A few weeks ago, the post brought a nasty surprise: a form letter to my husband from the taxman saying that his return had not been received in time and he was being fined £100 – a sum on which interest would be charged if payment was not received within four weeks.
There were a lot of reasons to feel cross about this, beyond the demand for £100, the first being that I had posted the return, if not exactly in good time, then in time for it to arrive by the deadline. The second was that there appeared to have been a delay of at least a week between the date of the letter and the date it was posted, leaving less than two weeks to appeal or pay up (they advise you to do both). But the third was the contrast between the speed with which HMRC issues its penalty notices and the time we had spent on hold, trying to obtain answers to our questions. You feel that all their staff are waiting to pounce on one-minute late-filers, even as the phones ring and ring.
As The Independent reported earlier this week, people trying to pay their taxes are routinely kept on hold, on a paid-for line, for more than five minutes. In our case, the average was more than 15 minutes. Add together the cost of the call and our time, and an argument could be made that we are due almost as much from HMRC as it is claiming from us. Except, of course, that the world does not work like that. In reality, the authorities always have the upper hand and the citizen – the taxpayer in this instance – is ever the supplicant.
While the odds have always been weighted against the “little people”, however, I have the distinct impression that the disparity in power has grown since the banking crisis. Or perhaps the truth is less that it has grown, than that long-standing injustices have been forced into the open by the inquest into the banking crisis and its aftermath. Either way, the upshot is that this country treats many of its citizens less fairly than we were inclined to believe. And that the unfairness relates especially to that elastic swathe of the population felicitously dubbed by Ed Miliband as “the squeezed middle”.
To continue the tax theme. While lowly officials at HMRC are sending letters to the likes of my husband, their bosses are lunching with the super-rich, trying to negotiate an amicable settlement, and their lawyers are scrutinising the small print of UK tax legislation to find out how, or even whether, they can extract some revenue from global giants who pay scarcely a penny. We sort of knew there was one law for the very big or very rich and another for the rest of us, but to see it spelt out like this, with the sums avoided by, say, Amazon or Starbucks – not even evaded, for heaven’s sake – estimated at enough to fund all manner of services that supposedly cannot be afforded, from maternity units to dementia care, then it is clear that we have been told less than the truth. It is not that the country cannot afford these services, but that its laws are framed in such a way as to favour something else.
At best, that something else might be presented as jobs, consumer provision and private enterprise. But the last, Labour, government introduced another distortion when it dreamt up working tax credits. These are, in effect, a subsidy to employers, allowing them to pay wages below benefit levels. You can argue that without this ballooning buffer there would have been more labour unrest and fewer jobs. But the system encourages a deceit: it allows what is in many respects a low-wage, low-productivity country to boast of having a thoroughly advanced economy providing decent living standards for all.
Nor is it just tax. The swingeing fine imposed on the Swiss bank, UBS, by international regulators this week was a reminder that it was not just when the banks threatened to fail that they had the whip hand over us. Whether it was corrupt individuals or the system, or both, that made possible the rigging of the London Inter-Bank Offered Rate (Libor) by Barclays, UBS and others, there were losers. And those losers were everyone who was placed at a disadvantage by an interest rate, on their debt or their credit, on which something had essentially been creamed off first.
Whether, as forecast, aggrieved customers will sue and thus finally bring the offending banks low scarcely matters, for the damage, in terms of distorted financial calculations and lost confidence, has been done. The fines so far have been mere pinpricks in the banks’ balance sheets. Meanwhile, interest rates remain too low for ordinary pensioner-savers to rely on and banks’ assets too scarce for ordinary businesses and house-buyers to obtain loans. Yet still the Government tells us we should work longer and save much more for our retirement – in funds depleted by management fees and ravaged by the vagaries of the stock market. As though, in the end, it will make much difference.
A cynical deception
The big secret that this Government, like the last, is unlikely to divulge is that those at the very top are largely insulated from the vicissitudes of the economy, whether they have contributed to its success or been complicit in its failures. Their capital is in safe havens, they treat tax as negotiable, they take gold-plated pensions early, they opt out of the NHS and they receive housing allowances on top of their pay – and there are more of them than there used to be. The other half of this secret is that the poorest, too, have been protected – at quite a different level, of course. The safety net remains; benefits are (or were) inflation-proofed, housing is subsidised and, once in the social sector, people tend to remain there, graduating to free social care that those with houses and jobs must pay for.
And in between, a huge swathe, are the rest of us, cajoled, chided and browbeaten into obeying rules that, as we learnt when it was too late, apply only to us. Together, we constitute an enormous middle, which is less squeezed than cynically deceived. I hope – and the Government should fear – that the middle of the next generation will see through the artifice and be less cooperative and more demanding.