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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

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Brexit will hike energy prices - progressive campaigners should seize the opportunity

Winter is Coming. 

Friday 24th June 2016 was a beautiful day. Blue sky and highs of 22 degrees greeted Londoners as they awoke to the news that Britain had voted to leave the EU.  

Yet the sunny weather was at odds with the mood of the capital, which was largely in favour of Remain. And even more so with the prospect of an expensive, uncertain and potentially dirty energy future. 

For not only are prominent members of the Leave leadership well known climate sceptics - with Boris Johnson playing down human impact upon the weather, Nigel Farage admitting he doesn’t “have a clue” about global warming, and Owen Paterson advocating scrapping the Climate Change Act altogether - but Brexit looks set to harm more than just our plans to reduce emissions.

Far from delivering the Leave campaign’s promise of a cheaper and more secure energy supply, it is likely that the referendum’s outcome will cause bills to rise and investment in new infrastructure to delay -  regardless of whether or not we opt to stay within Europe’s internal energy market.

Here’s why: 

1. Rising cost of imports

With the UK importing around 50% of our gas supply, any fall in the value of sterling are likely to push up the wholesale price of fuel and drive up charges - offsetting Boris Johnson’s promise to remove VAT on energy bills.

2. Less funding for energy development

Pulling out of the EU will also require us to give up valuable funding. According to a Chatham House report, not only was the UK set to receive €1.9bn for climate change adaptation and risk prevention, but €1.6bn had also been earmarked to support the transition to a low carbon economy.

3.  Investment uncertainty & capital flight

EU countries currently account for over half of all foreign direct investment in UK energy infrastructure. And while the chairman of EDF energy, the French state giant that is building the planned nuclear plant at Hinkley Point, has said Brexit would have “no impact” on the project’s future, Angus Brendan MacNeil, chair of the energy and climate select committee, believes last week’s vote undermines all such certainty; “anything could happen”, he says.

4. Compromised security

According to a report by the Institute for European Environmental Policy (the IEEP), an independent UK stands less chance of securing favourable bilateral deals with non-EU countries. A situation that carries particular weight with regard to Russia, from whom the UK receives 16% of its energy imports.

5. A divided energy supply

Brexiteers have argued that leaving the EU will strengthen our indigenous energy sources. And is a belief supported by some industry officials: “leaving the EU could ultimately signal a more prosperous future for the UK North Sea”, said Peter Searle of Airswift, the global energy workforce provider, last Friday.

However, not only is North Sea oil and gas already a mature energy arena, but the renewed prospect of Scottish independence could yet throw the above optimism into free fall, with Scotland expected to secure the lion’s share of UK offshore reserves. On top of this, the prospect for protecting the UK’s nascent renewable industry is also looking rocky. “Dreadful” was the word Natalie Bennett used to describe the Conservative’s current record on green policy, while a special government audit committee agreed that UK environment policy was likely to be better off within the EU than without.

The Brexiteer’s promise to deliver, in Andrea Leadsom’s words, the “freedom to keep bills down”, thus looks likely to inflict financial pain on those least able to pay. And consumers could start to feel the effects by the Autumn, when the cold weather closes in and the Conservatives, perhaps appropriately, plan to begin Brexit negotiations in earnest.

Those pressing for full withdrawal from EU ties and trade, may write off price hikes as short term pain for long term gain. While those wishing to protect our place within EU markets may seize on them, as they did during referendum campaign, as an argument to maintain the status quo. Conservative secretary of state for energy and climate change, Amber Rudd, has already warned that leaving the internal energy market could cause energy costs “to rocket by at least half a billion pounds a year”.

But progressive forces might be able to use arguments on energy to do even more than this - to set out the case for an approach to energy policy in which economics is not automatically set against ideals.

Technological innovation could help. HSBC has predicted that plans for additional interconnectors to the continent and Ireland could lower the wholesale market price for baseload electricity by as much as 7% - a physical example of just how linked our international interests are. 

Closer to home, projects that prioritise reducing emission through tackling energy poverty -  from energy efficiency schemes to campaigns for publicly owned energy companies - may provide a means of helping heal the some of the deeper divides that the referendum campaign has exposed.

If the failure of Remain shows anything, it’s that economic arguments alone will not always win the day and that a sense of justice – or injustice – is still equally powerful. Luckily, if played right, the debate over energy and the environment might yet be able to win on both.

 

India Bourke is the New Statesman's editorial assistant.