In this ground-breaking report, Dr Farnsworth of the University of York seeks to bring corporate welfare into the debate about the respective roles of the state and the market. Private businesses, he argues, heavily depend on the state. All depend on a good legal system, state-backed currency and financial system and various grants and subsidies. These various interactions, engagements and transactions, between the public and private sectors, help to ensure that the risks that would otherwise accrue to private companies are socialised, providing the basis for what this report suggests is the corporate welfare state. This paper seeks to conceptualise the function, as well as the size, of the British corporate welfare state to inform a much needed debate about the ways in which corporate welfare is funded and delivered.
Farnsworth estimates that subsidies, capital grants, tax benefits, insurance and advocacy as well as transport, energy and procurement subsidies are worth around £93bn per year. Businesses also extract huge value out of a range of other ‘public’ services, including in-work benefits and the education and health services. Such provision adds £52bn to the total. Lastly, the legacy costs of the 2008 bank bailouts and the ongoing too-big-to-fail subsidy to banks are together worth around £35bn per year.
Download SPERI Paper No. 24: The British Corporate Welfare State: Public Provision for Private Businesses.