Having given up entirely on BBC Radio 4 and TV news for accurate and non-biased reporting, I now listen to Radio 5 Live in the morning. It was just after the budget and there was a conversation (this is what they do, instead of the sterile Today interviews) with a number of self-employed men about the impact of the Treasury decisions on them.
It made for fascinating listening. The background is a summary that the Budget hit the self-employed twice, not just taking hundreds of pounds from their take-home profits by increasing national insurance deductions, but also by lowering the dividend allowance if they run their small business as a company.
If you’re self-employed and trying to get any sort of loan, you’d be lucky
Yes, there is a perceived advantage over those in salaried employment who pay more national insurance. I think is justified because the self-employed have to put up with much less security and stability. This unpredictable income makes planning ahead, saving or even providing for pensions very difficult. If you’re self-employed and trying to get any sort of loan, you’d be lucky.
Half of the self-employed earn less than the national living wage. A higher proportion of the self-employed work 50 hours or more per week than do employees. Clearly, if you’re working longer hours and earning less, with greater risk, then the government raising your tax is unexpectedly bad news – especially galling as another decrease in corporation tax to 17% is on the way. (By the way, that bastion of capitalism, the USA, has an average level of corporation tax of 39%, double the
proposed UK level.)
Nevertheless, listening to the self-employed group, you would never guess they were really upset. They had an up-beat, can-do attitude, laughing a lot and supporting each other, while deriding the hapless Chancellor. One Welshman confessed to withholding £11,000 in tax over a number of years and being caught out by HMRC. He had to pay it all back AND was fined £40,000! But, he said, I was wrong, so working 12 hours a day, 7 days a week, I did pay it all back. “Well done”, “Good on
you,” cried the others.
What a tonic, compared with the all too often carefully worded, emotionless replies we get from the corporate executives as they defend their huge bonuses or lay-offs.
Would that HMRC would proceed against some of the large company avoiders, the recovery of whose dodges runs into billions. And, once again, we can see the case against targets. In 2014-15 HMRC met a target to increase its number of prosecutions by 1,000. Well done! However, auditors found the drive to meet the target had led to a focus on “less complex cases” with a “large number of prosecutions for evading income tax, VAT and tobacco duty and lower value cases”. In other words, nabbing our poor Welshman for his £11,000, while allowing Vodafone to forgo a reported £6.75bn of tax after its takeover of Germany’s Mannesmann company in 2000.
Our government, which keeps illustrating its naïveté about the business world, reminds me of the old USSR and its central planning targets. One of the targets was for nails. They set a target for an increase in the volume of nails by weight. The market was flooded with six-inch nails. So they changed that to volume by numbers. The market was flooded with one-inch nails. Now this may be apocryphal, but it is equivalent to HMRC, in that it too is gaming the wasteful system of setting targets.
What about Local Heroes? Well, Sheffield is full of self-employed folk: for instance, the really skilled journeymen and artisans who keep the Georgian and Victorian buildings in shape, not to mention the great cafe and real beer bar owners. But there are others, which are larger companies, that are admirably designed and run.
John Lewis is a good example of a really big company that has great values as well as great service and does not have employees, but partners who share in the profits, the ups and downs of the company. They are also able to vote the majority of members on to the central council which safeguards the constitution of the partnership and can at least in the extreme remove the chairman.
But John Lewis is not really local, so let’s look at some in Sheffield, which, for starters , has over 40 co-operatives, the majority of which are run well. For my money, though, there are a couple of medium-sized companies that really do stand out. The first is the somewhat self-effacing Swann-Morton, the world class, global surgical blades and handles provider in Hillsborough, which, in my view, is the finest example of a co-op in the country. The employee terms are hard to beat: annual profit-share bonus, ten weeks a year holiday and a trust to administer the company, within which the employees have a 50% share and the remaining 50% placed in a charitable trust – to protect the employees, note, not the directors.
Another is the more flamboyant Gripple, the innovative fastener company set up by Hugh Facey, the chairman. It is his technical inventiveness that drives the company and, like Swann-Morton, his vision of a fairness that dominates the culture. It is also his presence as an impatient, iconoclastic entrepreneur that still predominates. It is very successful, with five Queen’s Awards to Industry. More importantly Gripple achieved two milestones the 100% ownership by the employees in 2013 and, this year, the sale of the 600 millionth fastener.
Gripple, like John Lewis and Swann-Morton, is innovative in another very special way – the way the pioneers designed their organisations. It seems the first principle was that of being fair to labour force and being straight in all their dealings. John Spedan Lewis struggled all his life against the entrenched view of hierarchical organisations where the bosses made all the decisions and made all the money. And, even today, a director of John Lewis told me that when she goes to business leader conferences, says where she works, she gets funny looks, almost as if to say is your company for real?
These are leaders who have vision, not just for the company, but for the values of solidarity, and are the real heroes of industry. Another local hero, John Ruskin, who created a museum for the working men of Sheffield in 1875, would be proud.