Saturday, 31 December 2011

Dogma-induced sleepwalking

John Millington, Morning Star

Most people across the country will have been using this week to recover from hangovers and colds following a little overindulgence at Christmas.

Similar things have been said about the economy - that "we" overindulged in credit and excess and now have to face the inevitable consequence - austerity.

The "we" in this story depends on whom you blame for the crisis. And even the most liberal commentators are now pointing the blame firmly at top bankers and finance leaders.

But how long will the hangover from the initial crisis, where the economy seems to be perpetually stuttering, last?

For most of next year, according to the centre-left think tank Institute for Public Policy Research (IPPR).

In his new year's message IPPR director Tony Dolphin points to a bleak 2012 for ordinary people citing the fallout from the eurozone crisis and the dire consequences of government imposed cuts.

"The eurozone crisis is unresolved and country after country is being forced to adopt extreme austerity measures that will result in large falls in output. As a result, the whole eurozone economy is believed to be back in a mild recession," he said.

A double-dip recession in Britain has been mooted for some time and can only be avoided by relaxing austerity measures, increased investment and an uplift in the spending power of the average worker.

Hardly long-term or revolutionary stuff but is it going to happen?

Political economist and tax justice campaigner Richard Murphy is not optimistic.

"Since consumer spending, exports and business investment aren't going to increase right now the only reason why the economy will change direction in 2012 is if the government decides to boost it.

"Osborne has committed himself not to do that. He won't cut taxes - even though his party would like that - and he won't spend even though the economy needs it, because he has committed himself to austerity."

Murphy believes Osborne's sole interest is the market and its masters.

But politically the Tories are committed to discrediting the Labour opposition particularly as austerity is affecting not just working-class and unemployed people but professionals and middle-class people too.

"He (Osborne) is using austerity supposedly to keep the markets happy - although there appear to be ample signs they would love a stimulus as they're suffering. But that leaves him in a hole with that option.

"He's also done it to make clear he's not the tax and spend party he says Labour were. So for two reasons - his credibility with the markets and the credibility of his anti-Labour Party narrative - he's got himself into a corner he can't get out of and it's all of his own making to suit his own political narrative.

"The trouble is, we pay the price for it.

"Labour's challenge is to break the idea this is tax and spend. It has to use the words 'jobs' and 'investment' often. The challenge is to find the language that shatters Osborne and the myth he's created."

There are plenty of suggestions for a counter-narrative for Miliband - as Murphy suggests - emanating from respected economists and Labour-affiliated unions.

Michael Burke writing in the Socialist Economic Bulletin yesterday lays out a Keynesian response to the crisis arguing that government investment in the economy can have a "multiplier effect" on the private sector.

"Since each economic sector responds variably to a change in another sector's activity, and often with a time lag, it is impossible to assign a precisely distributed causal effect of a change in fiscal policy. But we have noted above that Labour's increased spending of 1.8 per cent of GDP led to a recovery, which added 2.8 per cent to GDP.

"This demonstrates the way the state can lead economic activity in total. This is what Keynes called the 'multiplier effect' as the private sector responds to increased government spending. In this case the multiplier is 1.56 (the ratio of 2.8 per cent to increased spending equal to 1.8 per cent of GDP)."

Highlighting the vital role of the construction sector in any sustained and consistent economic recovery, Burke busts the myth there is no money left.

"George Osborne has provided £40bn in 'credit easing' to small and medium sized enterprises. They will not build homes, provide decent affordable housing and employ workers with these funds.

"But the state could because it is a vastly more efficient provider of large-scale housing as well as infrastructure projects."

Capitalism needs to have a degree of growth in order to maintain the status quo.

But the government is anxious to keep its chums in the private sector happy even if it means sacrificing the wider economy, including restricting growth in the short-term.

State intervention of this kind would, Burke adds, "Remove the main responsibility for construction from the hands of the private sector and place it in the hands of the public sector.

"It seems that nationalisation is only permissible when bondholders and shareholders are being rescued."

And Left Economic Advisory Panel co-ordinator Andrew Fisher points out that in the long-term, maintaining steady growth and reducing employment will require an overhaul of the bankers themselves.

"We need not just a national investment bank but the public ownership of all banks and control of the finance sector to redirect investment to create jobs and build the infrastructure we need."

Saturday, 24 December 2011

Some union leaders may have given up the fight, but their members shouldn't

Public sector pensions are affordable and sustainable. That is not just the opinion of LEAP, but of the National Audit Office and the Public Accounts Committee, who both acknowledge, along with the IFS and the Hutton report, that the cost of public sector pensions is falling relative to our GDP - due in large part to the reforms achieved in 2007-08 between the then Labour government and public sector trade unions. These reforms according to the NAO save the taxpayer £67bn over 50 years.


Why then have public sector union leaders, for example those in Unison and the GMB, signed up to a deal that makes further cuts to public sector pensions?

George Osborne announced in his October spending review that he wanted to cut public sector pensions to cut the debt, not in pension schemes (which does not exist), but the debt caused by the banking crisis and recession:
"From the perspective of filling the hole in the public finances, we will seek changes that deliver an additional £1.8 billion of savings per year in the cost of public service pensions by 2014-15 – over and above the plans left to us by the last government."

So why would unions sign up to cuts to public sector pensions to pay for a crisis their members had no role in causing? In effect, by signing up to the government's agenda the unions are also accepting the their argument that a bloated public sector caused the crisis.

But, you may ask, didn't the unions wrangle concessions out of the government? Not according to the government's lead Minister in the dispute, Treasury Secretary Danny Alexander:
The heads of agreement deliver the Government’s key objectives in full, and do so with no new money since our November offer. In future, scheme pension ages will match the state pension age and schemes will be on a career average basis; all the agreements are within the cost ceiling that I set in November, and will save the taxpayer tens of billions of pounds over the decades to come.

Danny Alexander said on 2 November that he was announcing his final offer. So these fake negotiations since have not gained a single penny extra. If not worth signing up to on 2 November, why sign up now?

In a dispute about working longer and paying more for a worse pension, Danny Alexander has won on all three counts. As he told the House of Commons:
"We have already made some changes that deal with short-term pressures, including changing the basis of pension uprating to the consumer prices index and increasing member contributions by 3.2 percentage points, phased over three years. Those proposals are unchanged ... In future, scheme pension ages will match the state pension age"

So on each of the key questions union members should be asking what has my union (in the case of Unison, GMB, ATL, FDA and others) gained so that it could recommend this 'deal' (more honestly described as total capitulation)?

What's more, an emboldened Danny Alexander proudly announced the true political agenda behind the pensions reforms his government sought: "The new pensions will be substantially more affordable to alternative providers". So in signing up to this scheme, union leaders are facilitating the privatisation of their members' jobs as well as the theft from their pensions.

Union members, and even union excecutives, of course have yet to have their say on the proposals, so at the moment this backroom capitulation has yet to be signed off. Union branches and trades councils are already organising for a no vote and to put pressure on their executives, so their leaderships may have to fight again.

To date though, it is a tragic reflection of the UK's trade union leadership that after the biggest strike for a generation, there is an utter vacuum where an industrial action strategy should be. Capitulation now, will leave the government emboldened to cut more jobs, privatise more services, and further constrain pay.

Tuesday, 20 December 2011

HMRC has a cosy relationship with the tax avoidance industry

MPs have criticised the agency but remained silent on its links with the big accounting firms that help companies avoid tax

Prem Sikka

The public accounts committee report on the operations of Her Majesty's Revenue and Customs (HMRC) is a damning indictment of the Treasury and tax officials. Some £25.5bn remains uncollected from disputes with 2,700 companies. The amounts are bigger than the budget for the secondary education or transport.

HMRC has entered into sweetheart deals that let multinational corporations off the hook, but there is little public accountability. Two deals have made newspaper headlines. The tax dispute with Vodafone was rumoured to be for around £6bn. HMRC and Vodafone denied this amount, but the committee noted that the company's accounts set aside around £2.2bn to meet its liability. It eventually settled for about £1.25bn. The second deal with Goldman Sachs related to unpaid tax on complex transactions and the company was not required to pay interest which had been expected to amount between £8m and £20m.

A major problem is that all deals are shrouded in secrecy, and therefore it is difficult to judge the efficiency and effectiveness of HMRC. The committee draws attention to numerous potential conflicts of interests and lunch/dinner meetings between the HMRC officials and corporate advisers to agree deals. Many of these meetings were not minuted, and where the minutes existed they were often not available. In the face of persistent questions from the committee, HMRC officials often sought refuge in confidentiality. The committee concluded that "there is a question about whether HMRC acted within the law and within its protocols" and that the government procedures lack the independence and transparency needed to provide sufficient assurance to parliament. Despite, this the National Audit Office has generally given a good write-up to HMRC.

The committee's report raises three broad questions. First, in common with other parliamentary hearings, the public accounts committee hearings made good theatre, but were not really effective. Leading witnesses, often briefed by lawyers, declined to provide the requisite information. This should be countered by forcing witnesses to provide evidence on oath. Rather than relying on goodwill the committee should insist on the evidence.

Second, the committee's report is short on meaningful reforms. Instead of the so-called independent review of sweetheart deals, or bureaucrats reviewing the work of other bureaucrats, it should have empowered the people. Thus the tax returns of all companies and related correspondence should be made publicly available. The disclosures will enable the people to make their judgment on complex avoidance schemes and secret deals reached with tax officials. Norway, Sweden and Finland already publish corporate tax returns in various forms and the same should be adopted by the UK too.

Third, the committee laments HMRC's cosy relationship with large companies, but is silent on the cosiness with the tax avoidance industry. It notes that HMRC officials attended numerous lunches, dinners and receptions organised by PricewaterhouseCoopers (PwC), KPMG, Deloitte and Ernst & Young. The lavish hospitality is organised to promote private interests rather than enhance HMRC accountability.

Many former ministers act as advisers to big accounting firms. For example, Labour grandee Lord Peter Mandelson has been an adviser to Ernst & Young. Former ministers Lord Digby Jones and Lord Norman Warner of Brockley have been advisers to Deloitte. Former Labour home secretary Jacqui Smith is a consultant for KPMG. Former Conservative minister Sir Malcolm Rifkind has been an adviser to PwC. Do such political links skew the relationship between government departments and the private sector?

The links between the big accountancy firms and the Treasury attract no comments from the committee. For example, former PwC staffer Mark Hoban is the current financial secretary to the Treasury. Sir Nicholas Montagu, one-time chief of the Inland Revenue, joined PricewaterhouseCoopers in 2004 before moving on to other lucrative commercial appointments. PwC partner Richard Abadie has been the head of private finance initiative policy at the Treasury. In June 2009, former PwC partner Amyas Morse was appointed UK comptroller and auditor general and became responsible for directing the National Audit Office. Former PwC tax partner John Whiting is the director of the newly established Office of Tax Simplification, advising the government on simplification of tax laws. Chris Tailby, one-time tax partner at PricewaterhouseCoopers became head (until 2009) of anti-avoidance at HMRC. In July 2010, partners from KPMG, Ernst & Young, Grant Thornton and BDO became members of the government appointed Tax Professionals Forum and help shape the UK tax laws.

Unsurprisingly, little progress is made on curtailing tax avoidance. The revolving doors must raise questions about the cosiness with the tax avoidance industry and HMRC's willingness to do secretive deals. Yet the committee raises no questions.

This article first appeared on Guardian Comment is Free

Wednesday, 14 December 2011

Austerity doesn't work - it's going to get worse in 2012



George Osborne will go down in history as the Chancellor who provided the textbook example of how austerity will make a recession or economic stagnation worse. Almost every policy decision he makes is exacerbating rather than solving or even ameliorating the crisis.

Osborne's Autumn Statement on 29 November should have been the wake-up call for millions - including him - that austerity is not working. He is missing every single target he set, and every projection made by the Office for Budget Responsibility has had to be negatively revised. As a result of Osborne's austerity drive we will have lower growth, more debt, higher unemployment, reduced demand and no prospect for growth in the coming year.

Two reports in recent days have confirmed the bleak outlook for Osborne's auterity Britain. The Chancellor had already downgraded his growth prediction to 0.7% from 2.1%. The Standard Chartered Bank was predicting 0.6% growth for 2012 (similar to Osborne's downwardly revised figure), but on 12 December it changed its prediction forecasting that in 2012 the economy will now contract by 1.3%.

This is very bad news. It is bad not just because it means the UK will be back in recession in 2012, going on past form it is also bad because it will mean George Osborne will react by imposing more austerity - that was his reaction this time: raising the state pensions age to 67 by 2026, capping public sector pay at 1% for two years (on the back of a two year pay freeze), cancelling tax credit increases, more conditionality on welfare claimants, especially the young unemployed. This was combined with more tax breaks for business: more enterprise zones, 100% capital allowances in some areas, extending business rate relief, and confirming that corporation tax will drop to 25% next April.

The second bad report this week was the Manpower jobs outlook survey on 13 December, which surveyed 2,100 employers and found that four out of five had no plans to hire workers in the next three months - the lowest level for three years. New unemployment figures are out later today. Mark Cahill, Manpower's managing director, said:
"The 2012 jobs market sits on a knife-edge. In some ways this is a reflection of a weakening economy. We hear stories about companies hoarding cash and not investing, and we see a number of business sectors battening down the hatches."

But if the money in people's pockets is being outstripped by inflation and more and more people are unemployed, why would a company prepare for growth? Demand in the economy is being squeezed by cuts. The 710,000 public sector job cuts by 2017 that Osborne announced are not going to be picked up by the private sector unless it is confident consumer spending is expanding.

Despite the few high profile capital projects announced by the Chancellor, capital spending is down - affecting construction and the supply chain. Why would any private company build housing when everywhere outside London house prices are falling and the mortgage lending is less than it was in 2000.

George Magnus, senior economic adviser at UBS says:
"Households are trying to reduce debt, incomes are stagnant and we are losing jobs in a weak labour market. Fiscal austerity alone cannot be effective in this environment. You have to have growth and the litmus test of government policy is job creation."

Cuts beget cuts - and I haven't even considered the impact of the c.£160bn of debt that UK banks have to repay in 2012, which could well lead to a further systemic crisis.

2012 is Olympic year with London on show to the world, but it will also be the year when Osborne's Olympian economic fuck-up will be plain for all to see.

Tuesday, 13 December 2011

'Poor decisions' led to £45bn RBS collapse, says feeble FSA report


Morning Star
Monday 12 December 2011
by Rory MacKinnon, Corporate Affairs Reporter

Financial watchdog chief Lord Turner stated the bleeding obvious today in a 452-page report on Royal Bank of Scotland's failure which said "poor decisions" were to blame.

Political economists rained down ire on the Financial Services Authority chairman's "pathetic" findings after a year-long investigation into the 2009 collapse.

Lord Turner pinpointed "multiple poor decisions" by directors which ultimately ended up with the bank needing a £45 billion bailout from taxpayers to fend off closure.

Failures included aggressive expansion with "inadequate due diligence," such as the 2007 takeover of Dutch high street bank ABN Amro, and dangerously low levels of capital permitted under "light-touch" regulation.

He said that the bank had suffered from an over-reliance on high-risk, short-term funding and had made substantial losses in credit trading which were underestimated by both the bank itself and regulators.

The FSA chief also blamed the "systemic crisis" the world over.

But Lord Turner only briefly touched on "underlying deficiencies in RBS management" that made it "prone to make poor decisions."

And he justified the failure of the FSA to spot the spiralling crisis as a side effect of it working "against a backdrop of political pressures for a 'light touch' regulatory regime."

Left-wing commentators were left unimpressed.

University of Wolverhampton Professor Roger Seifert dismissed the report as "pathetic."

Regulators' own lack of skill and technical expertise "was never the issue - it was a complete lack of political will," he said.

"It was not a minor failure or lack of skills and technical expertise.

"It was a failure at the heart of the liberal government."

Left Economics Advisory Panel's Andrew Fisher said the findings underlined the need for the government to take the banking system into taxpayer hands.

"The failure of RBS was due to a regime sanctioned by successive governments that instituted banks as the dynamic driving force of the economy rather than as safe depositories," he said.

"The banks and wider finance sector manage our money, our mortgages, our pensions.

"Their existence is essential for our day-to-day lives, our homes and our futures.

"This is a systematic failure to which the only sustainable solution is public ownership and control."

And Tax Justice Network economist Richard Murphy said: "Regulating better a structure that is inherently flawed will never give us the right answer.

"Reforming the system as whole is the only way forward now - and this is the elephant that dared not trumpet in this report."

Wednesday, 7 December 2011

Is a Robin Hood tax all it seems?

Jerry Jones

It seems a nice idea. Tax the financial speculators enriching themselves at our expense and use the proceeds to raise people out of poverty.

The Robin Hood tax campaign, which is sponsored by some 50 charities and other non-government organisations and supported by such luminaries as Comic Relief founder Richard Curtis and Archbishop of Canterbury Rowan Williams, is pushing this course of action.

According to the campaign, a package of financial transaction taxes on the purchase and sale of foreign exchange, shares, bonds and various derivatives, could raise over $400 billion (£250bn) worldwide.

That is more than enough to achieve the Millenium Development Goals, which range from halving extreme poverty to halting the spread of HIV/Aids and providing universal primary education by 2015, or even more ambitious goals.

But aren't these campaigners being a little starry-eyed? Assuming this amount could be raised by such means, can we trust governments to spend it for that purpose?

Already, the German and French governments want to hijack such taxes to fund the EU, whose accounts are notoriously opaque and corrupt.

Moreover, if Western governments were serious about ending poverty and so on, surely they would have long since put up the funds for that purpose?

If a Robin Hood tax could raise such funds, it would be up to the rest of us to campaign for it to be used in that way.

At the moment, the likelihood of a Robin Hood tax being introduced in Britain is nil, given the vehement opposition of the City, the Con-Dem government and right-wing lobby groups.

But just because the City and rightwingers are opposed to it, does that mean we should be for it?

Say a change of government did introduce such a tax and that we could prevent the EU grabbing it. Would the tax be capable of raising the kind of money suggested?

The trouble is that the calculations assume that the buying and selling of those various financial assets would carry on more or less as before.

Consider a transaction tax just on foreign exchange dealings, which is what the Robin Hood tax originally referred to when it was first coined by the campaigning group War on Want in the late 1990s - up to then it was known as the Tobin tax, after the Sveriges Riksbank (aka "Nobel") prize-winning economist James Tobin.

Tobin's original intention when he proposed the tax in 1972 had been not so much to raise funds but to make speculation less attractive. This would make exchange rates less volatile following the 1969 collapse of the Bretton Woods agreement, which had done that job the previous 25 years. But the Tobin tax was never implemented.

Today currency trading amounts to some £400 trillion a year. This is 50 times the total value of goods and services traded globally each year. The difference, it is assumed, is due to the large sums used for speculation.

Campaigners latch onto these figures, suggesting that a transaction tax of just 0.05 per cent could yield some £200bn just on foreign exchange dealings.

However, if the tax was doing its job according to Tobin, the amount of foreign exchange traded would slump to around that required for the purposes of real trade.

That is because it would no longer be worthwhile to speculate, which depends on very thin margins, and trading very large sums. It is likely therefore that nothing like that amount could be raised.

In 1984 Sweden introduced a 0.5 per cent transaction tax on the buying and selling of shares - that is, 1 per cent on a round trip.

Two years later it was doubled, and in addition, a 0.002 per cent transaction tax on bonds and other financial assets was introduced.

However trading volumes fell dramatically - to zero in some cases - and the revenues turned out to be barely 5 per cent of what had been anticipated. The policy was abandoned in 1990.

Britain has had a transaction tax on the purchase of shares - now known as the stamp duty reserve tax - for over two centuries.

The rate of tax has varied between 2 per cent and 0.5 per cent, the current rate.

Studies have found that trading volumes fell considerably when the rate was higher, and vice-versa. These days all financial intermediaries, which account for over 70 per cent of share dealings, are exempt, so its effect on trading volumes is minimal.

This is the dilemma for all transaction taxes. Are they to modify behaviour or to raise revenue?

If the former, they will not raise much revenue. If the latter, if the rate of tax is higher, trading volumes will reduce, so there is less to tax, and if low enough not to affect behaviour, they are likely to be hardly worth collecting.

Moreover, the financial sector is very adept at coming up with devices to get round regulations and avoid tax, making use of offshore tax havens to protect its privileges.

In effect, transaction taxes are an attempt to do things by proxy. Why not campaign for governments to address these issues directly and openly?

First there are more effective ways of raising revenue and to address poverty, and stimulate investment in real productive activities upon which that depends.

For a start, governments could make dealings with offshore tax havens illegal, so that the giant transnational corporations and the rich pay their fair share of taxes.

For Britain, this would of course affect the City, the world's second-biggest tax haven after Switzerland, as well as various enclaves still under British jurisdiction such as the Cayman Islands.

But this would be offset by the extra revenue made possible by eliminating tax evasion, especially if tax rates on profits and high incomes were raised to what they were in previous times.

Furthermore the diminished role of the City would make investment in other parts of the economy more attractive, which is sorely needed.

Meanwhile, genuine traders want stable exchange rates. At present they have to set up complex and expensive hedging arrangements to offset volatility, which in fact is what a large share of the supposed speculation in currencies is about.

This is what the Tobin tax was meant to address, though more recent research suggests that its effect could be to make currencies even more volatile.

It would be far better for all international trade to be conducted in a single global currency not connected with any particular country, with all national currencies adjusted to it, say, every quarter, on the basis of purchasing power parity.

Countries with failing economic polices might suffer, but this would not affect other countries.

Had the euro been introduced on that basis the eurozone now would not be in such difficulties.

For such a policy to work, capital controls would also be needed, but these are needed anyway, not only to cut out speculation but also to stop the surplus labour or profit generated by a country's people ending up somewhere else and therefore not available for investing in that country's economic development - which is what is needed to eliminate poverty.

In short, the campaign for a Robin Hood tax in the form of financial transaction taxes is largely a diversion from the real issues that need to be addressed

Tuesday, 6 December 2011

Nick Clegg's plan for shareholders to tackle fat-cat pay won't work


Today's shareholders are often foreign, functioning more like traders than owners – why would social justice bother them?

Prem Sikka

The deputy prime minister, Nick Clegg, and the business secretary, Vince Cable, are on a charm offensive. People facing wage freezes are being told that the government will crack down on runaway executive remuneration. A key mechanism is to encourage shareholders to take a more active role, whatever that might mean, because in the words of Clegg, "they own the companies, after all". The evidence shows that such claims are flawed.

In the last 30 years there have been massive changes in shareholding patterns. Shareholders are now traders in shares rather than owners. They have little long-term interest in a company and little inclination to invigilate them in the public interest. The table below is compiled from various surveys published by the Office for National Statistics and shows the pattern of share ownership in UK-listed companies:

Despite the giveaway of shares in privatisations and tax incentives to buy shares, for example through ISAs, direct share ownership by individuals has declined dramatically. The foreign ownership of UK companies has increased and 41.6% is held abroad by oligarchs, sheikhs, sovereign funds and foreign entities. A major change not captured by the above data is that the average duration of share holdings has fallen from around five years in the mid-1960s to around two years in the 1980s, and by the end of 2007 it declined to around 7.5 months. I know of financial institutions who now churn their portfolio every three months to pick winners, and that trend is already consolidated in banks. In October 2011, Andrew Haldane, a member of the Bank of England financial policy committee noted that "average shareholding periods for US and UK banks fell from around three years in 1998 to around three months by 2008. Banking became, quite literally, quarterly capitalism".

So the government is planning to tackle fat-cat pay by empowering shareholders. That did not happen even when a vast majority of the shares were held in the UK and for a longer duration. It certainly is not going to happen when shareholders have a short-term interest and primarily function as traders and speculators, rather than as owners. It is difficult to see why oligarchs, sheikhs and other foreign owners would be bothered by high levels of executive remuneration as their main concern is the returns on their investment rather than any sense of social justice in the UK. Individuals may have indirect ownership through insurance companies and pension funds, but they do not elect directors and cannot mandate these entities to vote in any particular way. In any case, directors of these entities have incentives to maintain high executive remuneration because it provides the benchmark for their own rewards.

Even if some shareholders could muster a resolution at the annual general meeting (AGM) to oppose fat cat pay, their chances of success are slim: directors are permitted to cast thousands of votes to defeat any unwelcome resolution. Even if a resolution is passed it is only advisory rather than binding on directors. In Clegg's world, shareholders are not only the owners but also the main risk-bearers. This is not quite so either: the banking crash has vividly demonstrated that risks are borne by savers and taxpayers. Shareholders have the benefit of limited liability but taxpayers have virtually written a blank cheque. At many other entities, shareholders only provide a minority of the finance capital and thus do not bear all the risks. In any case, their liability is limited. Employees also bear a heavy cost because their jobs and pensions depend on corporate wellbeing.

To curb fat-cat pay, the government needs to empower those with the long-term interests in a company. This requires not only putting employee representatives on remuneration committees, as Clegg is hinting, but putting them on company boards and changing the way the UK companies are governed. The debate about democratisation of major corporations is long overdue.

*This article first appeared at Guardian Comment is Free