The Paradise Papers, austerity and the privatisation of wealth, human rights and democracy


Outdated Conservative ideology has long framed the social safety net as an obstacle to national prosperity, the government claims that welfare somehow depresses economic growth and job creation. Indeed, Conservative efforts to dismantle the welfare state have been a constant in UK national politics. However, the truth is that as income inequality increases, the potential for economic growth is constrained. Seven years of austerity aimed at the poorest citizens have provided empirical evidence that does not verify the government’s claims.

The Conservatives also claim that welfare creates “perverse incentives” and “moral hazards” – it produces negative “unintended consequences,” as people who are eligible for support don’t have a job. Welfare is therefore reduced to ensure that people are not comfortable in claiming financial support, in order to “make work pay”. The problem with that, however, is that many people who work are also struggling to make ends meet. Work doesn’t pay because a miserly state provides perverse incentives for unscrupulous profit-driven employers to pay miserly wages that are well below average living costs. There has also been a marked loss of job security, too, over the last seven years.

All of this reflects a troubling reality of the labour market – that without government regulations and collective bargaining – the government have a history of legislating to undermine trade unions and traditionally loathe collective bargaining – employers are able to use “competition” to reduce wages. This state of affairs is clearly attributable to political decisions. It can be traced back over decades of policies favouring businesses at the expense of established employee rights. 

In the free market, all that matters is how many people are capable of doing your job. Competition matters, at least on paper. It doesn’t matter what qualities and skills you have. Workers are not paid according to their skills, they’re paid according to what they can negotiate with their employers. The more people there are in the labour market, the less bargaining power they have. The steady reduction of the support offered by the welfare state creates desperation, and also significantly reduces peoples’ choices regarding employment. It creates a race to the bottom, where wages are depressed and stagnating, and “efficiency” rules, along with the profit motive.

Furthermore, some employers are discriminatory, and pay workers different wages on the grounds of disability, age, race, or gender.

Changing policies to include a progressive tax structure would enhance economic growth and see a structural lowering in the unemployment, underemployment and low pay rates, with the other very valuable benefit of being ethical, fair, decent and compassionate. There are several excellent macro-economic reasons for substantially raising wages AND raising welfare. Notably, it could boost consumption, reduce inequality as well enhance economic growth.

In 2014, the Organisation for Economic Co-operation and Development (OECD) published a report that stated income inequality actually stifles economic growth in some of the world’s wealthiest countries, whilst the redistribution of wealth via progressive taxation and benefits encourages growth.

The report from the OECD, a global think tank, shows basically that what creates and reverses growth is the exact opposite of what the current neoliberal government are telling us. It highlights that the Conservative austerity programme is purely ideologically driven, and not about effectively managing the economy at all. However, many of us already knew this was so. The Conservatives have managed to narrate neoliberal ideology effectively, it became naturalised, and established as an “intuitive” and common sense kind of justification system for crass inequality, (accumulation by the wealthy through the dispossession of the poor) while its very design was to fragment the truth and disjoint rationality. This is precisely how dominant ideologies operate. 

Austerity was never about what works for the economy. Austerity is simply a front for policies that are entirely founded on ideology, which is all about “handouts” to the wealthy that are funded by the poor

If we provide support for those on low incomes, there will inevitably be higher aggregate spending, more jobs and a stronger economy. And if the income distribution continues to include those on low incomes, rather than the current redistribution to the wealthiest, there will be a lift in the growth potential of the economy. Unemployment would be structurally lower and there would be a self-supporting cycle of stronger economic activity as a result.

The Paradise Papers and the privatised magic money tree

Tax havens are one of the key engines of the rise in global inequality. I started writing this article just as the Paradise Papers leak hit the media, following information that was garnered by the German newspaper Süddeutsche Zeitung – which also received the Panama Papers last year – and shared by the International Consortium of Investigative Journalists with partners including the Guardian, the BBC and the New York Times.

Conservatives argue that economic inequality is essential to a healthy economy to generate the financial incentives for individuals to remain in further and higher education, to work hard and to invest their savings in productive enterprises, all of which will result in faster economic growth and rising average living standards. Wealthy people create jobs, and so the poorest citizens will benefit indirectly from economic inequality as some of the benefits of faster economic growth “trickle down” to them. The Conservatives claim that wealthy people are essential to the economy because they “create jobs” and more wealth. 

However, regardless of the plausibility of the debate about competition, meritocracy,  equality of opportunity, rather than equality of outcome – and the debate around wealth redistribution, the world’s super-wealthy have taken advantage of lax tax rules to siphon off at trillions of pounds, from their home countries’ economies and hoard it abroad – and the offshore drain involves a sum larger than the entire American economy. The sheer scale of hidden assets held by the super-wealthy also strongly suggests that standard measures of inequality, which tend to rely on surveys of household income or wealth in individual countries, radically underestimate the true level of inequality – the gap between rich and poor. 

Wealth doesn’t “trickle down”: it’s hidden away offshore. It’s hoarded. If you are remotely concerned about fairness and inequalities of wealth and power, you really must be concerned about the very existence of tax havens, and the significant impact this has on national economies. The Conservatives prize the idea of private property, and that impacts on their decision-making. Rather than address the issue that would have had a larger positive impact on our economy – tax avoidance and hoarding – they chose instead to impose austerity on the poorest citizens in the UK, they made “difficult choices” to dismantle the welfare state and raid our public funds, damaging our services and eroding our post war social safeguards. Wealth doesn’t “trickle down”, it trickles away offshore. Furthermore, it’s not feasible that the government was unaware of this. They have chosen to focus on supply side labor policies, and blaming the poorest for the big hole in the economy, some of which followed the banking crisis. They have chosen to regard our public services as “unsustainable” to prop up the immoral financial habits of a wealthy and powerful elite.

At the centre of the Paradise leak is Appleby, a law firm with outposts in Bermuda, the Cayman Islands, the British Virgin Islands, the Isle of Man, Jersey and Guernsey. The project has been called the Paradise Papers. It reveals (courtesy of the Guardian):

Graphic showing who is hiding their cash

The disclosures will certainly put pressure on world leaders, including Trump and the prime minister, Theresa May, who have both paid lip service to the idea of curbing aggressive tax avoidance schemes. 

The publication of this investigation, for which more than 380 journalists have spent a year combing through data that stretches back 70 years, comes at a time of growing global income inequality.

In the UK, the ideologically driven austerity programme has also contributed significantly to the redistribution of public funds from the poorest citizens to the wealthiest. I’ve said this before, but I’m going to say it again: 

Government policies are expressed political intentions regarding how our society is organised and governed. They have calculated social and economic aims and consequences. In democratic societies, citizen’s accounts of the impacts of policies ought to matter. But for the past seven years, the government have been completely disengaged with the public, and have failed to listen to accounts of the detrimental impacts of their public policies on marginalised social groups.

In the UK, the way that policies are justified is being increasingly detached from their aims and consequences, partly because democratic processes and basic human rights are being disassembled or side-stepped, and partly because the government employs the widespread use of linguistic strategies and techniques of persuasion to intentionally divert us from their aims and the consequences of their ideologically (rather than rationally) driven policies. Furthermore, policies have become increasingly detached from public interests and needs.

The justification offered by the government for its draconian policies aimed at society’s most marginalised (and protected) social groups is that welfare and other supportive public services are “unsustainable”. The government claims that “difficult decisions” have to be made, which invariably entail cuts to essential services and provisions, because we don’t have enough money.

In truth, the government simply has other plans for the money available, and prioritises the desires of the very wealthy, at the expense of meeting the needs of the poor. 

Other justifications reflect the behaviourist turn, which perpetuates the “culture of poverty” myth and embeds behaviourist theories regarding the presumed attitudes and “cognitive incompetence” of the poorest citizens in policies, which extend a disciplinarian and “correctional” element. However, such narratives and policies indicate a government of evidence-free fanatics. In policy, everything is something you decide to do, and there is nothing that you have to do. There are always alternative choices to consider regarding how our economy is managed.

Few things demonstrate the Conservatives’ wake of glib lies than their record on welfare spending – an area in which they have overseen a culture of waste. Just look at disability benefits. We’re told repeatedly that spending on “welfare” for disabled people is “out of control”, yet earlier this year it emerged that the Department for Work and Pensions has gone nearly £200m over budget, in paying two private companies from the public purse to run the personal independence payments (PIP) assessment system.

Then there is the Work Capability Assessment scandal. The National Audit Office (NAO) scrutinises public spending for Parliament and is independent of government. In their audit report last year, the NAO concluded that the Department for Work and Pension’s spending on contracts for disability benefit assessments is expected to double in 2016/17 compared with 2014/15. The government’s flagship welfare-cut scheme will be actually spending more money on the assessments themselves than it is saving in reductions to the benefits bill. It would be cheaper, and of course much more ethical to simply pay people what they were previously entitled to, based on their own doctors’ professional judgement.

The NAO report reflects staggering economic incompetence, a flagrant, politically motivated waste of tax payers money and even worse, the higher spending has not created a competent or ethical assessment framework, nor is it improving the lives of sick and disabled people. People are dying after being wrongly assessed as “fit for work” and having their lifeline benefits brutally withdrawn. Maximus is certainly not helping the government to serve even the most basic needs of sick and disabled people.

However, Maximus is serving the needs of a “small state” doctrinaire neoliberal government. The Conservatives are systematically dismantling the UK’s social security system, not because there is an empirically justifiable reason or economic need to do so, but because the government has purely ideological, anticollectivist prescriptions, and other plans for our public funds.

The Conservatives have now spent at least £700m in taxpayers’ money on these contracts with multinationals alone, despite the fact that the process they use is so flawed that one charity reported that as many as four out of five rejections for PIP that were appealed against were overturned. That indicates, at the very least, the use of a severely flawed assessment process. PIP assessments are purposefully designed to ensure that people are less likely to be found eligible for the support in meeting the additional costs of being disabled. Then there is the massive cost of tribunals to add to the cost of administrating the “cuts”. 

Meanwhile, multinational companies are shifting a growing share of profits offshore – €600bn in the last year alone – the leading economist Gabriel Zucman will reveal in a study to be published later this week. That money leaves a hole in our economy, which is refilled at the expense of those with the very least to contribute to paying off the “national debt” – another Conservative obsession and justification for their austerity programme. 

The human costs of a “business friendly” neoliberal economy

The government have long claimed that they are “helping” sick and disabled people into work. This “support” entails putting disabled people through systematic ordeals, and constantly moving ever-shrinking goalposts – the claimed objective of which is “targeting” resources to “those most in need”.

The Conservatives use glib, patronising, ridiculous and baffling phrases in their rhetoric, guidelines and policy papers, saying things like they don’t want disabled people to “fall out of employment”, for example. Yet PIP, which is a non means tested payment, quite often supports people in employment, as did the now abolished Independent Living Fund. But PIP is very difficult to qualify for. At my own assessment, my previous post (which ended seven years ago, with social services) was actually used as “evidence” that I don’t have significant cognitive difficulties. However I was forced to give up that post when I became too ill to work. PIP certainly doesn’t seem to be about supporting disabled people in maintaining independence, despite its title.

If it were, then we wouldn’t be witnessing so many losing their award as they are transferred from Disability Living Allowance, or seeing it reduced. Many disabled people are losing their mobility award and consequently, their motability vehicles, which inevitably means that some in this group won’t be able to continue working.

The government has targeted disabled people in order to cut their support and to make savings by reducing the availability of lifeline support that was once accessible to those of us unlucky enough to be disabled, to become ill or have an accident, leaving us unable to earn an income. You know, those provisions that our national insurance pays for.

There is no reason whatsoever to presume that disabled people are “frauds”. The ordeals that have been introduced into the welfare system to deter fraud are not justifiable, since prior to the “reforms”, welfare fraud stood at just 0.7%/. Some of that tiny percentage was actually down to bureaucratic error, too, as administrative errors are included in the statistic. 

The claim that the ordeals incorporated into the system are to “protect the public purse” from fraud is utter rubbish. The ordeals deter most people from claiming, unless they absolutely have no choice. I’ve put off claiming PIP since 2012, when I was advised to by my doctor. Who wants to suffer the utter loss of dignity and punishment that the system meters out unless they really REALLY have to.

Some perspective:

People don’t “fall” out of their jobs: they become too ill to work or they lose their jobs because they are disabled. Every person facing an assessment is in that position because both they and their doctor have concluded that they are unfit for work – too unwell or unable. But the government refuses to accept first hand accounts and the professional opinion of professionals.

The government isn’t “helping” disabled people; it is making it as difficult as possible for people to claim support. The Conservatives are actually trying to coerce sick and disabled people who cannot work to work. Let’s have it straight. Because the whole process is so difficult, and because you are assessed and reassessed constantly, often having to go through mandatory review then appeal, which takes months and months on end, people with chronic illnesses especially experience worsening health because of the terrible stress and strain they are placed under by the state, and are therefore even LESS likely to “move closer” to employment.

In looking to make savings on disability benefits, the government is inflicting unacceptable harm and damage on disabled people. The system damages people’s health, wellbeing and more generally, their lives, because they have to struggle endlessly for a little basic support that most civilised societies would deem essential and  unproblematic.

All of this is because of the insulting assumption the Conservatives make that people who have illnesses or are disabled for other reasons are using their circumstances to wriggle out of their obligations to work, and of course, to fulfil their duty towards national production and the economy. Unfortunately, disability and medical conditions often restrain people from full participation in society, whether they like that or not. Cutting support will simply make inclusion and participation even less likely. 

How assessments are weighted towards the miserly state

The government has justified cuts to welfare more generally by making claims about the characters, attitudes and cognitive capacities of people claiming social security more generally. However, regardless of the front of blame-mongering rhetoric, both ESA and PIP were never intended to be easily accessible support mechanisms for disabled people. The very design of the assessments indicates this.

The Work Capability Assessment is a “norm-referenced” system, not a criterion-referenced system. These terms refer to different ways in which the evidence gathered from an assessment process is used. Criteria-referenced systems are considered to be objective and consider each case individually and on its own terms. Norm-referencing is designed to compare and rank assessments in relation to one another, rather than in relation to objective criteria. Norm-reference assessments score better or worse against a hypothetical standard,  which is determined by comparing scores against the overall performance results of a statistically selected group (a cohort). 

All of which is a sophisticated way of saying that there are in-built targets. To receive ESA, someone must score the required number of points and fall within the proportion of people the system will actually permit.  In practice, this means there is a finite number of people who can be awarded benefit, and that’s regardless of the number of people who actually meet the eligibility criteria. A serious limitation of norm-reference assessments is that the reference group – the cohort – may not represent the current population of those being assessed. Norm-referencing does not ensure that an  assessment is valid, either (i.e. that it measures the construct it is intended to measure). There is nothing to stop a government from using a very biased sample of the population, when they select a cohort.

In 2007, Conservative MP Timothy Boswell warned (9 Jan 2007 : Column 169): “I can imagine circumstances […] in which a future minister […] might wish to say: ‘We will introduce a norm. We are not going to have, by definition, more than 1.5 million people on employment and support allowance,’ and the tests will, in effect, be geared to deliver that result.”

The reassessment of everyone claiming Incapacity Benefit and all disabled people claiming Income Support became a major Conservative crusade that was, we were told, to save billions of pounds a year from the welfare budget, in the Conservative age of austerity. 

Similarly PIP assessments were developed to fit with a pre-conceived idea of how many people ought to qualify for support. The assessment is designed to allocate as few points as possible, by ignoring the real barriers people face in their daily living and assessing a person’s ability to “function” by using the most trivial  and non comparable descriptors.  Esther McVey disclosed in 2012 that she anticipated 300,000 disabled people would have their disability support cut or ended during the change over from Disability Living Allowance (DLA) to PIP. That statement came before a single assessment had taken place. If that isn’t a declaration of the real intention behind the introduction of PIP, and that the assessment itself is pretty arbitrary, then I don’t know what is. It does strongly suggest the assessments are not being conducted fairly and “objectively”. 

In 2012, a GP posed as a trainee Atos assessor and recorded undercover video footage that was later broadcast by Channel 4’s investigative current affairs programme Dispatches. In the film, trainers warned the NHS doctor that if, on average, he were to recommend more than one claimant per day for the Support Group (out of the eight he would be expected to see each day) he would be subject to an increased level of management scrutiny through a mechanism known as “targeted audit”. The undercover doctor was told:

“If it’s more than I think 12% or 13%, you will be fed back ‘your rate is too high’.”

An assessor under “targeted audit” would have all of their reports scrutinised before they were sent to the Department for Work and Pensions (DWP) and would no longer be allowed to recommend any claimants for the Support Group without asking for permission first. When the doctor asked an experienced assessor where these rules had come from, she replied: “The DWP”.

Both the DWP and Atos categorically denied ever having had any target for getting claimants off sickness benefits. However, both eventually admitted that Support Group “norms” were being used nationwide, though they both denied that the purpose of “targeted audit” was to limit the number of claimants placed in the Support Group.

Atos said that the audit process triggered by the breach of a “norm” was intended to ensure consistency across the firm’s UK team: if the assessor’s reports met the DWP’s expectations, the healthcare professional would not be asked to change their recommendations.

The decision-making process for awards certainly do not command public confidence, they depend on assessments of “functional impact” that are far from a precise science. In fact it isn’t “science” at all. There is a continuing widespread misperception that PIP is a medical test rather than an assessment of functional capacity, not helped by the fact that assessors are refered to as “Health Professionals”, and Atos claims to be a “medical Service”, while Maximus claims it conducts a “health assessment” rather than a work capability assessment. 

Last November, a United Nations (UN) committee published a scathing report on the consequences of the austerity policies pursued by the UK government in welfare and social care, which it described as “grave and systematic violations” of the rights of people with disabilities. Many of us have raised our concerns and fears with the UK government about the harsh impacts of austerity on disabled people, following the publication of the welfare “reform” bill in 2012, but we were ignored. 

The members of the House of Lords, opposition ministers, the Work and Pensions committee, disabled people’s organisations, charities and support groups and many individuals all tried to engage the government, but to no avail. We were excluded from any democratic dialogue, with accusations of “scaremongering”, and then silenced with false statistics and dishonest claims from Conservative ministers, who presented to us nothing but their own prejudice and contempt. 

We meticulously presented cases to ministers that demonstrated the hardship, harm, distress, loss of independence and dignity, and sometimes, the deaths, that correlate with the reforms and cuts. However, the first hand accounts of our experiences of Conservative policies, as disabled people, were loudly dismissed as “anecdotal evidence”. Over and over we were told by ministers that there was no “proven causal link” established between the policies and the frightening events that we were experiencing and reporting. The fact that the government refused to listen to us and were so uncompromising added another dimension and depth to the fears we experienced.

Many of us raised felt we had no choice but to raise our concerns and fears with the United Nations using the Optional Protocol to the Convention on the Rights of Persons with Disabilities – a side-agreement to the Convention which allows its parties to recognise the competence of the Committee on the Rights of Persons with Disabilities to consider complaints from individuals. Many of us have been documenting and submitting evidence to the UN since 2012. There followed an inquiry, more evidence was gathered. The government dismissed the UN report as “patronising and offensive”. However, given that the government is well aware that disabled people and disability organisations were responsible for the complaints that initiated the inquiry, the  patronising and offensive bluster and attitude is descending from Whitehall. 

A recent report from the UN expressed grave concern regarding care and treatment policies, which were described as insufficient to the extent of being “inconsistent with the right to life of persons with disabilities as equal and contributing members of society”.

Labour’s Debbie Abrahams, the shadow work and pensions secretary said “The UN committee has found that this Tory government is still failing sick and disabled people. Their damning report highlights what many disabled people already know to be true: that they are being forced to bear the brunt of failed Tory austerity policies.”

Before 2010, the very idea of cutting disability support was unthinkable. The Conservative behaviourist turn is a cruel front for inexcusably squeezing a few pounds more from disabled peopleso that wealthy people can avoid paying tax.

Thatcher’s government was fond of perpetuating the “culture of poverty” myth, but the current government has taken that to a new low, and has implemented costly big state policies which aim at “recifying” behaviours considered “not in our best interests”. The only beneficiaries are the private companies and multinationals who make a profit from administering the punitive cuts. The cuts which are costing more to implement than they can possibly save, in a “business friendly” political climate. One where the government tells us that we need to “incentivise” wealthy people to create jobs and contribute to the economy by giving them more money, while poor people are “incentivised” by not having enough money to meet their basic survival needs. Accumulation by the wealthy by dispossession of the poorest.

Welfare has incorporated a Conservative moral crusade aimed at coercing conformity and compliance to draconian state-determined conditions.

Meanwhile, some very wealthy people are making massive profits from the governments’ austerity programme, particularly the welfare “reforms”. 

Conservatism is synonymous with social and economic inequality – with handouts for the rich and subsequently, much less money for the poor. 

In the UK, democracy, human rights, independence, wellbeing, security, freedom and wealth have been privatised. Only 1% of the population can afford them these days, and they tend to bank offshore.  

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20 thoughts on “The Paradise Papers, austerity and the privatisation of wealth, human rights and democracy

    1. Superb analysis. I’d like my MP, Victoria Prentis to read it. She sent me an email trotting out that old line about how the welfare “reforms” are to ensure the money goes to those who most need it Pft !!!.

      Liked by 1 person

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