The One Million, the FTSE 100 and the 99%

17/11/2011 22:57 GMT | Updated 17/01/2012 10:12 GMT

On Tuesday evening, a special BBC Newsnight programme saw an audience of unemployed young men and women speak about their search for work and the hopelessness that they feel about their situation. It was depressing viewing. On Wednesday, unemployment amongst 16-24 year olds in the UK rose above one million.

We should note the potential for significant change when a country has thousands of young people with no job to do. In north Africa, the International Labour Organisation estimates that youth unemployment was around 23.7% in 2009, and that it remained at about the same level in 2010 - pretty close to the current UK level of 21.9%. Such rates are seen as having contributed directly to the social and political unrest which led to the overthrow of the Tunisian and Egyptian regimes.

The main concern of the pundits here seems to be whether this week's unemployment figures directly correlate with the crisis in the Eurozone. But you would have to search far and wide to find anyone saying that they aren't related to the global financial crisis that hit hard in 2008.

And while the activities of the banks which created this situation continue to cause shockwaves for ordinary people, we find that it's business as usual for many of our multinational corporations.

A few weeks ago I blogged about the impact that tax dodging has on rich and poor countries alike.

Since then, this issue has gained more and more traction, with the G20 identifying the need for greater transparency to combat the problem. It's widely acknowledged that some of the problems of Greece and Italy have been exacerbated by their failure to collect taxes effectively - in Italy's case, from their own former Prime Minister, Silvio Berlusconi. Given the history of tax collectors in Rome, there's an irony in there somewhere.

Here in the UK, there are some similarities. As we know, the government desperately wants to cut the deficit, employing an arsenal of cuts to the welfare state to achieve this. As well as the young people without jobs, the cuts are hitting many of our most vulnerable such as disabled people and users of Sure Start centres although, to the government's credit, not the overseas aid budget. What is truly breathtaking though is that whilst regular people pay the price of the banks' foolhardiness, the government is bending over backwards to accommodate tax avoidance by some companies.

Take the 'sweetheart' deals between two multinationals and HM Revenue and Customs that the House of Commons Public Accounts Committee is investigating. Goldman Sachs appears to have been let off paying some £10 million of tax, and Vodafone as much as £4.75 billion - in this, the 'age of austerity'. Imagine the public services that money could fund and the jobs that it could support. Not content with this, in changes to the UK's anti-tax haven rules, Mr Osborne is set to give away another £2 billion of tax to companies in a move which could simultaneously cost developing countries up to £4 billion.

What is coming into sharp focus is the way that rules which apply to the majority - the 99% if you like - simply don't apply to the most powerful companies. ActionAid's recent research showed that 98 of the FTSE 100 companies use tax havens. Between them, they have set up almost 35,000 subsidiary companies, nearly 8,500 of which are in tax havens.

It won't shock you to hear that the banking sector makes most use of these - with 1649 tax haven companies between HSBC, RBS, Barclays and Lloyds alone. Channel 4 News did a great piece which highlights the absurd way in which this works, using Jersey as a case study. Typically, several companies are all registered at one address - where none of them do any real business - but enabling them to shift their profits into tax havens to avoid paying taxes around the world. There's nothing illegal about this but it is very difficult to argue that it is morally acceptable, especially in the present economic circumstances.

Imagine if you, or I, or some of the unemployed young people in that Newsnight programme were to register ourselves at an address where we do not actually live, so that we could claim benefits. That would be benefit fraud and it would be, rightly, illegal. But the effect - plundering state resources - would be no different to that of the activities of the 98 FTSE 100 companies in tax havens (although it would be on a vastly smaller scale of course).

So whilst the most powerful interests continue to have a special and distinct set of rules to play by, we see some politicians and the police devote time to removing the Occupy protestors in Wall Street and in the City of London. But they are really not the ones doing the damage.

Wherever you look, the vulnerable are paying the price for the actions of some of our companies. The young people in this country unable to get a job because of deep cuts which apply to everyone except those big corporations who get tax breaks. In poor countries, where the tax revenues are desperately needed, babies are put at risk because dire poverty means that their mothers cannot give birth safely. They'll be lucky to get a free place at school. Meanwhile, the revenues which could pay for the basic infrastructure such as roads and reliable electricity that would help business to thrive and create thousands of new jobs is siphoned off to tax havens.

The chorus of voices in protest is growing. How loud will it have to get before we see some change?