Fracking (etc): is Britain a democracy or a dictatorship?

 

The FT reports that a majority of North Yorkshire county councillors, elected to serve the people, followed the advice of unelected officers to vote against the wishes of those who put them in post; only 36 of the more than 4,800 responses to the council’s consultation were in favour of fracking.

The government promised to go “all out” for shale. Energy secretary, Amber Rudd, announced ‘she was determined to push forward with shale and even allow extraction under national parks’ and Chancellor George Osborne has promised that local areas will receive £100,000 per well and 1% of future royalties. He also said that he would also set up a sovereign wealth fund for the north of England to invest the proceeds.

However public opposition has prevented any fracking since 2011 when it caused two minor earthquakes near Blackpool. Brian Baptie, a seismologist at the British Geological Survey, said that the analysis showed that the epi­centre was within 500m of the well site and the timing of these earthquakes and that of the fluid injection [during fracking] indicated that there might be some connection between the two.

Nicky Mason, a local resident, said Third Energy had failed to disclose a gas leak at a nearby well until forced to by a freedom of information request.

The decision relates to a test, not full-scale mining activity

After changing its name four times (readers will wonder why), Third Energy will frack for shale gas at an existing well outside the village of Kirby Misperton – near the North York Moors National Park – to test if the rock below is suitable for large-scale exploitation and this will involve:

• use of a 37-metre high rig for eight weeks
• erection of a noise barrier of shipping containers
• transporting of gas by pipeline
• flowback water taken away by trucks.

As Ineos and Cuadrilla are given encouragement to reapply it is feared that further permission will eventually be given to produce on a large scale, which could lead to several hundred wells across the hills of North Yorkshire.

The FT quotes experts who foresee that the UK’s shale industry is threatened by simple economics: the tumbling price of gas.

“There could not be a worse time to be embarking on challenging gas projects,” said Howard Rogers, director of gas research at the Oxford Institute for Energy Studies. An oil and gas analyst at Jefferies, said: “There is a global glut of gas and we continue to see gas supply everywhere. That is why prices have come down so much. It means there is a big economic challenge for shale producers in the UK.” He pointed out that US prices have come down so much it could soon be cheaper to import gas from there rather than buy domestically produced supplies.

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The only hope for these threatened areas appears to be a check to the paramount political-corporate desire for profit.
 

 

Corporate Benefits Street – featuring Britain’s state-endorsed oligarchy

George Monbiot has analysed the rhetoric of the chancellor of the exchequer, George Osborne, who claimed that business is under political attack on a scale it has not faced since the fall of the Berlin Wall. Speaking at the Institute of Directors, he was introduced with the claim that “we are in a generational struggle to defend the principles of the free market against people who want to undermine it or strip it away”.

No, Digby: only concerned electors, Greens and Plaid Cymru are calling for greater restraints on corporate power

Monbiot adds that a few days before, while introducing Osborne at the Conservative party conference, Digby Jones, former head of the CBI, warned that companies are at risk of being killed by “regulation from ‘big government’” and of drowning “in the mire of anti-business mood music encouraged by vote-seekers”. Monbiot asks:

“Where is that government and who are these vote-seekers? They are a figment of his imagination” adding that all Labour can say is “us too”.

Legal strait-jackets

After warning against the Transatlantic Trade and Investment Partnership, “steered by business lobbyists” and noting the practice of writing in very costly penalty clauses into outsourcing contracts with corporates, he cites the example of one being negotiated with the probation service: “if a future government seeks to cancel these contracts (Labour has said it will) it would have to pay the companies the money they would otherwise have made over the next 10 years. Yes, 10 years. The penalty would amount to between £300m and £400m”.

Corporates enjoy windfalls everywhere as companies are assisted to capture essential public services – water, energy, trains

Monbiot continues: “Think of the massive state subsidies quietly being channelled to the private train companies. When Cameron told the Conservative party conference “there’s no reward without effort; no wealth without work; no success without sacrifice”, he was talking cobblers.

“Thanks to his policies, shareholders and corporate executives become stupendously rich by sitting in the current with their mouths open”.

In effect the public is a sitting duck – saddled with heavy charges set out in detail at great length by James Meek – that they are forced to pay.

Monbiot summarises: “Through a lobbying industry and a political funding system, successive governments have failed to reform, corporations select and buy and bully the political class to prevent effective challenge to their hegemony. Any politician brave enough to stand up to them is relentlessly hounded by the corporate media. Corporations are the enemy within”.

In the Guardian on Monday Aditya Chakrabortty had written about a very congenial silence – for the CBI and business lobby groups – at the very centre of our democracy.

Soundbites:

“The bill for corporate welfare is huge – and largely hidden. We know a lot about the people who claim social welfare: we know how much each benefit costs the public, but corporate welfare? The government has itself acknowledged: “There is no definitive source of data about spending on subsidies to businesses in the UK.

“Farnsworth has achieved something extraordinary: he has yanked into the open an £85bn subsidy that big business and the government would rather you didn’t know about”.

Kevin Farnsworth, a senior lecturer in social policy at the University of York, has produced a comprehensive audit of the British corporate welfare state. He has added up the subsidies and grants paid directly to businesses in the financial year 2011-12 which come to over £14bn – almost three times the £5bn paid out that year in income-based jobseeker’s allowance. Add to that the corporate tax benefits:

• the value of the cheap credit made available to banks and other business,
• the insurance schemes run by the government to protect exporters,
• the marketing for British business laid on by Vince Cable’s ministry,
• the public procurement from the private sector …

Farnsworth calculates that direct corporate welfare costs British taxpayers just short of £85bn – a conservative estimate.

Will the little fish organise? Chakrabortty thinks that Farnsworth’s research should trigger a public debate about the size and uses of the corporate welfare state, adding, “Personally, I’ll believe we’re getting somewhere when Channel 4 puts on Corporate-Benefits Street – with White Dee replaced by Amazon founder and inveterate tax-dodger Jeff Bezos”.

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Sources – read in full:

http://www.theguardian.com/commentisfree/2014/oct/07/bullying-corporations-enemy-within-business-politicians

http://www.theguardian.com/commentisfree/2014/oct/06/benefits-corporate-welfare-research-public-money-businesses

http://www.theguardian.com/politics/2014/aug/22/sale-of-century-privatisation-scam

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Budget Day: Professor Sikka highlights the British state, a major guarantor of corporate profits

Prem Sikka, professor of accounting and director of the Centre for Global Accountability at the University of Essex, points out that during his budget speech the Chancellor won’t talk about the amount spent on corporate welfare and how that is contributing to austerity, income and wealth inequalities, and deteriorating public finances. Read the full article here.

Extracts

In a society where corporations fund political parties and provide jobs for potential and former ministers, the state has become a major guarantor of corporate profits. There are cuts in investment in healthcare, education and social infrastructure, and hard won social rights. A kind of reverse socialism has been created where the state transfers wealth to the well-off and punishes ordinary people. The following examples provide some evidence for the above thesis.

A small sample of Britain’s escalating and unsustainable corporate welfare programme:

EDF

The price of gas and electricity has been rocketing and Energy companies are accused of making vast profits. But EDF and its partners are set to receive £17.6 billion subsidy for building a nuclear power plant even though this investment is projected to provide a return of up to 21%. Despite this exceptionally high rate of return, the company will be able to charge a price of £92.50 per Megawatt hour (MWh), roughly double the current wholesale price of electricity.

Consultants, including accountancy firms KPMG, picked-up £8million in fees. High profits are not accompanied with social responsibility. Energy company SSE declared record profits of £1.5billion, but wants taxpayers to bear the burden of cleaning-up the social and environmental mess.

Rail

In 1996, the railways were privatised and now over 100 companies are running them, but subsidies have increased. The industry has received over £60bn in subsidies, and more is on the way with the Crossrail and HS2 projects. The industry has paid vast amounts in dividends to its shareholders whilst the customer has ended up with the most expensive rail fares in the western world.

PFI

Rather than borrowing directly to finance investment in schools, hospitals, roads, bridge and social infrastructure, under the Private Finance Initiative (PFI) companies borrow money to build the project and then lease the assets to the government at exorbitant prices. In 2012, some 717 PFI contracts with a capital value of £54.7billion were running. The government is committed to repaying £301billion, a guaranteed profit of £247billion over the next 25-30 years.

The resulting profits do not necessarily get taxed in the UK either. For example, HICL Infrastructure is a fund established by HSBC and registered in Guernsey. Its portfolio of PFI projects includes Portsmouth Hospital and the John Radcliffe Hospital in Oxford. For 2011, it is estimated to have made a profit of £38million from 33 PFI schemes, but paid only £100,000 in UK tax.

The government should be clawing back billions from the PFI programme, as it has become evident that the interest rates have been rigged. Even a small adjustment could save taxpayers billions of pounds.

The financial sector

The financial sector preaches free markets and deregulation, but is almost entirely reliant on the state.

The deposit-taking licence is provided by the state without any quid pro quo and the state also provided insurance for deposits of up to £85,000 to promote confidence in the industry.

The sector has boosted its profits through indulgence in money laundering, insider trading, cartels, tax dodges, and the sale of abusive financial products, with virtually no prosecutions for ant-social practices.

In its boom years, between 2002 and 2007, the financial sector paid £203billion in UK corporation tax, national insurance, VAT, payroll taxes, stamp duty and insurance taxes, about half of that paid by the manufacturing sector. In return, the state has poured in billions.

The latest data shows that some £976 billion of loans, guarantees and other forms of support have been provided to banks. The Bank of England has helped out with another £375 billion under its quantitative easing programme. Rather than building their tattered finances, the banks continue to pay exorbitant executive salaries.

BT

BT has annual turnover of £18billion and profits of £2.5billion, but received a government subsidy of £1.2billion to install broadband for rural areas. BT will keep the assets and the revenues generated by the subsidy.

Lotus

With 13million people living below the poverty, many on low wages and lengthening queues at food banks, most Britons can only dream about buying a sporty car. Lotus, the sports car manufacturer, has received £10billion subsidy: the price of a £90,000 model is now reduced by £5,000, thanks to a government subsidy.

By any measure the role of the UK state has been restructured to guarantee corporate profits. This welfare programme needs to be rolled-back. If the government insists on supporting fledgling companies, then the amounts should be returned once the company is profitable.

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