The Corporate Dole Queue

Britain’s corporations are living off state handouts

By George Monbiot. Published in the Guardian 21st January 1998.

Few of us would argue with the promise the Chancellor made last week to launch a “war on poverty”. Neither is the hint that it will be partly financed through cuts in the government’s support for industry likely to prove unpopular. It has long been hard to see why, if free enterprise is as robust as successive governments have maintained, it needs state support at all. But where is Mr Brown’s blessed axe most likely to fall?

You can’t help entertaining mixed feelings about the possibility that the most visibly subsidised companies might be targeted first. No one outside the motor industry wants to see the railways run down, yet the thought of so much public money finding its way into the hands of the privateers who run them sticks in the craw. Much of the regional aid budget, indispensable as it is to the depressed parts of Britain, amounts to little more than relocation grants for ruthless multinationals, the UK’s most successful benefit tourists.

But, galling as these payments may sometimes be, they are just the hors d’oeuvre at the start of the huge free lunch the United Kingdom offers to private industry: the government could cut tens of billions of pounds from business subsidies without even touching them. It is seldom whispered even among Treasury hawks, but the corporate welfare state has never been fatter.

Corporate welfare suckles from so many teats that it is often hard to recognize, still harder to repulse. It is arguable that the whole nation has been marked down to a bargain basement price for sale to foreign “investors”. The Department of Trade and Industry’s Invest in Britain Bureau boasts to foreign businesses “The UK has the least onerous labour regulations in Europe, with few restrictions on working hours, overtime and holidays … There is no legal requirement to recognize a trade union. Many industries operate shift work, and 24-hour, seven days-a-week production for both men and women.” Britain is, in other words, a giant loss leader, financed by a stupendous social subsidy.

Most recent deregulation amounts in practice to externalization: businesses unload the costs they used to incur onto the rest of us. Deregulation has been blamed for last year’s alarming increase in fatal accidents at work. When companies need spend less on safety, the NHS picks up the bill. To ensure that such deregulation becomes irreversible, the Department of Trade and Industry (DTI), in negotiations over the Multilateral Agreement on Investment, is insisting that strong health and safety, consumer protection and environmental controls are unfair barriers to trade.

Other corporate handouts will be easier to terminate. The Department of Environment, Transport and the Regions (DETR) does its bit for free enterprise by pouring millions into the Construction Sponsorship Directorate, the Construction Industries Board and the Property Advisory Group. The DTI is little more than a corporate dole office. The notorious Aid and Trade Provision might have been cut off, but the DTI’s Export Credit Guarantee Department, the subject of a devastating Public Accounts Committee report, was rescued by corporate lobbying. Every year, the department spends tens of millions of pounds greasing the cogs of the oil industry, which, incidentally, pays the Crown little more than a peppercorn rent for the seabed whose treasures it taps.

The Private Finance Initiative is now as sticky with sweeteners as any Tory privatization deal. The nuclear industry has been allowed to accumulate a £30 billion shortfall in its provision against the costs of decommissioning, which will have to be discharged by the taxpayer. The Ministry of Defence still conflates the defence of the nation with the defence of the nation’s arms manufacturers.

Even social security offers as much help to business as it does to its nominal recipients. Family credit is, of course, a straightforward subsidy for sweatshops. So, in many cases, is housing benefit, which, incidentally, costs so much because the government is feather-bedding the property industry by refusing to impose the planning regulations needed to bring down the price of development land.

If Gordon Brown is serious about getting corporate scroungers off welfare and into work, he should start by decommissioning the DTI and reining back the DETR and MoD. Tony Blair tells us that no part of the welfare state should be exempt from reform. Let’s hope the Chancellor is listening.