Not sure about the City, but any discussion of what corporations get from the state (from all public policy, not just subsidies) has to go beyond taxation (to also include subsidies, the bailouts, cheap loans, the value of 'insurance' (eg Export Credit Guarantees) and other services - not to mention the benefits extracted from social policies more generally. Yes, this does return us to some of the arguments of the 1970s and early 1980s, but not before time in my opinion!
The costs of the assistance to the financial sector as a result of the crisis is, on conservative (IMF) estimates, equivalent to almost 20% of UK GDP. And this is just the upfront financing to the financial sector (excluding the assistance given to troubled industries such as the car industry). It also excludes the total cost of the overall 'exposure' which would add another amount that is equivalent to around 81% GDP. The ultimate costs, of course, are the austerity measures being unleashed at the moment.
But these 'exceptional' costs tell only part of the story of regular corporate benefits.
All businesses, at all times, depend on governments and the 'myth' that they do not (or ever could) is a fiction created by neoliberal ideologues. The assistance provided by successive US governments is testament to this (take a look at the work being carried out by the CATO institute - for different political ends but the data is useful).
But focusing on the UK and the question of the taxes and benefits that accrue to businesses in normal times: according to a study carried out by the OECD in 2009, tax 'benefits' aimed at corporations were worth around 5% GDP in the UK. Add to this business grants, wage subsidies and other forms of assistance, plus around 1% for tax dodging (see Richard Murphy's work on this) and you get to a figure of around 11% GDP. According again to OECD figure, combined corporate taxation brings in around 7% of GDP each year. This does not include government procurement which is worth between 5-10% GDP....
Having just completed a comparative study of all of all this (what I am calling, to borrow a US concept, Corporate Welfare) I can tell you that the UK isn't even the most generous 'corporate welfare state' based on comparative data. However, I have now begun a more thorough 'audit' of UK corporate welfare - and the only thing that is certain so far is that it is extremely difficult to get all the data (which is why I doubt it will be possible just yet to address David's question). On this, I would love to hear from anyone who has managed to properly penetrate the COINS database and would be willing to share their experiences/expertise.
In trying to examine available data relating to corporate welfare I have been amazed at how little is known (or admitted to) by governments. We know almost everything there is to know about state provision aimed at 'regular' citizens - and then some. The politics become clear when we consider how the press rake up daily examples of benefit fraud, undeserving claimants and the rest. Contrast this with the following from the UK's Office for Fair Trade (2004) (which still applies):
‘There is no single definitive source of data about spending on subsidies to businesses in the UK’ (OFT, 2004a). [Data on business subsidies in the UK fails to] ‘present a clear view of the total amount of subsidy provided by the public sector to private business’ (OFT, 2004b).
And subsidies are only one aspect of the benefits that accrue to private businesses.
Perhaps it is time to start talking about the 'duties' that should apply to corporate welfare claimants - starting with the primary duty of all citizens - to pay taxes!
And now for the shameless plug - my book on the subject is due out any day now: http://www.palgrave.com/products/TitlePrint.aspx?PID=415667
Kevin
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Dr. Kevin Farnsworth
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Dept of Sociological Studies
University of Sheffield
Northumberland Road
Sheffield S10 2TU
Tel. +44 (0)114 222 6441
www.k-farnsworth.staff.shef.ac.uk
----- Original Message -----
From: "BYRNE D.S." <[log in to unmask]>
To: [log in to unmask]
Sent: Monday, 12 December, 2011 8:54:50 AM
Subject: Re: City of London
Since a major part of the business of financial services, not just in the City of London although very much there, is the promotion of tax avoidance, then it would be interesting to know what if you like is the contribution net of that dodging of revenues which might sustain the welfare state.
David Byrne
From: Social-Policy is run by SPA for all social policy specialists on behalf of John Veit-Wilson
Sent: Sun 11/12/2011 12:39
To: [log in to unmask]
Subject: Re: City of London
The problematic [for some of us] bit of this kind of discussion is not the retail banking sector around the country and its employees and managers but the money market bit, largely concentrated in the City and referred to as such. What is also confusing [to me] is how this City contribution to 'total national income' is conceptualised and measured, as I fear that selective selections from derived statistics are often used tendentiously to promote one ideological position or another, for or against City activity composed of trading in capital and gambling on movements in the value of commodities and instruments.
I'd also be interested in the relation between the calculated value of the City activity in the national income and the contribution which City [not retail banking] activity makes to the government's tax incomes, both corporate and individual. Again, for some of us the problematic is whether the City [in this limited sense] is paying what it should do for the social and material infrastructure which makes it possible to operate here. Is it a net contributor to the national income? How could we tell? And if we can't tell accurately, robustly and convincingly, then why do we or the government prioritise its activities over others which more obviously and credibly benefit the national income?
Is this explained anywhere in terms which are acceptable to different ideological positions [without which agreement any productive discussion is futile], and which are comprehensible to non-specialists? That would be useful at a time like this.
John VW.
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From Professor John Veit-Wilson
Newcastle University GPS -- Sociology
Newcastle upon Tyne NE1 7RU, England.
Telephone: +44[0]191-222 7498
email [log in to unmask]
www.staff.ncl.ac.uk/j.veit-wilson/
-----Original Message-----
From: Social-Policy is run by SPA for all social policy specialists [ mailto:[log in to unmask] ] On Behalf Of Socialist Health Association
Sent: 11 December 2011 11:58
To: [log in to unmask]
Subject: Re: City of London
Is there not a distinction between retail banking - the part spread across the UK - and the finance business in the City? One of the consequences of having that in London is an upward pressure on incomes.
If Wilkinson & Pickett are right that has damaging consequences. The City clearly makes a contribution to taxation which we use to build more prisons and hospitals. If our society was more equal perhaps we wouldn't need them.
On 11/12/11 11:25, Paul Ashton wrote:
> "The City of London’s contribution to the national income is estimated
> at 2.4% of the total, while financial services represent 19.5% of
> total national income (or gross value added) in the whole of London.
> The financial services sector accounts for 10% of the total national
> income of Great Britain.
> Source: Office for National Statistics and Oxford Economics"
>
> "Just over one million people currently work in the financial services
> sector in the UK, with approximately one-third of that total employed
> in the financial services sector in London. The rest of the
> employment in the sector is spread across the UK, reflecting local
> business needs. Other key financial centres include Edinburgh and
> Leeds, both with more than 30,000 financial services employees, and
> Manchester, Glasgow and Birmingham, each with around 25,000 in the
> industry.
> Source: Office for National Statistics, Business Register and
> Employment Survey, December 2010"
--
Martin Rathfelder
Director
Socialist Health Association
22 Blair Road
Manchester
M16 8NS
0161 286 1926
www.sochealth.co.uk
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