Happy Christmas, Corporations! with love from George Osborne

The public debate about yesterday’s Chancellor’s Autumn Statement has been largely framed, by the Labour party as well as by the mass media, in terms of a redistribution between the poor and the rich, with the latter presented in their capacities as individual millionaire property owners. Strangely absent from these narratives are the main beneficiaries of this government’s economic policy: the corporations.

This is not, of course, to say that poor people won’t  pay the highest price – of course they will –  nor that the rich won’t  benefit from this conservative budget. But the main means by which they will benefit will be not as individuals who just happen to be wealthy but in their capacities as owners, directors or shareholders of companies .

And these companies have just been handed a triple christmas present of huge proportions by George Osborne.

Gift number one is the obvious one: ‘I have already cut the main rate of corporation tax from 28% to 24%, and it is set to fall further to 22%’ says Osborne.

Gift number two is a bit harder to spot. The real value of the minimum wage in the UK has been steadily falling (see, for instance, this report). This means that workers in low-wage jobs are increasingly reliant on claiming tax credits (see my blog about this here) which in turn means that their employers are receiving an ever-increasing subsidy from the taxpayer. According to HM Revenue and Customs (see the report here) ‘the numbers of families without children receiving Working Tax Credits-only has risen over time, almost doubling from 235,000 in April 2004 to around 455,000 in April 2009 and now at just over 580,000 in April 2012’ and ‘the numbers of families benefiting from the childcare element has consistently risen over time, from 318,000 in April 2004 to around 493,000 in April 2011’. As this summary table shows, tax credits already account for 27% of all  benefit spending – by far the largest single component. By comparison Job-seekers Allowance accounts for only 4%. So much for the idea that benefit recipients are ‘scroungers’. It is plain from these figures that the vast majority are hard-working people in low-paid work. And the subsidy that allows them to continue to do so is a very nice present indeed to their employers.

Gift number three is potentially perhaps the largest of all. This involves handing over a huge proportion of public assets, including welfare services that our parents and grandparents won at great sacrifice in the 20th Century, to private corporations as a new field for profit-making. (see my article on this here). By outsourcing these services, rather than simply selling them off, governments continue to carry the risk but hand over the potential profits to the private sector. And of course here the rhetoric of austerity is a mightly convenient means to encourage further outsourcing, since this can be presented as a way of saving taxpayers’ money. Public spending currently makes up around 46% of GDP so this is an extraordinarily rich seam to mine. So rich that when we put together a special issue of Work Organisation Labour and Globalisation  on the subject we called it ‘The New Gold Rush’.

So it really will be a very happy Christmas for these corporations and their shareholders.


The first demand should be that large corporations pay a larger share of tax.The recent outcry over tax avoidance by well-known multinationals shows that this will have overwhelming public support. This would not just involve a reversal of the latest cut in corporation tax (perhaps with some exemptions for small businesses) but would also involve a major campaign against tax avoidance. And it should go beyond tightening up UK regulations to close loopholes and include launching an international campaign to close down tax havens.

The second demand should be an increase in the minimum wage to at least the living wage recommended by the Living Wage Foundation, currently estimated at £8.55 per hour in London and £7.45 in the rest of the country. This would, at a stroke, reduce the largest component of benefit expenditure as well as raising extra money for the government in income tax.

The third demand should be to keep our public services public and allow public servants to work directly for the benefit of public service users, not for corporate profit.


1 thought on “Happy Christmas, Corporations! with love from George Osborne

  1. Pingback: So what’s wrong with tax credits? | Ursula Huws's Blog

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