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In Brexit Britain there will be no benefit caps for the multinationals

Aditya Chakrabortty in The Guardian


Take back control. Those three words now govern our politics. They sum up why Britain is leaving Europe, and they make up the yardstick by which Theresa May will be judged. Yet already, in the past few days, their hollowness has been exposed.

This story moves fast – and begins with a threat. Not a subtle moue of displeasure from behind an expensive pair of cufflinks, but a bluntly put, publicly issued ransom. At the end of September the boss of Nissan, Carlos Ghosn, goes to one of the car industry’s biggest annual events, the Paris Motor Show, and declares to reporters that Brexit means the UK now has to cut him “a deal”. If cars made in Britain are to face tariffs on export to Europe, he wants “some kind of compensation”.

Extraordinary: one of the biggest manufacturers in Britain effectively wants danger money to carry on investing here. Even more remarkably, Nissan has behind it the full might of the Japanese government, which sent 15 pages of demands on behalf of some of the country’s biggest businesses – along with the veiled threat to pull out of the UK.

Faster than you can say Micra, Ghosn is invited to Downing Street. Within two weeks he has a face-to-face with the prime minister. The UK has just opted to sever four decades of relations with its biggest trading partner, the government has no fiscal policy and her own party is in turmoil – yet May still clears her diary for the Nissan boss.

Then, a few days back, Ghosn announces Sunderland will not only carry on working, but will now make the new-model Qashqai. The obvious question is: what did his company get from our government? Yet business secretary Greg Clark refuses to divulge any detail of how much or even what kind of taxpayer support has been offered to Nissan – after all, it’s only our money. Instead, he waves off the deal as just a slightly prickly chat in the senior common room.

“One can overcomplicate these things,” he airily tells MPs at the end of October. A mere month after Ghosn made his initial threat, what apparently changed his mind was the government’s “intention to find common ground and to pursue discussions in a rational and civilised way”.

To say this doesn’t add up is beside the point: it’s not meant to. Clark and May obviously don’t want a rival carmaker or any other multinational operating in Britain to know how far they will go to keep them onshore. But if the multimillionaire boss of a £33bn auto giant only wanted a “rational and civilised” discussion, , he could try a Melvyn Bragg podcast. The Qashqai has been a massive seller for Nissan; the company would not have opted to make the next model out of Sunderland merely on the basis of some comforting ministerial purrs.

A source tells Reuters that “the government gave Nissan a written commitment of extra support in the event Brexit reduces its competitiveness”. The carmaker itself acknowledges that its executive committee made its decision upon receiving the “support and assurances of the UK government”. And the former deputy prime minister, Nick Clegg, warns that such deals could cost the taxpayer “colossal amounts of money”. How much? Were the EU to slap on 10% extra on British-made cars, the tariff bill for Nissan UK alone would come to just shy of £300m a year. If May and Clark were to try to cover half of that, they would be extending an unprecedented level of subsidy to just one company. Now imagine those same terms replicated for the other big car exporters: Toyota (which before the referendum warned of cutbacks if Britain left the EU), Honda, Jaguar Land Rover …

What you’ve just seen, then, is a foretaste of the way big business will deal with the government in Brexit Britain. First the threat, then the bargain, and finally, with unministerial haste, an expensive handshake behind closed doors. Each time, the public will be none the wiser, even as their government commits them to perhaps costly support for some company or sector, each one claiming strategic importance. And don’t think it will stop at cars.
Within 48 hours of the Brexit vote, the National Farmers’ Union was preparing for an extraordinary meeting of its council to draw up demands for Downing Street. Top of the list was the £2.4bn in subsidies that farmers get each year from Brussels. Within weeks, the new chancellor Philip Hammond was promising to carry on the handouts until the end of this decade. He made similar offers to universities and businesses reliant on EU grants.


Almost inevitably, the British state becomes even more of a milch-cow for big businesses


Put these numbers in context. Starting this week, the government will cut the benefits it gives to 88,000 families. That is huge turmoil – and it will cut just £100m from the welfare bill. Yet at the same time, billions are being committed to keep sweet businesses from the pharmaceutical giants to the landowners of the south-west.

These are businesses that have already done very well out of taxpayers. Consider Nissan UK: Kevin Farnsworth, lecturer in social policy at the University of York and an expert on government subsidies, calculates that over the past two decades it has taken £782m in loans, grants and handouts from the British and European public. In upfront cash transfers alone that comes to £130m.

Farnsworth has calculated this figure by combing Nissan accounts as well as the grant documents from the British government and its various agencies. He has compiled a database for other major businesses, to be found at corporate-welfare-watch.org.uk.

Where this takes you is to the dirty secret of the British business model. From Margaret Thatcher onwards, successive governments have lured multinational investors by promising them access to the single market, a cheap, biddable workforce and a bunch of corporate sweeteners. It was the same offer Dublin made to the tax avoiders of Silicon Valley and – within its own narrow confines – it worked. As Farnsworth points out, Britain has reliably taken in proportionately more foreign direct investment than most of its competitors.

The problem is that now the UK can no longer guarantee access to 500 million European consumers, it will need to make its workers cheaper and even more flexible and offer more handouts.

Surveying this debacle, it strikes me that Lord Acton got it wrong. It’s not power that corrupts; it’s powerlessness. What do you bargain with, when three decades of deregulation and weakening of local and central government mean you have hardly any cards left in your hand? Almost inevitably, the British state becomes even more of a milch-cow for big businesses. Forget about foreigners coming over here and taking our benefits; now think about multinationals cherry-picking our benefits. That trade-off isn’t rhetorical: it’s real. That money will come from our social security, our hospitals, our schools. Brexit Britain: a soft touch for corporate welfare. Is this what was meant by control?

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