They bleat about the free market, then insist that we subsidise them.
Never underestimate the self-pity of the ruling classes. Since Labour took
office in 1997, the Confederation of British Industry has been engaged in one
long whinge. It doesn’t matter that our taxes are among the lowest and
our regulations among the weakest in the developed world. It doesn’t matter
that the rich are richer than they have ever been. The CBI is the monster with
a thousand stomachs, that will never be satisfied.
In the submission it made to the Chancellor’s pre-budget report it demanded
that the government spend less on everything except business(1).
The state should cut its planned spending on health, social security and local
authorities, and use some of the savings to protect and enhance its “support
and advisory services for trade and businesses.” Our higher education
budget should be used to supply free research for corporations. The regional
development agencies should “expand their activities to support more extensive
business-to-business networking and collaboration”. Further road taxes
should be abandoned, and the climate change levy “should be frozen”,
but the government should help businesses by building more roads and airports.
This is what the CBI means by free enterprise.
I mention it to provide some context for the extraordinary revelations published
by the Guardian last week. Felicity Lawrence used the Freedom of Information
Act to discover who has been receiving the European Union’s farm subsidies(2).
The biggest beneficiaries, she found, were not farmers but food manufacturers.
In 2003 and 2004, the sugar company Tate and Lyle was given £227m of taxpayers’
money. Nestle was paid by you and me to export milk: I wouldn’t be surprised
if that includes its ever-popular sales of powdered milk to the third world.
Gate Gourmet, the airline catering company, took half a million pounds from
us for the little sachets of milk and sugar it puts on passengers’ food
trays: because they leave British airspace, they qualify for export subsidies.
KLM received a farm subsidy for “rural restructuring”: turning part
of the Dutch countryside into a runway. GlaxoSmithKline, Boots, Eton College,
Heineken, Grolsch, Shell and the tobacco company Philip Morris have been given
millions of pounds of farm subsidies, and at least one of them (Eton) doesn’t
even know why.
The British government can’t be blamed for this. Mr Blair has been trying
for years to cut the money handed out under the Common Agricultural Policy,
and for years has been thwarted, principally by France and Germany. At the European
summit this week, France and Germany will doubtless ensure that nothing changes
until at least 2013, undermining everything they claim to be striving for at
the simultaneous trade talks in Hong Kong. But what bothers our government is
not that the poor are giving to the rich, but that the Common Agricultural Policy
represents a general and unnecessary drain on state resources. How do I know?
Because when Britain provides its own agricultural aid, the same thing happens.
On Thursday the research organisation SpinWatch published a report on the outcome
of the government’s Curry Commission, which was supposed to help farmers
recover from the foot and mouth epidemic(3). When the commission
released its findings in January 2002, it claimed that the measures would help
to reconnect farmers with their market, reconnect food production “with
a healthy and attractive countryside” and reconnect consumers “with
what they eat and where it has come from”(4). The government
put aside £500 million to make this happen, then used the money to make
sure it didn’t.
It spent £2.3m on setting up something called the Food Chain Centre,
which would “help build more effective and efficient supply chains”(5).
The centre is run by the Institute of Grocery Distribution, a research group
working for the food manufacturers and superstores. All but one of the IGD’s
board of trustees come from companies which could be accused of helping to break
the connections between farmers and the market, the market and the countryside
and consumers and the food they eat: Tesco, Sainsbury, Asda, Compass, Nestle,
Heinz, Procter and Gamble, Bernard Matthews, Kraft and Unilever (6).
(The exception, whose presence on the board is something of a mystery, works
for the razor company Wilkinson Sword). The Food Chain Centre helps companies
to reduce their costs and enhance their profits, and we pay for it.
A further £1.4m has gone to the Cereals Industry Forum, which is run
by the food industry’s big lobby groups. The government has given £6.8m
to the Red Meat Industry Forum, which, among other public services, has been
helping Tesco to find cheaper ways of producing pork sausages (7).
So it goes on. But when the National Association of Farmers’ Markets,
which did exactly what the Curry Commission recommended, applied for £150,000
from the government, it was told to get lost. It collapsed soon afterwards.
Doubtless the money had already been spent on helping Tesco find new ways of
destroying its competitors.
There is nothing unusual about these handouts for private companies. In his
book Peverse Subsidies, published in 2001, Professor Norman Myers estimates
that when you add the direct payments US corporations receive to the wider costs
they oblige society to carry, you come up with a figure of $2.6 trillion, or
roughly five times as much as the profits they make(8). As
well as the $362 billion the OECD countries were paying for farming when his
book was published (or rather, as we have seen, for activities masquerading
as farming) they were shelling out some $71 billion on fossil fuels and nuclear
power and a staggering $1.1 trillion on road transport. Worldwide, governments
pay companies $25bn a year to destroy the earth’s fisheries, and $14bn
to wreck our forests.
The Energy Policy Bill the Bush administration drove through Congress this
summer handed a further $2.9bn to the coal industry, $4.3bn to nuclear power
and $1.5bn to oil and gas firms(9). According to the Democratic
congressman Henry Waxman, the oil subsidy “was mysteriously inserted in
the final energy legislation after the legislation was closed to further amendment
… Obviously, it would be a serious abuse to secretly slip [in] such a
costly and controversial provision”(10). Most of the
money, he discovered, would be administered by “a private consortium located
in the district of Majority Leader Tom DeLay … The leading contender for
this contract appears to be the Research Partnership to Secure Energy for America
consortium” whose board members include Marathon Oil and our old friend
Halliburton. “There is no conceivable rationale for this extraordinary
largesse. The oil and gas industry is reporting record income and profits …
the net income of the top oil companies will total $230 billion in 2005.”
It would be tempting to hold Bush responsible for this, but that would be only
half right. The oil firms were scooping up taxpayers’ money long before
they put their robot in the White House: Norman Myers reports that between 1993
and mid-1996, “American oil and gas companies gave $10.3 million to political
campaigns and received tax breaks worth $4 billion.”
This week the rich countries gathering for the World Trade Organisation meeting
in Hong Kong will tell the poor ones to open their economies to the free market.
But the free market does not exist. In every nation, the corporations hold out
their begging bowls and tax-payers line up to fill them. We are the ragged-trousered
philanthropists of the 21st century, the comparatively poor obliged to sponsor
1. The Confederation of British Industry, October 2005. CBI
Recommendations for the Autumn 2005 Pre-Budget Report. Submission to HM Treasury.
2. Felicity Lawrence, 8th December 2005. Multinationals, not
farmers, reap biggest rewards in Britain’s share of CAP payouts. The Guardian.
3. Andy Rowell, 8th December 2005. The ‘Big Food’
Takeover of British Agriculture. http://www.spinwatch.org//spaw/images/artwork/Big-food.pdf
quoted by Andy Rowell, ibid.
quoted by Andy Rowell, ibid.
6. The Institute of Grocery Distribution, viewed 11th December
2004. IGD Board of Trustees. http://www.igd.com/CIR.asp?menuiD=6&cirid=1210
7. The Food Chain Centre, 8th June 2004, viewed 12th December
2005. 20% Savings to be had in Sausage Supply Chain. http://www.foodchaincentre.com/CIR.asp?cid=42&type=3&subtype=8
8. Norman Myers and Jennifer Kent, 2001. Perverse Subsidies:
how tax dollars can undercut the environment and the economy. Island Press,
9. Eg Carol Werner, 29th July 2005. Subsidies: historic, current
and the skewing of market signals. Environmental and Energy Study Institute.
10. Rep. Henry Waxman, 27th July 2005. Letter to the Honorable
J. Dennis Hastert. http://www.democrats.reform.house.gov/Documents/20050727165629-26334.pdf