Sunday, 12 January 2014

More on the New Fascism - Will Hutton and 'corporate welfare'


Will Hutton writes about regulation. In simple terms Will accuses the government and corporate Britain of ‘defending the indefensible’. And in making his case Will covers ‘fixed-odds betting terminals’ (FOBTs), alcohol, cigarettes, sugar and flood defences arguing that:

It will not be British bookmakers who pick up the costs of addictive gambling in welfare bills and housing benefit; no drinks company will foot the NHS's bill for alcohol-related illness or police bill for crime; no sugar company the bill for obesity. House builders will cheerfully direct rainwater cheaply into the sewerage system and the water companies will then raise water charges and expect state guarantees for improving the system.

These ‘costs to society’ are not covered by the price we pay ergo the refusal of government to regulate – not simply to cover those ‘costs’ but also to control the behaviour of the gambler, sweet-eater, drinker and smoker – is a form of ‘corporate welfare’. And in making this argument Will litters his article with falsehoods and sweeping statements without foundation.

On FOBTs he quotes the entirely accurate statement from Neil Goulden of the Association of British Bookmakers that these machines are a very small part of total gambling revenue as some sort of egregious defence of these evil machines. Will then describes the political debate as if this is somehow driven by facts rather than the desire of Miliband to get a headline in the Daily Mail.

Skipping gaily from ignorance of the gambling industry, Will moves to the question of alcohol. Apparently there’s not enough regulation – the £15 billion in tax revenue for booze isn’t enough – and we should have minimum pricing. Worse still (according to an article in the British Medical Journal written by a freelance journalist) the government had the audacity to meet with the drinks industry while it was considering the regulation of that industry!

Will then states the truth about the Sheffield research into the effect of alcohol pricing on consumption:

...the higher the price, the less is consumed...

A sixteen-year-old GCSE economics student could have told Will that – it didn’t require loads of government cash bunged at Sheffield University to create a model that says “if you raise prices demand will most likely fall”. Plus, of course, Will didn’t mention that alcohol consumption has fallen over the past decade or that the idea of minimum pricing targets the less well-off (specifically) and protects the bigger alcohol consumers in higher income groups. In fact that minimum pricing for alcohol is a really stupid policy.

Will then arrives at ‘Big Sugar’, the evil masterminds behind our ‘obesity epidemic’:

Thus already the sugar industry, confronting the newly created Action on Sugar Campaign to lower the sugar content in food, is reaching for the same Goulden armament

Again Will ignores the responses to the Action on Sugar nonsense from well-known pro-obesity groups such as Diabetes UK:

"The evidence that sugar has a specific further role in causing Type 2 diabetes, other than by increasing our weight, is not clear. We look forward to the conclusions of the Scientific Advisory Committee on Nutrition, which is due to report this year.”

Being morbidly obese is bad for us and people who are grossly overweight eat lots of sugar. That doesn’t mean that you or I eating sugar is a bad thing.

Moreover, just like booze, we’ve cut down – our consumption of ‘non-milk extrinsic sugars’ (that’s all the stuff that the food industry add as well as the stuff we add) has fallen steadily since the 1970s. We may eat more sugar in processed foods but we’ve stopped adding it to drinks, consuming ‘full fat’ soda (over 60% of UK market now sugar free) and spooning it liberally onto fruit, breakfast cereals and puddings.

And then Will talks about house builders and drainage – specifically ‘sustainable urban drainage systems’ (SUDS) – saying that the builders are resisting this change for reasons of profit. Will is, quite simply, making stuff up – SUDS are a standard requirement in planning – as this demonstrates:

This practice guide is complementary to Planning Policy Statement 25: Development and Flood Risk (PPS25) and provides guidelines on how to implement development and flood risk policies by the land use planning system.

The problem isn’t building the systems but looking after them – if idiots like Will get there way it places the responsibility on the builder rather than the buyer of the building and that goes straight on the price thereby making houses more expensive. The alternative - escrow funds, water charges and taxation - seems to make more sense if only Will would peer out from behind his bigotry.

What we see here from Will Hutton is an example of using half-truths and ideology to make a pretty lame anti-business point:

The deal is clear: pass on the maximum cost to the state, minimise one's own obligations including tax payments, and insist anything else will cost jobs and penalise consumers. Corporate welfare works. Bookmaker William Hill, for example, declares £293m profit on a turnover of £1.3bn, and pays a mere £48m in tax. Drinks multinational Diageo pays £66m of UK tax on its £1.75 bn of UK turnover.

The problem is that the tax is mostly paid but us consumers, by the people who get the benefit from the products and services those businesses provide. And for drinking, smoking and gambling there is an extra tax on top of the business rate, corporation tax and VAT that everyone pays. It’s legitimate to ask whether the social benefit of these businesses outweighs the social costs – the answer in each case is probably yes once we’ve taken these extra taxes into account. But to argue that wanting less new regulation is “corporate welfare” is a completely ridiculous argument based on nothing other than a dislike of big business.

If Will Hutton wants to oppose ‘corporate welfare’ I’m right with him. However, I see corporate welfare as the cosy management of government contracts in non-market systems (especially defence and health), the use of regulation to prevent market entry in energy and finance, the protection of agriculture from international competition and the privileging of professions such as law and accountancy. Just for starters.

I doubt this is what Will wants though – I suspect he likes a bit of price-fixing, a bit of winner-picking. In truth the ideology we see here is the ideology of social control – the attack on drinking and sugar is an attack on our choices as consumers wrapped up in guilt-ridden middle-class judgementalism. And the criticism of business is founded in a belief – made unpopular by Mussolini – that the state provides the leadership, creativity and capacity to transform the nation and its people.

This is more of the nanny-knows-best, ordered society ideology that Will Hutton terms 'progressive'. More of the New Fascism.


1 comment:

Clarissa said...

I see Will Hutton is confusing turnover with taxable profit, the idiot...

A quick calculation says that William Hill's tax rate was just over 16% - close enough to the UK Corp Tax rate if you allow for any overseas income and write-downs.