeed any other country). If Apple sells 5% of its output in one year into the UK then we are looking at 5% of the total profit of Apple worldwide as the base to talk about. We must forget entirely about corporation tax but instead make an “Infrastructure Charge” which might coincidently be levied at what is deemed to be an appropriate UK corporation tax level, currently 20 %. The usual concern about high tax levels is that it discourages investment in a country. That it is claimed is why Apple is now resident in Ireland. However the Infrastructure Charge is independent of where anything is located, it simply is a crude but reliable method of coming to a fair charge. Of course each company paying the Infrastructure Charge can deduct that from their overall tax bills in their accounts as usual. However it does not require any agreement between governments in other countries. The only way that a multinational can avoid paying the Infrastructure Charge is by withdrawing from that market and foregoing the profits it already makes in that area.

How much money is involved? It is quite difficult to put this all together but a recent report by McKinsey & Co suggested that global corporate after-tax operating profits were in the region of US$8 trillion. The UK has approximately 1% of the world’s population and 3.5% of the worlds GDP. The UK proportion of those profits is therefore $280 billion. Let’s be generous and suppose that half of that has already been properly taxed and the other half has magically vanished to some more favourable tax haven. In that case 20% of $140 billion is about £28 billion. It is difficult to exaggerate how much difference that would make to the British NHS! To think this is been going on for many years could easily make someone quite angry.

Amazingly, companies like Google have no compunction about lying through their teeth (see: http://www.itv.com/news/2017-03-31/google-accused-of-being-less-than-transparent-after-revealing-latest-uk-tax-payments/ ). Recently Google paid a small amount of tax on their UK turnover which they stated as being £1 billion. However the global Google turnover declared by the company that the UK turnover was actually £5.65 billion. Under the AMCT proposed here, Google would pay closer over £1 billion, rather than the £36.4 million it actually coughed up.

The Infrastructure Charge as described above is fair and reasonable and will produce a very substantial income stream for the Treasury at a time when the great majority of the British people want to see much greater fairness in the way our society operates and the way that each of us pays our dues as we should and as we can afford.

Readers may be interested in the post from Richard Murphy on 30 September 2016 with a link to his article on Bloomberg dated 29 September 2016 entitled “Time for an Alternative Minimum Corporation Tax?” which you can find at: http://tinyurl.com/ho6yy73 . It is also interesting that the US does already have a version of AMCT which may well be why Donald Trump’s tax returns for 2005 show that he paid quite a decent amount of tax.

Summary: Theresa May in Birmingham claims the Conservatives are working for everyone but her policies, particularly on Brexit, are much more right-wing. Widespread concern about hard Brexit has caused further falls in the value of sterling. Labour has yet to articulate its own approach to the Brexit negotiations. Unless it does so, and does so quickly, the entire agenda will be set and dominated by the Government.  In order to get discussion rolling, here is a strawman proposal of what might be at the core of Labour policies on Brexit.

The first move should be, as proposed by Theresa May, to convert all EU legislation into UK law. This will allow everything to continue running much as it does. It allows Parliament to scrutinise any changes but it will be critical to ensure that the legislation is not restructured so that the dilution of those provisions cannot be implemented by executive order. All EU laws that were passed by Parliament should only be changed after proper parliamentary scrutiny.

As a matter of urgency we need to unambiguously guarantee that all EU residents already working in the UK will be allowed to remain. The uncertainty for them and indeed for their employers cannot be permitted to drag on for years. The view of Liam Fox, who simply looks upon real people who have made their lives in the UK as just another negotiating card is outrageous.

There are two main areas which need detailed policies, the single market and immigration. In a surprisingly middle-of-the-road piece on the Conservative Home website, Peter Lilley, the former Secretary of State for Trade and Industry and for Social Security suggests a very hands-off approach to the single market. Basically he suggests not making unnecessary work for ourselves. Simply declare that we will happily welcome all imports into the UK from the EU as they are treated under the current arrangements and in return we expect to export from the UK into the EU in the same way. Individual countries within the EU or indeed individual business sectors or other interests that are unhappy with this can raise the matter and negotiations, if appropriate, can then proceed on those specific matters. The great majority of trade is unlikely to be particularly contentious. Even if we had to leave the single market relatively little would change. Average tariffs into the single market are only about 4%, and more like 2.4% for manufacturers, much less than the 12-15% slump in sterling since the Referendum.

The worry about passporting rights comes mostly from not appreciating that they derive from simple requirements of liquidity and financial probity on financial services organisations from one part of the EU wishing to carry out retail sales in another. The UK regulation regime is strong and retaining these rights should be straightforward. In short, preserving passporting rights is really a fairly minor matter in the scheme of things.

The hardest area for these negotiations is undoubtedly immigration. There is no doubt that Labour is much more relaxed about immigration than the Tories or UKIP. We know that about 1/3rd of the 9 million who voted Labour at the last election backed Leave. Their concerns about immigration must be addressed if Labour is to be seen to respond to the results of the referendum seriously. Labour needs to attack immigration as an issue on several fronts. Firstly it must row back against the continuing negativity about migrants, explaining again and again what everyone knows. For many years Labour has made far too little effort to counter the right-wing anti-immigrant tone of Tory governments and the right-wing media. It has suited recent governments obsessed with austerity and deficit-reduction to blame the consequences of their policies on immigration. Immigrants are blamed for the stresses on the NHS, overcrowding in our schools and the shortage of affordable housing. They are not the benefit scroungers demonised by the right-wing tabloids. Very many are forced to accept poorly paid, unpleasant jobs that the locals are not prepared to countenance. They often live in substandard accommodation with minimal complaint. They are young, ambitious and energetic. They are eager to make success of their lives. Their demands on the NHS are small principally because they are young.

In reality our country simply cannot function without high levels of immigration. Already half of our migrants are not from the EU and come across borders that we control totally. Yet we let them in because our country simply couldn’t function without them. Restricting immigration to under 100,000 as the Government wants will simply crash our economy. The NHS and social care sectors would simply cease to function without migrants. Boosting the living wage as John McDonnell has promised makes many more jobs attractive, and clamping down on zero hours contracts will help to suppress some of the worst labour practices that exploit immigrants. Building very many more affordable houses in high cost areas will also ease these pressures, but these are all well into the future long after Brexit has happened.

At present non-EU immigrants must have the offer of a job, and in certain jobs there are quotas to try and keep numbers under control. Even if we maintain free movement from the EU we need to manage migration much better. We need to know who was coming into the UK, where they will work and what demands on local services they might make. We also have to start tracking who is actually leaving the UK, something that can be done very easily by putting exit passport information on airlines, railways and ships.

However the result of the Referendum means that politically we have to accept restrictions on EU migrants. One of the most straightforward things we could do is simply require that EU migrants are allowed to enter the UK only if they have a formal documented job to go to which has already been advertised within the UK but remain unfilled. A symmetrical arrangement could then apply to British workers wishing to take a job in the EU. The restrictions on non-EU migrants would stay as they are which is of course how they were managed under the then Home Secretary, Theresa May. The migration rate would be set by the demands of the UK economy. The best way of reducing that rate is to improve the quality of vocational training at every level given to our own children.

Labour has already identified the need for a Migrant Impact Fund, money used to offset the strain locally imposed by migration. How big might this turn out to be? The amount of money suggested by the Government is quite derisory. Amber Rudd promised £140 million or about £540 per head. Compared with the substantial sums of money distributed from central government to local authorities to pay for schools, the NHS and many other services this is quite inadequate, probably by a factor of 10. Money needs to be distributed to the local authorities in proportion to their receipt of immigrants. This must be paid immediately in anticipation of their arrival locally and their starting to pay taxes.

Above all, Labour must hammer home a fundamental number which shows how much the problem is exaggerated. Current immigration is only increasing our population by about one person in 200 per annum. Immigration is not a massive invasion rather a relatively minor perturbation but one that is critical to the functioning of our society. Problems arise when immigration is not spread uniformly across the country and the xenophobic opinions of UKIP and the right-wing media are allowed to go unchallenged. The Migrant Impact Fund when properly funded could substantially change the view of communities about incomers. Without it Labour will have an uphill battle against entrenched right-wing opinions of many otherwise centre-left voters.

This framework for what Brexit might look like is something that Labour needs to refine and complete if it is to have any influence on what happens.