How the Coalition is deliberately engineering a competitive deficit in British business

Prologue

I will try and limit myself to simply quoting two contrasting situations tonight, though this may prove rather difficult – if not entirely impossible.  [Editor's observation: in hindsight it was!]

Act I – Banking on it!

The first involves the Royal Bank of Scotland.  Quote number one here from our dearly beloved Guardian:

Royal Bank of Scotland stoked a political row on Thursday night after it announced it had awarded its chief executive, Stephen Hester, a bonus worth almost £1m.

The payment was derided as “utterly unacceptable” by one Liberal Democrat peer, while a Foreign Office minister calculated that Hester’s package meant he was paid in three days what a soldier in Afghanistan, “risking his life”, earned in a whole year.

What’s more:

The bailed-out bank attempted to justify the bonus – which is being paid in shares that Hester will be able to gain access to in 2014 – by saying it needed to reward the chief executive for the progress he had made in reducing the size of RBS.

Since he joined in November 2008, the bank has cut 33,000 jobs.

So Hester needs to have his already lavish salary almost doubled – in this case it is the state, as 80 percent shareholder, which has voluntarily chosen to act thus (for no prior contractual agreement imposed by a previous regime was operating in this particular instance) – in order to reward him for the magnificent skills and prescience required which allowed him to discover how to save pots of shareholder money by prejudicing the lives and times of what we must conclude are 33,000 unskilled and short-sighted workers.

So let’s just weigh that one up as we move onto quote number two, from the same newspaper:

The Royal Bank of Scotland has spent more than $4m (£2.5m) of British taxpayers’ money on lobbyists in Washington since it was bailed out by the government, documents disclose.

Both in-house and commercial lobbyists have been paid to influence American senators and congressmen reforming US finance law since the bank’s collapse and government bail-out in October 2008.

The money has been handed over despite calls from ministers for RBS and other banks that have received taxpayers’ handouts to refrain from hiring public affairs firms.

So is there anything I can add to this which you are not already thinking?

One rule for the rich – and quite another for the poor?

Act II – In the black!

It looks like the government might be trying to work out a way to limit the black economy in the UK to a maximum of £1000 in cash payments.  I’m not sure how many cash payments this might eliminate in reality – but let’s put that thought to one side for the moment.  Anyhow, today I read from tris over at Munguin’s Republic the following pair of golfing metaphors (ie par for the whole damn bloody dispiriting public-private sector course):

HMCR chief Dave Hartnett (you remember him, don’t you?),  says that it is the public’s duty not to pay tradesmen cash in hand, otherwise said tradesmen may be tempted (look away if you are of a sensitive disposition) to ‘evade paying their fair share of tax.’ (Shock, horror.)

And, if you do not act as tax collectors (unpaid), and they do “forget” to declare all their earnings, this might result in even deeper government cuts to public services. (More shock and horror!!)

However, according to tris the very same Mr Hartnett has also been responsible for a number of other matters over the past couple of years about which the Telegraph actually had this to say way back in December; matters which, in reality, cast a teensy bit of doubt on his intellectual cogency.  These matters are somewhat distanced from the alleged behaviours of your neighbourhood builder (who, incidentally, though probably irrelevantly to civil servants like the aforementioned individual, may as a result of government economic policy be currently struggling to make ends meet).  To continue in tris’s own words:

Now, would this be the same Dave Hartnett who, having allowed himself to be bought, on over 100 occasions, incredibly expensive meals, arranged multi-billion pound tax avoidance schemes with the Goldman Sachs and Vodafone…who, by strange co-incidence, had picked up the tabs for these “fine dining experiences”?

And did this multi-billion pound drop in tax revenue not in some way result in the government having less money to spend?

Meanwhile, we have a story from False Economy from September 2011 which clearly indicates that the government is actually being extremely coherent indeed (table here):

Disturbingly our research shows that some of the companies lining up to take a slice of the mushrooming multi-billion pound public service sector are among the most unethical in the UK and many remain largely unknown to the public

We’ve found that the biggest companies that are playing an increasingly important role in running our public services have the bottom rating for many of our ethical and environmental criteria, including environmental reporting, supply chain management, human and workers’ rights and political activity.

The government is now selling our public services to companies seemingly without any scrutiny of a company’s ethical or environmental policies. This apparent policy vacuum challenges the coalition’s stated claim that ‘this will be the greenest government that the UK has seen’. This is significant as it threatens to undermine the progress that the previous government had made in terms of its ethical and environmental purchasing policies.

And what’s more:

Another area that gives great cause for concern is the evidence we have uncovered that shows that 13 of the companies we surveyed have subsidiaries in countries that are widely considered to be tax havens, something that is included in our Anti-Social Finance category.

This implies that the companies concerned, including some of biggest names in the outsourcing industry such as BUPA, Capita and Sodexo, are managing their finances in such a way that they may be actively avoiding paying tax here in the UK.

Coherent government, that is, in the sense we have already observed: one set of permissible behaviours for the poorer end of society – and clearly quite another set for the wealthier ones amongst us.

Epilogue

I’m beginning to get the feeling that this government and its civil servants are not only being actively encouraged through close and carefully weaved private connections to set up a two-tier Britain as far as public services are concerned, they’re also being actively encouraged to create a Britain whereby:

1. everything which private companies need in order to function in the public space is externalised onto a rapidly shrinking state evermore at the exclusive service of private sector interests – that is to say, we as a voting public lose out twice: a) fewer public resources will remain as a whole and b) of the fewer resources that remain, more of them will end up in the pockets of private sector advocates
2. large industry interests will be massively prioritised at the expense of the small – that is to say, whilst only big companies will be able to afford the technical advice to avoid paying tax, small companies will inevitably end up paying proportionately far more than their big cousins ever will

This is in no way a free-market level playing-field of any kind whatsoever.  Traditional economies of scale mean those with a monopolistic stranglehold over whole sectors and industries already have a substantial advantage over their small- and medium-sized competitors.  But factor into the mix the reality that most large companies will now interpret the government’s recent agreements on tax liability as providing a green light for such behaviours … well, we can only then conclude that a competitive deficit is being deliberately engineered into the British business environment – a deficit intentionally designed to prejudice the smaller companies on that spectrum of economic activity and favour the much larger.

There must, of course, be a better way.  The question, of course, is who may provide the leadership we need on the matter.

I would like it to be someone from the party I belong to.

And I do wonder if, one day, it could ever be the case.