Should Billionaires Get Bail Outs?

Should we bail out billionaires? Obviously not. But should billionaire-owned businesses qualify for help? This is an issue raised by your friend and mine, Richard Branson and his long blog ostensibly written to Virgin employees, but very much a publicity counteroffensive rebutting the charges laid at his Caribbean door. I mean, to have effectively laid off your staff and then going cap in hand to the government with a four billion pound fortune to your name was sure to raise an eyebrow or two.

I didn't know this, but thanks to his letter to staff I've learned how Virgin is a philanthropic concern whose activities are entirely benign. All profits made by Virgin Care, for instance, are reinvested back into the NHS - or to be more precise, the services the company provides. According to the big cheese himself he's vowed never to draw a dividend from the business. And so the time Virgin sued the NHS in Surrey over its tendering process, the settlement went back into services and not anyone's pockets. Also, contrary to popular belief didn't you know Branson isn't actually a tax exile? Necker Island, his private tropical paradise/resort (yours from $5,000/night for a minimum three day stay) is his place of residence because, well, he likes it there. Fair enough, but domicile status and tax jurisdictions don't care about your affections. A 14-year tax-free holiday from the UK while gorging on the profits produced here, benefiting from the country's infrastructure and enjoying influence with top politicians - perhaps keeping mum on taxes missed might have proven better for brand Branson. Then we have the issue at stake: the position of Virgin Atlantic.

As I'm sure readers know, the company attracted negative publicity for foisting eight weeks unpaid leave onto its staff, which was accepted by the unions. This was prior to the announcement of the furlough scheme, so it is peculiar how Virgin is pressing ahead with it. Perhaps VA isn't as philanthropic as advertised. And also we learn Branson has stumped up £200m of his own readies to keep things afloat. His detractors point out this is only a small faction of his paper wealth, but his hoard won't be sat appreciating in the bank (or sitting idly in a discreet account in the Caymans). A lot will be tied up in property and assets, investments, financial products with fixed maturation dates, and so on. We don't know if Branson can get his hands on more money at a drop of a hat and, indeed, not just opening the books but laying bare his portfolio should feature in union plans for company rescue. Secondly, Branson says he's not seeking a bail out for the airline but a commercial loan from the government, for which he's willing to stump up his island as collateral.

It goes without saying Branson isn't a firm favourite around these parts for his union-busting antics, those stories, and having parasited off the wealth generated by others for 50 years. But here we have to separate the socially useless - the coupon clipping, profit snorting role Branson plays in his businesses - from the useful: the jobs and infrastructure those businesses support. Apparently, one of the reasons why the government have so far turned down Branson's plea for a loan is because they're not satisfied all avenues of fundraising have been explored. Margaret Hodge put the position more bluntly: sell your island. Yes, though when we're talking about bail outs we should act as if the government has a limited pot of money. As announced a couple of weeks ago, the Bank of England is printing money to fund government spending. The debt this creates not only benefits from ultra low rates of interests, but also doesn't really ever have to be paid back - the government can determine the length of repayment and have it written off. Therefore helping out whatever company doesn't cost the taxpayer a penny, and is also why post-Coronavirus public sector cuts are completely unnecessary from a balance sheet perspective.

Nevertheless, because the British state can create money and billionaires can't, as lender of last resort the state has leverage over them. Therefore businesses owned by non-domiciled tax dodgers shouldn't be ruled out of bounds when it comes to support, as per Denmark's tough policy, but this should come with strings attached. Naturally, as the Tory priority is saving capital the conditions so far seen are pathetic, like having furloughing businesses promising to keep jobs open for their staff when normal times return or, as in Virgin's case, making sure all available resources are mustered for their preservation. They will be under pressure not to simply hand cash over when it's asked for, and so have to make a show of conditionality. This is where the opposition might make itself felt when it's not mumbling "now is not the time." Among the strings Labour should call for are significant wage rises to compensate for the present unpaid period, if not outright nationalisation a controlling stake in the business, a suspension of dividend payments, contributions to a climate fund and/or clean air alternatives to aviation fuel, full trade union rights, workers reps on the board and scrutiny of decision-making, and the locking in of bailed out firms to a planned transport strategy - all entirely within the ambit of the platform Keir Starmer stood on during the leadership election. Branson can then bugger off and devote himself entirely to the philanthropic conscience his ilk cultivate after acquiring more cash than they can ever spend.

Bail outs for billionaires then? No. But bail outs for their businesses? Certainly. Not just to get us through this system shaking crisis, but to lay the foundations for the better world to come.