Loughborough study shows firms with political links top government bailout list
Loughborough University included the findings in a new paper, A very British state capitalism: Variegation, political connections and bailouts during the COVID-19 crisis.
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A Loughborough study has shown that debt-ridden firms with politicians on their boards are more likely to get COVID-19 bailouts.
Loughborough University included its findings in a new paper, A very British state capitalism: Variegation, political connections and bailouts during the COVID-19 crisis.
Firms that are part of larger groups, firms owned by large numbers of shareholders, labour-intensive firms and firms from hard-hit sectors had a better chance of receiving state funding.
One of the authors, Dr Anna Grosman, said: "Our study and recent events would suggest that British capitalism has assumed at least some of the features of crony capitalism.
"It is more typically associated with emerging markets, whereby taxpayer money goes towards private vested interests that include both businesses and members of the government.
"The British state has assumed a very diverse role in the economy over the years, and at times, more visible and extensive, as is the case presently.
"Questions arise as to whether these features of crony capitalism are there to remain after the crisis, or are they temporary adjustments that were necessary to accelerate the process of recovery."
Loughborough University, the University of Exeter, and Western University looked at 1,920 publicly listed companies in Britain.
They compared those that received government financial support during the COVID-19 pandemic and those that did not.
They found that COVID-19 assistance was unevenly distributed across numerous business sectors.
Badly affected sectors – transport, hospitality and support services such as renting and leasing, tour operators, security, and office support - had the highest probability of receiving COVID-19 financial aid from the government.
The team also found favouritism for businesses with high worker numbers (voters).
Where companies had affiliations with MPs or links to foreign governments, or they had run up excessive debts, the firms had a higher likelihood of receiving government financing.
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