The financial sector has been involved in money laundering, insider trading, cartels, tax dodges and the sale of abusive financial products. No banker has been prosecuted or evicted, but the government has showered billions on them. Some £976bn of loans, guarantees and other forms of support have been committed to bailout banks. The Bank of England has chipped in by printing £375bn under its quantitative easing programme.
The Private Finance Initiative (PFI) has given corporations a licence to print money. Under the PFI schemes, companies build schools, hospitals, prisons, roads and bridges, and lease them to the government for vast profits. In 2012, some 717 PFI contracts with a capital value of £54.7bn were running. The government is committed to repaying £301bn, a guaranteed profit of £247bn over the next 25-30 years. A large part of this could have been saved if the projects were directly funded by the government.
In 1996, the railways were privatised, but subsidies roll on. Since privatisation, the industry has received over £60bn in subsidies, and more is on the way for HS2 and Crossrail projects. The state-owned Network Rail has chipped in £30bn to provide track and signals, which would probably never be fully recovered from train companies. The UK has the most expensive rail fares in the western world, roughly double that price of equivalent day return and season tickets available in France and Germany.
The world's oil market is dominated by five companies - BP, Chevron, ConocoPhillips, ExxonMobil and Shell. In the last decade, they made profits of nearly $1 trillion, but demand subsidies for drilling for oil and gas in North Sea. According to a report published by the Overseas Development Institute, the industry probably picked a subsidy of $6.8bn (£4.25bn) in 2011.
In 2012, the European Union provided €83bn (£70bn) in support of agricultural producers, about 19% of the total farm receipts. Over the years Tate & Lyle, a sugar refiner, has received €830m even though it does not own any farms. Nestle has collected €93m. Others include Haribo, the sweet manufacturer; Groupe Doux, a French chicken processor, which does not raise poultry; Coca-Cola, the Duke of Westminster, the UK Royal family and the Catholic Church.
In folklore, companies develop products to expand their markets, but reality is something else. BT has annual turnover of £18 billion and profits of £2.5bn, but received a government subsidy of £1.2bn to install broadband for rural areas. BT will keep the assets and the revenues generated by the subsidy. In 2013, Walt Disney Corporation reported pre-tax profits of $9.6bn (£6bn), but still collected a subsidy of £16.6m for making parts of Captain America, Thor, and Guardians of the Galaxy in the UK. The film receipts go to Disney.
Last year, Serco received about £2bn of taxpayer funded contracts. The company has been accused of charging the taxpayer for electronically tagging offenders who were dead or in prison. The Serious Fraud Office is examining the claims. Atos has been severely criticised for its handling of the £500m project for carrying out "fitness to work" tests on disabled benefits claimants, and had to be removed. Soon, it received another public contract to extract patient records from GP surgeries for the NHS data sharing scheme.
Boots the chemist generates about 40% of its UK revenues by processing NHS prescriptions, but has devised ways of lightening its tax obligations. Following a buy-out, the company shifted its headquarters from Nottingham to the Swiss canton of Zug. The buy-out was financed by a debt of £9bn. The debt bought a global business, but has mostly been left in the UK rather than spread proportionately to each country of its operations. The UK government gives tax relief on interest payments even though the debt is not entirely used in the UK. This has enabled Boots to reduce its UK taxable income by £4.2bn from 2007 to 2013 and lower its tax payments by nearly £1bn. The UK government could change the rules so the level of tax relief is restricted to the amount of debt relevant to the UK business, but has not done so.
The above examples provide a glimpse of an expanding corporate welfare programme. Contrary to the claims of neoliberals, the state has not been rolled back. Instead, it has been restructured. Its major function is now to guarantee profits for corporations and operate a kind of reverse socialism where wealth travels upwards and is concentrated in fewer hands. The state shows little concern about protecting labour rights, equitable redistribution of wealth and investment in education, healthcare and social infrastructure. The UK state pension, expressed as a percentage of average earnings, is almost the meanest in the western hemisphere, with only Mexicans receiving a lower proportion. Isn't it time we said no to the corporate welfare programme.
Prem Sikka is Professor of Accounting at the University of Essex