Over the past few days there has begun to be a serious discussion about how we share out the considerable resources that this Country has more fairly. It hasn’t yet become a rational debate but has certainly begun as an emotional debate.
Two things have made people generally think.
The first is the appalling situation in the Premier League where cleaners are being furloughed whilst the footballers, who are also now not working are being paid up to £70,000 a week and are taking no pay cuts. Surely a Football Club cannot function without the groundsmen and the programme cleaners and the caterers and the boot room boys any more than it can function without footballers.
The second is the realisation that many of the people that we have come to rely on in the past few weeks and will be relying on for the next few months have wage levels that hover around or just above the Minimum Wage. Even a fully qualified nurse in charge of a ward and the lives of the people in it only earns around the median wage. These are the people who have been keeping us fed and watered, and healthy and saving our lives in extremis.
We have learned so much about the people who are bravely continuing to serve us in the shops and supermarkets and the people who get the supplies to them. We have begun to understand more clearly the important role played by the carers in our residential care homes and those that visit people in their own homes to care for them.
Inside the Councils we have more dedicated staff. The ones that keep our school hubs going, the social workers going out into increasingly difficult situations; the refuse collectors still out from the depot at 06.00 to keep our streets healthy.
Add to that the police officers, fire officers, coast guard etc, etc. and you have a huge number of people who don’t really get appreciated until we need them and who we don’t give large amounts of money to as a reward for services well rendered.
We have begun to think differently about what skilled and unskilled means. Taking care of an elderly person needs huge skill and just as importantly needs huge compassion. Yet we only pay them the barest of minimum wages sufficient to keep body and soul together. Its just as well that our NHS staff of all types and our people in the care system are not just out for the biggest wage. They have a concept of public sector service and value. Unfortunately, we rely on that ethos to keep wages low.
Who haven’t we missed in the past few weeks? The hedge fund managers; the short sellers of stock; the managing directors of Companies who have kept their own salaries intact whilst furloughing their staff. The Tim Martin’s of this world whose reaction to the crisis has been to cut their staff adrift although they have reserves to pay them and have cut off payment to smaller suppliers without reserves; the bankers who got their own bonuses paid whilst they were able to foresee financial problems ahead.
So, we need to take action but what should that action be? I don’t believe in a citizen wage. I don’t believe that we should all get the same money. I believe that we need a system which recognises those who work hard and those that don’t. I believe that we need a system which recognises those that have talent and those that haven’t. I believe that we need a system which recognises genuine risk takers who build businesses up and employ people. So, my belief very clearly is not that there should be no pay differentials but that those differences should be much smaller than they are now.
This does not imply communism but controlled capitalism and it is not only possible but happens in some of the most successful Countries on the planet. Look at the Scandinavian countries where both personal and corporate tax is higher but the quality of the public sectors services is much higher. These Countries have much higher wellbeing and personal satisfaction levels than the dog eat dog countries of the USA and UK. The most successful economy in Europe is Germany where many of the major companies are 20% owned by the state banks from the Lander and where top staff get salary levels much lower than FTSE 100 Chief Executives and run more successful businesses.
So, let’s take some steps now:
- Introduce an, ‘if you earn it here you get taxed here’ policy. This would stop the Dysons, Rees-Moggs and Bransons of this world making the money here but claiming overseas residency either for themselves or their companies to enable them to avoid paying their fair whack of tax.
- Do the same for the big IT based companies like Apple, Uber, Face Book and Twitter who minimise their tax in high tax countries by making licensing and other payments to parts of their Companies in low tax areas.
- Reform the tax code which HMRC uses to simplify it and make it harder to dodge around the system and find tax exemptions created in response to different pressure groups.
- Review the pensions anomaly by which high rate tax payers can save more money for their pensions because they save 40% of allowable income tax instead of 20%.
- Review the scam service companies by which big corporations pay individuals to contract their companies rather than themselves and thus avoid elements of National Insurance and income tax.
- Introduce a higher minimum wage which would mostly be paid for by a reduction in the number of tax credits which people have to apply for. Companies would not suffer because a corresponding cut in corporation tax could be made.
- Review the system of local taxation and base it on an ability to pay rather than the outdated property-based tax which dates back to mediaeval times.
- Consider a tax increment level over, say £250,000 per annum which attracts a much higher rate of tax. After all who really needs to earn more than £250,000 a year to live on?
Some of these will take time to introduce, Others could be introduced speedily if not immediately. Importantly now is the time to start talking about these whilst the considerations of who is really important to that big thing we call society is fresh in our minds.