Concierge Capitalism: The Conservative Free Market Myth

Concierge CapitalismThe Conservative Free Market Myth

In politics and economics, the Conservative Party has rigged the system in favour of an entrenched elite, contends Sam Bright

The starting gun has sounded on the Conservative leadership election, with a flock of candidates each attempting to win favour among their colleagues by summoning the spirit of Nigel Farage and Margaret Thatcher.

The culture war has found new oxygen – borrowing from the American alt-right – with a collective vilification campaign waged against trans people and their ‘woke’ allies. Farage’s acolytes Arron Banks and Andy Wigmore recruited vast numbers of members to the 2019 Conservative leadership contest via their Leave.EU operation – turning the party into a bully pulpit for populism.

On an economic front, meanwhile, the candidates have been promising a return to libertarian principles – collectively pledging more than £200 billion in tax cuts, worth more than double the annual NHS budget. Sajid Javid, who was Health and Social Care Secretary until last week, has even pledged to scrap the National Insurance rise designed to fund additional (and much needed) health and social care spending.

The political rationale is that Tory MPs are clamouring for authentically Conservative values on economics – eschewing Boris Johnson’s ‘boosterism’, involving relatively high levels of taxation and infrastructure spending, in favour of a renewed age of small-state Thatcherism.

The economic rationale is that, liberated from the burdens of taxation and government interference, private companies and individuals will have more resources to innovate and invest – engendering economic competition, growth, and higher productivity.

As Margaret Thatcher wrote in an article for the Telegraph in May 1978, a year before she was elected Prime Minister: “the free market is the only safe way of ensuring that productive effort is directed towards supplying what individuals actually want, and in a way which secures the dignity and independence of the worker.”

However, big rhetoric aside, the modern Conservative Party does not believe in a truly free market, and has manufactured an economic model based on monopolistic corporate control, cronyism and vulture capitalism.

Take the Johnson Government’s response to the Coronavirus pandemic. The UK needed to urgently procure supplies: personal protective equipment (PPE), testing kits and the likes. Rather than grappling with the problem early – by listening to existing suppliers, who were warning of upcoming shortages as early as December 2019 – the Government dithered, delayed, and then panicked.

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Yet its fallback plan was not corporate competition. Rather, ministers and their advisors reached for their phonebooks, scrapping the requirement for competitive procurement procedures and instead commissioning firms with personal ties to the regime.

At least £3 billion in COVID contracts were awarded to firms run by Conservative donors or close associates. Roughly 30% of PPE contracts (worth some £4 billion) were awarded through the notorious ‘VIP lane’ which expedited the bids of firms with links to ministers, advisors and MPs. This included one firm owned by a close ally of Michael Gove, that won PPE deals worth some £170 million.

In the months following the emergence of COVID-19, the Government awarded around £18 billion of contracts using emergency procurement regulations, which ditched competitive tender requirements.

The Government’s choice of private sector suppliers was devised in a private members’ forum; the rigged market superseding the free market.

This has also been the case in the Government’s appointment of public officials. The ‘Test and Trace’ system was run by Conservative life peer Dido Harding, wife of Conservative MP John Penrose. Meanwhile, Harding’s boss, Matt Hancock, resigned as Health and Social Care Secretary after being caught in an intimate moment with Gina Colangelo – an old university friend appointed as a non-executive director in his department with a £15,000-a-year salary.

It has been calculated that at least 16 individuals with close ties to the Conservative Party have been given lucrative non-executive jobs in key Whitehall departments. And while Boris Johnson appointed his friend Evgeny Lebedev to the House of Lords – contravening intelligence advice – the party’s biggest donors have invariably found their way into the upper house, with more than half receiving an honour or a peerage.

COVID aside, there is little genuine competition for big government contracts – the market dominated by billion-pound outsourcing firms that, despite repeated controversies, have captured chunks of the state.

Take Serco, for example, that has won the largest ever private sector contract from the Government – worth a whopping £1.9 billion – to manage more than 5,000 properties housing asylum seekers. The firm has a history of controversies in respect to its management of asylum accommodation, prompting a Government investigation into the behaviour of Serco guards in Yarl’s Wood detention centre – accused of degrading asylum seekers and of sexual harassment.

The firm has also been in hot water with the Serious Fraud Office (SFO) in recent years, and in July 2019 Serco took “responsibility for three offences of fraud and two of false accounting arising from a scheme to dishonestly mislead the Ministry of Justice”.

Despite these concerns, Serco is one of only five companies to have won £5.8 billion worth of contracts since 2010 to run asylum and migrant services.

Deloitte – one of the ‘big four’ accounting firms – practically acted as a surrogate for the civil service during much of the pandemic, being paid £2 million a-day to supply 2,000 consultants for the Test and Trace programme. In the year following the onset of the pandemic, contracts worth £510 million were awarded to 35 management consultancies, including £330 million awarded to Deloitte.

These accountancy firms have their own histories of wrongdoing, with Deloitte fined £20.6 million, £1.8 million, £362,500 and £16,270 in 2020 for violations related to “accounting fraud or deficiencies”.

Johnson’s addiction to these corporate climbers is long-standing, with millions disappearing into the pockets of consultants before his notorious Garden Bridge project was scrapped, while he was London Mayor.

Yet, as described by Aeron Davis in ‘Reckless Opportunists’, the big four consultancy giants “are also present at all the main political party annual conferences and make financial contributions to each of them too… They have become simply too big and too connected to discipline.”

A False God

Such is the form of capitalism engendered by the Conservative Party – whereby state assets, including natural monopolies like rail and energy, have been flogged to politically savvy corporate monoliths under the vague pretence of competition.

A generous corporate taxation system – reduced from a headline rate of 28% in 2010 to 19% today – combined with a laissez faire approach to legal tax avoidance, aided by London’s offshore service economy, has assisted the creation of commercial empires. The rise of the gig economy, and the Conservative Party’s unwillingness to institute protections for insecure workers, hike wages or curb the inflation of rents, has allowed these corporate giants to exploit the individual to pad their bottom line.

This is a form of concierge capitalism: using state power to tip the economic scales in favour of the entrenched elite, and awarding access to state contracts on the basis of inside knowledge and connections.

These principles violate the free market ideals preached by the Conservative leadership candidates, and actively guard against open competition on the basis of merit.

This is embedded in the architecture of the Conservative Party – with its reliance on big money donors, and its penchant for appointing Old Etonian prime ministers (graduates of the £45,000-a-year school have governed for 10 of the last 12 years).

Ben Elliot (also an Old Etonian), the chair of the Conservative Party, himself is the co-founder of Quintessentially – a concierge company for the super rich, offering everything from travel advice to real estate consultancy and personal shopping. Elliot, who is the nephew of Camilla, Duchess of Cornwall, has previously been accused of offering access to Prince Charles in exchange for a lucrative Quintessentially membership.

In the same way that professional and political success is reserved to those who attended elite schools, while successive governments have lauded the doctrine of social mobility, so too is our economy rigged in favour of the already rich and powerful – while prospective prime ministers bow before the false god of the free market.