Government bailouts: put people and planet first

Globally, COVID-19 has turned how our society works upside down, with massive impacts on health, jobs and how we live our lives. More and more people across the world are in financial and physical danger. As Rachel Kennerley explains, our government must make difficult decisions to help us recover both from the pandemic and from the climate crisis that we’re facing as well.
  Published:  06 May 2020    |      4 minute read

The pandemic has enormous economic consequences, and the UK government is considering bailing out companies – some of which are extraordinarily wealthy and polluting. If the government is spending billions of pounds of taxpayers' money, it must go to protecting people and the planet, not propping up dirty industries and their rich shareholders.

Whether it's companies flying planes, burning oil and gas or producing unnecessary plastics, polluting companies shouldn’t be bailed out unconditionally. The workers in these high-carbon industries worldwide need to be supported, with redeployment into low-carbon industries, training and re-skilling and a guaranteed basic income. No one should be left behind as we move to a global low-carbon economy.

Public money should be used for the public good – that means prioritising people and workers in need, prioritising low-carbon companies and making sure polluters are paying their fair share, and forging a path to a fair, sustainable future. We need to build back better, not return to normal.

1. Prioritise people

While anyone can be infected by coronavirus, the impact of the pandemic is not the same for everyone. The people who are already worst off and who society currently least supports are the ones most impacted by the consequences of the pandemic.

The same can be said of the companies and industries that are now begging for bailouts. It’s the workers who are at risk of unemployment, worsening conditions and contracting COVID-19. And yet, unconditional handouts could line the pockets of the multimillionaire top brass and shareholders.

As travel came to a standstill, airline Easyjet rapidly applied to the government for a bailout and was awarded £600 million of taxpayers' money. But behind the scenes, Easyjet bosses were taking advantage of the disruption to rewrite staff contracts. Revisions include changing work patterns and removing the provision of food to staff during flights, both of which could have consequences for staff safety and fatigue.

Oil and gas companies have also been accused of putting workers and local communities at risk during the pandemic. In Mozambique, gas companies at first refused to shut down or even slow their drilling. The shocking consequence of this is that the gas industry is responsible for two thirds of Mozambique’s COVID-19 cases.

Any bailouts should be used to support workers whose lives and livelihoods are at stake, not to further enrich wealthy shareholders and owners who’ve polluted the planet for personal gain.

2. Protect the climate

It's hard to overestimate the role that coal, oil and gas companies have had in driving climate breakdown. Just 100 of these companies have produced 70% of climate-wrecking emissions since 1988. Aviation companies aren't far behind.

Any bailouts for polluting companies need to be conditional on them prioritising climate over profit. These dirty companies must reduce their emissions in line with the Paris Agreement to keep global warming below 1.5 degrees C.

The UK currently supports polluting companies to the tune of millions, both at home and overseas.

  • The UK funds dirty projects internationally from its aid budget, which is meant to be used for poverty reduction.
  • It also funds international projects from UK Export Finance, which aims to support UK businesses. Between 2010 and 2017, 97% of UK Export Finance energy spending went to fossil fuel development, principally oil and gas exploration. The UK government is currently considering supporting UK gas companies to drill in Mozambique, which will release massive amounts of climate-wrecking emissions and do little for energy access in the country, as the majority of the gas is earmarked for Europe and China.
  • The government supports oil and gas companies with tax breaks and beneficial regulation, such as the government’s Maximising Economic Recovery Strategy, which ensures the UK supports oil and gas extraction from the North Sea.

The UK spends public money on making climate breakdown worse. Now these companies have come begging for more taxpayers' money to keep polluting in order to profit. If we don’t get this right, the companies most responsible for the climate crisis and environmental destruction will continue their polluting ways once the pandemic is over.

3. Pay a fair share

As well as prioritising profits over people and the planet, many corporate polluters haven’t been paying their tax.

For example, Richard Branson’s Virgin Atlantic has lobbied the UK government for a £500 million bail out, while its billionaire owner hasn’t paid tax to the UK since he moved to a tax haven 14 years ago. What’s even more galling at this time is that Branson’s Virgin Healthcare has been given NHS and local authority contracts worth £2 billion, while not paying tax in the UK.

The UK government could be using tax to generate public money from polluting industries, but instead it's supporting fossil fuel extraction with tax breaks, which give them an unfair advantage over greener energy companies. The Petroleum Revenue Tax is designed to generate public money from oil. But since 2016 the government has exempted companies from paying this tax, so bizarrely it doesn't generate any revenue from petroleum. Tax exemptions for aviation companies give them a similar advantage over lower-emission modes of transport.

Ordinary people pay their taxes, so corporate polluters should too. The government must remove unfair tax advantages and exemptions that give high-carbon industries an advantage over cleaner, greener ones.

Taxpayers deserve a say in what their future looks like. Any bailouts should be used to put the power back in the hands of the people. And back in the hands of the communities across this country who have stepped up in this crisis. 

It’s time to create a fairer, greener society for everyone.