The cost of things


Contrary to the impression given by newspapers, corporate fraud and defence spending cost us far more than dole cheats...

The annual cost of welfare in Britain is about £100 billion. The tabloid media blame this high cost on the "workshy", but most of it goes on pensions:

Annual cost (£ billions)
• Job Seekers Allowance: 2.3
• Housing benefit: 4.1
• Income Support: 6.5
• Child benefit: 8.8
• Benefits for disabled: 10.8
• Contribution-based pensions: 42.1

(Smaller costs include winter fuel payments for the elderly, at £1.7bn, etc. Source: Department for Work and Pensions, 2003)

When it comes to swindling, "dole cheats" aren't the biggest drain on the UK economy:

Estimated annual cost (£ billions):
• Corporate tax avoidance: 85
• Business fraud: 14
• Government fraud in Whitehall: 5
• Tobacco smuggling: 3.5
• VAT fraud on mobile phones: 2.5
• Total welfare fraud: 2
• Jobseekers Allowance fraud: 0.19
• Bulldozer smuggling: 0.15

(Sources, respectively: Guardian, 12/4/02; BBC Radio 4, 'Today', 23/8/01; BBC Radio 4 News, 1996; Guardian 17/12/99; BBC Radio 4, 'Today', 3/7/03; DWP, 2003; The Informal Economy, by Lord Grabiner, March 2000; Guardian, 25/8/01)

"A billion here, a billion there – sooner or later it adds up to real money" (Everett Dirksen)

The biggest "welfare leeches" are corporations. British businesses receive billions in handouts from the Department for Trade and Industry – the DTI is basically a corporate dole office. One of its many grants – Regional Selective Assistance – pays companies millions to "safeguard jobs". Nearly 1 in 8 companies receiving this grant are paid more than once, which according to the National Audit Office contradicts the aim of "helping firms become self-sustaining". It sounds like welfare dependency.

Meanwhile, America spends $175 billion per year on corporate welfare. Much of it takes the form of tax breaks – slashing the tax bills of successful companies by billions:

Corporate tax welfare 1996-2000 (US$ billions)
• Microsoft: 12
• General Electric: 12
• Ford: 9.1
• Worldcom: 5.3
• IBM: 4.7
• General Motors: 3.6
• Enron: 1

(Source: Citizens for Tax Justice)

Corporate dole is also used to bail out business failures. Examples include: (in Britain) the £46 billion of public money required to clean up the nuclear industry; (in America) the $15 billion bailout of airlines and the Savings and Loan scandal which is likely to cost US taxpayers over $1 trillion. According to Gore Vidal, the ongoing S&L bailout will cost more than the whole of US spending on social welfare from 1789 to the present. (Source: Vidal, On the State of the Union, 1994.)

The US government plans to spend $2.7 trillion ($2,700,000,000,000) on the military over the next six years. Britain is a long way behind, but still one of the five biggest military spenders:

Annual military budget (US$ billions)
• USA: 399
• Russia: 65
• China: 47
• Japan: 42
• UK: 38
• France: 29

Fighter jet development is one of the biggest "defence" costs. For example, America's F-22 cost $63 billion. The Eurofighter (a UK/European project) cost £50 billion (£30bn over budget and a decade overdue - some experts say it's already obsolete) – the cost to UK taxpayers was £20 billion, approximately £1,000 per household.

(Sources: Center for Defense Information, Eurofighter, BBC2, 11/11/03).

A long-running research project, What the World Wants, used databases of world resource and crisis information to calculate the costs of solving global problems. It found the total cost of tackling all the big problems equal to 30% of the world's total annual military expenditures ($780 billion). Here are some of the annual costs for "putting things right" (Source: Operating System Earth,, 1996):

• End homelessness: $21 billion
(Equivalent to the amount spent by the US on golf every 16 months)

• Eliminate starvation: $19 billion
(55% of what the US spends on weight loss per year)

• Stop global warming/ozone depletion: $13 billion
(27% of total insurance pay-outs for 1990s weather-related damage)

• Provide birth control: $10.5 billion
(1.3% of the world's annual military expenditures)

• Eliminate illiteracy: $5 billion
(20% of the amount of arms sales to developing countries)

"According to some estimates we cannot track $2.3 trillion in transactions." (Donald Rumsfeld, quoted on CBS News, 29/1/02)

Rumsfeld admitted that the Pentagon misplaced $2.3 trillion. This money has disappeared – nobody knows where it's gone. Government officials have blamed the accounting systems – the US Department of Defense has failed to produce independently audited accounts since 1995. $2.3 trillion would cover Britain's Jobseekers Allowance budget for 560 years. (Source: CBS News – see for a list of links.)

Article by Media Hell's Brian Dean – originally printed in the Idler, issue 33, Spring 2004