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?
Showing posts with label subsidy. Show all posts
Showing posts with label subsidy. Show all posts
Tuesday 8 November 2016
Tuesday 13 September 2016
Britain’s bosses fat and lazy? For once, Liam Fox has a point
Aditya Chakrabortty in The Guardian
Liam Fox ranks among the chief fantasists behind Brexit, deplores gay marriage as “social engineering”, and thinks nothing of claiming 3p from taxpayers for a car journey of less than 100m. But even a snake-oil salesman sometimes speaks the truth and in criticising British business as “too lazy and too fat on our successes”, he has a point.
I know, I know. Why defend a Tory headbanger who otherwise thirsts for cuts to the NHS budget and the slashing of taxes upon the rich? Why entertain lectures from someone whose only attempt at job creation was the boondoggle he shamelessly awarded his former best man?
Yet when the international trade secretary says, “If you want to share in the prosperity of our country, you have a duty to contribute to the prosperity of our country”, I fail to muster up the outrage. I share neither Fox’s views on the causes nor his suggestions on the solution. But he is on to something.
For the past six years, the Tory party has barely paused from laying into British workers. From Iain Duncan Smith to George Osborne, senior ministers wrote off a sizeable chunk of this country as “skivers”. The screws were twisted so hard that jobseekers who decline zero-hours contracts are now penalised with benefit sanctions.
And the Tories did all this with the simpering connivance of Nick Clegg’s LibDems. If you think that era ended with David Cameron, remember that Theresa May’s cabinet boasts luminaries who wrote a report stating: “Too many people in Britain … prefer a lie-in to hard work. Once they enter the workplace, the British are among the worst idlers in the world.”
Ever since 2010, the Tories have tried to pin the blame for economic sluggishness on the shirking Brits. At the same time, their ministers have boasted, with all the regularity of a cuckoo clock, about how the number of British people in work is now at a record high. As a matter of logic, both things cannot be true. The British cannot be both workshy and working more than ever before. The Tories have been fibbing – and at last one of their number has come out and said as much.
The real problem in Britain isn’t its workers: it’s the bosses. By this, I’m not getting at the poor old line managers. I mean those right at the top of big business who have got away with paying themselves too much and investing too little in their workers, their businesses and their society.
Consider pay. While the average British worker is barely better off than in 2008, wages for those at the top of British business have just kept soaring. Researchers at the High Pay Centre recently went through the accounts of the FTSE 100 largest companies. They found that chief executives raked in an average of £5.5m in 2015, up 10% from the year before.
Bung in the lavish pension arrangements and generous bonuses and the average chief executive now earns the same as 129 of their employees. There is no justification for such a wide disparity: no one is as productive as 129 other people. We have gone beyond “Because I’m Worth It” to “Because I Said So” (and my mates on the remuneration committee backed me up). Even when shareholders revolt, as happened at BP over the £14m handed out to its chief executive despite huge losses, they are roundly ignored.
The TUC has just crunched the numbers on how much investment the private sector makes in this country. Of the 29 leading industrialised countries, the UK comes in at 27. Businesses in Estonia, the Czech Republic, Poland: all invest more in plants, equipment and the rest. The only countries that do worse are Greece and Iceland.
We have the same calamitous showing in spending on research and development. A few years ago, the Sheffield University physicist Prof Richard Jones went through the figures. He wrote: “In 1979 the UK was one of the most research-intensive economies in the world. Now, among advanced industrial economies, it is one of the least.” All of our competitors – the US, Japan, France and Germany – have maintained or increased their spending on research. South Korea and China are breathing down our necks. But the British capitalist class prefers the safe bets, the quick bucks – and the mega handouts to the senior executives and the shareholders.
Vice chairman of Stronger In campaign calls off Liam Fox after saying is Britain ‘fat and lazy’
Friday afternoons on the golf course? Fox may have watched one too many episodes of Terry and June. But what’s clear is that Britain’s bosses pay themselves far more than is justified either by comparison with their workers or on their performance. They have spent years relying on taxpayers to top up poverty pay and on the regulators to allow pensions holidays – just so they could hand out more money to shareholders.
They take what academic Kevin Farnsworth estimates at £93bn a year in corporate welfare – cash handouts and subsidies. But they react with horror to the notion of decent wages or chipping in for apprenticeships, rather than treating them as the normal overheads of doing business in a developed country. If that’s not fat and lazy, I don’t know what is.
Of course there are good and non-greedy bosses. But I have spent six years hearing the view that the British are lazy spongers with barely a demurral from most of the media or the political classes. It is high time to push the pendulum back a little.
Fox sees the answer to all this as more slash and burn: of taxes, of red tape, of public spending. That is delusional. Britain has spent 40 years making the burden on business easier, and the results have been to create a capitalist class so sluggish and short-term that it now threatens the continuation of capitalism.
Better, by far, to have a more honest capitalism: in which the responsibilities of business – on taxes, on pay and on investment – are laid out alongside their rights.
Liam Fox ranks among the chief fantasists behind Brexit, deplores gay marriage as “social engineering”, and thinks nothing of claiming 3p from taxpayers for a car journey of less than 100m. But even a snake-oil salesman sometimes speaks the truth and in criticising British business as “too lazy and too fat on our successes”, he has a point.
I know, I know. Why defend a Tory headbanger who otherwise thirsts for cuts to the NHS budget and the slashing of taxes upon the rich? Why entertain lectures from someone whose only attempt at job creation was the boondoggle he shamelessly awarded his former best man?
Yet when the international trade secretary says, “If you want to share in the prosperity of our country, you have a duty to contribute to the prosperity of our country”, I fail to muster up the outrage. I share neither Fox’s views on the causes nor his suggestions on the solution. But he is on to something.
For the past six years, the Tory party has barely paused from laying into British workers. From Iain Duncan Smith to George Osborne, senior ministers wrote off a sizeable chunk of this country as “skivers”. The screws were twisted so hard that jobseekers who decline zero-hours contracts are now penalised with benefit sanctions.
And the Tories did all this with the simpering connivance of Nick Clegg’s LibDems. If you think that era ended with David Cameron, remember that Theresa May’s cabinet boasts luminaries who wrote a report stating: “Too many people in Britain … prefer a lie-in to hard work. Once they enter the workplace, the British are among the worst idlers in the world.”
Ever since 2010, the Tories have tried to pin the blame for economic sluggishness on the shirking Brits. At the same time, their ministers have boasted, with all the regularity of a cuckoo clock, about how the number of British people in work is now at a record high. As a matter of logic, both things cannot be true. The British cannot be both workshy and working more than ever before. The Tories have been fibbing – and at last one of their number has come out and said as much.
The real problem in Britain isn’t its workers: it’s the bosses. By this, I’m not getting at the poor old line managers. I mean those right at the top of big business who have got away with paying themselves too much and investing too little in their workers, their businesses and their society.
Consider pay. While the average British worker is barely better off than in 2008, wages for those at the top of British business have just kept soaring. Researchers at the High Pay Centre recently went through the accounts of the FTSE 100 largest companies. They found that chief executives raked in an average of £5.5m in 2015, up 10% from the year before.
Bung in the lavish pension arrangements and generous bonuses and the average chief executive now earns the same as 129 of their employees. There is no justification for such a wide disparity: no one is as productive as 129 other people. We have gone beyond “Because I’m Worth It” to “Because I Said So” (and my mates on the remuneration committee backed me up). Even when shareholders revolt, as happened at BP over the £14m handed out to its chief executive despite huge losses, they are roundly ignored.
The TUC has just crunched the numbers on how much investment the private sector makes in this country. Of the 29 leading industrialised countries, the UK comes in at 27. Businesses in Estonia, the Czech Republic, Poland: all invest more in plants, equipment and the rest. The only countries that do worse are Greece and Iceland.
We have the same calamitous showing in spending on research and development. A few years ago, the Sheffield University physicist Prof Richard Jones went through the figures. He wrote: “In 1979 the UK was one of the most research-intensive economies in the world. Now, among advanced industrial economies, it is one of the least.” All of our competitors – the US, Japan, France and Germany – have maintained or increased their spending on research. South Korea and China are breathing down our necks. But the British capitalist class prefers the safe bets, the quick bucks – and the mega handouts to the senior executives and the shareholders.
Vice chairman of Stronger In campaign calls off Liam Fox after saying is Britain ‘fat and lazy’
Friday afternoons on the golf course? Fox may have watched one too many episodes of Terry and June. But what’s clear is that Britain’s bosses pay themselves far more than is justified either by comparison with their workers or on their performance. They have spent years relying on taxpayers to top up poverty pay and on the regulators to allow pensions holidays – just so they could hand out more money to shareholders.
They take what academic Kevin Farnsworth estimates at £93bn a year in corporate welfare – cash handouts and subsidies. But they react with horror to the notion of decent wages or chipping in for apprenticeships, rather than treating them as the normal overheads of doing business in a developed country. If that’s not fat and lazy, I don’t know what is.
Of course there are good and non-greedy bosses. But I have spent six years hearing the view that the British are lazy spongers with barely a demurral from most of the media or the political classes. It is high time to push the pendulum back a little.
Fox sees the answer to all this as more slash and burn: of taxes, of red tape, of public spending. That is delusional. Britain has spent 40 years making the burden on business easier, and the results have been to create a capitalist class so sluggish and short-term that it now threatens the continuation of capitalism.
Better, by far, to have a more honest capitalism: in which the responsibilities of business – on taxes, on pay and on investment – are laid out alongside their rights.
Sunday 21 August 2016
Can we really justify spending £5.5m per Olympic medal at Rio 2016
Janet Street Porter in The Independent
Winning medals in Rio certainly makes us feel good, and the sight of dedicated, super-fit young people celebrating years of hard work is absolutely inspiring and moving. But the big question must be this: are the Rio Olympics anything more than high grade TV entertainment?
Our national success has been at a large financial and, possibly, social cost. UK Sport, which decides how to allocate tax and lottery money, has a ruthless policy. Put bluntly, its remit is to focus on backing winners, to hunt out the rare people who can achieve the remarkable. This highly controversial strategy means that sports which didn’t deliver predicted results at the London Olympics in 2012 – table tennis, swimming and volleyball, for example – had their funding cut.
Two thirds of UK Sport’s money goes to specially selected 14-25 year olds – the winners of the next decade and the 2024 Olympics – and they also fund an elite group of “podium level athletes” with extra cash for living expenses and training.
This policy has brought massive success in Rio, where the UK stands second above China in the medals table, when we were ranked 36th in Atlanta just two decades ago. But the picture on the other side of the television set is far from encouraging.
Slumped on sofas all over the country, we sit glued to the screen with spreading bums and tums and atrophied leg muscles. One in four of us now resemble Neil the Sloth from the Sofaworks advert.
In spite of the government spending millions on public health campaigns, Brits do less than 30 minutes of any exercise (including walking at a normal pace) in a week. Worse, new research reveals that years spent hunched over laptops, tapping on smart phones and playing video games has resulted in a generation of young men having weaker hand grips than 30 years ago. Their muscles are starting to atrophy and shrink.
How to address this lack of motivation in our national psyche, and make exercise part of everyday life? That’s the way it is here in Sweden, where I’m on holiday (I’ve seen very few fat children).
Sport England launched a four-year strategy last May to encourage more grassroots participation in sport, but the task is daunting. The truth is that Olympic success simply doesn’t galvanise ordinary people to take a walk, go for a swim, play a game of tennis or learn to box.
We look on our gold medal winners as gorgeous pinups, who we revere and cherish, but who perform in a way we cannot relate to. They have nutritionists, wear aerodynamic clothing, and are 100 per cent driven. They are not normal shapes, their bodies have adapted to achieve maximum potential through specialised training. Laura Trott, Jason Kenny and their teammates are modern gods, not role models.
The discrepancy between the impressive achievements by Team GB and a lack of motivation in the population at large is increasing. The number of adults playing any sport has dropped since 2012. In the poorest areas like Yorkshire and Humber, 67,000 fewer people are involved in sport. In Doncaster the decline is over 13 per cent, whereas in well-heeled Oxford, it’s up 14 per cent.
Overall, more than 350,000 people have taken to their sofas and given up exercise of any kind in the four years since London 2012.
David Cameron might have given an extra £150m to fund sports in primary schools until 2020, but that sum is pitiful given the way sport has been systematically downgraded by the Department of Education over the last 10 years. Now, the amount of time children spend each week playing sports and participating in PE has dropped to one hour and 42 minutes a week – that’s 25 minutes less than 2010.
To make regular activity part of a normal mindset, you have to start in primary schools. All over the country, ageing swimming pools are being closed by councils anxious to save money on repairs. Most will be in the poorest areas. Local authority cuts have seen playing fields sold off and opening hours of existing facilities curtailed.
It’s been estimated that each medal in Rio has cost £5.5m of public funding. There are some tough questions to be asked about whether financial priorities should be re-aligned to focus on the many, rather than the few.
Winning medals in Rio certainly makes us feel good, and the sight of dedicated, super-fit young people celebrating years of hard work is absolutely inspiring and moving. But the big question must be this: are the Rio Olympics anything more than high grade TV entertainment?
Our national success has been at a large financial and, possibly, social cost. UK Sport, which decides how to allocate tax and lottery money, has a ruthless policy. Put bluntly, its remit is to focus on backing winners, to hunt out the rare people who can achieve the remarkable. This highly controversial strategy means that sports which didn’t deliver predicted results at the London Olympics in 2012 – table tennis, swimming and volleyball, for example – had their funding cut.
Two thirds of UK Sport’s money goes to specially selected 14-25 year olds – the winners of the next decade and the 2024 Olympics – and they also fund an elite group of “podium level athletes” with extra cash for living expenses and training.
This policy has brought massive success in Rio, where the UK stands second above China in the medals table, when we were ranked 36th in Atlanta just two decades ago. But the picture on the other side of the television set is far from encouraging.
Slumped on sofas all over the country, we sit glued to the screen with spreading bums and tums and atrophied leg muscles. One in four of us now resemble Neil the Sloth from the Sofaworks advert.
In spite of the government spending millions on public health campaigns, Brits do less than 30 minutes of any exercise (including walking at a normal pace) in a week. Worse, new research reveals that years spent hunched over laptops, tapping on smart phones and playing video games has resulted in a generation of young men having weaker hand grips than 30 years ago. Their muscles are starting to atrophy and shrink.
How to address this lack of motivation in our national psyche, and make exercise part of everyday life? That’s the way it is here in Sweden, where I’m on holiday (I’ve seen very few fat children).
Sport England launched a four-year strategy last May to encourage more grassroots participation in sport, but the task is daunting. The truth is that Olympic success simply doesn’t galvanise ordinary people to take a walk, go for a swim, play a game of tennis or learn to box.
We look on our gold medal winners as gorgeous pinups, who we revere and cherish, but who perform in a way we cannot relate to. They have nutritionists, wear aerodynamic clothing, and are 100 per cent driven. They are not normal shapes, their bodies have adapted to achieve maximum potential through specialised training. Laura Trott, Jason Kenny and their teammates are modern gods, not role models.
The discrepancy between the impressive achievements by Team GB and a lack of motivation in the population at large is increasing. The number of adults playing any sport has dropped since 2012. In the poorest areas like Yorkshire and Humber, 67,000 fewer people are involved in sport. In Doncaster the decline is over 13 per cent, whereas in well-heeled Oxford, it’s up 14 per cent.
Overall, more than 350,000 people have taken to their sofas and given up exercise of any kind in the four years since London 2012.
David Cameron might have given an extra £150m to fund sports in primary schools until 2020, but that sum is pitiful given the way sport has been systematically downgraded by the Department of Education over the last 10 years. Now, the amount of time children spend each week playing sports and participating in PE has dropped to one hour and 42 minutes a week – that’s 25 minutes less than 2010.
To make regular activity part of a normal mindset, you have to start in primary schools. All over the country, ageing swimming pools are being closed by councils anxious to save money on repairs. Most will be in the poorest areas. Local authority cuts have seen playing fields sold off and opening hours of existing facilities curtailed.
It’s been estimated that each medal in Rio has cost £5.5m of public funding. There are some tough questions to be asked about whether financial priorities should be re-aligned to focus on the many, rather than the few.
Thursday 18 August 2016
This Olympics hysteria shows that Britain has turned Soviet
Simon Jenkins in The Guardian
Team GB's Olympics success shows UK can thrive outside EU, say Brexiters
No surprise, it is working. The best coaches were hired. Talent was ruthlessly selected and nurtured. Money was lavished on research, equipment, clothing and peak performance timing. The French and Germans noted that the British are doing far better in Rio than at recent world championships. Here clearly is one field in which British state investment knows how to pick winners.
Iain Dyer, Britain’s star cycling coach, talks like a Formula One boss. “We peaked in our research and innovation. The helmets were the 2012 ones, but the bikes are new, and different components and strategies are used for the first time.” Aerodynamic suits with magic chevrons are everywhere.
Rod Carr of UK Sport is equally open. He relates how the mix of penalties and incentives since Sydney led, in the case of gymnastics and swimming, to each sport thinking afresh and coming back with an investable proposition.
Athletes are unique among public servants in enjoying a hypothecated tax to give themselves up to £28,000 a year “to concentrate on training”. Poor countries can eat their hearts out.
I am thrilled by personal success, by Mo Farah’s 10,000m, Charlotte Dujardin’s horsemanship, Wayde van Niekerk’s 400m and Simone Biles’ mesmerising gymnastics. They are a joy to watch. But I do not mind their nationality. The nationalisation of sport – the hamfisted draping in the union jack after breasting the tape – so clearly diminishes the individual achievement. Ever since its introduction by Hitler at the 1936 Olympics, such chauvinism has infused democratic as well as authoritarian regimes. Olympic Games are like wars, foreign adventures offering regimes a salve to domestic woes. Athletes are recruited to the flag like soldiers. They are declared “heroes” and showered with honours.
For years, the Olympics were corrupted by shamateurism and drugs. The IOC, with British representatives present, knew perfectly well what was happening, but turned a blind eye. The most honest gold medal of recent years should have gone to the British media, alone in relentlessly revealing corruption and cheating in international sport. Yet it was accused by Britain’s Lord Coe of “a declaration of war on my sport”. When this was seen to be rubbish, he did not resign. He was declared an expert on sports ethics and appointed to the IOC. The Russians who blew the whistle on athletics doping are now forced to hide for their lives somewhere in America. These are the realities that should sit alongside the “heroism” of today’s games.
None of this explains the BBC, which has brought Rio close to a British National party awayday. The Chinese had it right. They used to dedicate their medals to the Chinese Communist party and people, who after all had paid for them. As for the accusations against Britain’s cyclists, the response is simple. Who needs to cheat with drugs when medals go to money? Perhaps the best answer is for countries that have no money to be allowed drugs, to level the playing field. They are cheaper.
‘I was touched, like everyone, by the Jason Kenny/Laura Trott ‘golden love bond’, but how many times did I need to see them in tears?’ Photograph: David Davies/PA
Australia’s cycling star, Anna Meares, said of Britain’s triumphant cyclists: “They’ve got it together … but, to be honest, I’m not exactly sure what they’ve got together.” The French and Germans were heard to murmur likewise. One interpretation could be that murky word “cheating”, although Meares strongly denied that she had ever suggested this. Given the recent history of the Olympics and the fierce pressure on British athletes, the accusation is pardonable. I doubt if it is true. What Britain “got together” was the money. Is that cheating?
I have intermittently enjoyed the Olympics on television. Mostly it is hours of flatulent BBC staff killing time by interviewing one another, interspersed with a few seconds of mostly baffling hysterics. Clare Balding appears in perpetual shriek: “Oh my God, I think our great British paint is drying faster than the Russian and the Colombian paint – but we must await a decision from the judges.”
Then on Tuesday night the BBC went bananas. At 10 o’clock we were denied important news – of Anjem Choudary’s conviction, of swingeing tax fines and of possible “special status” for Britain outside the EU. Instead we had to sit for an hour and a half, waiting for three minutes of BBC pandemonium as British cyclists yet again pedalled fast. We had to watch while the BBC aired pictures of its own commentary box punching the air and howling. These were not so much journalists as state cheerleaders. I was touched, like everyone, by the Jason Kenny/Laura Trott “golden love bond”, but how many times did I need to see them in tears? It was a total collapse of news values, the corporation peddling tabloid chauvinist schlock.
Throughout the cold war, Soviet bloc nations used sport as a proxy for economic success. With the connivance of the International Olympic Committee, they turned what used to be an amateur sport into the equivalent of a national defence force, hurling money and status at their athletes while the IOC turned the Games into a lavish field of the cloth of gold – at some poor taxpayer’s expense.
The west used to ridicule the communists for this. Their athletes were derided as state employees, civil servants and cheats. Of course many took drugs. Winning was what mattered to the Soviets, the state media being monopolised to convince their people that their “system” was better.
Since Atlanta in 1996, Britain has followed suit. The poor performance of British athletes was considered by John Major as a comment on his government. He demanded medals, and lots of them. The subsidy to “elite” sport was increased tenfold, from £5m to £54m, while popular sports facilities were closing. Money was directed specifically at disciplines where individuals could win multiple medals rather than just one, away from field athletics to cycling and gymnastics. It worked. The medals tally at Sydney 2000 rose from 15 to 28.
A UK Sport graph tracks the precise link between government grant (dressed up as lottery money) and Olympic medals. By 2012, this had risen to £264m, delivering 65 medals (just over £4m a medal). For Rio it has been £350m for the Olympics and Paralympics, with the target that Britain become “the first host nation to eclipse our London 2012 medal haul”.
Australia’s cycling star, Anna Meares, said of Britain’s triumphant cyclists: “They’ve got it together … but, to be honest, I’m not exactly sure what they’ve got together.” The French and Germans were heard to murmur likewise. One interpretation could be that murky word “cheating”, although Meares strongly denied that she had ever suggested this. Given the recent history of the Olympics and the fierce pressure on British athletes, the accusation is pardonable. I doubt if it is true. What Britain “got together” was the money. Is that cheating?
I have intermittently enjoyed the Olympics on television. Mostly it is hours of flatulent BBC staff killing time by interviewing one another, interspersed with a few seconds of mostly baffling hysterics. Clare Balding appears in perpetual shriek: “Oh my God, I think our great British paint is drying faster than the Russian and the Colombian paint – but we must await a decision from the judges.”
Then on Tuesday night the BBC went bananas. At 10 o’clock we were denied important news – of Anjem Choudary’s conviction, of swingeing tax fines and of possible “special status” for Britain outside the EU. Instead we had to sit for an hour and a half, waiting for three minutes of BBC pandemonium as British cyclists yet again pedalled fast. We had to watch while the BBC aired pictures of its own commentary box punching the air and howling. These were not so much journalists as state cheerleaders. I was touched, like everyone, by the Jason Kenny/Laura Trott “golden love bond”, but how many times did I need to see them in tears? It was a total collapse of news values, the corporation peddling tabloid chauvinist schlock.
Throughout the cold war, Soviet bloc nations used sport as a proxy for economic success. With the connivance of the International Olympic Committee, they turned what used to be an amateur sport into the equivalent of a national defence force, hurling money and status at their athletes while the IOC turned the Games into a lavish field of the cloth of gold – at some poor taxpayer’s expense.
The west used to ridicule the communists for this. Their athletes were derided as state employees, civil servants and cheats. Of course many took drugs. Winning was what mattered to the Soviets, the state media being monopolised to convince their people that their “system” was better.
Since Atlanta in 1996, Britain has followed suit. The poor performance of British athletes was considered by John Major as a comment on his government. He demanded medals, and lots of them. The subsidy to “elite” sport was increased tenfold, from £5m to £54m, while popular sports facilities were closing. Money was directed specifically at disciplines where individuals could win multiple medals rather than just one, away from field athletics to cycling and gymnastics. It worked. The medals tally at Sydney 2000 rose from 15 to 28.
A UK Sport graph tracks the precise link between government grant (dressed up as lottery money) and Olympic medals. By 2012, this had risen to £264m, delivering 65 medals (just over £4m a medal). For Rio it has been £350m for the Olympics and Paralympics, with the target that Britain become “the first host nation to eclipse our London 2012 medal haul”.
Team GB's Olympics success shows UK can thrive outside EU, say Brexiters
No surprise, it is working. The best coaches were hired. Talent was ruthlessly selected and nurtured. Money was lavished on research, equipment, clothing and peak performance timing. The French and Germans noted that the British are doing far better in Rio than at recent world championships. Here clearly is one field in which British state investment knows how to pick winners.
Iain Dyer, Britain’s star cycling coach, talks like a Formula One boss. “We peaked in our research and innovation. The helmets were the 2012 ones, but the bikes are new, and different components and strategies are used for the first time.” Aerodynamic suits with magic chevrons are everywhere.
Rod Carr of UK Sport is equally open. He relates how the mix of penalties and incentives since Sydney led, in the case of gymnastics and swimming, to each sport thinking afresh and coming back with an investable proposition.
Athletes are unique among public servants in enjoying a hypothecated tax to give themselves up to £28,000 a year “to concentrate on training”. Poor countries can eat their hearts out.
I am thrilled by personal success, by Mo Farah’s 10,000m, Charlotte Dujardin’s horsemanship, Wayde van Niekerk’s 400m and Simone Biles’ mesmerising gymnastics. They are a joy to watch. But I do not mind their nationality. The nationalisation of sport – the hamfisted draping in the union jack after breasting the tape – so clearly diminishes the individual achievement. Ever since its introduction by Hitler at the 1936 Olympics, such chauvinism has infused democratic as well as authoritarian regimes. Olympic Games are like wars, foreign adventures offering regimes a salve to domestic woes. Athletes are recruited to the flag like soldiers. They are declared “heroes” and showered with honours.
For years, the Olympics were corrupted by shamateurism and drugs. The IOC, with British representatives present, knew perfectly well what was happening, but turned a blind eye. The most honest gold medal of recent years should have gone to the British media, alone in relentlessly revealing corruption and cheating in international sport. Yet it was accused by Britain’s Lord Coe of “a declaration of war on my sport”. When this was seen to be rubbish, he did not resign. He was declared an expert on sports ethics and appointed to the IOC. The Russians who blew the whistle on athletics doping are now forced to hide for their lives somewhere in America. These are the realities that should sit alongside the “heroism” of today’s games.
None of this explains the BBC, which has brought Rio close to a British National party awayday. The Chinese had it right. They used to dedicate their medals to the Chinese Communist party and people, who after all had paid for them. As for the accusations against Britain’s cyclists, the response is simple. Who needs to cheat with drugs when medals go to money? Perhaps the best answer is for countries that have no money to be allowed drugs, to level the playing field. They are cheaper.
Wednesday 22 June 2016
The shocking waste of cash even Brexiteers won’t condemn
In or out, everyone seems to agree that the poor should keep subsidising the rich with land subsidies.
Photograph: George Monbiot
All this is now on the brink. Across Romania, farmers are beginning to realise that they can make money simply by cleansing the land. In eastern Transylvania I saw the heartbreaking results (below): the mass felling of trees and destruction of wildlife, not for any productive purpose, but just to meet the European rules. It’s the same kind of vandalism, driven by diktat and blindly enforced by bureaucrats, that the Romanians suffered under their former despot, Nicolae Ceausescu. The European subsidies rules are responsible for one of the world’s great unfolding disasters, which ranks only a little way behind the fires in Indonesia and thecollapse of coral reefs.
Photograph: George Monbiot
This dog that hasn’t barked exposes the real agenda of the leading Brexiters. They denounce the transfer of public money from rich to poor; they are intensely relaxed about the transfer of public money from poor to rich. It also challenges those who wish to remain.
I will vote in on Thursday, as I don’t want to surrender this country to the unmolested control of people prepared to rip up every variety of public spending and public protection except those that serve their own class. But if we are to live in Remainia, we should insist on sweeping change. Daylight robbery and mass destruction: the EU is supposed to prevent them, not deliver them.
Arable farmland near Leighton in Shropshire. ‘These payments shouldn’t be called farm subsidies: you don’t have to produce any food to receive them.’ Photograph: David Bagnall/Alamy
George Monbiot in The Guardian
Do the Leave campaigners care about the misuse of public money? No. How do I know? Because they have scarcely mentioned the European Union’s great bonfire of banknotes. You know, the item that accounts for roughly 40% of the EU budget, or £42bn a year, almost all of which is wasted. You don’t know? I rest my case.
I’m talking about farm subsidies. If the Brexiters have raised the subject at all, it’s only to assure recipients that these vast sums will continue to be extracted from taxpayers’ pockets if Britain leaves. Some – such as Theresa Villiers and Owen Paterson – have suggested that the great giveaway of public funds could even be increased.
The leaders of the remain campaign are no better: George Osborne, while ripping down essential public services, has warned that if the UK votes out, this outrageous provision of unearned income might dry up. We should stay in Europe, he told the press in Northern Ireland, to ensure that brimming buckets of public money – £3bn a year in the UK – continue to be dispensed.
They would more accurately be described as land subsidies, as they are paid by the hectare. The more land you own or lease, the more public money you are given, so the richest people in Europe clean up. And not just in Europe: Russian oligarchs, Saudi princes and Wall Street bankers have bought up tracts of European farmland, thus qualifying for the vast sums we shovel into their pockets. Why is no word raised against these benefit tourists?
This is arguably the most regressive distribution of public money in modern times. Taxpayers of all stations stock the wine cellars of dukes and hedge fund managers. As much as 80% of the funds are harvested by the richest 25% of recipients. The poorest farmers are excluded: you cannot claim subsidies unless you own or lease at least five hectares. A report by the European court of auditors reveals that the EU has no useful data on farm incomes, and therefore no knowledge of whether farm subsidies serve any social purpose.
This racket is perhaps the strongest of all arguments for leaving the European Union, but the Brexiters’ silence resounds. Among the 13 Conservative MPs who signed an open letter last week undertaking not to cut subsidies for owning or leasing land if Britain leaves the union was Iain Duncan Smith. His wife’s family’s estate, on which he lives, receives £150,000 a year of your money, handed to them by the EU.
Remember what Duncan Smith did to the poor while he was work and pensions secretary? He presided over a system that drove many to food banks. I struggle to imagine less deserving beneficiaries of public charity than Iain Duncan Smith and family.
Hold on – I’ve just thought of one. Paul Dacre, editor-in-chief of the Daily Mail – which rails ceaselessly against other misuses of EU funds, real or imagined – has extracted £460,000 in European subsidies since 2011. How? By owning a shooting estate in Scotland and a tract of land in Sussex. I doubt Dacre knows much more about farming than the average reader of his newspaper, but you don’t have to be a farmer to receive this money; the rules say only that you must have “eligible land at your disposal”.
Whenever you see someone lamenting the “something for nothing culture” in the press, or attacking “bureaucrats, lobbyists and other jackals that scavenge for taxpayers’ money”, you could place a hefty bet that either they or people close to them are stuffing their pockets with EU funds.
There’s another reason for calling these payments land subsidies: you don’t have to produce any food to receive them. Your land just has to look agricultural, which means bare. Among the “ineligible features” listed in Westminster’s version of the European rules are ponds, wide hedges, regenerating woodland, reedbeds, thriving salt marsh and trees sufficient to form a canopy. The common agricultural policy is a €55bn incentive to destroy wildlife habitats and cause floods downstream.
All the good things the EU has done for nature are more than counteracted by this bureaucratic idiocy. Millions of hectares of wildlife habitat in the EU are threatened by this rule; clearance has taken place already across vast areas. Why do we hear so little about it?
I spent part of this spring in Romania, in the midst of hundreds of thousands of hectares of wood pasture (below): a mosaic of flowering meadows, marshes and trees. I have seldom seen such a profusion of life anywhere on earth. I watched golden orioles, hoopoes, honey buzzards, red-backed and great grey shrikes, lesser spotted eagles, black storks, yellow wagtails, roe deer, wild boar and bears. Cuckoos were so common they flew around in flocks. All nine species of European woodpecker live in one small valley where I stayed; so do bee eaters, goshawks, corncrakes, quails, nightjars, tortoises, tree frogs, pine martens, wildcats, lynx and wolves.
George Monbiot in The Guardian
Do the Leave campaigners care about the misuse of public money? No. How do I know? Because they have scarcely mentioned the European Union’s great bonfire of banknotes. You know, the item that accounts for roughly 40% of the EU budget, or £42bn a year, almost all of which is wasted. You don’t know? I rest my case.
I’m talking about farm subsidies. If the Brexiters have raised the subject at all, it’s only to assure recipients that these vast sums will continue to be extracted from taxpayers’ pockets if Britain leaves. Some – such as Theresa Villiers and Owen Paterson – have suggested that the great giveaway of public funds could even be increased.
The leaders of the remain campaign are no better: George Osborne, while ripping down essential public services, has warned that if the UK votes out, this outrageous provision of unearned income might dry up. We should stay in Europe, he told the press in Northern Ireland, to ensure that brimming buckets of public money – £3bn a year in the UK – continue to be dispensed.
They would more accurately be described as land subsidies, as they are paid by the hectare. The more land you own or lease, the more public money you are given, so the richest people in Europe clean up. And not just in Europe: Russian oligarchs, Saudi princes and Wall Street bankers have bought up tracts of European farmland, thus qualifying for the vast sums we shovel into their pockets. Why is no word raised against these benefit tourists?
This is arguably the most regressive distribution of public money in modern times. Taxpayers of all stations stock the wine cellars of dukes and hedge fund managers. As much as 80% of the funds are harvested by the richest 25% of recipients. The poorest farmers are excluded: you cannot claim subsidies unless you own or lease at least five hectares. A report by the European court of auditors reveals that the EU has no useful data on farm incomes, and therefore no knowledge of whether farm subsidies serve any social purpose.
This racket is perhaps the strongest of all arguments for leaving the European Union, but the Brexiters’ silence resounds. Among the 13 Conservative MPs who signed an open letter last week undertaking not to cut subsidies for owning or leasing land if Britain leaves the union was Iain Duncan Smith. His wife’s family’s estate, on which he lives, receives £150,000 a year of your money, handed to them by the EU.
Remember what Duncan Smith did to the poor while he was work and pensions secretary? He presided over a system that drove many to food banks. I struggle to imagine less deserving beneficiaries of public charity than Iain Duncan Smith and family.
Hold on – I’ve just thought of one. Paul Dacre, editor-in-chief of the Daily Mail – which rails ceaselessly against other misuses of EU funds, real or imagined – has extracted £460,000 in European subsidies since 2011. How? By owning a shooting estate in Scotland and a tract of land in Sussex. I doubt Dacre knows much more about farming than the average reader of his newspaper, but you don’t have to be a farmer to receive this money; the rules say only that you must have “eligible land at your disposal”.
Whenever you see someone lamenting the “something for nothing culture” in the press, or attacking “bureaucrats, lobbyists and other jackals that scavenge for taxpayers’ money”, you could place a hefty bet that either they or people close to them are stuffing their pockets with EU funds.
There’s another reason for calling these payments land subsidies: you don’t have to produce any food to receive them. Your land just has to look agricultural, which means bare. Among the “ineligible features” listed in Westminster’s version of the European rules are ponds, wide hedges, regenerating woodland, reedbeds, thriving salt marsh and trees sufficient to form a canopy. The common agricultural policy is a €55bn incentive to destroy wildlife habitats and cause floods downstream.
All the good things the EU has done for nature are more than counteracted by this bureaucratic idiocy. Millions of hectares of wildlife habitat in the EU are threatened by this rule; clearance has taken place already across vast areas. Why do we hear so little about it?
I spent part of this spring in Romania, in the midst of hundreds of thousands of hectares of wood pasture (below): a mosaic of flowering meadows, marshes and trees. I have seldom seen such a profusion of life anywhere on earth. I watched golden orioles, hoopoes, honey buzzards, red-backed and great grey shrikes, lesser spotted eagles, black storks, yellow wagtails, roe deer, wild boar and bears. Cuckoos were so common they flew around in flocks. All nine species of European woodpecker live in one small valley where I stayed; so do bee eaters, goshawks, corncrakes, quails, nightjars, tortoises, tree frogs, pine martens, wildcats, lynx and wolves.
Photograph: George Monbiot
All this is now on the brink. Across Romania, farmers are beginning to realise that they can make money simply by cleansing the land. In eastern Transylvania I saw the heartbreaking results (below): the mass felling of trees and destruction of wildlife, not for any productive purpose, but just to meet the European rules. It’s the same kind of vandalism, driven by diktat and blindly enforced by bureaucrats, that the Romanians suffered under their former despot, Nicolae Ceausescu. The European subsidies rules are responsible for one of the world’s great unfolding disasters, which ranks only a little way behind the fires in Indonesia and thecollapse of coral reefs.
Photograph: George Monbiot
This dog that hasn’t barked exposes the real agenda of the leading Brexiters. They denounce the transfer of public money from rich to poor; they are intensely relaxed about the transfer of public money from poor to rich. It also challenges those who wish to remain.
I will vote in on Thursday, as I don’t want to surrender this country to the unmolested control of people prepared to rip up every variety of public spending and public protection except those that serve their own class. But if we are to live in Remainia, we should insist on sweeping change. Daylight robbery and mass destruction: the EU is supposed to prevent them, not deliver them.
Tuesday 9 February 2016
If we want to solve the housing crisis, we must answer these three questions
Paul Mason in The Guardian
As housing charity Shelter turns 50, the country is still plagued by overcrowding, rogue landlords, insecure tenancies and homelessness. How do we even begin to make things better?
Boys from the City Of London school on a charity walk in aid of Shelter from Blackfriars, London, to Windsor, Berkshire, on 26 March 1969. Photograph: Len Trievnor/Getty Images
Its official name was Navigation Street, and a glance at a 19th century map suggests its origin: an isolated row of terraced houses leading down to the canal that runs through the middle of my hometown.
Canals were originally called “navigations” and the people who dug them “navvies”. This term – still in use in the 1960s – was code for poor, itinerant, Irish manual workers. So we called it “Navvy Street”: it was where the poorest people in the town lived and probably served that function from when it was built to when it was knocked down and turned into a “close”.
Navigation Street was the place I thought of when the housing charity Shelter reissued documentary photographs from the 1960s to mark its 50th anniversary. If you flick through Nick Hedges’ photos now, you could be forgiven for thinking they depict some kind of uniform, northern industrial bleakness at of the time. But you’d be wrong.
Shelter and the slums: capturing bleak Britain 50 years ago
The overcrowding, dirt and abject poverty in those images shocked people because they were exceptional. Two decades of post-war social housebuilding, plus a pro-active welfare state, had done a lot to suppress poverty. Places like Navigation Street were rare by the late sixties.
Shelter was born because people realised dwindling number of classic slum streets were not the only problem: there was widespread hidden homelessness expressed through overcrowding. The private rented sector was utterly insecure and housing costs were devouring the incomes of the poor.
Skip forward 50 years and we too have rising homelessness – 54,000 families in England last year, up 36% since the financial crisis began. Housing charities record rising overcrowding, precarious tenancies, predatory landlords and unaffordable rents. The difference is it’s not only the poor who suffer.
The shared student house has been reincarnated as the shared young professional’s house, with some even forced to share rooms. According to Crisis, there are 3.5m households containing a “concealed” adult or couple in England.
Meanwhile apartments too small to live in are being built across southern England: their occupants will have jobs once considered middle class. Precarious tenancies, outlawed during the housing reform movement of the 1960s, have created a “complain and you’re out” culture.
If you wanted to photograph the modern housing problem you’d go to the coffee shops where young people perch over laptops, late into the night, rather than endure their overcrowded flat. You would photograph the sofa-surfers; the migrants forced to live in converted garages; the families packing their bags as rent hikes and benefit cuts in the private rented sector force them to move to the periphery of towns and cities, or throw themselves at the local council for help.
The root of this problem is not one of policy – though the row over social housing and housing supply will probably shape this parliament – the deeper problem is the financialisation of home ownership.
At one point, rising home ownership solved many of the problems identified the 1960s. The predictably steady rise in house prices over time, like predictable inflation, created an escalator for the working class. If you combined that with vigorous social housebuilding, as practised by both Labour and Conservative councils in the 1970s, you created affordability at both ends of the scale.
If you then dramatically slash the supply of social housing, through right-to-buy and reduced council building, you create a permanent imbalance that turns home ownership into a form of asset investment.
‘Pay to stay’ trap will force working families out of council homes
What you get then is boom and bust. And the only way to cure the bust is for the government to greet every collapse in market prices with effective state subsidies for home ownership. This, in turn, induces a speculative frenzy of one way bets – on development, on buy to let, on off-plan investment buying from abroad.
To economists who study financial frenzy, the British housing market has followed the classic curve: the certainty of rising prices and short supply draws more and more people into the market, knowing a crash cannot wipe them out – because when confronted with falling house prices, governments have used taxpayers’ money and micromanagement of the banks to halt a spiral of repossessions and falling prices.
We don’t know what Britain would look like if the same levels of explicit subsidy and implicit preference had been pumped into the social rented sector. All we know is that the current situation is not tenable.
But we can ask ourselves the following questions:
First: how much space are people entitled to live in? The market sets no limits; even such formal rules as they still exist (they are being weakened) are flouted by the young salariat.
Second: what is the optimal balance between the private, social and state-owned rented housing and the owner-occupied sector? This cannot be hard to fathom since many cities in the 1980s and early 1990s achieved housing markets that “cleared” in economic terms: in Leicester in the 1980s I had no problem finding a secure private tenancy; no problem getting the council to hound my landlord to maintain it properly; very little problem moving from there to a housing association flat; very little problem transferring, as a key worker, from there to a council flat in London. Yes, London.
Third, what do we mean by “affordable”– when it comes to either rents or prices on state-specified newbuild homes? Under both Labour, Coalition and the Conservatives the concept of affordability has become delinked from incomes and attached to a percentage of the market rate. The same state that decided nobody should be repossessed during the 2008-11 housing slump could decide that nobody has to pay more than a fixed percentage of their incomes on housing costs.
Maybe we need to start with principles: that everyone has a right to a home; that every person has a right to a minimum amount of space in that home; and that those who claim the right to own houses nobody lives in should pay a hefty, disincentivising penalty.
Yes, that’s an infringement of the market – but housing in Britain has never been a free market: it is being created and re-created through regulation and deregulation – on benefits, on affordability, on building standards, on right to buy. The point is to shape the market towards smart outcomes.
As housing charity Shelter turns 50, the country is still plagued by overcrowding, rogue landlords, insecure tenancies and homelessness. How do we even begin to make things better?
Boys from the City Of London school on a charity walk in aid of Shelter from Blackfriars, London, to Windsor, Berkshire, on 26 March 1969. Photograph: Len Trievnor/Getty Images
Its official name was Navigation Street, and a glance at a 19th century map suggests its origin: an isolated row of terraced houses leading down to the canal that runs through the middle of my hometown.
Canals were originally called “navigations” and the people who dug them “navvies”. This term – still in use in the 1960s – was code for poor, itinerant, Irish manual workers. So we called it “Navvy Street”: it was where the poorest people in the town lived and probably served that function from when it was built to when it was knocked down and turned into a “close”.
Navigation Street was the place I thought of when the housing charity Shelter reissued documentary photographs from the 1960s to mark its 50th anniversary. If you flick through Nick Hedges’ photos now, you could be forgiven for thinking they depict some kind of uniform, northern industrial bleakness at of the time. But you’d be wrong.
Shelter and the slums: capturing bleak Britain 50 years ago
The overcrowding, dirt and abject poverty in those images shocked people because they were exceptional. Two decades of post-war social housebuilding, plus a pro-active welfare state, had done a lot to suppress poverty. Places like Navigation Street were rare by the late sixties.
Shelter was born because people realised dwindling number of classic slum streets were not the only problem: there was widespread hidden homelessness expressed through overcrowding. The private rented sector was utterly insecure and housing costs were devouring the incomes of the poor.
Skip forward 50 years and we too have rising homelessness – 54,000 families in England last year, up 36% since the financial crisis began. Housing charities record rising overcrowding, precarious tenancies, predatory landlords and unaffordable rents. The difference is it’s not only the poor who suffer.
The shared student house has been reincarnated as the shared young professional’s house, with some even forced to share rooms. According to Crisis, there are 3.5m households containing a “concealed” adult or couple in England.
Meanwhile apartments too small to live in are being built across southern England: their occupants will have jobs once considered middle class. Precarious tenancies, outlawed during the housing reform movement of the 1960s, have created a “complain and you’re out” culture.
If you wanted to photograph the modern housing problem you’d go to the coffee shops where young people perch over laptops, late into the night, rather than endure their overcrowded flat. You would photograph the sofa-surfers; the migrants forced to live in converted garages; the families packing their bags as rent hikes and benefit cuts in the private rented sector force them to move to the periphery of towns and cities, or throw themselves at the local council for help.
The root of this problem is not one of policy – though the row over social housing and housing supply will probably shape this parliament – the deeper problem is the financialisation of home ownership.
At one point, rising home ownership solved many of the problems identified the 1960s. The predictably steady rise in house prices over time, like predictable inflation, created an escalator for the working class. If you combined that with vigorous social housebuilding, as practised by both Labour and Conservative councils in the 1970s, you created affordability at both ends of the scale.
If you then dramatically slash the supply of social housing, through right-to-buy and reduced council building, you create a permanent imbalance that turns home ownership into a form of asset investment.
‘Pay to stay’ trap will force working families out of council homes
What you get then is boom and bust. And the only way to cure the bust is for the government to greet every collapse in market prices with effective state subsidies for home ownership. This, in turn, induces a speculative frenzy of one way bets – on development, on buy to let, on off-plan investment buying from abroad.
To economists who study financial frenzy, the British housing market has followed the classic curve: the certainty of rising prices and short supply draws more and more people into the market, knowing a crash cannot wipe them out – because when confronted with falling house prices, governments have used taxpayers’ money and micromanagement of the banks to halt a spiral of repossessions and falling prices.
We don’t know what Britain would look like if the same levels of explicit subsidy and implicit preference had been pumped into the social rented sector. All we know is that the current situation is not tenable.
But we can ask ourselves the following questions:
First: how much space are people entitled to live in? The market sets no limits; even such formal rules as they still exist (they are being weakened) are flouted by the young salariat.
Second: what is the optimal balance between the private, social and state-owned rented housing and the owner-occupied sector? This cannot be hard to fathom since many cities in the 1980s and early 1990s achieved housing markets that “cleared” in economic terms: in Leicester in the 1980s I had no problem finding a secure private tenancy; no problem getting the council to hound my landlord to maintain it properly; very little problem moving from there to a housing association flat; very little problem transferring, as a key worker, from there to a council flat in London. Yes, London.
Third, what do we mean by “affordable”– when it comes to either rents or prices on state-specified newbuild homes? Under both Labour, Coalition and the Conservatives the concept of affordability has become delinked from incomes and attached to a percentage of the market rate. The same state that decided nobody should be repossessed during the 2008-11 housing slump could decide that nobody has to pay more than a fixed percentage of their incomes on housing costs.
Maybe we need to start with principles: that everyone has a right to a home; that every person has a right to a minimum amount of space in that home; and that those who claim the right to own houses nobody lives in should pay a hefty, disincentivising penalty.
Yes, that’s an infringement of the market – but housing in Britain has never been a free market: it is being created and re-created through regulation and deregulation – on benefits, on affordability, on building standards, on right to buy. The point is to shape the market towards smart outcomes.
Wednesday 3 February 2016
We’re drowning in cheap oil – yet still taxpayers prop up this toxic industry
George Monbiot in The Guardian
As these new crisis bailouts for fossil fuels show, it’s those who are least deserving who get the most government protection
Oil appeared to peak in the United States in 1970, after which production fell for 40 years. That, we assumed, was the end of the story. But through fracking and horizontal drilling, production last year returned to the level it reached in 1969. Twelve years ago, the Texas oil tycoon T Boone Pickens announced that “never again will we pump more than 82 million barrels”. By the end of 2015, daily world production reached 97m .
Instead of a collapse in the supply of oil, we confront the opposite crisis: we’re drowning in the stuff. The reasons for the price crash – an astonishing slide from $115 a barrel to less than $30 over the past 20 months – are complex: among them are weaker demand in China and a strong dollar. But an analysis by the World Bank finds that changes in supply have been a much greater factor than changes in demand. Oil production has almost doubled in Iraq, as well as in the US. Saudi Arabia has opened its taps, to try to destroy the competition and sustain its market share – a strategy that some peak oil advocates once argued was impossible.
‘Last week David Cameron flew to Aberdeen, where he announced another £250m of funding for, er, free enterprise, much of which will be used to prop up oil and gas.’ Photograph: Andrew Milligan/AFP/Getty Images
The outcomes are mixed. Cheaper oil means that more will be burned, accelerating climate breakdown. But it also means less investment in future production. Already, $380 billion that was to have been ploughed into oil and gas fields has been delayed. The first places to be spared are those in which extraction is most difficult or hazardous. Fragile ecosystems in the Arctic, in rainforests, in remote and stormy seas, have been granted a stay of execution.
BP reported a massive loss today, partly because of low prices. A falling oil price drags down the price of gas, exposing coal-mining companies to the risk of bankruptcy: good riddance to them. But some renewables firms are being tanked by the same forces; they are losing their subsidies just as gas prices crash. One day they will compete unaided, but not yet.
To cheer or lament these vicissitudes is pointless. They are chance events that counteract each other, and will at some point be reversed. The oil age, which threatens the conditions sustaining life on Earth, will come to an end through political, not economic, change. But the politics, for now, are against us.
Already, according to the International Monetary Fund, more money is spent, directly and indirectly, on subsidising fossil fuels than on funding health services. The G20 countries alone spend over three times as much public money on oil, gas and coal than the whole world does on renewable energy. In 2014, subsidies for fossil fuel production in the UK reached £5bn. Enough? Oh no. While essential public services are being massacred through want of funds, last year the government announced a further £1.3bn in tax breaks for oil companies in the North Sea. Much of this money went to companies based overseas. They must think we’re mad.
Last week David Cameron flew to Aberdeen, where he announced another £250m of funding for, er, free enterprise, much (though not all) of which will be used to prop up oil and gas. A further £20m of public money will be spent on seismic testing. Expect more whale strandings, and ask yourself why the industry that threatens our prosperity shouldn’t cover its own bloody costs.
The energy secretary, Amber Rudd, says she stands “100% behind” this “fantastic industry”. She will “build a bridge to the future for UK oil and gas”. Had she been born 300 years ago, I expect she would have said the same about the slave trade. In a few years’ time her observations will look about as pertinent and about as ethical.
Oil companies have already been granted “ministerial buddies” to “improve access to government” – as if they didn’t have enough already. Now they get an“oil and gas ambassador”, and a new ministerial group, to “reiterate the UK government’s commitment to supporting the oil and gas industry”. A leaked letter shows that Rudd and other ministers want to silence local people by transferring the power to decide whether fracking happens from elected councils to an unelected commission. Let’s sack the electorate and appoint a new one.
Compare all this to the government’s treatment of renewables. Local people have been given special new powers to stop onshore windfarms being built. To the renewables companies Rudd says this: “We need to work towards a market where success is driven by your ability to compete in a market, not by your ability to lobby government.” Strangely, the same rules do not apply to the oil companies. Your friends get protection. The free market is reserved for enemies.
Yes, I do mean enemies. An energy transition threatens the kind of people who attend the Conservative party’s fundraising balls. It corrodes the income of old schoolfriends and weekend guests. For all the talk of enterprise, old money still nurtures its lively hatred of new money, and those who control the public purse use it to protect the incumbents from the parvenus. As they did for the bankers, our political leaders ensure that everyone must pay the costs imposed by the fossil fuel companies – except the fossil fuel companies.
So they lock us into the 20th century, into industrial decline and air pollution, stranded assets and – through climate change – systemic collapse. Governments of this country cannot resist the future forever. Eventually they will succumb to the inexorable logic, and recognise that most of the vast accretions of fossil plant life in the Earth’s crust must be left where they are. And those massive expenditures of public money will prove to be worthless.
Crises expose corruption – that is one of the basic lessons of politics. The oil price crisis finds politicians with their free-market trousers round their ankles. When your friends are in trouble, the rigours imposed religiously on the poor and public services suddenly turn out to be negotiable. Throw money at them, trash their competitors, rig the outcome: those who deserve the least receive the most.
As these new crisis bailouts for fossil fuels show, it’s those who are least deserving who get the most government protection
‘Oil companies have already been granted ‘ministerial buddies’ to ‘improve access to government’ – as if they didn’t have enough already.’ Illustration: Andrzej Krauze
Those of us who predicted, during the first years of this century, an imminent peak in global oil supplies could not have been more wrong. People like the energy consultant Daniel Yergin, with whom I disputed the topic, appear to have been right: growth, he said, would continue for many years, unless governments intervened.
Those of us who predicted, during the first years of this century, an imminent peak in global oil supplies could not have been more wrong. People like the energy consultant Daniel Yergin, with whom I disputed the topic, appear to have been right: growth, he said, would continue for many years, unless governments intervened.
Oil appeared to peak in the United States in 1970, after which production fell for 40 years. That, we assumed, was the end of the story. But through fracking and horizontal drilling, production last year returned to the level it reached in 1969. Twelve years ago, the Texas oil tycoon T Boone Pickens announced that “never again will we pump more than 82 million barrels”. By the end of 2015, daily world production reached 97m .
Instead of a collapse in the supply of oil, we confront the opposite crisis: we’re drowning in the stuff. The reasons for the price crash – an astonishing slide from $115 a barrel to less than $30 over the past 20 months – are complex: among them are weaker demand in China and a strong dollar. But an analysis by the World Bank finds that changes in supply have been a much greater factor than changes in demand. Oil production has almost doubled in Iraq, as well as in the US. Saudi Arabia has opened its taps, to try to destroy the competition and sustain its market share – a strategy that some peak oil advocates once argued was impossible.
‘Last week David Cameron flew to Aberdeen, where he announced another £250m of funding for, er, free enterprise, much of which will be used to prop up oil and gas.’ Photograph: Andrew Milligan/AFP/Getty Images
The outcomes are mixed. Cheaper oil means that more will be burned, accelerating climate breakdown. But it also means less investment in future production. Already, $380 billion that was to have been ploughed into oil and gas fields has been delayed. The first places to be spared are those in which extraction is most difficult or hazardous. Fragile ecosystems in the Arctic, in rainforests, in remote and stormy seas, have been granted a stay of execution.
BP reported a massive loss today, partly because of low prices. A falling oil price drags down the price of gas, exposing coal-mining companies to the risk of bankruptcy: good riddance to them. But some renewables firms are being tanked by the same forces; they are losing their subsidies just as gas prices crash. One day they will compete unaided, but not yet.
To cheer or lament these vicissitudes is pointless. They are chance events that counteract each other, and will at some point be reversed. The oil age, which threatens the conditions sustaining life on Earth, will come to an end through political, not economic, change. But the politics, for now, are against us.
Already, according to the International Monetary Fund, more money is spent, directly and indirectly, on subsidising fossil fuels than on funding health services. The G20 countries alone spend over three times as much public money on oil, gas and coal than the whole world does on renewable energy. In 2014, subsidies for fossil fuel production in the UK reached £5bn. Enough? Oh no. While essential public services are being massacred through want of funds, last year the government announced a further £1.3bn in tax breaks for oil companies in the North Sea. Much of this money went to companies based overseas. They must think we’re mad.
Last week David Cameron flew to Aberdeen, where he announced another £250m of funding for, er, free enterprise, much (though not all) of which will be used to prop up oil and gas. A further £20m of public money will be spent on seismic testing. Expect more whale strandings, and ask yourself why the industry that threatens our prosperity shouldn’t cover its own bloody costs.
The energy secretary, Amber Rudd, says she stands “100% behind” this “fantastic industry”. She will “build a bridge to the future for UK oil and gas”. Had she been born 300 years ago, I expect she would have said the same about the slave trade. In a few years’ time her observations will look about as pertinent and about as ethical.
Oil companies have already been granted “ministerial buddies” to “improve access to government” – as if they didn’t have enough already. Now they get an“oil and gas ambassador”, and a new ministerial group, to “reiterate the UK government’s commitment to supporting the oil and gas industry”. A leaked letter shows that Rudd and other ministers want to silence local people by transferring the power to decide whether fracking happens from elected councils to an unelected commission. Let’s sack the electorate and appoint a new one.
Compare all this to the government’s treatment of renewables. Local people have been given special new powers to stop onshore windfarms being built. To the renewables companies Rudd says this: “We need to work towards a market where success is driven by your ability to compete in a market, not by your ability to lobby government.” Strangely, the same rules do not apply to the oil companies. Your friends get protection. The free market is reserved for enemies.
Yes, I do mean enemies. An energy transition threatens the kind of people who attend the Conservative party’s fundraising balls. It corrodes the income of old schoolfriends and weekend guests. For all the talk of enterprise, old money still nurtures its lively hatred of new money, and those who control the public purse use it to protect the incumbents from the parvenus. As they did for the bankers, our political leaders ensure that everyone must pay the costs imposed by the fossil fuel companies – except the fossil fuel companies.
So they lock us into the 20th century, into industrial decline and air pollution, stranded assets and – through climate change – systemic collapse. Governments of this country cannot resist the future forever. Eventually they will succumb to the inexorable logic, and recognise that most of the vast accretions of fossil plant life in the Earth’s crust must be left where they are. And those massive expenditures of public money will prove to be worthless.
Crises expose corruption – that is one of the basic lessons of politics. The oil price crisis finds politicians with their free-market trousers round their ankles. When your friends are in trouble, the rigours imposed religiously on the poor and public services suddenly turn out to be negotiable. Throw money at them, trash their competitors, rig the outcome: those who deserve the least receive the most.
Tuesday 24 February 2015
Are low oil prices here to stay?
By Richard Anderson
Business reporter, BBC News
Predicting the oil price is a bit of a mug's game.
There are simply too many variables involved to make any kind of meaningful, definitive forecast.
What we do know is that, despite a recent upturn, the price of oil has slumped almost 50% since last summer following the longest-running decline for 20 years.
And we know why - US shale oil, and to a lesser extent Libyan oil returning to the market, has pushed up supply while a slowdown in the Chinese and EU economies has reduced demand.
Add to the mix a strong US dollar making oil more expensive in real terms, pushing demand even lower, and you have a recipe for a plummeting oil price.
What happens next is a little harder to see.
With the booming US shale industry showing little signs of slowing, and growing concerns about the strength of the global economy, there are good reasons to suspect that the current slump in the oil price will continue for some time.
This is precisely when Opec, the cartel of major global oil producers, would normally step in to stabilise prices by cutting production. It has done so many times in the past, so often in fact that the market expects Opec to intervene.
This time it hasn't. In a historic move at the end of last year, Opec said not only that it would not cut production from its 30 million barrels a day (mb/d) quota, but had no intention of doing so even if oil fell to $20 a barrel.
And this was no empty threat. Despite furious opposition from Venezuela, Iran and Algeria, Opec kingpin Saudi Arabia simply refused to bail out its more vulnerable cohorts - many Opec members need an oil price of $100 or more to balance their budgets, but with an estimated $900bn in reserves, Saudi can afford to play the waiting game.
Opec now supplies a little over 30% of the world's oil, down from almost 50% in the 1970s, partly due to US shale producers flooding the market with almost 4 mb/d from a standing start 10 years ago.
"Given this scenario, who should be expected to cut production to put a floor under prices?" Opec argued last month.
Equally, Saudi is not prepared to sacrifice more market share while its competitors, not least US shale oil producers, prosper. Safe in the knowledge that it can withstand very low oil prices for the best part of a decade, it would rather stand back and, as Philip Whittaker at Boston Consulting Group says, "let economics do the work".
The implications of Opec's decision, therefore, go way beyond sending the oil price crashing even further.
"We have entered a new chapter in the history of the oil market, which is now starting to operate like any non-cartel commodity market," says Stuart Elliott at energy specialist Platts.
The fallout has been immediate in many parts of the industry, and promises to wreak further havoc in the coming months and, quite possibly, years.
'Serious risks'
Without Opec artificially supporting the oil price, and with potentially weaker demand due to sluggish global economic growth, the oil price is likely to remain below $100 for years to come.
The futures market suggests the price will recover slowly to hit about $70 by 2019, while most experts forecast a range of $40-$80 for the next few years. Anything more precise is futile.
At these kinds of prices, a great many oil wells become uneconomic. First at risk are those developing hard to access reserves, such as deepwater wells. Arctic oil, for example, does not work at less than $100 a barrel, says Brendan Cronin at Poyry Managing Consultants, so any plans for polar drilling are likely to be shelved for the foreseeable future.
World's top oil producers, 2014 (million barrels a day)- US: 11.75
- Russia: 10.93
- Saudi Arabia: 9.53
- China: 4.20
- Canada: 4.16
- Iraq: 3.33
- Iran: 2.81
- Mexico: 2.78
- UAE: 2.75
- Kuwait: 2.61
Source: IEA
North Sea oil production is also at serious risk, certainly in terms of new wells that need an oil price of about $70-$80 to justify drilling. Indeed in a recent interview with Platts, the head of Oil & Gas UK said at $50, North Sea oil production could fall by 20%, dealing a hammer blow not just to the companies involved but to the Scottish economy as a whole.
Exploration into unproven reserves in regions such as Southern and West Africa will also grind to a halt.
Questions are also being asked about fracking. Costs vary a great deal, but research by Scotiabank suggests the average breakeven price for US shale producers is about $60. At the same price, energy research group Wood Mackenzie estimates that investment in new wells would halve, wiping out production growth.
"The vast majority [of US shale wells] just don't work at $40-$50," says Mr Cronin.
Oil majors are already suffering, having announced tens of billions of dollars of cuts in exploration spending. But while the share prices of BP, Total and Chevron are all down about 15% since last summer, the majors have the resources to see out a sustained period of low oil prices.
There are hundreds of other much smaller oil groups across the world with a far more uncertain future, not least in the US. Shale companies there have borrowed $160bn in the past five years, all predicated on selling oil at a higher price than we have today. Banks' patience can only be tested so far.
Oilfield services companies are also "feeling severe pain", according to Mr Whittaker, with share prices in the sector down an average 30%-50%. Last month, US giant Schlumberger announced 9,000 job cuts, some 8% of its entire workforce.
But it's not just oil companies that are being hit by lower oil prices - the renewables sector is suffering as well.
In the Middle East and parts of Central and South America, oil is in direct competition with renewables to generate electricity, so solar power in particular will suffer at the hands of cheap oil.
Fuel price calculator
Elsewhere, falling oil prices are helping drive down the price of gas, the direct rival of renewables. Subsidies, therefore, may have to rise to compensate.
Indeed lower oil and gas prices undermine a fundamental economic argument propounded by many governments to support renewables - that fossil fuels will continue to rise in price.
The impact is already being felt - shares in Vestas, the world's largest wind turbine manufacturer, are down 15% since the summer, while those in Chinese solar panel giant JA Solar have slumped 20%.
Lower oil prices are also a grave concern for electric carmakers, with sales of hybrids in the US falling while those of gas-guzzling SUVs surge.
'Profound impact'
The knock-on effects within the energy industry of a sustained period of lower oil prices are, then, both widespread and profound.
But while Saudi Arabia's decision to call time on supporting the oil price marks an important milestone in the industry, oil's self-stabilising price mechanism remains very much intact - prices fall, production drops, supply falls, prices rise.
As a direct result of lower prices, exploration and production will be curtailed, and while it may take a number of years to filter through, supply will fall and prices will rise. After all, while there may be hundreds of new small suppliers entering the fray, there are still too few big players controlling oil supply for a truly free market to develop.
But real change is on the way. There is a growing realisation that fossil fuels need to be left in the ground if the world is to meet climate change targets and avoid dangerous levels of global warming.
Against this backdrop, it is only a matter of time before a meaningful carbon price - hitting polluters for emitting CO2 - is introduced, a price that will have a profound impact on the global oil market.
Equally, for the first time oil is facing a genuine competitor in the transport sector, which currently accounts for more than half of all oil consumption. Electric vehicles may be a niche market now, but as battery technology in particular advances, they will move inexorably into the mainstream, significantly reducing demand for oil.
The oil market is undergoing significant transformation, but more fundamental change is on the horizon.
Tuesday 27 January 2015
'We would evict Queen from Buckingham Palace and allocate her council house,' say Greens
LAMIAT
SABIN in The Independent
Saturday 24 January
2015
Queen Elizabeth II
would be evicted from Buckingham
Palace
The party would
move the royal family out of the 775-room mega-mansion, complete with tennis
court, lake and heli-pad amid 40 acres of land nestled in the leafy St James’
Park area of Westminster
However there are
no plans that Her Majesty and Prince Philip would be turfed out in the cold,
like the estimated 2,500 people sleeping rough in England alone, as
Green leader Natalie Bennett said she would not be short of potential places to
live.
She said in
an interview with The Times: “I can’t see that the Queen
is ever going to be really poor, but I’m sure we can find a council house for
her — we’re going to build lots more.”
This would mean,
under the Greens’ suggestions, that the Duke and Duchess of Cambridge, Prince George and the unborn baby would also be served an
eviction notice from Kensington
Palace
Ms Bennett said that
the party is planning to expand on the country’s dwindling social housing stock
as “GDP is a lousy tool for progress” compared to people having a “better
quality life”.
The housing crisis
and lack of universally-affordable properties has been attributed to the Tory policy of allowing council and housing association tenants
to buy their homes at heavily discounted prices. It has also been
blamed on foreign investors buying up land for luxury developments while mortgages
and private rents go through the roof.
Ms Bennett also
criticised “parasitical” global companies who do not pay their fair share of
tax by basing their businesses in tax-havens such as the Cayman
Islands , even though they rely on public assets such as roads and
the NHS to make a tidy profit.
The Greens, with
branches in different regions of the UK
Their rising
popularity, as shown by rapidly increasing numbers of memberships, has
catapulted Ms Bennett to being invited to take part in two televised political
debates ahead of the general election on 7 May.
Prime Minister
David Cameron had insisted that he would not take part unless Ms Bennett was
included if Ukip’s Nigel Farage was invited, despite the Greens having announced a total of 43,829 memberships across the UK compared
to the latter’s 41,966 members as of last week.
Ms Bennett said:
“People are really hungry for something different. There is an element of us
being fresh and new, but we are also talking about ideas, optimism and changing
things.”
The Greens also
plan to raise the minimum hourly wage to £10, with a guaranteed £71 a week
universal basic income for all adults, with half of the £280 billion cost of the
policy to come from tax, she indicated, with the rest made up of money already
paid out in benefits like jobseekers’ allowance.
A tax of 1 or 2 per
cent on people worth more than £3 million would also be implemented and the
party suggested that the state could have powers to seize assets from the
wealthy.
She said: “People
say to me that the rich will dodge [the tax], but in some of the countries that
already have it there is a simple rule that says if you haven’t declared
something on your wealth tax, you don't own it.”
Tuesday 9 December 2014
Business giants walk off with our billions. No more something for nothing
The state has the powers to make business serve us better. A north London borough is leading the way
A few weeks ago, I had the disconcerting experience of sitting in a smart room full of clever people who sincerely held a silly idea. We had been gathered together by a big charity to discuss its research on inequality, and talk naturally turned to Britain’s free-market economy. Some praised the free market, others longed to reform it: all agreed it was central to the UK being one of the most unequal economies in the rich world.
The famous political philosopher worried whether the free market was eroding our ethics; the gentle wonk from a rightwing thinktank thought that tempering it would turn a dynamic economy into an arthritic one. The British people now saw themselves as free-marketeers, argued the strategist from a giant consultancy; try telling that to the Occupy protesters in Parliament Square, retorted the environmentalist at his elbow.
Economists, politicians, academics: all well read and well meaning. But what was this free market they each took for granted? It had nothing to do with the tap water in our glasses – that came from the local monopoly, Thames Water. Nor did it apply to the trains that delivered some of my fellow diners – many rail services face no direct competition.
And what about the lights and heating? Nearly three decades on from the start of liberalisation, 90% of the gas and electricity piped into our homes is still controlled by an oligopoly of six huge suppliers who contend for our custom by trying to bamboozle us with their tariffs.
Few conceits are more cherished by our political classes than the notion that this is a free-market economy. To the right it is what makes Britain great. For the left it is what they are up against. And for the rich it is what justifies their huge pay packets: after all, they have earned it.
When asked for his view of western civilisation, Gandhi said he thought it would be a very good idea. I feel much the same way about the free market: I’m genuinely curious to see what such a mythical beast looks like. But that term, however widely accepted and advertised, has little to do with today’s Britain. The economy most of us experience – everything from who collects our bins, to how we commute to work, to that new school attended by the kids – is often not a free market at all. Instead, it’s a bog of privately run monopolies; of public projects and services outsourced to businesses for years, even decades, at a time; and massive taxpayer subsidies handed to the corporate sector with fewer questions asked than of disabled people wondering where their living allowance has gone.
Grasp that, and the question of how to tame corporate power becomes easier to answer. If corporations rely on the public for a sizeable chunk of their revenues and power, then we should start asking what they are doing for us in return. Do businesses deserve the privileges given them by society?
You almost never hear this question from any politician. What you get instead is the kind of cant served up by David Cameron at last year’s Conservative conference: “It’s not the government that creates jobs. It’s businesses that get wages in people’s pockets, food on their tables, hope for their families and success for our country.”
Really? Cameron can’t be looking at the same economy as the rest of us. In Britain businesses take £85bn a year from the public in grants, subsidies, insurance schemes, preferential credit and government services. That’s the corporate welfare bill as totted up by Kevin Farnsworth, senior lecturer in social policy at the University of York, and he admits it’s on the conservative side. Add on the various subsidies for too-big-to-fail banks and you’re well in excess of a hundred billion. Nor does he include the most fundamental privilege society affords the investors in a business such as Tesco: that of limited liability, which means they only stand to lose the value of their shares, and no more. We could argue for limited liability, but let’s not pretend it’s anything less than a substantial underwriting of shareholder enterprises.
If it is business that gives, and government that takes, then how does Cameron account for privatisation and outsourcing? Take the farce that is the rail industry, where taxpayers stump up billions for the infrastructure and the upgrades, while tycoons such as Richard Branson and Brian Souter put in hardly any investment, and always have the option in hard times of walking away. That is what GNER did with the East coast mainline that the public had to step in and save – and which the government has justawarded to Branson and Souter.
The same wacky logic of low risk, low investment applies in outsourcing. G4S can’t provide the security for the Olympics, Serco can’t lay on the staff for an out-of-hours GP service in Cornwall – but never mind, both still get to bid and win more public sector work. Under this coalition the money spent on outsourcing has doubled to £88bn,creating a whole string of what Margaret Hodge at the public accounts committee calls “quasi-monopolies”.
The fashionable thing to say is that in a globalised economy states can’t keep up with businesses. That is to get the relationship the wrong way round. The reality is that states often give businesses their revenues and so their power. More than that: markets are created by states, who provide the infrastructure, the transports and the rule of law.
So let’s start asking businesses what they’ve done for us recently. If the state is going to subsidise the rail industry (and we will, until it’s eventually renationalised), ministers should insist not just on an intermittently punctual train service and a token contribution to the Treasury, but also better pay and conditions for staff, decent training, and a commitment to sourcing equipment in Britain.
This is what the Centre for Research in Socio-Cultural Change terms “social licensing” in its latest book, The End of the Experiment. The academics’ suggestions have been followed by one council in north London, Enfield. Officers and researchers sat down and worked out how much money its 300,000 residents sent the way of big businesses: 11 Tesco stores, for instance, provided the PLC with around £8m of its annual profit. And what did the area get back? Not very much, but the highlight included a community toilet scheme and some charitable giving from the supermarket’s corporate social responsibility department.
And so the council has started asking big businesses, such as utility firms, what they had done for Enfield recently. They’ve begun hassling banks to lend more to local businesses, the likes of British Gas to give more of their local work to local contractors with local staff – or run the risk of being named and shamed in the local press. It may sound small, but imagine if the same approach were taken by Holyrood or Cardiff – or by Westminster.
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