“And you’re working for no-one but me” is George Harrison’s sign off to the first song on one of the greatest British albums of all time, the Beatles’ Revolver. But compared to what follows it has always struck me as rather a damp squib – lyrically one extended whinge about how Surrey mansion dwellers pay too much in tax. I suppose to be fair to the author, Harrison was very anti-war and he objected to unwillingly paying millions in tax – at the time the top rate stood at 92.6% – so governments could bomb people.
Nonetheless
it is quite sad that of all the sentiments the Beatles expressed, “in the end”
it was those of Taxman that had the greatest longevity. You need a lot than
love, and giving war a chance now seems to be the spirit of the age (alright
that was Lennon). But thanks to Margaret Thatcher, Ronald Reagan, and the
sprouting up of numerous tax havens around the world successful pop stars need
no longer fret about governments getting their paws on their money.
But from the
perspective of nearly sixty years, to sing “you’re working for no-one but me”
with reference to His Majesty’s tax collectors seems faintly ridiculous. We’re
definitely working for someone but there are people much
further up the queue than HMRC. Perhaps their silhouettes need more light shone
on them:
Landlords
and Banks
The first
thing we all need is somewhere to live. After rising above inflation for years,
rents increased by 9%
in 2024, the
highest surge on record. The average rent now consumes over a third of renters’
income and more than half
of it in London.
Though there
are only 11 and half million renters in the UK, their numbers are inexorably
rising. But they are still below the so-called “owner occupiers”. Except in
many cases, while they occupy, they don’t own anything. The ‘owners’ are
paying off a debt (which everyone calls a mortgage to avoid calling it a debt)
to the actual owner of their property, usually a bank. And since interest rates
have ballooned in the last few years – in the context of house
prices inflating by 1,000% since the early 1980s – that debt has become
much more expensive.
Banks, by
the way, are sharing the pain by making record profits – HSBC amassed £24
billion in 2023, an 80% increase. This windfall results from the interest they
receive on mortgage payments and loans being so much higher than the interest
they pay on their savings accounts. Why this discrepancy should exist is a bit
of a mystery. Theoretically, the two should cancel each other out and banks
should not be laughing all the way to the bank because interest rates have been
hiked. Maybe Sir Kier – who gave HSBC’s chief executive a knighthood in
December – can enlighten us.
It’s good to
know the people your monthly labours are paying off are having a hard time too.
Utility
companies
Next on the
identity parade are water and energy companies. In the past, these two public
services were nationalized. But in our post-Thatcherite wasteland, sorry
landscape, they are the play things of private equity firms who load the
owners with debt and expect their captive customers – us in other words – to pay for the
privilege of being compelled to use them. I just love the free market.
And when, as
with Bulb Energy, these wealth destroyers experience liquidity problems, they
can rely on the taxpayer, in the form of the government, to bail them out. Not
that we have any say in the matter.
When the
direct debits kick in every month, a lot of the damage to your balance is down
to these two suspects. Energy bills are about 50% higher than they were
pre-Covid. As with rent and mortgage payments, only in a semantic sense is this
not taxation. Unless you want to live in a cave somewhere, or on the streets,
you need a home and you need heating and water. Contrary to American monetarist
proselytiser, Milton Friedman, we are not “free to choose”.
And it’s
going to get worse. The average water bill will increase by 36% over the few years.
“If you get
too cold, I’ll tax the heat,” Harrison sang in 1966. He meant, “I’ll raise the
energy price cap”.
Corporations
and things like eating
In common
with all living beings, human beings need to consume if they want to continue
living. But the cost of consumption keeps going up. If consumer inflation has
fallen from its highs of a couple of years ago, that doesn’t mean prices will
return to their former levels, just that they will continue to rise at a slower
rate (although inflation seems going up again now anyway).
But the ever-increasing
cost of essential goods is not solely due to ‘impersonal’ factors like the cost
of raw materials. It is also down to the power of the huge corporations that
dominate the market to increase costs above the ‘natural’ rate of inflation. For
example, in the UK, “price mark ups” – price increases above the production
costs to produce profit – rose from 58% in 2002 to 82% in 2020. The profits of
the 350 largest companies on the London
Stock Exchange have swollen by 73% since 2019.
This price
gouging is symbolised by internet providers typically hiking raising annual
broadband fees – now essential for doing most things in life, including work –
by CPI (inflation) plus 3.9%. Why? Because they can.
What is now
hitting home is that, contrary to the advertising, the Thatcherite revolution
did not enthrone the consumer as king. Everyone knew that workers would have to
suck it up, but the customer was felicitated. But that’s not how things have
turned out. All regulators have a duty to protect the consumer but, as evidenced
by the failure to compel banks to pay interest on savings in line with hikes in
interest rates, this is just honoured in the breach. And with Reeves’s drive
for deregulation, such a responsibility is going to become even more threadbare.
You have to crane your neck to see the real
beneficiaries.
Only in the
perverse universe we now inhabit, could a privately educated ex-stockbroker who
claims to be “keeping the flame of Thatcherism
alive” and controls a company masquerading as a
political party be the one to take advantage of this situation.
It’s enough
to make you gently weep.
