The People Before Profit party



While they didn't take part in the virtual hustings, the socialist People Before Profit party attracts sizeable support in Brockley and Telegraph Hill, maintaining a high-visibility presence with posters in a number of shop windows along Brockley Road, which is either ironic or a withering commentary on the state of Brockley business.

While at the Mayoral and Parliamentary level they stand no realistic chance of election, they are hopeful of securing some Councillor representation. When we spoke to Brockley Ward candidate Patrick McGinley about his (seperate) campaign on behalf of local Council leaseholders (about which more soon) he was hard at work printing leaflets, with disaffected Labour voters a key target. His platform is based on restoring transparency to local government, providing more facilities for local young people and improving the accountability of the Council's housing budget.

So how big a factor do you believe the People Before Profit will be in this election?

40 comments:

Anonymous said...

Does this mean shooting practice for youngsters so they dont hit innocent passers by.

change said...

I keep bumping into local acquaintances with friends who are standing for People Before Profit. They are all people who have been actively involved in trying to get what is right for Lewisham. No sitting on the fence stuff. I really fancy a change of mayor, theirs sounds the most interesting. No career politicians in their group.

Anonymous said...

Not really sure how this works, in terms of fair electoral coverage ...

Brockley Nick said...

out of interest, do you think the bias works for or against them?

Deptford dame said...

I wasn't clear if they declined to take part, or were not invited. They have been campaigning very hard in New Cross and Evelyn wards, I suspect they will at least cut the Labour councillors' majorities significantly.

Anonymous said...

People before Profit are not a socialist party, they support the socialist councillors in telegraph hill but PBP are non-partisan.

Tyrwhitt Michael said...

For those voting at Lewisham Bridge School make sure you use the Brookbank Road entrance.

I wasted ten minutes this morning by going round to Vian Street.

Happy voting

david said...

ahhhh voting done now :)

Brockley Nick said...

"People before Profit are not a socialist party, they support the socialist councillors in telegraph hill but PBP are non-partisan."

I knew someone would try and pull me up on this one and I understand that they are not The Socialist Party, but they are socialist, in that the policies and principles they espouse are broadly socialist - not that there's anything wrong with that.

I'm sure there's a fascinating debate to be had about the ideological intricacies of minor left-wing political parties, but socialist will do as a broad descriptor - at least as useful as calling Labour left-wing, the Tories right-wing and the LibDems liberal.

Anonymous said...

yes, it would be like call this blog a narrow-minded, right-wing bigots blog if one were to judge it by some of the input from contributors

labels don't always help

Tamsin said...

"socialist" with a small "s" the way people can be "conservative" with a small "c".

love detective said...

" at least as useful as calling Labour left-wing"

i.e. not useful in the slightest

Brockley Nick said...

I knew someone would try that line too!

Anonymous said...

I'd say this is more of a hand-wringing, eco-hippies blog

Anonymous said...

It's an incredibly useful blog - letting you know of events like the Evening Walk through the Cemetery on Remembrance Day which you would otherwise not learn about until too late and giving real-time warning of traffic problems and water turn-offs.

Also amusing, a little bit controvesial but basically good-mannered.

love detective said...

"I knew someone would try that line too!"

i'd say it's more accurate to describe lpbp as socialist than new labour as left wing to be fair

although i'd never associated a pledge to get rid of corporation tax as something associated with a socialist influenced party, especially one called people before profit

people before profit, but low taxes before people!

Brockley Nick said...

Yes, it's an odd one not to want to tax profits...

Anonymous said...

Can they be the very social, public spirited, socialisty alliance.

I like the sound of the Telegraph Hill councillors, they stand up to Bulldozer Bullock. Although you don't stand much chance against a bulldozer.

John Moonbow said...

When I first voted in Brockley, a decade ago, I was the only one not wearing sandals, this morning I was the only one not wearing a pinstripe

Tubes and Tories cometh!!!

John Moonbow

Nick Ingham said...

On the Corporation Tax issue I think this is one of George Hallam's rather more interesting ideas.

Corporation Tax affects all sizes of business from the company in Brockley with half a dozen staff to a huge company like Tescos.

Whenever a company makes a profit it has a choice of two things to do with that profit (a) retain it in the company or (b) pay it out in dividends to shareholders (or in bonuses to directors).

Our current tax system encourages businesses to pay out profits to shareholders/directors (as dividends which are paid out of post tax profits are effectively tax free from the company's perspective)

I understand that George wants to shift the burden of taxation from option (a) to option (b) by getting rid of corporation tax and increasing taxes on dividends, bonuses, etc.

Encouraging companies to retain more cash reserves in the business will have a number of effects (including encouraging investment in R&D or in new plant and machinery) but perhaps most importantly will ensure businesses are more able to survive through lean times.

Anonymous said...

Conservative Brockley eh John.

Whoops said...

I suprised myself when I accidentally voted for Ian Hamilton this morning.

Looking down the list, it seemed that only Dean and Ian were electable.

I hope I haven't wasted my vote!

TJ said...

"Tubes and Tories cometh!!!"

Thats the thing aobut the Tories, they know good housing stock when they see it...

...and how to agument it with duck houses.

Ed said...

One of their guys nearly reversed his car into me as I entered my home in the TeaFactory last night so definitely won't be voting for them; didn't even apologise...

love detective said...

Nick, cheers for the elaboration of the policy but I can't get my head around how that could possibly work

assuming say a 50% payout rate where every 100 of post tax profit (being 139 pre tax profit) pays out 50 in dividends. so under that scenario 39 is raised through corporation tax on the company's profits plus an additional amount of say 11 to 16 if the dividend ultimately gets paid to an individual - so say in total 50 is raised in tax overall (39 through corporation tax and 11 through individual tax)

In this scenario if corporation tax is scrapped and the 'behavioural' effect is achieved, i.e. the 50 previously paid out as dividends is reinvested in the company's activities, then this translates into 50 of lost taxation income for the state (i.e. the previous 39 of corp tax and say 11 of individual tax) - the way in which this would be balanced out from your post above would be to increase taxes on dividends, but in this case no dividends are paid out (so you can't tax something that doesn't exist!)

so it seems to me that this scheme would only even come close to working if its behavioural effect is actually the opposite of what was intended, i.e. companies continue to pay out the same amount, or more, in dividends as before (and even then in the above example they would then have to be taxed at something like 100% to replace the lost tax take of 50, in which case nothing would be paid out as no shareholder would want a dividend that they would be taxed 100% on)

(you mentioned also that tax on bonuses could be increased to close the gap, but this is ultimately no different (in behavioural terms) to collecting the tax as corporation tax, and in any case would be nowhere near to replacing the lost corporation tax)

thing is though, regardless of all the above, putting 'get rid of corporation tax' on election material, with no other context/explanation seems suicidal for a supposedly progressive organisation - however even if it was explained it would seem to represent a transfer of value from the public to the private sphere which again seems nuts coming from who it is coming from

please tell me i've got my sums wrong and this has actually been thought through properly? (not that it really matters either way mind)

Nick Ingham said...

love detective - as George lectures in economics for a living I really hope this has been thought through properly! He has tried to explain this in detail to me but I must confess my eyes glazed over after a while.

I think there is a minor "double taxation" flaw in your figures.

I assume you mean a company makes a pre tax profit of £139m which attracts Corp Tax at the standard rate of 28% leaving £100m of post tax profit therefore Govt receives a tax revenue of approx £39m.

Agree so far. However, in principle, when some or all of this is paid to shareholders they do NOT pay tax again on dividend income they receive as the company has already paid tax on this profit.

In a case where all the shareholders who received dividends are basic rate tax payers the Govt would receive no further tax revenue.

(If some of the shareholders are higher rate taxpayers they will have to chip in a small amount more tax - the tax credit calculations here are where I start to lose the plot).

Therefore I'm not sure I agree with your £11-16m figure.

To make the policy revenue neutral it appears to me that the dividend would have to attract tax at a rate of at least 56%.

i.e. assuming half the profits are paid out as dividends the total dividend payment being £70m taxed at 56% gives a Govt revenue of £39.

In principle, I like the concept that we should change the tax system to discourage business owners (both large and small) from taking a short term view.

The example that springs to mind is one where a major retail firm that owned most of its own buildings was taken over by a private equity firm. The new owners effectively remortgaged all the buildings and used the money they raised to pay themselves a dividend.

In the short term, a few individuals made a load of money. In the long term, the company was saddled with huge debts to service.

Feel free to email George through the email address on his website. I'm sure you will get a better reply than mine!

Nick Ingham said...

One other throught. It was Gordon Brown who changed tax credit law so that pension funds (who are often major shareholders) can no longer reclaim tax on dividend payments.

In the good old days, the pension funds who held shares in your company would have been able to claim some/all of that £39m that the company had paid in Corporation Tax back from the Govt (hence reducing the Govt's revenue to less than the £39m figure you quote).

Got to go before my brain explodes!

love detective said...

@nick

"In a case where all the shareholders who received dividends are basic rate tax payers the Govt would receive no further tax revenue.

(If some of the shareholders are higher rate taxpayers they will have to chip in a small amount more tax - the tax credit calculations here are where I start to lose the plot).

Therefore I'm not sure I agree with your £11-16m figure"


the 11-16 is based on either all of the shareholders being higher or super higher rate tax payers, i.e. they pay tax of either 32.5% or 42.5% on the dividend income, they can offset that by the 10% credit that all recipients get (which allows basic rate taxpayers who pay 10% on gross dividend income to have no further liability) - so 11 represents 22.5% (32.5% less 10% credit) of the 50 dividend and 16 represents 32.5% (42.5% less 10% credit) - if the working assumption is that all shareholders are all basic rate taxpayers then obviously the 11-16 doesn't come into it, but that's not that a realistic assumption!

"To make the policy revenue neutral it appears to me that the dividend would have to attract tax at a rate of at least 56%.

i.e. assuming half the profits are paid out as dividends the total dividend payment being £70m taxed at 56% gives a Govt revenue of £39."


- even being generous to the policy and assuming for the time being that all shareholders are basic rate taxpayers (which is highly unlikely) it still seems to fall over however , as to make it tax neutral you are saying that to raise £39 the tax rate would have to be 56%. however that (already high rate) is contingent on exactly the same dividend payout ratio as before (i.e. half of distributable profit) so the ability of the policy to claw back the corporation tax lost is dependent on a high dividend payout ratio being maintainted, which is exactly the opposite of what the the policy sets out to try and do!

the more likely scenario is that it would (in accordance with the stated desire of the policy) encourage a higher proportion to be retained within the company, say 75% (which is likely given the massive increase in tax that individuals receiving dividends would have to pay, so they would seek to avoid that by pushing for reduced dividend payouts)- that would give a dividend payout of say 35, which would have to be taxed at 115%(!) to claw back the lost corporation tax.

you could say that by keeping the same payout ratio but the fact that it is applied to a higher distributable profit amount that the policy would then allow for more money to be retained within the company, but that is a straight transfer from the taxpayer to private shareholders as company shareholders would pressurise companies to payout less dividends (as they would be getting taxed at at least 56% on them) so the monetary amount of dividends (and the taxable base) would fall, meaning no matter how much tax was levied on them it wouldn't be enough to claw back the lost corporation tax

david said...

presumably the thinking is that where the policy is successful and more cash is retained in the business rather than paid out as dividends you don't end up with a public -> private transfer as, assuming no other tricky ways to get the cash to the shareholders, the monies are reinvested in the business and essentially spent in the economy (more VAT for the Govt at final consumption if this increases) more money to pay people to work and more jobs and so the virtuous cycle goes. In an ideal world. Although I may have missed the point (again).

Mrs Nick Ingham said...

@love detective - Nick has gone out to pound the pavements in the LPBP cause ... so I'll chip in to the best of my ability.

George's case, as he explained it to us, is looking at the overall taxation picture. For example, if businesses are encouraged to invest and keep cash reserves then they are more able to keep going through the lean times (thus staff keep their jobs and keep paying income tax rather than losing their jobs and claiming JSA), it encourages R&D and investment (thereby helping to create new jobs, more income tax revenue etc.).

Overall, George argues for making taxation simpler, so that there are fewer loopholes that rich people with clever accountants can take advantage of ... although that might put a few clever accountants out of a job! ;-)

As Nick said, drop George an email via his website and I'm sure he would love to engage in a debate about his ideas for the tax system.

love detective said...

ok cheers for the replies, still not convinced of the argument though, either conceptually or numerically, it sounds too much like market liberal type thinking, i.e. don't interfere with business or the markets, don't force redistribution through the state, keep taxes simple and flat, and magically the invisible hand will somehow, no matter how implausible it seems, make things better for everyone

(i still voted for him though - and out of the last five elections where i've been able to vote, it's the first time i've ever voted)

Brockley Nick said...

I happen to agree with a policy of seeking to lower taxes on profits (and wages) (and switching more of the tax burden on to wealth, consumption and pollution), but I don't see how it's consistent with a party that calls itself People Before Profit...

Tamsin said...

Keeping tax simple is something that no government seems prepared to do - understandable since their advisers in HMRC have a vested interest in making themselves indispensible by creating complexities that no-one else can understand.

The sheer quantity of tax and reporting legislation that business men either have to understand or pay other people to deal with on their behalf has steadily increases.

Because of the wide ranging benefits of re-investment in the business and the virtuous cycle David refers to this policy is not at all inconsistent with the ideals of "People before Profit".

love detective said...

business persons tamsin

Brockley Nick said...

@Tamsin - the trouble is that however subtle People Before Profit's arguments may be, the name is designed to demonise "profit", suggesting that "people" are somehow inconsistent with "profit".

Therefore, to turn around and say, actually profit can be great and we are so keen on the stuff, we want to eliminate all tax on it (but retain taxes on people) is wholly inconsistent.

Brockley Nick said...

PS - there are indeed benefits of reinvesting profit. There are also benefits with paying it out as dividends to things like pension funds, which "people" need for their retirement.

In other words, profit is good. So why demonise it in the name of your party?

That's the trouble with facile sloganeering...

love detective said...

i agree with nick

the whole thing seems like the kind of thing that thatcher or blair would come out with - let the market do the (re)distribution - which seems to invest a huge amount of faith in an idea that they are otherwise nominally opposed to

Anonymous said...

Dumb name, dumb party. But useful idiots for the right, in terms of taking away a slice of the Greens vote.

Tamsin said...

Mayoral results due some time after 8pm this evening and the Council results some time after 11.

a/h ref="http://www.lewisham.gov.uk/CouncilAndDemocracy/DemocracyAndElections/"/a
A lot of exhusted ballot paper counters...

Anonymous said...

if the Green's lose councillors I will blame People Before Profit.

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