Saturday, 8 December 2012

Starbucks hit by UK Uncut protests as tax row boils over

Activists stage a series of sit-ins amid concerns that the firm's decision to pay the Treasury £20m over two years misses the point

Anti-tax avoidance protesters have targeted UK branches of Starbucks, attempting to turn them into women's refuges and crèches, saying that the company's unilateral decision to pay £20m to the Treasury over two years is missing the point. The coffee chain faced a backlash from customers when it emerged last month they had received 3bn in sales over 14 years yet claimed to have made a loss in Britain each year, vastly reducing its corporation tax bill.

The campaign group UK Uncut has organised 45 protests to pressurise the government to clamp down on tax avoidance and roll back cuts to public services. A UK Uncut spokesperson, Anna Walker, said that 1,000 people attended 45 sit-ins across the country.

At Starbucks' flagship store on Conduit Street in central London about 40 activists and six children were threatened by police with arrest for aggravated trespass and – after a brief discussion – the protesters agreed to leave. At Vigo Street in London's Mayfair, about 60 protesters gathered among customers sipping lattes and herbal tea, chanting: "If you don't pay your taxes we'll shut you down."

The protests are taking the form of sit-ins, designed to highlight the impact on women's services by transforming Starbucks branches into spaces that reflect those being lost due to the government's deficit-reduction measures.

Anna Walker stressed it was not targeting Starbucks staff, but highlighting the impact of the government's austerity measures on the most vulnerable. "This is not just about Starbucks and tax avoidance," she said. "That's just the tip of the iceberg. The government is not only refusing to tackle tax avoidance, but it's dismantling public services because it loses £25bn a year to it. People are incredibly angry when they see multinational companies getting off scot-free when they are the ones feeling the pinch."
On Thursday, Starbucks UK managing director, Kris Engskov unilaterally announced that the coffee company would pay £10m a year over the next two years. Starbucks came under fire earlier this year when it was revealed that it had paid only £8.6m in tax since it opened its first store in the UK 14 years ago. In that time, the coffee chain has made £3bn in sales yet has claimed it has made a loss in Britain every year. In October, HMRC said a total of £32bn had been lost to tax avoidance in the past year, an increase of £1bn on 2010-11.

Words: The Guardian
Pictures: Getty Images

Monday, 3 December 2012

Social enterprises and charities can't thrive in toxic public sector markets

The Shadow State
Peter Holbrook writes about the findings and ambitions
of Social Enterprise UK's new report

Decades of outsourcing by successive governments now means that £82bn, a third of spending on public sector commissioning and procurement, is spent with independent providers. Accelerated by recent policies, the health and social care act, the work programme and welfare reform act, this is predicted to rise to £140bn by 2014. But with the majority of contracts going to large firms and their shareholders, we're witnessing money moving out of the public realm and being turned into private wealth. The consequences of this are serious for both society and the wider economy.

The Shadow State provides evidence that, in the drive to maximise shareholder profit, sub-standard public services are being delivered by private firms in areas where it really matters – in care for children, the elderly and the disabled. As these companies seek to cut costs wherever they can, we're seeing staff wages being driven down and councils having to pick up the bill, whether in housing benefit or, in the longer term, great swathes of people who can't save for their retirement. In effect, taxpayers are subsiding multinational firms who are simply not paying their way.

At the same time, there is mounting evidence that some social enterprises and charities are being squeezed out of public service markets. Civil society organisations with a social mission in their DNA, which put people and communities first, and that reinvest their profits to improve the quality and number of services, are not faring well. Social enterprises and charities can't thrive in markets that have become toxic. The result is a lack of competition, leaving commissioners with little choice of provider.

Yet we have a once-in-a-generation opportunity to change the direction of travel. The public services (social value) act is throwing commissioners a lifeline to contract for community wealth, not private wealth. The culture of commissioning is such that councils are too often expected to make decisions based on lowest cost rather than 'whole community' prosperity. They're understandably following the lead of their peers – across the country, councils are opting to commission from private firms which vow to provide services at low prices. The danger is that when social enterprises and charities disappear, large private firms will put their prices up, and commissioners, service users and taxpayers will be held to ransom.

We are calling on government to strengthen the social value act. It's due to become law in January, it had the backing of the social enterprise sector and cross-party political support, and it has the potential to create more open markets. The legislation should help create a more level playing field for social enterprises and charities to bid alongside private sector providers by making sure that the additional 'social value' (social and economic well-being) they create is taken into account when contracts are drawn up.

Multinationals and other big businesses can't be blamed for gravitating towards the UK's public service markets – despite all the cuts, there is still a lot of money changing hands. Some services are perhaps best provided by expert providers in the private sector. But many of the services at stake are dealing primarily in human relationships, and economies of scale and shareholder value are often at odds with what is really needed in these markets. Currently, firms are being allowed to operate in a way that is harmful, and without full and proper transparency. All providers of public services should be open to scrutiny to allow the public to hold them to account. That's why we are calling on government to intervene. We're recommending open-book accounting on public sector contracts, and a range of other measures to help prevent excessive profiteering and increase transparency. These recommendations do not solely aim to improve the environment for social enterprises and charities. They seek to improve public sector commissioning and markets for all, but as a result we believe social sector organisations will flourish.

It's dangerous for the national debate on our public services to rumble on and focus only on state vs independent and whether marketisation should continue or be halted.

There's a huge market out there already and it could be dramatically improved with a huge impact on national well-being. The question now has to be: what kind of businesses do commissioners in government departments and in councils need to deliver services for citizens? How do we want these business to behave? At the moment too many are serving a wealthy minority, when they should be looking after the 99%.

Polling reveals little public support for shareholders making profits from public services

Polling for the Shadow State has identified public dissatisfaction about shareholders making profits from the delivery of public services. Two thirds of UK adults believe it is unacceptable for shareholders to profit from running hospitals and health services (66%), children's homes (66%), police services (66%), and care homes for elderly and disabled people (63%).

The poll suggests a lack of awareness about who is running some public services funded by the taxpayer. Almost half of UK adults (43%) believe the government runs the majority of children's care homes in Britain, whereas in reality the private sector now runs 65% of residential homes for children. Only 11% are run by charities.

Peter Holbrook is chief executive of Social Enterprise UK. The Shadow State is available to download here.

The Guardian

Saturday, 1 December 2012

Councils angry at £1bn of stealth cuts

Council leaders have accused the government of imposing some £1bn of cuts by stealth, leaving town halls dealing with an even bigger reduction in income than they had been braced for. The spending settlement of 2010, which covers most of this parliament, saw local government take a steep cut of 28 per cent to their main grant over a four-year period.

The latest phase of these reductions will be announced in mid-December by the Treasury, just days after George Osborne’s Autumn Statement. However, the Local Government Association says it has identified nearly £1bn of additional cuts or delays to grants in recent months, further adding to their woes. In some authorities these cuts could amount to “more than 10 per cent of core funding from government”, the LGA warned in a briefing note to council leaders seen by the Financial Times.

Local government had hoped that 2013-14 would be a year when overall government funding would be “reasonably stable” after two years of steep cuts, according to the group. Under those proposals, set out in the comprehensive spending review, there should have only been a 0.8 per cent cut to this year’s core funding – after 9 per cent cuts in both 2011/12 and 2012/13. However, “what we are now seeing is the prospect of potential funding reductions that . . . amount to a total funding reduction of up to a further £1bn or more,” the document says. 

The £1bn figure for cuts and deferred grants includes £345m of delayed business rate payments and £200m of education support funding switched to academies. The figure also includes a £150m reduction in the early intervention grant and £100m of “under-funding” from changes in council tax benefit. The final component is an estimated £200m stemming from a pay freeze in local government which the Treasury clawed back from councils.

One Whitehall official said that some of the LGA’s calculations had been “disingenuous”. A spokesman for the communities department said that the full details of next year’s spending would not be clear until the local government finance settlement in December. “Councils account for a quarter of all public spending – this year English councils will spend £114bn – so it is vital they continue to play their part tackling the inherited budget deficit,” he said.

But Sir Merrick Cockell, chair of the LGA, said he was in talks with senior ministers to try to “sort out” the issue. “This has significant implications for all local services. In particular it threatens to severely limit councils’ ability to promote growth at a local level, which would be hugely counterproductive,” he said.

The group has previously warned that the last spending review, combined with the rising cost of social care, will mean that money for non-statutory services such as libraries and leisure centres will have been slashed by 90 per cent in cash terms by 2020.

Financial Times