Fri 25 Jan 2019
British people are coughing up £24bn to help big oil. It’s yet another example of the illusion that is modern capitalism
The “free market” is a creed that stirs up near religious devotion among its believers. It is in fact a con, a myth, a great deception. Take the latest striking example: according to the National Audit Office, British taxpayers are expected to cough up £24bn for tax relief given to oil and gas corporations, for the removal of North Sea wells, rigs and pipelines. Better start saving up, because if the companies suddenly go under, that bill will only increase. Indeed, some companies have already defaulted on the costs of decommissioning, leaving you and I to pay millions of pounds.
Many questions arise here. While Britain’s Tory government frittered away its North Sea oil wealth, Norway invested the proceeds into a sovereign wealth fund which is now worth $1tn. We could have saved up the wealth to invest in the country’s future – what a tragic waste. It is also a damning indictment that we are splashing out on tax breaks for big oil rather than properly investing in tackling the existential crisis of climate change, and in doing so, creating vast numbers of jobs in renewable energy as Germany has done.
But it is yet another example of socialism for the rich, capitalism for everyone else. Britain’s private sector is utterly dependent on state largesse to make money. They depend on the state to invest in infrastructure; in research and development; in education to train up their workforce; in law and order to protect their property – and yet many big companies fail to contribute in exchange thanks to mass tax avoidance.
Because so many employers refuse to pay their workers a wage on which they can live – most Britons languishing below the poverty line are in work – the state has to spend billions of pounds a year on in-work benefits. Private landlords charging rip-off rents are subsidised by about £9bn a year by the state. The backbone of 21st-century British capitalism – finance – was famously bailed out by the state after it plunged the economy into turmoil, and banks benefit from numerous other subsidies, too: such as their implicit “too big to fail” subsidy worth billions, and the state insurance of all bank deposits.
Rail companies receive more subsidies than they did when the industry was publicly owned. According to the National Audit Office in 2016, the Treasury spends about £225bn – or about £3 in every £10 of government money – on private or voluntary providers. The list goes on.
Modern capitalism is based on a myth: that thriving private entrepreneurs generate wealth through their own hard work, innovation and get-up-and-go. In fact, the state subsidises the entire system, nationalising the risks but privatising the profits, while allowing its beneficiaries – our shameless, profit-obsessed elite – power without accountability. It exposes how rotten our entire social order is – and why it has to go.