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Accountancy's starring role in Corbynomics

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21st Aug 2015
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With Jeremy Corbyn still ahead of the Labour leadership pack, who else’s fingerprints should we find on economic policy – so called Corbynomics – than tax campaigner Richard Murphy?

The influential accountant, blogger and author has seen Labour’s left wing Cinderella adopt many of his tax policy ideas.

Murphy is a deeply divisive figure among accountants, but his accounting-based critique of Chancellor George Osborne’s tax policy has presented an interesting alternative to the usual anodyne political discourse on the subject.

“Osborne’s approach is that of the accountant. I can say that: I am one,” wrote Murphy in one of his broadsides against the current chancellor. “All he’s interested in is balancing the books. How, or why, he doesn’t care. That’s his number one aim.

“Well I have a message for George based on my experience of running real businesses, which is something he’s never done: it is that if all you aim to do is balance the books you fail the customer and you fail your employees, and because you do that you end up going bust, even if the books do balance. And that’s what Osbornomics will do for the UK.”

Murphy has been contributing on a daily basis to his Tax Research blog on UK tax policy – and it seems Jeremy Corbyn was listening. The term “Corbynomics” has been bandied about by the media, but what does it actually mean? And from an accountant’s perspective, what does it propose for the tax system?

Corbyn’s central tax tenet, to echo Murphy again, is tax justice. “The UK has shifted from taxing income and wealth to taxing consumption; and from taxing corporations to taxing individuals,” said Corbyn. “We must ensure that those with the most, pay the most, not just in monetary terms but proportionally too.”

George Osborne’s inheritance tax changes were cited by Corbyn as an example of favouring the wealthy. According to Corbyn, the policy will “lose the government over £2.5bn in revenue between now and 2020. What responsible government committed to closing the deficit would give a tax break to the richest 4% of households?”

Corbyn’s tax policy isn’t just directed at the wealthy, but also business. One of his big ideas is to strip away tax relief for businesses, which he alleges amounts to a £93bn tax black hole. “Money which would be better used in direct public investment, which in turn would give a stimulus to private sector supply chains,” said Corbyn.

Corbyn’s policies have Murphy’s fair tax fingerprints all over them. Corbyn has repeated, verbatim, Murphy’s claim that government is missing out £120bn in tax revenues: comprising £20bn in tax debt, £20bn in tax avoidance and £80bn in tax evasion.

The £120bn figure quoted in Corbyn’s campaign leaflet The Economy in 2020 has come in for criticism. Murphy himself admitted to Bloomberg that only £20bn of that total is recoverable. “I didn't write the leaflet and that strikes me as an omission,” he said. “You can’t ever collect all the tax that’s owing in an economy.”

Doubts about the figures aside, Corbyn made a tax crackdown one of his central policies. Many of his ideas on tax have been aired before, but at least one of them will resonate most with accountants - a promose to reverse staff cuts at HMRC and Companies House, and taking on more staff, to ensure that “HMRC can collect the taxes the country so badly needs”.

Corbyn also suggests:

  • The introduction of a proper anti-avoidance rule into UK tax law
  • Country-by-country reporting for multinational corporations
  • Reform of small business taxation to discourage avoidance and tackle tax evasion
  • Enforce proper regulation of companies in the UK to ensure that they file their accounts and tax returns and pay the taxes that they owe.

What do you think about Corbynomics and its plans for the tax system? Do Richard Murphy’s figures stack up?

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Replies (31)

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By lovebucket
21st Aug 2015 15:55

Sounds about right. I knew Corbyn's policies were whack, and now we know why.

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By abaco
22nd Aug 2015 08:47

Typical

Like the overwhelming majority of would-be Labour leaders past and present, Corbyn is a complete ignoramus when it comes to economics while this chap Murphy sounds like he's the heir to Russel Brand.

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Replying to Paul Crowley:
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By adrianstone
24th Aug 2015 10:12

hang on, abaco...

Please see the letter in the Observer on 22 August for a list of economists who are probably not to be considered "ignoramus's".

Russell is spelt with two l's, by the way.

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Replying to djn24:
By Charlie Carne
24th Aug 2015 11:45

People in glass houses

adrianstone wrote:

Please see the letter in the Observer on 22 August for a list of economists who are probably not to be considered "ignoramus's".

Russell is spelt with two l's, by the way.

If you're commenting on the spelling of others, I'd suggest checking your own spelling. The plural of ignoramus is ignoramuses. There is certainly no apostrophe in the word (unless you work for a greengrocer).

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By thomas34
22nd Aug 2015 10:15

Murphy's Law

Murphy needs to update his Wikipedia page where he reckons tax evasion amounts to £25bn per year - now apparently up to £80bn. I suppose that's inflation for you. I now remember why I never read the Guardian.

 

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Teignmouth
By Paul Scholes
22nd Aug 2015 17:49

Good luck to him

With New Labour having stolen the Cons clothes in 1997 and the Cons having recently stolen Labour's clothes, we are sick with centre-right, one-liner, synthetics.  

We need someone like JC to encourage a decent opposition.  He is unlikely to lead it long-term but maybe he'll encourage some new blood with a feel for what a decent society should be like.

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John Stokdyk, AccountingWEB head of insight
By John Stokdyk
24th Aug 2015 09:14

BBC seem to be listening in...

It may be complete coincidence, but this morning's 'Today' programme on Radio 4 devoted a significant chunk of time to Richard Murphy, "the architect of Corbynomics" at around 7:16am. He did a pretty cogent job of explaining his stance, and frankly sounded more logical and coherent than the Tory politician who appeared later to defend the amounts of money being pumped into the married couple's allowance.

Richard has already blogged about his appearance, and you can listen again on the BBC website. Click the link and when the player appears, move the rectangular white slider next to the time figure until it shows 01:16:16 or thereabouts.

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By Ian McTernan CTA
24th Aug 2015 10:35

And today in Dreamland...

So, tax the rich disproportionally, stifle enterprise, centralise everything and nationalise it without compensation and everything will go swimmingly?

I sometimes wonder what planet these people live on..

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By chatman
24th Aug 2015 11:49

Wow!

Blimey Francois - no doubt about whose side you're on!

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John Stokdyk, AccountingWEB head of insight
By John Stokdyk
24th Aug 2015 12:01

Please don't impugn the reporter's integrity

I've revisited the article and cannot see any obvious signs of bias or favouritism. The decision to publish the piece was taken by the site's editors, so any brickbats for giving Richard the oxygen of publicity should be aimed in our direction.

The article makes clear that he is a divisive figure and does not state his figures as undisputed facts. For years, however, we have highlighted the extent to which Richard has helped to shift the debate on tax avoidance - which has caused discomfort for some practitioners and AccountingWEB members. The Labour leadership debate is everywhere at the moment - including the Today programme. Richard Murphy's behind the scenes role provides a great accountancy angle that we judged to be of both political and professional interest to members.

Can we now get back to the main subject of the debate rather than bias (and spelling)?

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By chatman
24th Aug 2015 12:35

Biased Article

"who else’s fingerprints should we find on economic policy – so called Corbynomics – than tax campaigner Richard Murphy?" Fingerprints are used in the context of crime and getting caught out. You would never use the term in a positive context.

"Corbyn has repeated, verbatim, Murphy’s claim that government is missing out £120bn in tax revenues". So what if he used the same words if that is the only available research on the subject? Can we have the wording used please?

The whole tone of the article is as if Corbyn has been caught consorting with some sort of criminal and it sounds like the fact that Corbyn has drawn on some of Murphy's research has been used to imply that Murphy has written the entire tax section of Corbyn's manifesto.

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John Stokdyk, AccountingWEB head of insight
By John Stokdyk
24th Aug 2015 13:18

To hear Richard explain it...

He HAS written the entire tax section of Corbyn's manifesto and is quite pleased to have done so (Richard likes nothing better than for politicians to recognise his efforts and give them a running chance of being enacted).

@chatman - The "fingerprints" interpretation is yours, I think you can also have your fingers all over something without being thought of as being a criminal.

Just to confirm that bias is in the eye of the beholder, I was concerned that you were accusing Francois of being biased in favour of Murphy's left-wing stance, since covering the Labour campaign at all could be construed as giving publicity to their tax policies. But whatever his (or my) political tendencies, our job is to put the facts in front of you in clear, but compelling terms that encourage AccountingWEB members to offer their own thoughts on the matter.

I'm satisfied that we've acheived that.

Meanwhile, the source document for Corbyn's economic and tax policies contains the bulletpoints listed at the end of the article.

Richard's relationship with the Corbyn campaign has cropped up frequently in his blog, from an episode where he provided technical support to the candidate at a speech in July, and discussions of the £120bn tax gap figures. In this blog, he states, "It was quite explicitly an attack on Jeremy Corbyn’s use of my tax gap data to support what now seems to be called Corbynomics."

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Replying to Angus Wood:
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By chatman
29th Aug 2015 10:23

@John Stokdyk

John Stokdyk wrote:

He HAS written the entire tax section of Corbyn's manifesto and is quite pleased to have done so (Richard likes nothing better than for politicians to recognise his efforts and give them a running chance of being enacted).

Well why not say that then, instead of just implying it? And if it's true, can we have a reference?

John Stokdyk wrote:
@chatman - The "fingerprints" interpretation is yours

Well there's a statement of the obvious if ever I heard one. Who else's interpretation would I make when I read something? Whose interpretation do you get when you read something? Perhaps what you really wanted to say was that no-one else but me has drawn that interpretation. If so, do you have evidence to support such a claim?

John Stokdyk wrote:
I think you can also have your fingers all over something without being thought of as being a criminal.

Well of course you can; this is another statement of the obvious that does not address the issue; fingerprints are left on most things you touch, but that is hardly the point is it? Fingerprints are used to uncover crimes when people seek to conceal their involvement. The connection is obvious.

John Stokdyk wrote:
our job is to put the facts in front of you in clear, but compelling terms that encourage AccountingWEB members to offer their own thoughts on the matter.

Exactly; hence my surprise.

John Stokdyk wrote:
I'm satisfied that we've acheived that

Can you explain why? I have explained why I think you haven't.

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By ireallyshouldknowthisbut
24th Aug 2015 13:32

.

Not sure what the fuss it about on the article. Seems to be exactly the sort of thing Accounting web should be reporting on. 

As for Corbyn, this to me is exactly what Labour should be doing and not trying to be "Tory light".  Good government needs a good opposition, and I personally would rather see the Tories running scared of left wing policies than hard line right wing ones.  

Being "in bed" with our old friend Mr Murphy does however strike me as rather worrying.  Reality and rhetoric are not clearly separate in his universe which does seem slightly different to the one most other people occupy. 

Still it shows excessive self promotion will get you places.

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By carnmores
24th Aug 2015 13:40

hello from Greece JS
I listened to Today this morning on the bbc iradioplayer, he does bang on but he has created a niche for himself so love or loathe his national investment bank he is at least trying to come up with solutions. He is a quantative easer and Imo that ain't going to work

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By AlexLondon
24th Aug 2015 14:16

waiting for .....

This is also being discussed, in some detail, on Jolyon Maugham's waitingfortax.com

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Francois
By Francois Badenhorst
24th Aug 2015 16:03

Corbyn has been a breath of fresh air

I agree with Paul and Ireallyshouldknow... Corbyn seems prepared to live and die on his principles, which whether you agree with them or not, is refreshing. Compared to a political shape shifter like Osborne, it'll be nice to have lefty rabble rouser leading the opposition rather than yelling from the back benches.  

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Replying to Wanderer:
Maytuna
By DJKL
24th Aug 2015 21:22

The catch

FrancoisB wrote:

I agree with Paul and Ireallyshouldknow... Corbyn seems prepared to live and die on his principles, which whether you agree with them or not, is refreshing. Compared to a political shape shifter like Osborne, it'll be nice to have lefty rabble rouser leading the opposition rather than yelling from the back benches.  

The catch Corbyn may find is that to lead Labour in the Commons he has to stand in front of his own benches and present them with his back. The real danger he will face will not be across the despatch box

It could well be more like the pantomime,

"They're behind you"

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By mwngiol
25th Aug 2015 10:36

Corbyn

I can't help but think that Corbyn is the right choice of Labour leader, based on 'traditional' Labour values etc.

However in terms of winning elections, that won't happen based on 'traditional' Labour values.

So Corbyn is the right man for Labour but a Corbyn Labour would be unelectable.

Maybe the 'moderates' or 'New Labour' types should start their own party because the truth is that Blair may have won a few elections but he wasn't 'Labour'.

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By carnmores
25th Aug 2015 12:03

he is not unelectable

he could easily win especially if the economy has recovered 

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Chris M
By mr. mischief
27th Aug 2015 09:47

Corbyn and Murphy

Having followed Murphy on Twitter for over 3 years I would summarise my thoughts thus:

1.  His tax justice campaign has been very effective, and in my view generally accurate and spotlighting the right areas whereby the proportion of the cake hoovered up by the guys at the top has increased over the past 30 years.

2.  Whilst some of his economic analysis is very good - for example his critique of quantitative easing - in my view Corbynomics is "same old same old".  The same old stuff which has been tried in extreme forms by USSR, Chairman Mao and the like, and in milder forms by various Western countries including our own.  The vast majority of these have been disasters of one sort or another.

I consider myself to be the ultimate swing voter, having voted for 7 different parties in the past 32 years of voting.  When I have voted Labour they have always won.  When I have voted elsewhere they have always lost, except 2005 when the only reason I voted elsewhere was Iraq.

Corbyn and his like have no chance of getting my vote, and I very much doubt their chances in Stockton South, Norwich, Nuneaton, Carlisle etc.  We could do with a more credible Labour party as history tells us that when the Tories are supremely confident they cannot lose the next election, muck-ups happen.

 

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By carnmores
27th Aug 2015 09:56

always good to meet a swinger on the internet

I disagree , if he is elected leader he could well win the GE , every so often there is an almighty political blip and this might well be the next 

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Chris M
By mr. mischief
27th Aug 2015 12:20

£10,000

You can have £10k at even money if he gets elected that he is not PM of this country 5 years from now.  We simply set up an escrow account, transfer in our £10k deposits and whoever wins takes out the lot in 5 years time.

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By mwngiol
27th Aug 2015 15:09

Election

It would take more than an almighty political blip. A "true" Labour party will never get enough seats to win a Gen Election, and Corbyn is pretty much "true" Labour.

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By carnmores
28th Aug 2015 11:09

even money

typical lousy odds , if everybody is so sure why arent I getting 10/1

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Chris M
By mr. mischief
28th Aug 2015 11:33

£5,000 at 2 to 1 ?

Never give a sucker an even break!

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By carnmores
29th Aug 2015 10:03

still terrible - most quotes are around 7/1

:-)

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By carnmores
30th Aug 2015 15:12

i remember in the early 80's
40 economists wrote to the Times saying Geoffrey Howes budget with tax and spending cuts was the wrong approach . We know that the economists were wrong and I have that wonderful feeling of deja vu sweeping over me all over again ;)

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Replying to Wanderer:
Maytuna
By DJKL
31st Aug 2015 16:17

Economists, say no more.

carnmores wrote:
40 economists wrote to the Times saying Geoffrey Howes budget with tax and spending cuts was the wrong approach . We know that the economists were wrong and I have that wonderful feeling of deja vu sweeping over me all over again ;)

ONE

Three econometricians went out hunting, and came across a large deer. The first econometrician fired, but missed, by a metre to the left. The second econometrician fired, but also missed, by a metre to the right. The third econometrician didn't fire, but shouted in triumph, "We got it! We got it!"

TWO

A mathematician, a theoretical economist, and an econometrician are asked to find a black cat (who doesn't really exist) in a closed room with the lights off. The mathematician gets crazy trying to find a black cat that doesn't exist inside the darkened room and ends up in a psychiatric hospital. The theoretical economist is unable to catch the black cat that doesn't exist inside the darkened room, but exits the room proudly proclaiming that he can construct a model to describe all his movements with extreme accuracy. The econometrician walks securely into the darkened room, spends one hour looking for the black cat that doesn't exist and shouts from inside the room that he has caught it by the neck."

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By carnmores
30th Aug 2015 15:24

Francois
Osborne is no more a shape shifter whatever that may mean than Corbyn. Tories are trying to encourage people into work and not live on welfare. I think that's a good thing. I suspect that Corbyn wants to raise more tax to pay more welfare its all a bit Animal Farm for me. Just look back to when tax credits were introduced... Oh they will only cost 3billion and turned out to cost over 100 and became the biggest gerrymandering exercise ever in the UK. how civil servants would deal with Corbyn and vice versa is fascinating. Was there really a near coup against Wilson

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