Cuts to Welfare, Subsidies to Corporations – The hidden welfare state

The Black Triangle Campaign was founded to support the human rights of disabled people and to oppose the Government’s “Work Capability Assessments”, which re-classify sick and disabled people as “fit for work”.

 

The hidden welfare state that the U.K. government dares not speak of

The UK has two welfare states. There is one that is reported and endlessly discussed, and another, which is rarely mentioned. Whilst the first is suffering enormous cuts under the Tory/LD coalition, the other just keeps expanding.

Governments on the left and the right can always justify welfare cuts by pitting, for example, mobility scooters against needle exchanges, or the soft-play area in children’s playgrounds against an old people’s home. Who deserves it most, they say, students or cleaners? Old or young? But when we’re running not one, but two welfare states, that’s a totally fake scenario. The real choice is between playgrounds or gas rigs; between Meals on Wheels or The City of London Currency Speculators’ Maintenance Allowance.

There’s a connection – never mentioned – between, let’s say, Britain’s eight new deep-water gas rigs and its new food banks. The connection is that the $4.5 billion subsidy package being doled out to transnational gas corporations is a very big slice of the welfare pie. And to keep the gas transnationals on the benefits to which they are addicted, hungry humans have to queue for tinned food that is too close to its sell-by date to be kept on the shelves of supermarkets, many of which are themselves massive recipients of corporate welfare.

Not only does the UK pay out unemployment benefits less generous than Romania, Albania and the US, but the wages of the employed have simply not kept pace with productivity over the last 30 yrs. Tory Ideology is all about Handouts to the Wealthy paid for by the Poor.George Osborne has cut £18bn from benefits plus a further £81bn from public services in the name of unavoidable austerity, whilst at the same time providing huge subsidies, tax cuts and removing regulation for the hidden ‘welfare’ system that benefits the private sector.

No goods or services are directly returned to the government in exchange for these expenditures, although of course, politicians will argue that they’re stimulating the economy, helping struggling industries, creating jobs or funding important research but actually this is just a corporate welfare system.

The Cato Institute, for example, estimated that in the US, $93 billion were devoted to corporate welfare in 2002. This was about 5% of the federal budget, and nearly twice the amount spent on social welfare ie. feeding people, housing the homeless, raising children out of poverty etc.

There is no reason to think the situation is different in the UK. However, overall statistics for the UK corporate welfare budget are hard to discover, and the variety of different subsidies are staggering. Needless to say, the Tories focus their attention on fraud and waste in the social welfare budget.

Welfare fraud and waste is never far from the top of the UK’s news agenda – but the real figures often bear almost no resemblance to popular belief. The British public, for example, think around 27% of the welfare budget is lost of fraud, according to TUC research.

The Department for Work and Pensions’ latest data on fraud and error in the benefit system shows a very different reality: fraud exists, but at a far lower level than the public believes – and is outweighed by errors from claimants and officials alike. The DWP estimates £3.5bn has been overpaid due to errors and fraud in the system; 2.1 per cent of the overall benefit expenditure.

The corporate welfare budget arises from four main sources: Paying little or no tax – Tax havens; tax breaks; enjoying huge subsidies and the removal of employment and environmental protection regulations.

Tax Havens
 The UK’s 100 biggest public companies are running more than 8,000 subsidiaries or joint ventures in onshore and offshore tax havens, according to research. The figures, published by the charity Action Aid, show that only two of the companies listed on the UK’s FTSE 100 have no subsidiaries in tax havens – while companies such as Barclays and Tesco own hundreds. http://www.guardian.co.uk. The UK Crown Dependencies and Overseas Territories constitute half of the world’s most frequently used tax havens.

Tax Breaks
Almost one in four of Britain’s biggest listed companies paid no corporation tax in this country last year – and almost half fail to disclose their tax payments to the UK at all, according to research by The Mail on Sunday.  According to the annual reports and accounts of all the companies in the FTSE 100, 47 companies gave no obvious figures for tax paid in Britain.  Of the 53 who did, 12 showed they paid no tax at all and, six actually received a tax credit.Tax Avoidance
 Treasury minister, David Gauke, admitted in reply to a parliamentary written question that only four employees of HMRC are working to capture 124 tax fugitives. The amount of uncollected tax rose again last year. A Labour MP pointed out that the four officials dedicated to the tax fugitives compares with the 450 HMRC staff involved in administering the withdrawal of child benefit from higher-rate taxpayers.

Subsidies
Currently, it is estimated that the government has already provided £43.5bn in various subsidies including the National Infrastructure Plan, the Equity Loan and Help to Buy schemes, the Enterprise Finance Guarantee and the Regional Growth Fund, with nothing to show for it. Far greater sums are in the pipeline, up to £310bn.

Meanwhile supermarkets get an enormous subsidy to help with one of their major overheads, staffing costs. This is because many employees in these large and successful companies are paid only the minimum wage. And because the current minimum wage is not a living wage, nearly everyone on it has to claim tax credits to be able to make ends meet. Those tax credits are funded by the taxpayer. The supermarkets are effectively state subsidised industries.

In addition to the recent unprecedented public support for the financial sector The NEF (New Economics Foundation) identified at least three significant hidden subsidies:

* The ‘Too Big to Fail’ subsidy: The government now provides a public guarantee, effectively insurance against banks going bust. This gives banks a huge commercial advantage over other firms in a market system. It means banks are able to borrow money much more cheaply than if they were not ultimately underwritten by the public. Exchanges with leading auditors in front of the House of Lords Select Committee on Economic Affairs in January 2011 confirm this. A conservative analysis reveals that this hidden subsidy could be worth £30 billion annually. It means that bonuses to senior staff for ‘performance’ and dividends to institutional investors are at least in part a straight transfer from the taxpayer.
* The quantitative easing windfall subsidy: When it was decided that the economy needed more liquidity, the Bank of England pumped money in using the technique called ‘quantitative easing’. To meet various, and sometimes self-imposed, requirements, it did by purchasing government bonds through investment banks. Merely for being passive conduits for this ‘risk free’ arrangement the banks took a cut of every trade. Here nef analysts found that banks enjoyed a significant windfall, but that lack of transparency keeps the likely amount hidden.
* The ‘make the customer pay’ subsidy: Since the baking crisis of 2008, the banks have been increased the gap between what they have to pay to borrow money, and what they charge people to borrow from them. This is the so-called interest rate ‘spread’. This is because they can borow money from the Bank of England at virtually 0%. As it is, the taxpayer is subsidising the banks twice over: once through taxpayer funded public support to the banks, and secondly through paying much higher interest to borrow than the banks do. This hidden subsidy amounts to at least another £2.5 billion each year.

Focus On Benefit Cuts and Sanctions

Benefit claimants Assessed as ‘fit for work’ are dying within six weeks of assessment
Thousands of sick benefit claimants are dying within six weeks of being wrongly assessed as “fit to work”, a North-East MP claimed yesterday, during a commons debate  in which he called for an independent assessment of the Coalition’s welfare policy.

Ian Mearns, Labour MP for Gateshead, blamed the Government for the misdiagnosis at least 10,600 sick and disabled people in just ten months, who then quickly died. He said: “Four people a day are dying within six weeks of being declared fit for work under the work capability assessments. It is scandalous.

Mr Mearns said the figure of 10,600 deaths, after unsuccessful claims for Employment and Support Allowance (ESA), covered the period January to November 2011. And he added: “This Government has repeatedly refused to release updated 2013 figures for deaths within six weeks of an end of an ESA claim.”Stop the benefits cuts and sanctions says Citizens Advice Bureau Punishing Poverty is a report published last week by Citizens Advice and which is based on a national survey of those who have had benefits stopped or sanctioned for not meeting the endless ‘work related activity’ conditions imposed by Jobcentres.  Hundreds of thousands of claimants have faced sanctions varying in length between four weeks and up to three years.  These sanctions are often imposed for the most trivial of reasons and as this report exposes, quite often for circumstances that are entirely beyond the claimant’s control.  It is not just unemployed claimants who face sanctions, but increasingly sick and disabled people and single parents with children over the age of five.

The results of the survey portray a truly horrific account of the destitution and human misery that this regime has inflicted on people.  Stories of families ripped apart, pregnant women left without food, those with dietary needs due to health conditions becoming sick, mental health deteriorating, suicide attempts and people forced to beg or go through bins to find food.

These stories are not the inevitable consequence of economic crisis, the UK is still one of the richest countries in the world. Benefit sanctions barely save the tax payer a penny such is the cost of policing and administering the system. 

As the Citizens Advice report reveals there are countless tales of benefits being stopped due to a mistake by the Jobcentre, or because a claimant faced unavoidable circumstances such as travel delays, hospital appointments and even job interviews which caused them to be late to an appointment with their advisor.  It is the widespread, seemingly haphazard nature of the regime which forces all claimants into a state of perpetual fear.  The threat of the dreaded brown envelope through the door from the DWP is a feature of life on all benefits, a daily reminder that you are only ever a heartbeat away from complete destitution.

The welfare state is not a political weapon to stigmatise  or scapegoat people, force down wages and pursue a work makes you free ideology. It should exist as the opposite, to empower, provide dignity and even act as a force against poverty pay – saying to grasping employers that there is an alternative for people if all you’ve got to offer is shit wages. Benefit sanctions must be brought to an immediate end with no exceptions. The full report can be downloaded at: http://sdrv.ms/1c48ECq10 Facts About Benefits Britain
1) A TUC survey showed that people think around 41% of benefits go to the unemployed, the real figure is 2.6%. (1)

2) 42% of the Welfare Bill goes to pensioners, 21% goes to people in low paid work. (2)

3) Nearly 80% of JSA claimants stop claiming within 6 months. (3)

4) Of the 7.8 million families receiving child benefit, 1.2 million have more than two children. (4)

5) A TUC survey found that people think around 27% of welfare is lost to fraud – the real figure is only 0.7%, around £1.2 billion. (5)

6) Around £17 billion of benefits that people are entitled to goes unclaimed every year. (6)

7) Immigrants are 60% less likely to claim benefits than a British-born person. (7)

8) 64% of families receive benefits – that’s 20.3 million families. (8)

9) The UK spends 12% less on benefits per head than France does, and 19% less compared to Germany. (9)

10) 93% of new Housing Benefit claimants in 2010 and 2011 came from working people, as UK housing costs are the 3^rd highest in Europe. (10)

The Marxist theory of the state: Deformed and Degenerated Workers’ States and Capitalist States

From Socialist Fight (British Section, Liaison Committee for the Fourth International) 
The post WWII debate in the Fourth International of the late 1940s and early 1950s on the class character of the ‘Buffer States’ in Eastern Europe was resurrected in 1989-92 with the fall of the Berlin Wall and the collapse of the USSR following the Yanayev coup and Yeltsin’s counter-coup of August 1991. We will see from the struggles we have outlined below that the Stalinist bureaucracies became divided into three camps following the defeat of the Brezhnevites by Gorbachev in 1989; those Gorbechevites on the left who wished to retain the degenerate and deformed workers’ states by opening up the economic plan by glasnost (openness) and perestroika (restructuring), those in the middle (Yanayev and Deng in China) who sought the restoration of capitalism by slow, planned measures, maintaining the Stalinist bureaucracy as the vehicle of restoration and those on the right like Yeltsin who sought a rapid capitulation to western Imperialism and their own enrichment by plundering the state assets in alliance with western transnational corporations. We can observe at least elements of these three tendencies in most of the counter-revolutionary overturns of 1989-92.

The first debate on the nature of the East European countries behind the ‘iron curtain’ in the FI in the late 1940s eventually resulted in the correct conclusion that they were deformed workers’ states, but much confusion remained. We will look at the position again as it emerged in the debate over the class character of Cuba in the early 1960s and the debate about the class character of Cambodia in the late 1970s following the invasion by Vietnam on 25 December 1978. And of course, as we have mentioned, the debate following the victory of the counter-revolutionary restoration of capitalism in Eastern European and Asian states in the late 1980s and early 1990s.

Capitalist Control – How do they do it

From the Kingston Socialist Workers Party – Smarter than your average swappys.
Capitalism, as we have seen, is a class divided society based on exploitation. Under capitalism a tiny highly privileged minority rules over the large majority and lives off their labour. How do they get away with it ?

The answer, as the Italian Marxist, Antonio Gramsci pointed out, is by a combination of force and consent. In reality force and consent are very closely intertwined and mutually reinforce each other, but for the moment I shall discuss them separately.

The element of force is primarily exercised by the state, that network of interlocking institutions – armed forces, police, judiciary, prisons, government bureaucracies etc – which stands over society and claims general authority, including a monopoly of legitimate force.

This state apparatus claims, at every level of its operation, to represent society as a whole – the so-called national or public interest. Hence the perennial assertion by police, judges, generals and so on that they are politically neutral. But the idea of a common national or public interest is a myth. The nation consists of classes, exploiters and exploited with opposed interests, and the society which the state represents is not society as such but specifically capitalist society, based on capitalist property relations and capitalist relations of production. The first duty of the state is to secure the preservation of this capitalist order. and since this order embodies the supremacy of the capitalist class, the state is, in the words of Marx ‘ but a committee for managing the common affairs of the whole bourgeoisie’.

The class character of the state is reflected in its composition. The upper ranks of the military, the police, the judiciary and the civil service are drawn overwhelmingly from the bourgeoisie and retain economic, family and social ties with that class. But the intrusion into this milieu of the occasional individual from the lower orders changes nothing. On the one hand the actual class position of such an individual is changed by the fact of their promotion and their outlook will tend to change accordingly. On the other hand acceptance of the capitalist mode of operation of the state is the condition of such promotion.

The consequence of the capitalist nature of the state is that force, or the threat of force, underpins almost every aspect of daily life. Consider some examples: a worker goes to work and makes some products. At the end of the day he or she tries to take all or some of them home. The worker will, of course, be forcibly arrested and forcibly detained in a police cell. Or the workers at a factory decide to go on strike, but only ninety per cent of them come out while ten per cent try to continue working. The law, in the shape of a substantial number of police, will immediately arrive at the factory to ensure the scabs’ ‘right to work’. But if the factory bosses decide to close down and make all the workforce redundant, the police will also arrive, this time to ensure that everyone goes home and no amount of appeals to the ‘right to work’ will move them in the slightest.

In all these cases the police will say they are ‘only doing their job’, but that is the point – their job is the enforcement of capitalist exploitation. The examples I have given may seem slightly strange precisely because they are so obvious, so taken for granted, but that is also the point. Capitalist exploitation would not last five minutes without state law, backed by state force, to sustain it.

Most of the time state force remains as far as possible low key and in the background but it comes to the fore the moment there is a real challenge to the interests of the capitalist class. If the challenge comes from abroad this takes the form of war; if the challenge is internal it is met with repression. If the challenge comes from an elected government it can take the form of organizing a military or fascist coup, as happened, for example, with General Pinochet in Chile in 1973 or as has been attempted recently against the Chavez government in Venezuela.

This last point – the potential use of state power on behalf of the bourgeoisie and against the government of the day – is very important. First it completely undermines the official constitutional view (and the view promulgated by political science and taught in the education system) that the state apparatus is subordinate to the elected government. Secondly it raises a key issue in Marxist theory which was ignored or distorted by most supposedly socialist or Marxist parties in the twentieth century.

The strategy of these organizations, beginning with German Social Democracy before the First World War, was to win ‘power’ by means of parliamentary elections, thus acquiring control of the state apparatus which would then be used to construct socialism. But Marx, on the basis of the experience of the Paris commune, had argued that it was not possible for the working class to take over the existing state machine and use it for its own purposes. The existing state was organically tied to the bourgeoisie and could not be used for socialism; rather it had to be broken up – smashed – and replaced by a new state apparatus created by the working class.

Marx’s genuine theory of the state was rediscovered and vigorously reasserted by Lenin in his great book, The State and Revolution. More than that it was put into practice in the Russian Revolution by means of soviet power, i.e. the power of workers’ councils. Later, however, the international communist movement, under the direction of Stalinism reverted to the idea of a parliamentary road to socialism and taking over the existing state apparatus.

But, the objection is often raised, the modern state, with its armies, tanks, bombs, planes etc is too powerful to be smashed, even by the largest mass movement of the working class. This, however, leaves out of the equation the crucial weakness of the state and of all the power of the ruling class which is the fact that for all its operations it depends on the collaboration of a section of the working class. Every gun needs a soldier to carry it, every tank a driver, every plane a team of mechanics. Almost the entire apparatus of the state is staffed, at its lower levels by workers and what happens in a mass revolution is that the pressure leads to many or most of these workers breaking from their officers and joining the people. This is how the state is broken. What this makes clear however is that the final analysis the rule of the bourgeoisie depends not just on force but also on a kind of acceptence.

The Role of Ideology
As we have seen the dominance of the ruling class rests fundamentally on force, exercised first and foremost through the state. However, if it rested on force alone it would be highly vulnerable to overthrow by the working class who constitute the large majority of society. The power of the capitalist class and its state is greatly strengthened by the fact that most of the time it is able to secure an acceptence of its rule from the majority of the very people it oppresses and exploits.

It is the role of ideology to obtain and maintain this consent. Every society has a dominant ideology – a set of ideas, a worldview, which serves to explain, justify and sustain the existing social order and its institutions. It is part of the strength of the dominant ideology in modern capitalist society that, generally speaking , it does not name itself or even acknowledge its own existence . It does not say to people this is ‘capitalist ideology’ and you must believe it all. Rather it presents itself as a series of individual ‘common sense’ propositions which are supposed to be either self- evident or definitively proved by history, like: ‘ Management and workers should work together for the benefit of all’, or ‘ Nobody is above the law,’ or ‘ Obviously, firms have to make a profit’ or ‘There will never be complete equality, it’s against human nature.’

In reality these are not separate ideas but parts of a systematic ideology which, like the state apparatus, serves the interests of the capitalist class. Its basic principle is to depict capitalist relations of production as eternal and unchangeable, and every challenge to capitalism as hopelessly unrealistic and/or downright wicked. But why do those who are disadvantaged by these ideas, namely working people, frequently accept them, at least in part ?

Marx gave a clear answer to this question:
The ideas of the ruling class are in every epoch the ruling ideas, i.e. the class which is the ruling material force in society, is at the same time its ruling intellectual force. The class which has the means of material production at its disposal, has control at the same time over the means of mental production, so that thereby, generally speaking, the ideas of those who lack the means of mental production are subject to it. ( The German Ideology)

The means of mental production – the schools, universities, publishers, press and media generally – are today enormously expanded (mass education, TV, radio, film etc) compared to Marx’s day, but they remain almost entirely in the hands of the capitalist class and its state. This means that for the large majority of people almost every item of news, almost all their knowledge of history, of economics, of science, and most of the teaching they receive on morality and religion is brought to them within the framework of capitalist ideology. This cannot fail to have a massive effect on their thinking.

In addition to this bourgeois ideology has the advantage of long tradition and of often appearing , at least on the surface, to reflect reality. For example, firms that fail to make a profit do go out of business and their workers do lose their jobs. And, crucially, just as capitalist ideology legitimizes the state, so the physical force of the state backs up the ideology. As I stated in the last column force and consent interact and reinforce each other. Put this way the real question becomes not why do so many working people accept bourgeois ideas but how can the hold of these ideas be broken?

The great weakness of capitalist ideology is that it fails to correspond to workers’ experience – their experience of exploitation, poverty, unemployment, injustice etc. As a consequence the grip of the ruling ideas is never total. Most working people develop what Gramsci called ‘contradictory consciousness’; they reject some parts of the dominant ideology while continuing to accept other parts of it. For example a worker may display a clear understanding of the class struggle in the workplace but hold reactionary attitudes towards women or migrant workers. At the same time there will be a small minority who break with capitalist ideology as a whole and adopt a coherent socialist and Marxist outlook. This minority is extremely important because in certain circumstances it can win the leadership of many or even the majority of workers whose consciousness remains mixed.

What are these circumstances? First, when the objective conflict of interest between the classes turns into an open struggle such as a strike, especially a mass strike. Second, in conditions of serious economic and/or political crisis, such as a major slump or disastrous war, when the gap between the dominant ideology and reality becomes so wide that its hegemony starts to disintegrate. But above all when these two sets of circumstances coincide. Then it becomes possible for the coherent minority not only to lead the majority of the workers in struggle – on the basis of the progressive side of their consciousness – but also to start to transform the consciousness of the majority into all out opposition to the system.

The element of mass struggle is crucial because the level of workers’ consciousness is closely related to their confidence. The less confidence workers have in their ability to challenge and change the system the more they are likely to accept the dominant ideology, especially those aspects of it , such as racism, xenophobia, sexism, homophobia etc, which divert their anger and bitterness onto scapegoats. The higher their confidence, the more their horizons widen and they become open to new ideas. In mass struggle they get a sense of their collective power and the advantages of solidarity prove themselves in practice.

Then what becomes decisive is the size, influence and organization of the coherent minority and its ability to give a clear political focus to the anger and aspirations of the masses. It is this combination of circumstances, ideas and action that break both the hold of capitalist ideology and the power of the capitalist state.

South West Surrey MP Jeremy Hunt Conspires with Murdoch’s Media Monopoly

Jeremy Hunt. Now what does that rhyme with?

Jeremy Hunt was appointed as a Privy Counsellor on 13 May 2010. Whilst, I don’t know what a privy counsellor is, this certainly stinks.

It’s been revealed by the BBC that Ofcom thinks there are big problems with Murdoch’s BSkyB power grab. Their report to Jeremy Hunt- Tory MP for South West Surrey and Secretary of State for Culture, Olympics, Media and Sport- says the Competition Commission needs to be involved.

 The argument is over Murdoch’s News Corp’s attempt to buy the 60.9% of BSkyB shares it currently doesn’t own.  In the report that Jeremy Hunt is keeping secret, Ofcom argues that it may be against the public interest because it would reduce “diversity and quality in the UK media below an acceptable level”. Ofcom recommends that the move is referred to a full Competition Commission enquiry.

 But Jeremy Hunt is sitting on the report and refusing to make it public. Instead, he’s been locked in secret meetings with Murdoch’s representatives. It looks like he could be trying to cook up a way of giving Murdoch’s power grab the green light. These meetings were not minuted and didn’t have any civil servants present.

Things could move very quickly – if Jeremy Hunt thinks he can get away with it, he could give Rupert Murdoch the go-ahead in the next couple of days. This is highly dodgy behaviour. We, the public need access to Ofcom’s report and we need to speak up in favour of the independent inquiry which Ofcom says is necessary.

If we don’t want a fat cat monopoly on the media, we need to make a fuss. The more public awareness there is for this issue, the less room Jeremy Hunt has to stitch anything up. We need to flood our MPs with messages telling them to speak out against the secrecy. Jeremy Hunt needs to be hearing from MPs and the media that he has to follow Ofcom’s recommendation.

Please click here to send an urgent e-mail to your MP. Demand an end to the secret meetings and for Jeremy Hunt to conform to Ofcom’s wishes.
http://www.38degrees.org.uk/hunts-secret-meetings

The BBC’s Robert Peston sums up the suspicious behaviour of Jeremy Hunt: “What I don’t understand is why Jeremy Hunt, the Culture Secretary, has not simply published the report and announced that there will be a further Competition Commission enquiry. Why is he only showing the report to Murdoch’s lobbying team? There’s a real risk he’s working with them to find a way round the Ofcom report”.

Ofcom’s recommendation to refer the BSkyB deal to the Competition Commission was a response to pressure from the 38 Degrees group. Now it seems Jeremy Hunt is trying to dodge the report. We need to let Jeremy Hunt know we won’t stand for yet another conspiracy with Rupert Murdoch. 

Jeremy Hunt was appointed as a Privy Counsellor on 13 May 2010. Whilst, I don’t know what a privy counsellor is, this certainly stinks.

Now it happens that Jeremy Hunt was only given the power to rule on media mergers on 20^th December 2010. Business Secretary Vince Cable was stripped of those responsibilities after he told undercover Daily Telegraph reporters he had “declared war” on Rupert Murdoch.

Labour MP Tom Watson has written to the cabinet secretary, Sir Gus O’Donnell, accusing the culture secretary, Jeremy Hunt, of being “knee deep in News Corp”. In the letter, the MP for West Bromwich East accused the government of misleading parliament by failing to disclose the meetings which were held on 28th June and 21st July. Watson said he had been told in replies to written parliamentary questions that no formal meetings had taken place between Hunt and News Corp executives.

Watson also highlighted other meetings, including one on 21st July between the culture secretary and Jeremy Darroch, the chief executive of BSkyB, which was also unminuted. Watson said Hunt should not be handed the power to rule on News Corp’s bid, and demanded to know if the Cabinet Secretary knew about these meetings when he took legal advice before authorising the transfer of powers from Vince Cable to Jeremy Hunt.

The Voice Of Anti-Capitalism – You read it here first (unless you read the papers)