Nothing will change until the political system is freed from the clutches of corporations and the super-rich

The law is being used to enforce existing power structures for the benefit of the few

Prem Sikka is an Emeritus Professor of Accounting at the University of Essex and the University of Sheffield, a Labour member of the House of Lords, and Contributing Editor at Left Foot Forward.

We are all brought up to value ‘the rule of law’ as it provides stability, predictability, accountability and protection of human and property rights. We are frequently told that no one is above the law and all persons have access to courts. However, all is not well.

The traditional explanations of ‘the rule of law’ assume that the state is an umpire who receives inputs from citizens. These are processed and the output is laws. This is silent on how class, money, bribery, corruption, power shapes laws, or even prevents issues from being considered. The law is being used to enforce existing power structures for the benefit of the few. Occasionally, a few crumbs are thrown to pacify the masses but these concessions and can be withdrawn, as shown by the government’s push to cut disability benefits.

It is hard to recall any public petitions, marches or protests demanding unchecked profiteering, austerity, poverty, poor housing, homelessness, low wages and pensions, long queues for hospital appointments, sewage in rivers, cuts in education spending, gender pay gap, or closure of thousands of libraries and community centres. These are imposed because the rich and powerful demand laws to protect their wealth. The poorest 20% pay a higher proportion of their income in taxes than the richest 20%. Corporations and the rich fund political parties, hand consultancies to legislators and control means of production to colonise the legal system. The countervailing power of the low and middle class income households is weak, trade unions have been emasculated and protests are made difficult. For example, the Police, Crime, Sentencing and Courts Act 2022 empowers the police to ban noisy protests, and radicalism amongst the young has been squeezed out by £267bn of student debt.

Governments amplify the agenda of corporations and the rich. They tell workers that wage rises are inflationary but remain silent on ever increasing executive pay, dividends and share buybacks. Wages are taxed at marginal rates of 20% – 45% plus national insurance contributions (NIC). The returns on investment of wealth are taxed at lower rates. Capital gains are taxed at marginal rates of 18% to 32%, and no NIC is payable. Dividends are taxed at marginal rates of 8.75% to 39.35% and no NIC is levied.

Firing workers and rehiring at lower pay and inferior working conditions has become a widespread practice. P&O Ferries knowingly violated UK employment law and fired nearly 800 workers without notice and replaced them with cheaper agency workers to boost profits. No government department prosecuted the company. Delivery firm DPD has sacked drivers who criticised pay cuts. Grand Theft Auto maker Rockstar Games has been accused by a trade union of sacking staff to stop them from unionising. The Employment Rights Bill, soon to become law, will not end these practices. There is a huge inequity between the rights of workers and employers. Workers must have a ballot to withdraw labour; employers do not need one to withdraw capital and close operations. Secondary picketing is unlawful but secondary production is permitted.

Governments bend laws to transfer vast amount of wealth to corporations and their controllers. The Private Finance Initiative (PFI) is one such example. Under PFI, the government contracts with the private sector to design, build, finance and maintain long-life public assets, such as schools, hospitals, roads, prisons, office buildings bridges and tunnels. Since its inception in 1992, around £60bn of private money has gone into 700 PFI projects. In return, the government will pay £306bn. The government has revived PFI and now calls it Public-Private Partnership (PPP).

Corporate funded think-tanks, with easy access to policymakers, urge governments to cut benefits, pensions, free schools meals, education spending, and charge fees for seeing family doctors, but oppose tax rises on the rich. Such think-tanks have shaped laws to secure vast subsidies or free cash for corporations. Recipients include auto, steel, film, shipbuilding, oil, gas, biomass, semiconductor and internet companies. No equity stake is taken by the government. Full details are not published as the contracts are considered to be ‘commercially sensitive’ which prevents public and parliamentary scrutiny.

Despite public concern, laws have been enacted to privatise public services and boost corporate profits. Water, energy and other companies have skinned customers for years. Prison services are outsourced, enabling companies to make vast profits. The NHS doles out contracts to private sector cataract clinics with profit margins of 32%-43%. Local authorities spend around 61% of their budgets on social care, which is mostly controlled by the private sector. Profitability among the largest care home chains ranges from 11% to 42% of revenues. 15 largest children’s home providers made average annual profit of 23% per year. Companies providing residential care to children have pre-tax profit margins of 19%-25%. On 18th November 2024, the government said “We will crack down on care providers making excessive profit … put a limit on the profit providers can make”. A year later, nothing more has been heard. Instead, the government enacted laws to continue with the two-child benefit cap, impose disability benefit cuts and snoop on benefit claimants’ bank accounts.

Laws are enacted to make tax concessions to assets managers of private equity. The top marginal rate of tax for them will be 34.1%, instead of 45%. The NHS drugs prices could be increased by 25% to appease companies. Banks welcomed public bailouts but oppose accompanying regulation. Obedient governments have reversed the post-2008 crash laws. The cap on bankers’ bonuses has been removed. Capital adequacy requirements for banks are being watered down. The regulators’ duty of customer or public protection in almost all sectors has been diluted. Now they must balance their duty of customer protection with the goal of promoting economic growth. Chancellor Rachel Reeves sought to protect bank profits by overriding the Supreme Court hearing case against banks for mis-selling car loans. The Chancellor said that she was “considering overruling the Supreme Court’s decision with retrospective legislation, in order to help save lenders billions of pounds, in the event that it ruled in favour of consumers”. The same concern is not shown for victims of bank scandals. For example, the Financial Conduct Authority, the Serious Fraud Office and corporate-funded City of London Police have been unwilling to investigate HBOS frauds dating back to 2003. They have been content for Lloyds Bank (owner of HBOS since January 2009) to investigate. It promised a report, the Dobbs Review, in 2018. However, no report has been published, and Ministers fob-off parliamentary questions .

The poor are denied financial privacy. The Public Authorities (Fraud, Error and Recovery) Bill assumes that all recipients of universal credit; employment and support allowance; and state pension credit are likely to commit fraud. The state is taking powers to snoop on their bank accounts without any court order or right of appeal. Money for assumed frauds can be removed directly from their bank accounts. The government estimates that this will recover up to £1.5bn in the next five years.

No equivalent power is taken to monitor human traffickers, narcotics smugglers, directors of bankrupt businesses, banks selling dud products, or the tax avoidance industry. In 2023-24, HMRC failed to collect £46.8bn of taxes due to error, avoidance, evasion and fraud, which is around £500bn since 2010. The National Audit Office concluded that wealthy elites are dodging more tax than had been estimated by HMRC. In 2023-24, HMRC issued 456 penalties to wealthy individuals (individuals earning more than £200,000 a year, or with assets over £2 million, in any of the last three years) totalling £5.8 million, compared to 2,153 penalties totalling £16.2 million in 2018-19. The number of wealthy individuals prosecuted following HMRC’s criminal investigations was 30 in 2019-20, 5 in 2021-22, and 25 in 2023-24. The same benevolence is applied to accountants, lawyers, bankers and finance experts enabling tax abuse. Just five prosecutions were brought in 2023-2024, down from 16 in 2018-2019.

The low/middle income families can’t easily get legal advice or hire lawyers. Legal-aid is scarce. Even if they can cobble something together they won’t get a timely hearing. There is a backlog of 78,329 Crown Court and 361,027 Magistrates’ courts cases. The courts deliver interpretation of law, not justice. People have been in prison for over 20 years for stealing a phone. There are 8,493 ‘unreleased’ prisoners serving indeterminate sentences, often for petty crime. The law becomes blinkered when dealing with the well-off. The Post Office scandal shows that with the aid of corporations and lawyers, hundreds of innocent postmasters were convicted of fraud and forced to hand millions of pounds to the Post Office. After 26 years and despite tons of evidence, no beneficiary from the scandal has been forced to compensate the victims or charged for false criminal prosecutions. The treatment of people affected by Grenfell, Windrush, cladding, mortgage prisoners, infected blood, Hillsborough and other scandals, shows how selective the rule of law is.

Nothing will change until the political system is freed from the clutches of corporations and the super-rich.