Show Hide image

Forget Benefits Street. When will we shame the scroungers lapping up corporate welfare?

Ignore the media misinformation: spending on out-of-work benefits isn’t out of control, nor is the welfare state responsible for growing poverty.

From The Big Benefits Row to Benefits Street, everyone in the media seems to want to talk about welfare these days. Or, more accurately, social security.

In an age of austerity, I won’t pretend to be surprised by the obsession with welfare and so-called “welfare dependency”, but there is a point worth making here: why do we obsess over handouts for the poor, rather than handouts for the rich? Why isn’t the scandal of corporate welfare the subject of fly-on-the-wall documentaries, too? When will my former colleagues at Channel 4 air a series called Bankers’ Street?

Ignore the media misinformation: spending on out-of-work benefits isn’t out of control, nor is the welfare state responsible for growing poverty. It cannot be repeated often enough: most of the social security budget (53 per cent) is spent on pensioners. That compares with a little over a quarter (26 per cent) on those much-maligned out-of-work benefits. Spending on the latter, as a proportion of national income, has been pretty flat for almost three decades.

The number of working households living below the poverty line now outnumbers the number of workless households – 6.7 million compared with 6.3 million. A life on social security isn’t the chief driver of poverty; a life on low pay is. Rather than decry the level of benefits that the jobless and the disabled are entitled to, perhaps politicians and pundits should focus on how four out of every five new jobs created under this government have been in low-pay sectors such as retail, hospitality and residential care. One in five of the UK workforce now earns less than the living wage and requires in-work benefits just to make ends meet – that’s five million people in total.

So let us turn instead to the real scandal, the issue that dare not speak its name: corporate welfare. Where is the ministerial or media anger over the activities of G4S and Serco, which are accused of ripping off the taxpayer but which make millions from lavish government contracts? Where are the howls of outrage over taxpayer-funded payouts to the fossil-fuel industry? The Met Office’s chief scientist may believe “there is a link” between the recent floods and climate change but the government continues to subsidise the coal, oil and gas industries to the tune of £2.6bn a year.

Why are the rail company bosses not household names in the same way as White Dee or Smoggy from Benefits Street? The UK has the most expensive rail fares in Europe and yet, according to research by the University of Manchester, the train-operating companies are completely dependent on public subsidies. The university’s June 2013 report for the TUC, aptly entitled The Great Train Robbery, revealed that the top five recipients alone got almost £3bn in taxpayer support between 2007 and 2011. Meanwhile, Network Rail, which is in charge of the UK’s rail infrastructure, receives an annual public subsidy of £4bn (roughly four times greater than the comparable cost under the publicly owned British Rail in the early 1990s).

Dare I mention PFI? Wait, don’t yawn at the back. The Private Finance Initiative, where construction and maintenance of schools, hospitals, roads and the rest are contracted out to private firms, was invented by the Tories in 1992, ramped up by New Labour over 13 years and continues under the coalition. As of 2013, it was forecast that 725 PFI contracts for public facilities across the UK, with a total capital value of £54bn, will cost the Exchequer more than £300bn by the time they are paid off. How’s that for a “something for nothing” culture?

Then there are the bank bailouts, perhaps the biggest act of corporate welfare in living memory. You want benefit spongers? Head for the Square Mile. As of 2013, the total level of financial support provided to the banks by the state, in the form of guarantees and cash outlays, amounted to £141bn, according to the National Audit Office. At the height of the financial crisis, the figure was an astonishing £1.1trn – enough to cover the £5bn Jobseeker’s Allowance budget for the next 200 years. And yet, in spite of being propped up by the taxpayer, RBS and Lloyds are expected to pay out roughly £900m in combined bonuses for 2013. Do I hear the word “scroungers”?

The truth is that the austerity junkies and deficit fetishists on the right aren’t bothered by welfare, or the cost of welfare, per se – only by the billions of pounds that go to the poor rather than the rich; to social programmes, job-guarantee schemes and housing for the homeless, rather than to the shareholders of multinational corporations and other financial institutions.

Remember: big business needs big government. The US economist Dean Baker rightly refers to “nanny-state conservatives”, whom he describes as “enthusiastic supporters of the big-government policies that send income flowing upward”. They are aided by their friends, allies and outriders in the right-wing media echo chamber, who have never had to endure the indignity of turning to payday lenders or food banks in order to survive. The callousness of commentators and columnists who kiss up and kick down, to borrow a line from the Labour MP Jon Cruddas, is unforgivable.

The job of the press, in the words of the Irish-American satirist Finley Peter Dunne, “is to comfort the afflicted and afflict the comfortable”. The modern media, however, with their relentless frenzy over social security payments to those at the bottom rather than corporate welfare payouts at the top, have shamelessly turned Dunne’s dictum on its head.

Mehdi Hasan is the political director of the Huffington Post UK and a contributing writer for the New Statesman

Mehdi Hasan is a contributing writer for the New Statesman and the co-author of Ed: The Milibands and the Making of a Labour Leader. He was the New Statesman's senior editor (politics) from 2009-12.

This article first appeared in the 19 February 2014 issue of the New Statesman, The Space Issue

Photo: Getty
Show Hide image

Who will win in Manchester Gorton?

Will Labour lose in Manchester Gorton?

The death of Gerald Kaufman will trigger a by-election in his Manchester Gorton seat, which has been Labour-held since 1935.

Coming so soon after the disappointing results in Copeland – where the seat was lost to the Tories – and Stoke – where the party lost vote share – some overly excitable commentators are talking up the possibility of an upset in the Manchester seat.

But Gorton is very different to Stoke-on-Trent and to Copeland. The Labour lead is 56 points, compared to 16.5 points in Stoke-on-Trent and 6.5 points in Copeland. (As I’ve written before and will doubtless write again, it’s much more instructive to talk about vote share rather than vote numbers in British elections. Most of the country tends to vote in the same way even if they vote at different volumes.)

That 47 per cent of the seat's residents come from a non-white background and that the Labour party holds every council seat in the constituency only adds to the party's strong position here. 

But that doesn’t mean that there is no interest to be had in the contest at all. That the seat voted heavily to remain in the European Union – around 65 per cent according to Chris Hanretty’s estimates – will provide a glimmer of hope to the Liberal Democrats that they can finish a strong second, as they did consistently from 1992 to 2010, before slumping to fifth in 2015.

How they do in second place will inform how jittery Labour MPs with smaller majorities and a history of Liberal Democrat activity are about Labour’s embrace of Brexit.

They also have a narrow chance of becoming competitive should Labour’s selection turn acrimonious. The seat has been in special measures since 2004, which means the selection will be run by the party’s national executive committee, though several local candidates are tipped to run, with Afzal Khan,  a local MEP, and Julie Reid, a local councillor, both expected to run for the vacant seats.

It’s highly unlikely but if the selection occurs in a way that irritates the local party or provokes serious local in-fighting, you can just about see how the Liberal Democrats give everyone a surprise. But it’s about as likely as the United States men landing on Mars any time soon – plausible, but far-fetched. 

Stephen Bush is special correspondent at the New Statesman. His daily briefing, Morning Call, provides a quick and essential guide to British politics.