Powerful lobbyists and fawning ministers are corroding society

The lack of regulation and legislation for which wealthy lobbyists press is mostly a form of welfare for big business

• 
• • Will Hutton
  • The Observer, Saturday 11 January 2014 19.07 GMT

The UK drinks industry lobbied vigorously against a minimum price. Photograph: Johnny Green/PA

It was a classic exchange. Neil Goulden, chair of the Association of British Bookmakers, did his best to defend the indefensible. We must place the problem of addictive fixed-odds betting machines in context, he told Radio 4's Today programme last week. They constitute only a small part of the industry's total revenues; there are very few problem gamblers. Britain has the best regulated and most socially responsible gaming industry in the world. Obviously voluntary efforts, which had already achieved much, needed to go further. But there was no need for more intervention.

Later, in the House of Commons, the prime minister, keenly aware that Ed Miliband has thrived when combining the cost of living crisis with example after example of predatory capitalism, was not going to allow himself to be painted as the friend of the betting and casino industries. But equally, he had to keep alive his deep conviction that regulation, always " burdensome", should be avoided as a matter of principle and, if conceded, kept as minimal as possible.

Yes, he understood the leader of the opposition's concern that ordinary high-street betting shops were being turned into mini-casinos via these machines and were proliferating in some of the most deprived parts of the country. But a "review", he claimed, of unspecified provenance was under way. There was no need to support the Labour party's proposals. The issue was kicked into the long grass.

Last week witnessed a procession of examples where successive industries demonstrated their unnerving and effective capacity to block efforts at making them work more in the social and public interest. The British Medical Journal revealed in a powerful article that the UK drinks industry had enjoyed no fewer than 130 meetings with ministers in the run-up to last July's abandonment of the commitment to set a minimum price of 40p for an unit of alcohol. The evidence from Sheffield University's alcohol research department is unambiguous: the higher the price, the less is consumed, lowering crime and death rates alike.

Yet purposeful intervention even for these high stakes is not what Conservative ministers or rightwing thinktanks believe in. Better a world of voluntary codes of practice and forums promoting responsibility than anything with teeth that might "burden" business or – shedding crocodile tears – "penalise the poor". Indeed, it was in precisely those terms that the health secretary, Jeremy Hunt, discussed minimum alcohol pricing with Asda chief executive, Andy Clarke. In case we were in any doubt, the public health minister, Jane Ellison, spelled out the Conservative position, preferring a " collaborative approach on public health" in a "voluntary way" in which business is a "partner".

Collaboration, voluntary, partnership and social responsibility are good words. Regulation, legislation, quotas and tax are bad words, for, it is alleged, these are just the sort of things to raise prices and disadvantage hard-pressed consumers. Thus already the sugar industry, confronting the newly created Action on Sugar Campaign to lower the sugar content in food, is reaching for the same Goulden armament. British housebuilders, fighting off proposals to landscape new developments so that rainwater runs off naturally, plead that house prices will rise as a result, and thus four years after the 2010 Flood Defence Act, requiring such development to improve our much-depleted flood defences, there is still no agreement.

Part of the problem is that in the indiscriminate drive to create a smaller government, the Department of the Environment, reeling from cuts, has not the manpower to follow through on legislation. But the problem is made worse because the environment secretary, Owen Paterson, believes, like Jeremy Hunt at health and many other colleagues, that essentially their job is to do whatever business says.

Obviously in a capitalist economy, private business is a principal driver of growth. Great entrepreneurship in action is fabulous, but crucially it never emerges from private action alone. There is always some pubic agency involved in, and often leading, the risk-taking. Yet the fiction of our times is that all business is entrepreneurial, all business aims to behave well, all business accepts that it should pay the social costs of its activities and that any effort to shape business activity is counterproductive. These are the propositions that underpin the stance of the business lobbyist – and of the minister welcoming him or her. The public, if it only knew, would surely despair.

The lack of regulation and legislation for which the business lobbyists press is rarely to support entrepreneurship; in most instances, it is a sophisticated form of corporate welfare. It will not be British bookmakers who pick up the costs of addictive gambling in welfare bills and housing benefit; no drinks company will foot the NHS's bill for alcohol-related illness or police bill for crime; no sugar company the bill for obesity. Housebuilders will cheerfully direct rainwater cheaply into the sewerage system and the water companies will then raise water charges and expect state guarantees for improving the system.

The deal is clear: pass on the maximum cost to the state, minimise one's own obligations including tax payments, and insist anything else will cost jobs and penalise consumers. Corporate welfare works. Bookmaker William Hill, for example, declares £293m profit on a turnover of £1.3bn, and pays a mere £48m in tax. Drinks multinational Diageo pays £66m of UK tax on its £1.75 bn of UK turnover. Executive pay is stunning; indeed, it even provoked a shareholder revolt at William Hill last year.

The low regulation lobby is in effect creating high-return, low-risk business fiefdoms largely free of social and public obligations. Worse, shareholders and investors set these returns against what they might expect investing in frontier technologies and innovation. Why do that when you can make more certain and higher profits in pay-day lending, bookmaking or the drinks business? The Cameron-Osborne-Hunt-Paterson mantra leads straight to a low innovation economy and a high-stress, low-wellbeing society, while offering unnecessarily high returns to those at the top.

Reality is very different. Business is part of the society in which it trades. Regulation and legislation, far from burdens, are crucial grit in the capitalist oyster. They are proposed in our democracy because they will reduce public and social costs that otherwise society has to bear. By obliging business to accept the costs it creates, it raises genuine innovation. It is time to call time. We don't want ministers acting as surrogate corporate lobbyists. We need them to fashion a new compact between business and society.

It's business that really rules us now

 

Lobbying is the least of it: corporate interests have captured the entire democratic process. No wonder so many have given up on politics

 

• 
• • George Monbiot
  • The Guardian, Monday 11 November 2013 20.31 GMT

‘Tony Blair and Gordon Brown purged the party of any residue of opposition to corporations and the people who run them. That's what New Labour was all about.' Photograph: Sean Dempsey/PA

It's the reason for the collapse of democratic choice. It's the source of our growing disillusionment with politics. It's the great unmentionable. Corporate power. The media will scarcely whisper its name. It is howlingly absent from parliamentary debates. Until we name it and confront it, politics is a waste of time.

The political role of business corporations is generally interpreted as that of lobbyists, seeking to influence government policy. In reality they belong on the inside. They are part of the nexus of power that creates policy. They face no significant resistance, from either government or opposition, as their interests have now been woven into the fabric of all three main political parties in Britain.

Most of the scandals that leave people in despair about politics arise from this source. On Monday, for instance, the Guardian revealed that the government's subsidy system for gas-burning power stations is being designed by an executive from the Dublin-based company ESB International, who has been seconded into the Department of Energy. What does ESB do? Oh, it builds gas-burning power stations.

On the same day we learned that a government minister, Nick Boles, has privately assured the gambling company Ladbrokes that it needn't worry about attempts by local authorities to stop the spread of betting shops. His new law will prevent councils from taking action.

Last week we discovered that G4S's contract to run immigration removal centres will be expanded, even though all further business with the state was supposed to be frozen while allegations of fraud were investigated.

Every week we learn that systemic failures on the part of government contractors are no barrier to obtaining further work, that the promise of efficiency, improvements and value for money delivered by outsourcing and privatisation have failed to materialise.

The monitoring which was meant to keep these companies honest is haphazard, the penalties almost nonexistent, the rewards can be stupendous, dizzying, corrupting. Yet none of this deters the government. Since 2008, the outsourcing of public services has doubled, to £20bn. It is due to rise to £100bn by 2015.

This policy becomes explicable only when you recognise where power really lies. The role of the self-hating state is to deliver itself to big business. In doing so it creates a tollbooth economy: a system of corporate turnpikes, operated by companies with effective monopolies.

It's hardly surprising that the lobbying bill – now stalled by the House of Lords – offered almost no checks on the power of corporate lobbyists, while hog-tying the charities who criticise them. But it's not just that ministers are not discouraged from hobnobbing with corporate executives: they are now obliged to do so.

Thanks to an initiative by Lord Green, large companies have ministerial "buddies", who have to meet them when the companies request it. There were 698 of these meetings during the first 18 months of the scheme, called by corporations these ministers are supposed be regulating. Lord Green, by the way, is currently a government trade minister. Before that he was chairman of HSBC, presiding over the bank while it laundered vast amounts of money stashed by Mexican drugs barons. Ministers, lobbyists – can you tell them apart?

That the words corporate power seldom feature in the corporate press is not altogether surprising. It's more disturbing to see those parts of the media that are not owned by Rupert Murdoch or Lord Rothermere acting as if they are.

For example, for five days every week the BBC's Today programme starts with a business report in which only insiders are interviewed. They are treated with a deference otherwise reserved for God on Thought for the Day. There's even a slot called Friday Boss, in which the programme's usual rules of engagement are set aside and its reporters grovel before the corporate idol. Imagine the outcry if Today had a segment called Friday Trade Unionist or Friday Corporate Critic.

This, in my view, is a much graver breach of BBC guidelines than giving unchallenged airtime to one political party but not others, as the bosses are the people who possess real power – those, in other words, whom the BBC has the greatest duty to accost. Research conducted by the Cardiff school of journalism shows business representatives now receive 11% of airtime on the BBC's 6 o'clock news (this has risen from 7% in 2007), while trade unionists receive 0.6% (which has fallen from 1.4%). Balance? Impartiality? The BBC puts a match to its principles every day.

And where, beyond the Green party, Plaid Cymru, a few ageing Labour backbenchers, is the political resistance? After the article I wrote last week, about the grave threat the transatlantic trade and investment partnership presents to parliamentary sovereignty and democratic choice, several correspondents asked me what response there has been from the Labour party. It's easy to answer: nothing.

Tony Blair and Gordon Brown purged the party of any residue of opposition to corporations and the people who run them. That's what New Labour was all about. Now opposition MPs stare mutely as their powers are given away to a system of offshore arbitration panels run by corporate lawyers.

Since Blair, parliament operates much as Congress in the United States does: the lefthand glove puppet argues with the right hand glove puppet, but neither side will turn around to face the corporate capital that controls almost all our politics. This is why the assertion that parliamentary democracy has been reduced to a self-important farce has resonated so widely over the past fortnight.

So I don't blame people for giving up on politics. I haven't given up yet, but I find it ever harder to explain why. When a state-corporate nexus of power has bypassed democracy and made a mockery of the voting process, when an unreformed political funding system ensures that parties can be bought and sold, when politicians of the three main parties stand and watch as public services are divvied up by a grubby cabal of privateers, what is left of this system that inspires us to participate?

At last, a politician has been arrested

Mark Steel in The Independent

At last, a politician has been arrested.

The one they’ve taken in is Caroline Lucas, the Green MP, because of all the lousy things you can remember politicians doing in recent years, have any been as filthy as what she did this week, standing in a field with a placard?

Some MPs, such as Stephen Byers and others, were filmed promising to use their status to offer access to ministers, if you paid them between £3,000 and £5,000 a day. That could be seen, if you were picky about morals, as abusing your position slightly, but he only needed a mild caution, because at least he didn’t bring the good name of Parliament into disrepute by standing in front of a tree protesting about fracking.

If Caroline Lucas had any decency, instead of writing a slogan about protecting the environment on that placard, she’d have sold the space for advertising. She could still have had “Stop Climate Change” in one corner, but the rest of it would have been sold for £3,000 to £5,000 to someone reputable such as British Aerospace, and say something like “There’ll be sod-all to frack after our bombs attack”, and the reputation of our government would be intact.

Countless MPs seem to be involved in the process of lobbying, so much that it’s now an industry in which companies employ specialists to butter up politicians to influence policy, or secure the odd million-pound contract. But Caroline Lucas has taken it too far, using her position to meet a bloke with dreadlocks who lives up trees.

When Tony Blair was Prime Minister he used his post only to meet people of vital importance to the nation, like Cliff Richard and President Assad of Syria, but that Lucas woman has spent her time hobnobbing with an angry farmer and a couple who haven’t worn shoes since 1973.

Then there were all those MPs who seemed to be competing with each other to file the most imaginative claim for expenses. One of them must have thought he’d won when it was revealed he’d claimed public money to have his moat cleaned, but then must have been horrified and yelled, “Oh no, some bastard’s trumped me by claiming for a duck island.”

One or two of these were arrested, but most of them weren’t, including those who claimed tens of thousands for unnecessary second homes. Because, as they all pointed out, they weren’t breaking any rules, not like Caroline Lucas who stood only a few hundred yards from a giant drilling machine, intimidating it so much it now needs counselling at a specialist therapy unit for bullied industrial equipment.

And none of the MPs who were caught claiming all this money could possibly have been doing it for personal gain. But protesting in a Sussex village opens up so many business opportunities, lucrative sponsorship deals and chat show appearances it’s only right such selfish behaviour is what the authorities crack down on.

It could also be argued that telling a blatant lie in order to get elected could be a breach of the electoral system. To pick an example at random, if you, let’s say, won votes by pledging to abolish tuition fees but once you were elected you trebled them instead, that may bring democracy mildly into disrepute. But no one gets arrested for that, because it’s a trifle compared to the deception of Caroline Lucas, who stood for the Green Party, and then betrayed all those who voted for her by protesting in defence of the environment, a policy no one could be expected to be associated with the Green Party in any way.

Or imagine if you’d insisted, throughout an election campaign, that you would absolutely not under any circumstances raise VAT to 20 per cent, and then a week after the election you raised VAT to 20 per cent. Could that, if you were to examine it carefully, be seen to contain a hidden mistruth? Maybe, but not as much as someone who pledges to oppose fracking, and then once elected opposes fracking. Such behaviour makes a mockery of our constitution; is it any wonder politicians aren’t trusted?

Another issue that might have resulted in a small arrest could have been the politicians who led the country into a war on a premise that turned out to be a pile of nonsense. As this is a week for locking people up if they’ve jeopardised our national security, maybe that jeopardised it a bit, as it appears to have angered some people in the Middle East. But across that region the local population will be yelling, “Thank God the British have finally arrested one of their politicians. Because the one who ruined everything was that Green Party woman from Brighton. Every time she waved that placard it caused another of our buildings to collapse. Now she is arrested at last we may sleep in peace.”

Her arrest, along with the other protesters, according to a police spokesman, was due to the fact she was “disrupting the life of the village”. So now they’ll be able to carry on with their tranquil lives, enjoying the sweet morning coo of a 25-ton boring drill clacking into the earth to extract gas in a process likely to cause underground tremors, without it being spoilt by the racket of a Sussex MP standing in the mud.

Corporate power has turned Britain into a corrupt state

Westminster lobbying is the least of it. Revolving-door colonisation of public life is a corrosive threat to democracy

• 
• • Seumas Milne
  • The Guardian, Tuesday 4 June 2013 22.20 BST

'Hector Sants, head of the Financial Services Authority in charge of regulating banks until last year, who joined Barclays six months later. But he's only one of a stream of regulators who have made similar moves.' Photograph: Micha Theiner/City AM / Rex Features

If you're under attack, create a diversion. David Cameron and Nick Clegg have been floundering as the spectre of Westminster sleaze has returned to haunt them. Four years after the MPs' expenses scandal engulfed British politics, yet another alleged scam has been exposed. First a Tory MP and then a clutch of greedy peers were caught on camera apparently agreeing to take cash from journalists posing as representatives of foreign companies. "Make that £12,000 a month," grinned Jack Cunningham, Tony Blair's former "enforcer".

Cameron and Clegg had promised to deal with parliamentary influence-peddling, and done nothing about it. So on Monday they came up with a plan: to crack down on trade unions. Wrapped in a panic bill to set up a register of lobbyists are to be powers to police union membership lists and cut union spending in election campaigns. The first will make what is already the almost impossible task of holding a legally watertight strike ballot still harder. The second is a direct attack on Labour funding.

The contemptuous class cynicism of the coalition leaders' response takes some beating. Not only are unions the most accountable and only democratic part of the political funding system; but by including anti-union clauses in the new bill, Cameron and Clegg want to ensure Labour's opposition – all the better to change the subject and wrongfoot the opposition in the process.

Even Conservative MPs were embarrassed at the crude chicanery of it. Just as absurd is the fact that the register would have done nothing to prevent the latest lobbying scams – except help the puffed-up parliamentarians avoid getting stung in the first place. And the new law would apply only to lobbying firms, while directly employed corporate lobbyists would be exempt. Add to that the failure to bring elections to the House of Lords, and there will certainly be more jobs-for-life cronies cashing in with corporate clients in the years to come.

The truth is that parliamentary sleaze merchants are small fry in the corporate lobbying game. Before he became prime minister, Cameron predicted that secret corporate lobbying was "the next big scandal waiting to happen", adding: "We all know how it works." As a former lobbyist himself, he certainly did – and still does.

Cameron's own election adviser, the Australian Lynton Crosby, is a lobbyist – for tobacco, alcohol, oil and gas companies. Which is why the prime minister came under attack for dropping curbs on cigarette packaging and alcohol pricing. His party treasurer Peter Cruddas resigned after offering access to Cameron for a £250,000 party donation. His defence secretary, Liam Fox, resigned over his relationship with the lobbyist Adam Werritty.

But lobbying doesn't begin to cover the extent of corporate influence. More than ever the Tory party is in thrall to the City, with over half its income from bankers and hedge fund and private equity financiers. Peers who have made six-figure donations have been rewarded with government jobs.

But the real corruption that has eaten into the heart of British public life is the tightening corporate grip on government and public institutions – not just by lobbyists, but by the politicians, civil servants, bankers and corporate advisers who increasingly swap jobs, favours and insider information, and inevitably come to see their interests as mutual and interchangeable. The doors are no longer just revolving but spinning, and the people charged with protecting the public interest are bought and sold with barely a fig leaf of regulation.

Take David Hartnett, head of tax at HM Revenue & Customs until last year and the man whose "sweetheart deals" allowed Starbucks and Vodafone to avoid paying billions in tax. He now works for the giant City accountancy firm Deloitte, which works for Vodafone. The two-way traffic between the big four auditing firms and government is legendary: staff are sent on secondments to HMRC and the political parties and then return to devise new loopholes for corporate clients.

Then there's Hector Sants, head of the Financial Services Authority in charge of regulating banks until last year, who joined Barclays six months later. But he's only one of a stream of regulators who have made similar moves. The same goes for the 3,500 military officers and defence ministry officials who have taken up jobs in arms companies in the past 16 years – as it does for top civil servants and intelligence officials. The cabinet secretary, Jeremy Heywood, is the living embodiment of the revolving door, having moved effortlessly from the Treasury to Blair's office to the investment bank Morgan Stanley and back to work for Cameron.

That's before you get to the politicians. City directorships in opposition used to be a Tory preserve. But after New Labour embraced corporate power it became a cross-party affair. Blair is in a class of his own, of course, raking in £20m a year from banks and autocratic governments; but he is followed closely by dozens of New Labour ministers who moved out of government into lucrative corporate jobs, often for firms hustling for contracts from their former departments.

It defies rationality to believe that the prospect of far better paid jobs in the private sector doesn't influence the decisions of ministers and officials – or isn't used by corporations to shape policy. Who can seriously doubt that politicians were encouraged to champion light touch regulation before the crash by the lure and lobbying of the banks, as well as by an overweening ideology?

Privatisation has extended the web of lubricated relationships, as a mushrooming £80bn business uses jobs and cash to foist a policy that is less accountable, lowers standards and is routinely more expensive on the public realm. When 142 peers linked to companies involved in private healthcare were able to vote on last year's health bill that opened the way to sweeping outsourcing – and the City consultancy McKinsey helped draw it up – it's not hard to see why.

Britain is now an increasingly corrupt country at its highest levels – not in the sense of directly bribing officials, of course, and it's almost entirely legal. But our public life and democracy is now profoundly compromised by its colonisation. Corporate and financial power have merged into the state.

That vice can be broken, but it demands radical change: closure of the revolving doors; a ban on ministers and civil servants working for regulated private companies; a halt to the corrosive tide of privatisation; and a downward squeeze on boardroom pay to reduce the corporate allure. It's going to need a democratic backlash.

Bilderberg 2013 comes to … the Grove hotel, Watford

 

The Bilderberg group's meeting will receive greater scrutiny than usual as journalists and bloggers converge on Watford

• Charlie Skelton
• The Guardian, Sunday 2 June 2013 17.03 BST

Protesters at Bilderberg 2012. This year's meeting of the global elite is in Watford and is expected to be unusually open. Photograph: Mark Gail/The Washington Post

When you're picking a spot to hold the world's most powerful policy summit, there's really only one place that will do: Watford. I guess the Seychelles must have been booked up.

On Thursday afternoon, a heady mix of politicians, bank bosses, billionaires, chief executives and European royalty will swoop up the elegant drive of the Grove hotel, north of Watford, to begin the annual Bilderberg conference.

It's a remarkable spectacle – one of nature's wonders – and the most exciting thing to happen to Watford since that roundabout on the A412 got traffic lights. The area round the hotel is in lockdown: locals are having to show their passports to get to their homes. It's exciting too for the delegates. The CEO of Royal Dutch Shell will hop from his limo, delighted to be spending three solid days in policy talks with the head of HSBC, the president of Dow Chemical, his favourite European finance ministers and US intelligence chiefs. The conference is the highlight of every plutocrat's year and has been since 1954. The only time Bilderberg skipped a year was 1976, after the group's founding chairman,Prince Bernhard of the Netherlands, was caught taking bribes from Lockheed Martin.

It may seem odd, as our own lobbying scandal unfolds, amid calls for a statutory register of lobbyists, that a bunch of our senior politicians will be holed up for three days in luxurious privacy with the chairmen and CEOs of hedge funds, tech corporations and vast multinational holding companies, with zero press oversight. "It runs contrary to [George] Osborne's public commitment in 2010 to 'the most radical transparency agenda the country has ever seen'," says Michael Meacher MP. Meacher describes the conference as "an anti-democratic cabal of the leaders of western market capitalism meeting in private to maintain their own power and influence outside the reach of public scrutiny".

But, to be fair, is "public scrutiny" really necessary when our politicians are tucked safely away with so many responsible members of JP Morgan's international advisory board? There's always the group chief executive of BP on hand to make sure they do not get unduly lobbied. And if he is not in the room, keeping an eye out, then at least one of the chairmen of Novartis, Zurich Insurance, Fiat or Goldman Sachs International will be around.

This year, there will be a great deal more "public scrutiny" of Bilderberg. Pressure from journalists and activists has won concessions from the venue: for the first time in 59 years there will be an unofficial press office, staffed by volunteers, on the grounds. Several thousand activists and bloggers are expected, along with photographers and journalists from around the world.

Back in 2009 there were barely a dozen witnesses – harassed and arrested by heavy-handed Greek police. This year there is a press zone, police liaison, portable toilets, a snack van, a speakers' corner – all the ingredients for a different Bilderberg. A "festival feel" has been promised. If you are concerned about transparency or lobbying, Watford is the place to be next weekend. Whether the delegates reach out to the press and public remains to be seen. Don't forget, they've got their hands full carrying out the good works of Bilderberg. The conference is, after all, run as a charity.

If you've been wondering who picks up the tab for this gigantic conference and security operation, the answer arrived last week, on a pdf file sent round by Anonymous. It showed that the Bilderberg conference is paid for, in the UK, by an officially registered charity: the Bilderberg Association (charity number 272706).

According to its Charity Commission accounts, the association meets the "considerable costs" of the conference when it is held in the UK, which include hospitality costs and the travel costs of some delegates. Presumably the charity is also covering the massive G4S security contract. Fortunately, the charity receives regular five-figure sums from two kindly supporters of its benevolent aims: Goldman Sachs and BP. The most recent documentary proof of this is from 2008 (pdf), since when the charity has omitted its donors' names (pdf) from its accounts.

The charity's goal is "public education". And how does it go about educating the public? "In furtherance of these objectives the International Steering Committee organises conferences and meetings in the UK and elsewhere and disseminates the results thereof by preparing and publishing reports of such conferences and meetings and by other means." Cleverly, it disseminates the results by resolutely keeping them away from the public and press.

The charity is overseen by its three trustees (pdf): Bilderberg steering committee member and serving minister Kenneth Clarke MP; Lord Kerr of Kinlochard; and Marcus Agius, the former chairman of Barclays who resigned over the Libor scandal.

Labour MP Tom Watson remarks: "If the allegations that a cabinet minister sits on the board of a charity that discreetly funds a secretive conference of elites are true then I hope the prime minister was informed. It was David Cameron who heralded the new age of transparency. I hope he asks Kenneth Clarke to adhere to these principles in future." At the very least, George Osborne and Clarke may consider adhering to the ministerial code when it comes to Bilderberg and declare it in their list of "meetings with proprietors, editors and senior media executives" as they've failed to do in the past. Of course, with the lobbying scandal in full spate it's possible our ministers will steer clear of such a major corporate lobbying event. We'll find out on Thursday.

The Self-Hating State

Devolving policy to “the market” doesn’t solve the problem of power. It makes it worse.

GEORGE MONBIOT

  

In other ages, states sought to seize as much power as they could. Today, the self-hating state renounces its powers. Governments anathematise governance. They declare their role redundant and illegitimate. They launch furious assaults upon their own branches, seeking wherever possible to lop them off.

This self-mutilation is a response to the fact that power has shifted. States now operate at the behest of others. Deregulation, privatisation, the shrinking of the scope, scale and spending of the state: these are now seen as the only legitimate policies. The corporations and billionaires to whom governments defer will have it no other way.

Just as taxation tends to redistribute wealth; regulation tends to redistribute power. A democratic state controls and contains powerful interests on behalf of the powerless. This is why billionaires and corporations hate regulation, and – through their newspapers, thinktanks and astroturf campaigns – mobilise people against it. State power is tyranny; state power is freedom.

But the interchangeable middle managers who call themselves ministers cannot wholly dismiss the wishes of the electorate. They must show that they are doing something to protect what people value. They resolve the contradiction between the demands of the electorate and the demands of big business by shifting their responsibilities to something they call “the market”. This term is often used as a euphemism for corporations and the very rich.

To justify the policy of marketisation, they invest the market with magical capabilities. It can reach the parts that the ordinary scope of government can’t reach; it can achieve political miracles. I don’t believe that market mechanisms are always wrong. I do believe that they fail to solve the problem of power. In fact they tend to compound it.

Last week the European Emissions Trading System died. It was supposed to create a market for carbon, whose escalating price would force companies to abandon fossil fuels and replace them with less polluting alternatives. In principle it was as good a mechanism as any other. What it did not offer was a magical alternative to political intervention.

The scheme collapsed on Tuesday, after the European Parliament voted against an emergency withdrawal of some of the carbon permits whose over-supply had swamped the market(1). Why were too many permits issued? Because of the lobbying power of big business. Why did MEPs refuse to withdraw them? Because of the lobbying power of big business.

If a market is to serve a wider social goal than simply maximising corporate profits, it must operate within a tight regulatory framework. Pricing mechanisms do not magic away the need for regulation: if anything they enhance it. To make them work, politicians still have to confront and overcome powerful interests. They still need to govern and decide. Yet everywhere markets are invoked as an alternative to dirigiste and decisive government.

To make a significant impact, the price of carbon needs to be in the region of €30 or 40 per tonne. It needs to be incapable of falling far, and likely to rise. At the time of writing the price is €2.8(2), and it’s going nowhere. The Economist reports that this puts European carbon permits “below the level of junk bonds.”(3)

In an important respect the scheme has been worse than useless. New airports and roads and power stations have been justified with the claim they they will not raise emissions, as the greenhouse gases they produce will be absorbed by cuts made elsewhere. The one lasting impact of the European carbon market has been to rationalise polluting projects which might not otherwise have been built.

But even as this scheme collapses, governments are launching new ones, creating markets which are far less appropriate – even in theory – than the trade in carbon. Last month, the UK’s Ecosystem Markets Task Force, a body set up by the government but largely composed of corporate executives, published its final report(4). It invokes the magic of the markets to fill the gap left by the withdrawal of democratic governance.

Not everything it proposes is dangerous and wrong. Creating incentives to reforest the hills from which our rivers flow, or for farmers to use anaerobic digesters to process waste makes sense: as long as it redeploys rather than augments farm subsidies. But in other respects an attempt to reconcile the protection of the living planet with commerce simply turns the biosphere into another corporate asset.

For example, the task force revives the old myth that nature is best served by harvesting timber. As long ago as 1995 a paper by the biologists Clive Hambler and Martin Speight showed that of the woodland insect species listed as threatened in Britain, 65% are threatened by the removal of old and dead wood, while just 2% are threatened by a reduction in this management(5). But the task force maintains that bringing “unmanaged woodlands into active, sustainable management for woodfuel … is a win-win for business and nature.”(6) Just as the myth was at last being laid to rest, it has been revived by the need to make nature and markets appear compatible.

This is an example of what happens in a market-based system: any clash between generating profit and protecting the natural world is resolved in favour of business, often with the help of junk science. Only those components of the ecosystem which can be commodified and sold are defended(7,8,9). Nature is worthy of protection when it is profitable to business: the moment it ceases to be so, it loses its social value and can be trashed. As prices fluctuate or crash, so do the fortunes of the ecosystems they are supposed to protect. As financial markets move in, with the help of the environmental bonds and securitisations the task force champions(10), the defence of nature becomes ever more volatile and uncertain. The living planet is reduced to a subsidiary of the human economy.

When governments pretend that they no longer need to govern; when they pretend that a world regulated by bankers, corporations and the profit motive is a better world than one regulated by voters and their representatives, nothing is safe. All systems of government are flawed. But few are as flawed as those controlled by private money.

The Muck and the Top Brass

MoD lobbying claims: 

The fact that some of Britain’s leading ex-servicemen were prepared to lobby the Ministry of Defence on behalf of foreign arms companies is just the latest example of the cosy but compromising revolving door between Whitehall and the private sector, says Andrew Gilligan.

By Andrew Gilligan

6:45AM BST 15 Oct 2012

199 Comments

For the British people, the Royal British Legion’s Festival of Remembrance is a chance to honour the men and women killed and maimed in our name. For the Legion’s president, Lieutenant-General Sir John Kiszely, however, it is also “a tremendous networking opportunity” which “commercial people can get in on”.

The general’s tongue had been loosened by a £110,000 offer from South Korean arms dealers, who wanted his help selling their products to the Ministry of Defence. His Legion role, he told them, was “extremely useful for all these contacts”. As he explained: “If I tried to book in… to have a meeting on behalf of a company, I probably wouldn’t get past the door.” But “with Andrew Robathan [the Armed Forces minister], I would get into his office by saying, 'As president of the British Legion, you know, it’s time’… and that’s when you sow the seed.”

To the same generous Koreans, Admiral Sir Trevor Soar, ex-Commander-in-Chief Fleet and self-proclaimed “MoD warrior”, offered to “target” his former subordinates and “get them interested”. Sir Trevor, who only left the Navy this year, is still covered by the two-year lobbying ban commonly imposed on retired officers, but told his would-be clients that the restriction had “no legality” and he would “just basically ignore it”.

General Sir Mike Jackson, head of the Army during the Iraq War, offered to “dangle a fly in the waters” on the Koreans’ behalf. General Lord Dannatt, another ex-chief of the general staff and former adviser to David Cameron, boasted about how he’d avoid anti-lobbying rules by “targeting” an old school contemporary who happens to be the MoD’s permanent secretary. For a “reasonable” £100,000 for 24 days’ work a year, he’d set up lunch with the chief of defence procurement, Bernard Gray. Air Chief Marshal Lord Stirrup, former chief of the defence staff, told the South Koreans he would “grill” former colleagues and ministers on their behalf over private dinners at his house in London. “When do we start?” he asked.

This morning, amid the ashes of several distinguished reputations, the question is: where will it end? The chequebook-ready Koreans were, of course, undercover reporters from The Sunday Times. Of the eight senior former officers they approached, only two refused their blandishments completely. And for the Ministry of Defence, the implications are particularly seismic. The department is notorious throughout Whitehall for signing colossally expensive contracts that deliver poor value for taxpayers. Can there possibly be any connection between this and the fact that so many of its people go on to work for defence contractors? 

One of the most heavily criticised recent contracts is for the Royal Navy’s two new aircraft carriers. These will cost taxpayers more than £6 billion, even though one will be immediately mothballed and the other will carry no aircraft until 2020. At least four top officers and ministers involved – including the heads of the Navy and the RAF, the vice-chief of the defence staff, and the defence procurement minister, Baroness Taylor – went on to join companies involved.

Then there is the contract dubbed the “worst deal in history”: to give the Air Force 14 new Airbus A330 transport/tanker aircraft. Bought by a civilian airline, A330s cost as little as £85 million each, or £1.2 billion for 14. But the MoD is paying £10.5 billion – for aircraft it will not even own, but lease. Nor did the price include standard military fitments such as flight-deck armour, meaning that the jets were unable to fly into any war zone.

Roughly half the price, according to the National Audit Office, comprises financing costs and profits for AirTanker, the PFI consortium that actually owns the planes. Over the last few years, more than 30 MoD officials, including some directly involved in negotiating the deal, have moved from the ministry to the companies concerned. As Paul Flynn, a Labour MP who has campaigned on the issue of defence procurement, told me: “I am not suggesting misconduct by any individual here, but the prospect of retirement work is potentially corrupting.”

All this is known as the “revolving door”. In 2009/10, the latest year for which full figures are available, 326 officers or MoD officials were cleared to join the private sector. Of these, 240 went to defence companies. Fully 20 were generals, admirals or air marshals.

The problem is not confined to the MoD. At the Cabinet Office, John Suffolk has moved from the highly sensitive post of chief information officer to become global cybersecurity officer at Huawei, a Chinese company accused by the Pentagon of having “close ties” to Beijing’s military. Lord Hunt, the former Labour health minister, joined Cumberledge Connections, a health lobbyist run by a former Tory health minister. Baroness Smith of Basildon, once the minister responsible for information technology, has joined Vertex Data Science, a computer outsourcing firm.

The body supposed to regulate all this is called Acoba, the Advisory Committee on Business Appointments, part of the Cabinet Office. When they leave public service, ministers and senior officials must ask the committee to approve any jobs they’re offered (more junior staff, including the vast majority within the MoD, are dealt with at departmental level). But Acoba seems extremely reluctant to place its foot in the revolving door. In fact, over the past 15 years, it has not vetoed a single application. According to its annual reports, it considered 944 applications between 1996 and 2011. Of these, 412 were approved with conditions and 532 unconditionally. None was rejected.

Even where conditions were imposed – typically a ban on lobbying former colleagues – none has ever lasted for more than two years. Acoba’s chairman, the former minister Lord Lang, told MPs that longer prohibitions would be a “restraint of trade” and against applicants’ human rights. And, as Sir Trevor told the undercover reporters, even the existing bans have no legal or contractual standing. Acoba itself has no powers to police them: Mr Suffolk, the Huawei employee, has been told he must not “draw on any privileged information” from his time at the Cabinet Office, but that condition seems almost impossible to enforce. Last year, 13 former ministers, officials and military officers – including the former Cabinet Secretary, Lord O’Donnell – did not even bother to approach Acoba before taking new jobs.

Lord Lang has insisted that the committee “works extraordinarily well”. But in 2010, rather more extraordinarily, he was himself filmed by undercover reporters – this time from Channel 4’s Dispatches – offering his services to a fake lobbying company, though he told them he would do no lobbying personally. Mr Flynn says that the Commons’ public administration committee wanted to veto Lord Lang’s appointment to Acoba, but could not do so because it had already been announced. Instead, it has this year published a report calling for the entire organisation to be scrapped.

This week’s scandal seems sure to hasten that event. But replacing Acoba will be complicated. Those exposed yesterday have enjoyed careers for life and lavish pensions – one more reason why their conduct is so questionable. But younger civil servants and officers no longer have such luxuries. If they are to be able to support themselves, any new system must allow them to transfer between employers without penalising them for their periods of public service.

More broadly, yesterday’s disclosures might trigger a wider reappraisal of Britain’s reverence for its top military officers. The brass are among the few senior public servants still relatively immune from public criticism, with the monumental failures of Iraq and Afghanistan customarily blamed on dishonest politicians or cheese-paring officials. In fact, many of the most pig-headed mistakes were made by Britain’s military leadership.

Yet old generals can also be a vital check and balance in the system: protesting against defence cuts, criticising the Government when it strays off course. Ministers will love it if they are banned from the MoD’s precincts, as the current Defence Secretary, Philip Hammond, suggested yesterday, but the Forces may well come to regret it. Still, should that happen, the generals really will have no one to blame but themselves.