Socialist Worker

New bill will let Tories hand millions to their mates

by Charlie Kimber
Issue No. 2762

The Tories used EU state aid rules as an excuse for not saving steel workers jobs

The Tories used EU state aid rules as an excuse for not saving steel workers' jobs (Pic: Unite Wales )


The Tories have announced a new way to shower private businesses with huge handouts from public funds.

Government officials told the BBC it was "the most important bit of post-Brexit legislation yet”.

The Subsidy Control Bill will replace the state aid rules that applied when Britain was part of the European Union (EU). Those rules require EU member states to seek approval for government assistance to firms so that there is a “level playing field” for capitalist competition.

In practice, this means a corrupt EU-wide system of favours and deals. National governments are allowed to subsidise some corporations in their own country so long as they support similar moves in other countries.

British governments often used the EU regulations as an excuse for not nationalising industries to protect jobs and workers’ wages. They said such moves would be blocked as “unfair competition”.

In 2019, for example, the Tories argued they could not nationalise British Steel because of the rules.

But the Tories’ new regime won’t be a move towards a more planned and democratic economy.

Instead, it will mean cash for the bosses that Tories favour.

Their multibillion awards to cronies and accomplices in sleaze during the pandemic will be replayed on an economy-wide basis.

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Tory business secretary Kwasi Kwarteng said, "We are seizing the opportunities of being an independent trading nation to back new and emerging British industries.”

The Labour Party and trade union leaders are also likely to demand that “good companies” are stuffed with money. They hope for a “social partnership” approach between bosses, union leaders and government.

The new law will lead to international battles between bosses. The EU fears that British companies might grab an advantage.

Challenges 

Legal challenges have already begun. Three months ago the European Commission referred Britain to the EU’s Court of Justice. The charge is that Britain has not fully recovered £80 million granted as a tax exemption to firms in Gibraltar. The EU says this broke state aid rules.

Its competition supremo said it “gave an unfair advantage to some multinational companies”.

This case relates to corporate handouts that took place before Britain left the EU.

But the lawyers can expect to be very busy in the future as the Tories make new grants and loans.

The Tories’ plan will also upset the Scottish and Welsh governments. The devolved administrations want to decide which firms benefit in their areas and prevent what they describe as a post-Brexit Westminster power grab over subsidies. 

They say control over state aid policy should have come to them after Brexit. This would enable then to favour their own favourites and show off to the EU—which they hope one day to rejoin—how responsible they can be.

But under the Tory proposals there will be a British-wide control system. The devolved administrations will be “empowered” to subsidise companies if they fit a “set of UK-wide principles”.

Neither the old EU rules nor the Tories’ new ones are in the interests of workers. The issue should not be which set of bosses are enriched—but using resources for democratic public ownership and meeting social need.


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