Vox Political on the Tories’ Plan to Turn Education into a Tax Avoidance Scam

Mike over at Vox Political posted up a very ominous piece reporting the tax affairs of one of the academy chains. Bellevue Education, which runs a number of academies in the south east, appears in the Panama Papers as an offshore company registered in the British Virgin Islands. In other words, it’s a tax avoider. Mike draws the obvious conclusion from this that as David Cameron and Nicky Morgan want all schools to become academies, and thus tax avoidance schemes for the big business fat cats running them.

The Tory plan to turn education into a tax avoidance scam

I don’t doubt for a single moment that Mike’s right, and this fact has very grave implications for the quality of the service these academy chains will provide, and their stability as businesses.

One of the points George Monbiot makes about the PFI initiative for hospitals in his book, Captive State, is that the overheads in running hospitals are so large, that the corporations approached to fund and run them can only be persuaded to do so through massively inflating their costs to the British taxpayer, and by cutting the service delivered to the public. It’s why, thanks to the Private Finance Initiative, Britain now has fewer hospitals than it actually needs, which have been more expensive to build than if the government simply raised the money through the usual sources of bonds, loans and taxation. It’s also why the PFI hospitals are smaller.

The hedge funds that were responsible for running so many of the care homes, that collapsed and were prosecuted for the extremely poor treatment of their elderly or disabled residents, were also involved in massive tax avoidance scams. There was some kind of financial trick involved, which made these homes run at a technical loss. This meant huge profits for the hedge funds running them, but it also meant that they were extremely vulnerable financially. The result was the slew of scandals, which got into the page of the Private Eye’s ‘In the Back’ column, which reported on the extremely dubious financial arrangements behind them.

This new revelation that Bellevue Education is based off-shore, suggests that the private education chains running the academies similarly find it difficult to run them at a profit without indulging in tax avoidance at a massive level. Mike reports that academies perform poorly compared to ordinary LEA schools. This bears out the conclusion that for-profit firms cannot effectively run services, like schools and hospitals, that are properly the responsibility of the state. Like the PFI hospitals, it shows that the private investment in schools is more expensive to the British taxpayer, in terms of tax money lost to the government, the burden of which is then passed on to the rest of us. And it also suggests that as businesses, they are also vulnerable and likely to collapse at the merest drop in profits. And then, no doubt, the fat cat bankers behind them will be squealing for the British taxpayer to bail them out.

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