Wednesday, August 16, 2006

Dirty Rotten Business

Public service ethos

A few weeks ago we blogged the outrageous case of DCMS quango Visit Britain, which is using £8m of taxpayers' money to set up in competition against existing businesses in the UK holiday lettings market. A shocking abuse of power which jeopardises one of Tyler's favourite holiday companies.

But of course, Visit Britain is not alone. All over the country government departments and quangos are competing unfairly against private businesses- ie those guys that create the wealth we all live off. And they do so using business practices that would simply not be tolerated in the private sector, including predatory pricing and wholesale theft of intellectual property rights.

The biggest and baddest is the BBC. Its £3bn pa tax subsidy keeps it immune from the market pressures bearing down ever more acutely on its commercial rivals. Not only does it undercut competitors by supplying its product "free", but it also has the funds to expand aggressively into new markets, both overseas and in the new digital media. It routinely outbids all-comers for those "stars", and it routinely rips off programme ideas from all and sundry. No wonder Murdoch is spitting blood (or whatever that stuff he has flowing through his veins is).

Another equally appalling but less well known example is the £0.5bn pa British Council headed by my Lord Kinnockio (see previous BC blogs here and here). David Blackie's excellent blog The Language Business gives chapter and verse on exactly how the BC competes against private sector providers in language training. He quotes a recent Economist article:

“Should tax-favoured charities bid against profit-making firms? The British Council , for example – a quango, and charity, that represents British cultural interests abroad – charges for English language tuition. A recent report for the Foreign Office said that the Council’s business activities required constant monitoring lest they annoy both private providers and foreign tax authorities.”

David- whose own business has been savaged by BC's intellectual piracy- comments:

"I am an annoyed private provider. I am annoyed that the British Council cannot be trusted to keep its subsidised hands off genuine private enterprise, including enterprise that it undertakes to support. I am annoyed that the organisation is completely unaccountable in respect of its commercial activities. I am annoyed that we pay taxes in order that the organisation and its employees should get a subsidy of over half a million pounds a day, plus tax exemptions, early retirement and civil service pensions. I am annoyed that it makes a virtue of promoting British educational institutions, but that it needs to be paid large amounts to do this when all British taxpayers are paying for it anyway. I am annoyed that this shifty, self-serving, self-righteous and parasitical organisation rides roughshod over genuine tax-paying British enterprise and gets away with it."

There's little we can add to that. Other than wishing more power to the Blackie elbow.

Update- see here for another similar situation: the Department of Constitutional Affairs' Statute Law database, which has been in development since 1991 costing taxpayers an unknown amount, and whose contents are being withheld from a private sector information provider who wished to make them accessible to a wider public.


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