Corporations once lobbied politicians to win approval for their pet policies – now it is the other way round. HPC Deputy Director Luke Hildyard blogs for Left Foot Forward
Political parties now operate within parameters defined by big business. In a globalised economy, democratically-elected governments are comparatively powerless to curb the excesses of multi-national companies that have grown larger than many countries.
The market value of Shell, the UK’s biggest company, is slightly higher than the GDP of Portugal.
Big business is also afforded a generous platform for its views by the UK media. Most of the newspapers through which people access political news are part of corporations controlled by super-rich individuals with their own economic interests and agendas.
These outlets provide a willing platform for the views of ‘business leaders’, who are usually posited as all-knowing economic sages whose personal interests are at one with those of wider society, rather than self-serving millionaires seeking to preserve their opulent lifestyles in the face of rising concern about inequality and social justice.
Corporations have successfully gained undue influence over the UK state through party funding, lobbying, the increased outsourcing of public services to private sector management and the colonisation of key government jobs by managers with corporate backgrounds.
In 2011, research found that more than half of the Conservative Party’s funding came from firms and individuals working in the financial services industry. Labour also receives substantial funding from City donors.
The UK has the third-largest lobbying industry in the world, behind only the US and Brussels, agitating behind closed doors on behalf of major corporations.
While the lobbyists recruit from the ranks of politicians and civil servants, an increasing number of policy-makers are hired from international private-sector consultancies and professional services firms, imbued with the political and economic orthodoxies of these organisations.
In many cases they don’t even have to formally change employer. A recent study found that, in the five UK Government departments analysed, fees paid to external consultants amounted to 40 per cent of staff costs.
As a result, corporate power can no longer be considered as merely the most powerful of a series of different lobbying interests, including charities and trade unions, but a governing institution in its own right.
It is possible to find evidence of the influence wielded by big business in almost every policy area. The IPSOS Mori issues tracker lists immigration, the NHS, the economy, unemployment, defence/foreign affairs, and poverty/inequality as the most important issues facing the UK as ranked by members of the public.
On each issue, key policies reflect the interests of corporations and conflict with the will of the public. For example, popular demand for reduction in immigration levels or measures to cut the gap between rich and poor remains unfulfilled.
At the same time, increased provision of NHS services by the private sector and the cut in the top rate of tax go ahead at the behest of big business with little public support.
Whether or not these policies are any good (many on the left have a similar position on immigration to big business, albeit for different reasons) is not the issue, so much as the power of unelected corporations to exercise huge influence in the interests of the tiny number of people who control them and the powerlessness of democratically elected politicians to do anything about it.
At the High Pay Centre we have seen this first-hand in meetings with MPs who have told us that they personally support a particular policy but couldn’t endorse it without the support of ‘business.’
Corporations once lobbied politicians to win approval for their pet policies. Now it is the other way round.
This sense of corporate impunity has enabled the pervasion of anti-politics sentiment and the rise in support for new parties on the left and right, in the UK and other parts of Europe.
Politicians’ deference to business interests in cases such as the failure to reform the banking industry, address the culture of executive pay or tackle tax avoidance – allied to an economy plagued by falling wages – helps to reinforce the impression of a self-serving establishment subject to a different set of standards to the rest of society.
Even the most timid challenge to business is subject to unrelentingly hostile attacks in the media – such as with the characterisation of Ed Miliband as ‘Red Ed’. It would be legitimate to argue that we need to bring energy companies back into public ownership and end private education.
Yet Miliband’s comparatively tame proposals to temporarily cap energy prices and scrap tax breaks for private schools are attacked in the media for being ‘anti-business’ or ‘class war’. So compiling a policy programme that might address people’s cynicism is a near impossible task.
This raises profound implications about the interests in which corporate power is exercised and the processes that make it accountable. But these questions are rarely discussed in UK public life.
A Princeton University study from earlier this year, observing the growth of corporate power in America, compared nearly 1,800 policies enacted over 20 years to opinion poll data and the stated policy position of major business groups.
The authors recorded the striking but somewhat under-reported conclusion that the US could no longer be considered a ‘majoritarian democracy’ in light of the success of big business in ensuring policy reflected its own interests, regardless of public opinion. Is the UK any different?
(This article initially appeared on Left Foot Forward. You can download our collection of essays on corporate power here)