Nissan first invested in the UK in the early 1980s following protracted negotiations over the deal it could extract from the British government. Declassified memos from the Thatcher administration paint a picture of a company of skilled negotiators on the one hand, and a government desperate to win much-needed investment to prop-up its ailing automotive industry on the other. The original deal between Nissan and the UK was worth £124 million in 1984 (equal to more than £380m in 2017) made up of regional development grants, selective financial assistance, and heavily discounted land. Fast forward 30 years and Nissan has amassed £800m in corporate welfare. Yet, despite this generosity of the British taxpayer and the dedication of the Sunderland workforce, Nissan is using Brexit as leverage to extract even more from British taxpayers.
Our company report on Nissan UK draws on public statements from Nissan executives, transcripts of parliamentary hearings, and government documentation of corporate welfare to reveal the level of dependence of the company on the British Government. But it also goes further in arguing that Nissan represents a case study of an emerging pattern where major transnational corporations either get the deal they want or take their investment elsewhere. Big business is empowered; smaller businesses, policymakers, workers and citizens are disempowered. The government has already given in to Nissan, feeling that it had no choice but to acquiesce to Nissan’s demands and, in-so-doing, has set a dangerous and unsustainable precedent.
Our new report on Nissan UK reveals that the company has extracted £800m in corporate welfare since it began negotiating to come to the UK in 1980. Having examined funds distributed since 2015 and considering recent public statements and parliamentary testimony by Nissan executives, our research reveals that Brexit has given the company even more bargaining power.
Just as it had to craft a sweetheart deal to entice Nissan to open its Sunderland plant in the early 1980s the government is once again, thanks to Brexit, in the position of having to craft a new and even more lucrative deal to keep the company in the UK.
Our report raises questions about the loyalty, costs and contribution of companies such as Nissan. It asks whether such provision is sustainable and whether the UK can afford to increase corporate welfare handouts whilst cutting corporate taxation and imposing austerity on the social welfare state. Strategic support to businesses able and willing to invest in the long-term may be essential in the post-Brexit period, but before the UK government commits to an endless wishlist of corporate-support measures, and more of its budget is diverted to corporations, the government needs to make corporate welfare as conditional as social welfare. Handouts should come with longer-term commitments, corporate accountability, a willingness to support state provision (through taxation) and tangible positive outcomes for the UK and its citizen-taxpayers.
Authors: Kevin Farnsworth, Nicki Lisa Cole and Mickey Conn
Full title: Oiling the wheels: Nissan, private investment and British corporate welfare
Published: September 26, 2017
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