Dangerous Subsidies

Call me daft, but I’d imagine most people think that holding a full-time job in a developed western society should enable someone to feed, clothe and house themselves without additional help.

But that doesn’t happen – we need additional tax credits, housing benefit, winter fuel allowance etc just to survive. So why is that? The main answer is dangerous subsidies.

The logic of a minimum wage was that people working decent hours should be paid enough to meet their basic needs. The campaign for a living wage is attempting to tackle this. Low wages enhance corporate profits, and govt subsidies to low wage individuals work as subsidies to corporate profits. High corporate profits then get eaten up in excessive executive remuneration, with a little left for dividends. The dividends mostly go to corporate investors and pension schemes. But the pension scheme providers are charging more in fees than the schemes are earning, in order to cover excessive executive remuneration!

The winter fuel allowance is necessary for many of our most vulnerable pensioners. This covers their bills, which are paid to the energy cos. But the energy companies, and the fossil fuel wholesalers are massively subsidised by Govts across the world, either in direct subsidies, or via tax breaks.


So we subsidise the production and supply of essential fuels, (for companies who make super-massive profits). Then we tax the user massively at the pump (for vehicles), and at the same time provide price support via Winter fuel allowances. The net beneficiaries are the extremely well remunerated executives at BigEnergy Inc, and once again, the executives running your pension scheme.

Oh, yes, and my personal favourite, housing.

2/3 of recipients of housing benefit are in social housing, the rest in the private market. But 40% of the spend (£17bn a year) goes to private landlords. That’s £7bn a year. Housing a million people. If we invested £7bn building houses we could house a 200,000 people a year. So lets look at the beneficiaries of this subsidy – firstly it’s the private landlords, people with enough wealth to be able to afford a house they don’t live in. Secondly, the beneficiaries are other property owners – this subsidy makes private renting a worthwhile “job”, and keeps the price of properties high (the poor can’t buy them; the landlords don’t need to sell them). Expensive properties are particularly loved by the wealthy, as with zero effort, their capital grows by the day. And lastly, the other happy beneficiaries of the subsidy are the banksters, insurance co’s etc. Because the bank’s investments can be held at the balance sheet valuations, meaning no losses incurred, PLUS they can then gamble many multiples of it.

So what on the face of it is a means of giving extra income to the poorest, is actually a subsidy to the wealthiest in our ranks, and ultimately to the detriment of the direct recipient. That’s a subsidy so nasty that most people would struggle to follow the money!

And, then there’s agriculture. The EU Common Agriculture Policy was set up post WWII to stabilise food production. The single payment scheme pays directly to landowners, who by happy coincidence already happen to be among the richest people in Europe. The more land you own, the more you get, paid for by the taxes of ordinary Europeans. The richest landowners have been using this money to increase their land, taking an even bigger cut of the subsidy. In Britain, 2/3rds of its 60m acres are, rather amazingly, owned by only 0.26% of the population. Of that, the vast majority is owned by the even more astonishingly small number of just 1200 individuals. Other major recipients are British Sugar plc, Unilever, Nestle, banks, distillers. That’s where the majority of the £3.3bn a year in CAP payments go in the UK. Now there are arguments to be had around food, self-sufficiency etc, but paying the richest to keep fields “ready” for agriculture, when demand and populations continue to rise is madness.

(see this piece by George Monbiot http://www.guardian.co.uk/commentisfree/2012/nov/26/europe-bung-landowners-farm-subsidies) and this http://www.tlio.org.uk/reformCAP

Summing up, that’s a lot of billions of money being siphoned away from the average folk, and into the arms of the wealthiest landowners – so tell me again this isn’t a feudalist society. It’s definitely not free-market capitalism, or whatever our governors and talking heads claim it to be. So when you’re in the queue at the Post Office, or in the pub and someone mentions the problems with the welfare state, please do remember to tell them that the biggest claimaints and indirect recipients are the Queen, the banks, and the richest landowners in the country. And don’t feel bad for claiming for that extra bit of benefit or tax credit, it’s what the “most successful” people in the country do all the time.


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