How the state corrupts the "free" market

Libertarians often go on about how the state, whilst pretending to promote a free market actually more often than not corrupts that market through its own actions - protection, government contracts and so on and that this leads to the skewing of the market towards bigger corporations. I came across a good example today. The chief executive of an Oxfordshire based construction company Leadbitter (who are amongst other things building new blocks on my halls site now here at Brookes) writes for the local paper that:

The only crumb of comfort for Leadbitter is that changes in Government guidelines should soon mean the company will qualify at least to bid for large-scale, post-2011 Government projects — for example, under the Government’s Building Schools for the Future programme.

At present it is frozen out of the framework of firms that may make such bids because only companies with national coverage may do so; and that disqualifies Leadbitter. Despite being the UK’s 25th biggest builder — with offices in Plymouth, Bristol, Cardiff, Southampton, Sittingbourne, and Exeter (as well as its Abingdon HQ) – it still counts as a regional builder, not a national one.

[From Construction chief: Worst is yet to come (From The Oxford Times)]

The UK's 25th largest builder is not allowed to bid for a huge raft of government contracts. It is certainly big enough to deal with our £40m+ contracts for halls, so why not schools, say? Because the bigger firms have some clout that gets them government contracts - I can't believe that's in line with EU tendering rules, but there we go...big government, sponsoring big business, to the exclusion of local firms employing local people.

The whole of public sector procurement, from what I can see, is just the same. You'll find the same half dozen software firms appearing on shortlists for local authorities' back office systems for example. The same small group of companies bidding to take over admin functions in the public sector - in the vanguard of which is Capita, unsurprisingly founded and led by a former civil servant insider. And so on.

Do you see? This is NOT a free market. Those chosen few enjoy vast amounts of patronage and privilege at our expense - cartels and monopolies always push up prices or push down quality and we're the ones paying for all this, not only in our taxes but, if we don't work for these specially favoured companies, our jobs and livelihoods potentially.