Cameron and Miliband are both right on the constitution – But for the wrong reasons

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Posted: 27 Sep 2014 12:00 AM PDT
Stephen Barber

As the constitutional fallout from the Scottish Independence Referendum campaign continues, Stephen Barber looks at how the two main party leaders down south are addressing ‘the English Question’. Cameron and Miliband may be acting from short term partisan motivations, but this doesn’t mean they’re wrong. While any plausible constitutional settlement is complex, it must be based on devolution to ‘cities and counties’, with any proposed ‘English Parliament’ failing to offer real devolution of powers closer to the people.

Westminster leaders need to put aside short-term party advantage in a similar way that Scottish politicans did during the referendum campaign. If they did, not only might they forge a constitutional settlement that will serve England well for a generation, they might also find they can enjoy the sort of ‘apathy free’ politics that was a highlight of the independence referendum. Whether they choose to engage seriously or not, it is clear that there needs to be real devolved power to England and if new institutional layers are to be discounted, the settlement needs to be one of ‘Cities and Counties’.

What a shame it is that the Westminster party leaders have reverted to type by putting narrow electoral advantage ahead of England and the United Kingdom’s constitutional future. The contrast in England to the sort of leadership Alex Salmond and Alistair Darling showed over Scotland is stark. Westminster should take note because it is this sort of politicking which is responsible for the cynicism of voters and poor turnout at elections: something entirely absent from Scotland where 86% turned out to vote in the referendum.

David Cameron favours ‘English votes for English matters’. Ed Miliband wants to delay changes for years and until a Constitutional Convention can report. It is clear why: Labour would likely suffer from the emasculation of Scottish MPs and whatever the chaos, the Conservatives (who only secured a single Scottish MP at the last election) would more often command Commons majorities on ‘English’ votes; irrespective of who formed the government. If anyone wanted a blueprint of how not to reform a constitution, this could well be it.

Credit: UK Parliament, CC BY NC 2.0But that doesn’t mean that everything the Westminster elite have said is wrong. Cameron is surely right that new powers for Holyrood must be balanced with a fair English Settlement. And Miliband is surely right that the position we find ourselves in demands more thought than enshrining two classes of MPs. They are right, but for the wrong reasons.

A better reason would be to forge a workable and legitimate constitutional settlement in England. And here Scotland has done the service of defining powers which need to be devolved from Whitehall not only to Holyrood in the wake of the independence campaign but also to England. As such, the English need to have a direct say over education, health, transport, welfare and the environment. Not only that, this power has to be balanced by the responsibility to raise taxation used to pay for those services. This ensures the new settlement isn’t simply about Westminster throwing more money at poorer areas of the UK but is about genuinely devolving both power and accountabilities.

An English Parliament has its attractions as a replication of the sort of devolution seen in Scotland, Wales and Northern Ireland. But as home to 53 million of the 64 million population of the United Kingdom, it doesn’t devolve power much of a step closer to the people. Moreover Miliband has already ruled out new government and new layers of politicians. Of course that could be solved by the John Redwood plan of English MPs doing two jobs; an English Parliament drawn from within the Westminster Parliament and two classes of MP. But that is so very messy with potentially rival governments created from a single chamber that it needs to be dismissed out of hand.

Consequently any new settlement in England needs to be forged from existing structures outside of Westminster. My proposal would be a combination of cities and counties plus a long overdue reform of the House of Lords.

This would mean empowering the great and small metropolitan areas of England perhaps comparable to what has happened in London. It would create figures accountable to the electorate and able to make policy in areas which matter to them. Such a move could both politically invigorate those parts of the country Westminster cannot reach and boost local economies left behind by the growth of the Capital. For those who do not live in or around the cities, the settlement should be accompanied by a new enabling of the existing twenty six County Councils of England and other council areas. The prize would be a new era for local government as real power is devolved from the centre.

One other overdue reform needs to be included in this settlement: the House of Lords about which I have recently written. The upper house is an indefensible, antiquated constitutional muddle. It remains appointed by the Prime Minister, has grown too big and is full of party donors and factotums. With any new constitutional settlement, reform of the Lords should not be ignored, because it presents an opportunity for some democratic legitimacy in the upper chamber as it is slimmed down and given a role in the new constitutional arrangements of the whole of the United Kingdom.

A new positive English settlement embracing the Cities and Counties and a reformed Lords is possible, but it needs leadership from the top of our politics. Putting aside narrow party advantage might be difficult, but if it happens, not only will Britain have the constitutional arrangements it deserves, leaders might also find some of that ‘apathy free’ politics rubs off on them.

Cameron and Miliband are both right on the constitution – But for the wrong reasons

This charming eulogy emphasises Benn’s belief in the primacy of democracy, along with his dignity and good humour

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The Guardian, Thursday 2 October 2014 23.45 BST
Tony Benn: Will and Testament

He ‘immatured with age’ … Tony Benn in a still from Will & Testament
Only a curmudgeon would deny the charm and persuasiveness of this eulogy to Tony Benn. Benn emerges with consistency, dignity and good humour, and as someone whose views on the banking crisis, our punitive military adventures in the Middle East and the centrist timidity of New Labour have largely been vindicated. The film is careful to deride Britain’s fondness for toothless national treasures – and to quote Benn’s irritation with this duplicitous media phenomenon. Though emphasising Benn’s belief in the primacy of democracy, however, it doesn’t touch on Labour’s deputy leadership vote in 1981, which he lost to Denis Healey – an occasion of great bitterness.

Tony Benn is a romantic, a maverick, a non-team player with a streak of conceit – in some ways, not so different from Enoch Powell. Amusingly, the nearest the film gets to interviewing anyone who actually had to work with Benn is resurrecting the taped, exasperated voice of Harold Wilson, who said Benn “immatured with age”. Actually, it’s our dull, shallow political culture that looks immature without Benn. One footnote: a final acting credit for “young Tony Benn” appears to indicate that reconstructions have been used – presumably the photographs showing the undergraduate Benn with his soon-to-be-wife, Caroline, at Oxford.

http://www.theguardian.creviewom/film/2014/oct/02/tony-benn-will-and-testament-

A Constitutional Convention now looks like the safest way out of the constitutional shambles

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Following a closer than expected outcome in the Scottish independence referendum, many are criticising David Cameron for his negotiation of the Edinburgh Agreement which paved the way for the referendum. Nat le Roux thinks is more concerned about Cameron and other party leaders having precipitated a slow-motion constitutional train crash. It represents a peculiar type of collective folly for the party leaders to approach major constitutional reform, which would be effectively irreversible, in the same spirit of short-term political improvisation, he writes.

Much of the media commentary on the Scottish referendum and its aftermath has focused on the apparent poor judgement of the Westminster elite – the prime minister in particular – in the negotiation of theEdinburgh Agreement and the subsequent referendum campaign. There are three principal accusations:

  • The UK government should not have conceded a referendum in the first place. Cameron’s apologists argue that he had no choice after the SNP won an outright majority of seats in the Scottish Parliament in the 2011 election (despite the headwind of a proportional voting system). However, there is no compelling evidence to suggest that this result reflected any increase in popular support for independence, which had been running at around 30 per cent for several years. Certainly there were no mass pro-independence demonstrations, Catalan style, on the streets of Glasgow or Edinburgh. And in the 2010 UK general election the SNP won only 6 out of 59 Scottish seats.
  • The terms of the referendum were loaded in the Nationalists’ favour. Cameron was determined to structure the referendum as a simple yes/no to full independence, without a third ‘devo max’ option. As a quid pro quo for a binary question, he made significant concessions to Alex Salmond, leader of the SNP, on other issues: the framing of the question (so that ‘Yes’ meant ‘Independence’ not ‘Union’); an electoral qualification which included 16-year olds but excluded native Scots resident in England; and – most important of all – a deferred polling date which gave the Nationalists two years to build support.
  • The UK party leaders’ ‘vow’ in the final week of the campaign was panicky and ill-considered. After the YouGov poll showing a narrow ‘Yes’ lead on September 7th, the Westminster elite were apparently thrown into blind panic; for the first time in the campaign, a ‘Yes’ result seemed a real possibility. The three party leaders published a joint declaration promising substantial fiscal devolution without any variation in the Barnett formula in the event of a ‘No’ vote. This is a very generous promise which allows the Scottish electorate to have their cake and eat it. It goes beyond any likely ‘third option’, which Cameron was so determined to keep off the ballot paper. And it was arguably entirely unnecessary: in the days after the YouGov poll, the betting market – the most reliable indicator of electoral outcomes – never showed more than a 30% likelihood of a ‘Yes’ vote.

These accusations seem to have considerable force, but they are retrospective: if things had turned out otherwise, Cameron’s critics would be singing a different tune. The Edinburgh Agreement and the referendum campaign were driven by politicians, and most political judgements are made under pressure, with limited information, and against the clock. In the ebb and flow of normal party politics that does not matter very much: most foolish decisions are of limited consequence and are in any event reversible by subsequent governments. However it represents a peculiar type of collective folly for the party leaders to approach major constitutional reform, which in this case would be effectively irreversible, in the same spirit of short-term political improvisation.

Janan Ganesh put the point eloquently in the Financial Times recently:

“It is hard to avoid the image of Mr Cameron and his peers scrawling a new constitution on the back of a panini wrapper as their trains hurtle north for a jaunty last-minute campaign stop they never expected to have to make. There must be a point at which the British traditions of amateurism and muddling through become indistinguishable from the chaotic caprice of a banana republic” 

The referendum has settled nothing. Indeed the party leaders’ reckless ‘vow’ may have precipitated a slow-motion constitutional train crash whose essential elements are already becoming apparent:

  • In Scotland, ‘the 45%’ have not accepted that the question of independence is settled ‘for a generation’. Salmond’s successor will work assiduously for a second referendum within five years. She will shout ‘betrayal’ from the rooftops if Westminster does not pass new and far-reaching devolution legislation ahead of the UK general election.
  • Cameron did not consult his party before committing the government to a promise which most backbenchers believe is grotesquely over-generous to Scots. He has tried to buy them off with a promise of ‘English votes for English laws’ on the same timetable as Scottish devolution. This proposal has, true to form, been introduced at very short notice and without proper consideration. It is difficult to see how it could work in practice without creating legislative deadlock. (Imagine a future Labour government, elected on a platform of Health and Education reforms, with an absolute parliamentary majority but a minority of English seats. It would be unable to implement its manifesto commitments, or indeed to pass any legislation at all in these areas, without opposition support.)
  • However the ‘English votes’ gambit has set an effective electoral trap for Labour: opposition will appear self-interested and anti-democratic, and will suggest that Mr Miliband is not confident it can win a majority of English seats in 2015.
  • The government’s timetable for implementing any of these proposals is extremely tight. It is difficult to see how measures put before the Commons in January can be passed into law before Parliament rises for the general election at the end of March, especially if the Lords are uncooperative.

A year ago, The Constitution Society argued that, if Scotland voted ‘No’ in the referendum, a Constitutional Convention should be held to agree proposals for devolved government in the UK as a whole. The long-term future of the Union cannot be satisfactorily settled by the normal processes of electoral politics. Mature reflection is required, in a forum which includes citizens who are not professional politicians. Alan Renwickhas argued that the most appropriate model is the Irish Constitutional Convention of 2012, where members of the public sat alongside representatives of the political parties.

Within the past few days, Labour has taken up the idea of a UK Constitutional Convention, to be held in the autumn of 2015. Inevitably, the government will paint this as a cynical expedient intended to postpone Labour’s day of reckoning on the ‘English votes’ question. That is a matter for regret: for all the Westminster parties, a Constitutional Convention now looks like the safest way out of the constitutional shambles which their leaders have created.

http://blogs.lse.ac.uk/politicsandpolicy/the-referendum-and-after-how-not-to-change-the-constitution/

‘Poverty Porn’ undermines the welfare state

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‘At their annual conference, the Conservatives announced that if elected next year they plan to issue those on benefits with pre-paid cards for food so they don’t ‘waste it’ on items such as cigarettes or alcohol. This is the latest in a long line of measures which suggest that current welfare reform is based upon the notion that people in poverty are to blame for their circumstances, write Dan Silver and Kim Allen.

The UK is in the grip of what seems like permanent austerity. Political parties strive to be seen as the most qualified to make the “tough long-term economic decisions.” Only this week we have heard George Osborne, Iain Duncan Smith and David Cameron announce plans at the Conservative Party conference for even tougher and more punitive welfare sanctions in an attempt to cut the deficit. But these so-called ‘tough’ decisions most often seem to be about punishing people in poverty, and never about clamping down on tax evasion of the wealthy.

Welfare reform is creating increased hardship within local communities; in Greater Manchester alone, 4,500 people have been sanctioned and have had their benefits frozen or completely stopped. Foodbank use is soaring – with an estimated 500,000 people in the UK being forced to use them last year. This week the Conservative Party announced that, if elected next year, they plan to issue those on benefits with pre-paid cards for food so they don’t ‘waste it’ on items such as cigarettes or alcohol.

This is the latest in a long line of measures which suggest that current welfare reform is based upon the notion that people in poverty are to blame for their circumstances. They are seen as part of a feckless and irresponsible underclass – who are who are unwilling to ‘help themselves’ out of poverty, happy to live a life on benefits.

Tom Slater argues that public consent for these reforms is gathered in part through a ‘production of ignorance’ which focuses attention on the behaviour of people in poverty, while neglecting to mention structural inequalities, such as the existence of a precarious jobs market that leaves people cycling in and out of low-paid work.

On the 6th of November we will be holding an event in Manchester as part of the ESRC Festival of Social Science which will examine some of these ideas by bringing together local communities, social science researchers, activists, journalists and policymakers to consider what role the recent swathe of television programmes such as Channel 4’s Benefits Street – often referred to as ‘poverty porn’ – have in shaping policy and public attitudes to welfare.

The programme has been cited by politicians as revealing the ‘the hidden reality’ of the lives of people ‘trapped’ on state-benefits, and presented as further ‘evidence’ of the need for welfare reform. For example – earlier this year Conservative MP Philip Davies stated:

“Every time people look at White Dee … it will serve as a reminder to people of the mess the benefits system is in and how badly Iain Duncan Smith’s reforms are needed. White Dee is bone idle and doesn’t want to work another day in her life and has no intention of finding a job. She expects the taxpayer to fund her life on benefits”

The realities of these depictions of life in poverty are questionable. Take People Like Us a 2013 BBC production which was advertised as depicting “real life” on a housing estate in Harpurhey, North Manchester. Far from real life, a woman who took part in the Open Society Foundation’s research in a nearby neighbourhood said: “It’s nothing like us round here. I don’t know anyone like that to be honest with you. So in that way the media is a bad thing because it’s made to look as if nobody wants to work and they get drunk all day.” Local resident Richard Searle, due to speak on November 6th, has described it as “Jeremy Kyle-style, laugh- at-the-chavs type of television.”

With such a contrast between the thoughts of communities portrayed, and politicians seeking to justify policies through these programmes, clearly this is an issue for debate.

Note: This article gives the views of the author, and not the position of the British Politics and Policy blog, nor of the London School of Economics.

About the Author Dan Silver is co-Director of the Social Action & Research Foundation . Kim Allen is Research Fellow in the Education and Social Research Institute at the Manchester Metropolitan University.

It’s socialism for the rich and capitalism for the rest of us in Britain

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Owen Jones

Who are the real scroungers? Free-marketeers decry ‘big government’ yet the City and big business benefit hugely from the state – from bailouts to the billions made from privatisation. Socialism does exist in Britain – but only for the rich

Socialism lives in Britain, but only for the rich: the rules of capitalism are for the rest of us. The ideology of the modern establishment, of course, abhors the state. The state is framed as an obstacle to innovation, a destroyer of initiative, a block that needs to be chipped away to allow free enterprise to flourish. “I think that smaller-scale governments, more freedom for business to exist and to operate – that is the right kind of direction for me,” says Simon Walker, the head of the Institute of Directors. For him, the state should be stripped to a “residual government functioning of maintaining law and order, enforcing contracts”. Mainstream politicians don’t generally talk in such stark terms, but when the deputy prime minister Nick Clegg demands “a liberal alternative to the discredited politics of big government”, the echo is evident.

And yet, when the financial system went into meltdown in 2008, it was not expected to stand on its own two feet, or to pull itself up by its bootstraps. Instead, it was saved by the state, becoming Britain’s most lavished benefit claimant. More than £1tn of public money was poured into the banks following the financial collapse. The emergency package came with few government-imposed conditions and with little calling to account. “The urge to punish all bankers has gone far enough,” declared a piece in the Financial Times just six months after the crisis began. But if there was ever such an “urge” on the part of government, it was never acted on. In 2012, 2,714 British bankers were paid more than €1m – 12 times as many as any other EU country. When the EU unveiled proposals in 2012 to limit bonuses to either one or two years’ salary with the say-so of shareholders, there was fury in the City. Luckily, their friends in high office were there to rescue their bonuses: at the British taxpayers’ expense, the Treasury took to the European Court to challenge the proposals. The entire British government demonstrated, not for the first time, that it was one giant lobbying operation for the City of London. Between 2011 and 2013, bank lending fell in more than 80% of Britain’s 120 postcode areas, helping to stifle economic recovery. Banks may have been enjoyed state aid on an unprecedented scale, but their bad behaviour just got worse – and yet they suffered no retribution.
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Contrast this with the fate of the unemployed, including those thrown out of work as a result of the actions of bailed-out bankers. In the austerity programme that followed the financial crisis, state support for those at the bottom of society has been eroded. The support that remains is given withstringent conditions attached. “Benefit sanctions” are temporary suspensions of benefits, often for the most spurious or arbitrary reasons. According to the government’s figures, 860,000 benefit claimants were sanctioned between June 2012 and June 2013, a jump of 360,000 from a year earlier. According to the Trussell Trust, the biggest single provider of food banks, more than half of recipients were dependent on handouts owing to cuts or sanctions to their benefits.

Glyn, a former gas fitter from Manchester, was sanctioned three weeks before Christmas 2013, and received no money. He had missed a signing-on day because he was completing a job search at Seetec, one of the government’s corporate welfare-to-work clients. Then there’s Sandra, a disabled Glaswegian who lives with her daughter. She was sent a form asking to declare whether she lived with someone; assuming it meant a partner, she said no, and was called in to a “compliance interview”. Because her daughter was not in full-time education, Sandra was stripped of her entitlement to her £50 per week severe-disability allowance. While the financial elite could depend on the state to swoop to their rescue, those who suffered because of their greed felt the chill winds of laissez-faire. Socialism for the rich: sink-or-swim capitalism – and food banks – for the poor.

Socialism for the rich manifests itself in a variety of ways. In 2004, corporations were posting record profits, and yet their workers’ wages had begun to stagnate or – in the case of those in the bottom third of the income scale – had started to decline. To ensure that these underpaid workers have an adequate standard of living, they receive tax credits “topping up” their take-home pay – subsidised, of course, by the taxpayer. In 2009–10, for example, the government spent £27.3bn on such tax credits. Between 2003–4 and 2010–11, a whopping £176.64bn was spent on them. Now, millions of working people who would otherwise be languishing in abject poverty depend on these tax credits. But that does not detract from the fact that tax credits are, in effect, a subsidy to bosses for low pay. Employers hire workers without paying them a sum of money that allows them to live adequately, leaving the state to provide for their underpaid workforce.

The same principle applies to the £24bn spent on housing benefit. In 2002, 100,000 private renters in London were forced to claim housing benefit in order to pay the rent; by the end of the New Labour era, rising rents had increased the number to 250,000. On the one hand, this was the symptom of the failure of successive governments to provide affordable council housing. With tenants instead driven into the more expensive private rented sector, housing benefit acts as a subsidy for the higher rents of private landlords. But housing benefit is another subsidy for low wages, too. According to a study by the Building and Social Housing Foundation in 2012, more than nine in every 10 new housing-benefit claims in the first two years of the coalition government went not to the unemployed but to working households. Many of these claimants are workers whose pay is so low that they simply cannot afford the often extortionate rents being charged by private landlords. As well as individual private landlords, companies providing private housing were being subsidised by housing benefit, in some cases receiving more than a million pounds of taxpayers’ money each year, such as Grainger Residential Management and Caridon Property.

One such private landlord is Conservative MP Richard Benyon, one of Britain’s wealthiest parliamentarians whose family is worth around £110m. Despite having condemned spending on social security for “rising inexorably and unaffordably”, and having applauded the government for “reforming Labour’s ‘something for nothing’ welfare culture”, Benyon benefits from £120,000 a year through housing benefit collected from his tenants. Another vigorous supporter of cuts to the welfare state was Tory MP Richard Drax, whose estate received a substantial £13,830 housing benefit in 2013. They are both wealthy benefit claimants who advocate slashing state support for the poor.

Much of Britain’s public sector has now become a funding stream for profiteering companies. According to the National Audit Office (NAO), around half of the £187bn spent by the public sector on goods and services now goes on private contractors. One such company was Atos, first hired in 2005 by the then Labour government to carry out work-capability assessments. Its contract was renewed by the coalition in November 2010, now with far greater responsibilities as the government launched a sweeping programme of so-called “welfare reform”. This five-year contract was worth £500m, or £100m of public money every year. In 2012 the NAO condemned the government contract with Atos for failing to offer value for money. Atos had not “routinely met all the service standards specified in the contract”, the report declared; its record on meeting targets was “poor”; the government had failed to seek “adequate financial redress for underperformance”; and the “management of the contract lacked sufficient rigour”.

Disabled people who needed support were having their support stripped away by Atos. In one three-month period in 2012, 42% of appeals against Atos judgments were successful; but it is a process that is expensive for the taxpayer and often traumatic for the claimant. In the harsh benefit-bashing climate of austerity Britain, disability charities reported that “scrounger” rhetoric had provoked a surge in abuse towards disabled people on the streets. But the behaviour of state-funded private contractors such as Atos must surely raise the question of who the real scroungers are. It was not until April 2014 that Atos was forced to abandon the contract because of the growing backlash, but not until they had pocketed large sums of public money.

This hiving off of core state functions – in this case, assessing support for some of the most vulnerable people in society – to private companies who exchange public money for a poor service is a striking feature of the modern establishment. Another such business is A4e, a welfare-to-work company dogged by controversy over poor performance. As one former A4e contractor suggested to me, A4e was running a “farming exercise”, cherry-picking easy cases and leaving the rest in the “field”. Its former chairman Emma Harrison paid herself £8.6m in dividends, all courtesy of the taxpayer. In February, four former A4e employees admitted committing acts of fraud and forgery after charging the state for working for clients that did not even exist.

In 2012, £4bn of taxpayers’ money was shovelled into the accounts of the biggest private contractors: Serco, G4S, Atos and Capita. It led to a damning assessment from the NAO, which Margaret Hodge, chair of the Public Accounts Committee, summed up: this outsourcing, she concluded, had created “quasi-monopolies”, the “inhibiting of whistleblowers”, the trapping of taxpayers into lengthy contracts, and a “number of contracts that are not subject to proper competition”. G4S had been contracted to provide security personnel for the 2012 Olympics; when it failed to provide them, the state – predictably – had to step in, mobilising 3,500 soldiers and leading even the then minister of defence, Philip Hammond, publicly to question his previously unwavering commitment to private sector provision of state functions. At the end of 2013, the Serious Fraud Office launched an investigation into Serco and G4S, after they allegedly overcharged the taxpayer tens of millions of pounds for the electronic tagging of clients, charging for clients who had left the country or were even dead. Many of these private contractors, such as Atos and G4S, pay little or no corporation tax, even as they benefit from state munificence.
Rail Owen Jones ‘Privatisation of rail was a form of socialism for the rich.’ Photograph: Velar Grant/Demotix/Corbis

Privatisation of rail was a form of socialism for the rich that became particularly notorious. According to a report by the Centre for Research on Socio-Cultural Change, state spending on the privatised railways was six times higher than it was in the dying days of British Rail. And yet under the privatised system, rolling stock was replaced less frequently, there was not enough carriage space to accommodate rising numbers of rail passengers, and ticket prices were the highest in Europe. As the report put it, technological innovation and improvement were powered or underwritten by the state. The taxpayer shouldered the risk, while profit was privatised: or “heads they win and tails we lose”.

Big business is dependent on the state in a multitude of other ways. An expensive law-and-order system defends its property. The privatisation of Royal Mail ensured that the state kept the pension liabilities – nationalising the debt, privatising the profit. The business elite benefits from around £10bn spent on research and development by the British state each year: and innovations from the internet to the technology behind the iPhone originate from public sector research, as Mariana Mazzucato uncovered in The Entrepreneurial State. Big business relies on extensive spending on infrastructure: in 2012, the Confederation of British Industry suggested savings from cuts to benefits – raids on the pockets of the working and non-working poor – could be used to invest in the road network. And the state educates the workforce of big business at vast expense.
Royal Mail Owen Jones ‘The privatisation of Royal Mail ensured that the state kept the pension liabilities.’ Photograph: Matthew Lloyd/Getty Images

With big business benefiting from so much state largesse, you might expect gratitude in the form of the glad payment of taxes. After all, this socialism for the rich is not cheap. A common figure bandied around by defenders of Britain’s wealthy elite is that the top 1% of earners pay a third of all income tax, conveniently ignoring the fact that only a quarter of government revenue comes from income tax, with much of the rest coming from national insurance and indirect taxes paid by the population as a whole. But tax avoidance is rampant among much of the corporate and wealthy elite that benefits so much from state handouts. While the law cracks down on the misdemeanours of the poor, it allows, even facilitates, the far more destructive behaviour of the rich. Compare the billions lost through tax avoidance to the £1.2bn lost through benefit fraud, an issue that remains the news fodder of choice for the rightwing press.

The manner in which this happens shows who the state exists to serve. The Big Four accountancy firms – EY, Deloitte, KPMG and PricewaterhouseCoopers (PwC) – have been slammed for their role in tax avoidance. But their response is instructive. “We don’t ever condone tax avoidance or support tax avoidance,” pledges EY’s Steve Varley. “Fundamentally, parliament has to legislate what parliament wants to happen … And people like us can follow the legislation and provide advice to our clients.”

But what Varley conveniently fails to mention is that firms such as EY help design the law in the first place, and then go off and help advise their clients on how to get around it. “We have seen what look like cases of poacher, turned gamekeeper, turned poacher again,” declared the Public Accounts Committee in April 2013, “whereby individuals who advise government go back to their firms and advise their clients on how they can use those laws to reduce the amount of tax they pay.” This is an astonishing finding. Senior MPs have concluded that accountants were not simply offering governments their expertise: they were advising governments on tax law, and then telling their clients how to get around the laws they had themselves helped to draw up.

When it comes to rhetoric, the modern establishment passionately rejects statism. The advocates of state interventionism are dismissed as dinosaurs who should hop in a time machine and return to the discredited 1970s. And yet state interventionism is rampant in modern Britain: but it exists to benefit the rich. No other phenomenon sums up more starkly how unjust modern Britain is. Social security for the poor is shredded, stripped away, made ever more conditional. But welfare for large corporations and wealthy individuals is doled out like never before. The question is not just whether such an establishment is unjust: the question is whether it is sustainable.

• Owen Jones’s The Establishment: And How They Get Away With It is published by Allen Lane this week.