Who is really paying for corporate profits?

All the current and rightful anger over the failure of so many major corporations operating in the UK but not paying tax is not the only cause we have for concern. Too often these companies also sing proudly about their contribution in employment terms while failing to acknowledge the part taxpayers play in making this possible. Our contribution comes in the form of subsidising the earnings of staff.
One example has come up in Norfolk recently where the Norse Group has issued press releases proclaiming its significant contribution to the local economy through its employment of some 5,700 workers. These people earn about £84 million a year. In total of course. My argument is not really with Norse who are no different in this regard but they do have an unusual history.
They were formed as a result of out sourcing by Norfolk County Council. Initially this was of its property activities, which are quite considerable of course. From this beginning Norse has grown to take on more work from Norfolk, then Great Yarmouth, then Norwich City and now councils all over the UK use them generating a gross turnover last year approaching £180 million and gross profits of £40 million.
The payroll equates to about £15,000 average pay per worker. We do not know how many are part-time and this could be critical but we can guess that in common with most companies a significant number will be managerial and the ratio of salary between the least and the best paid will be substantial.
Of course if we knew what the full time equivalent number was it would be easier to calculate true value but these days this is never mentioned. It is why when retailers like Tesco arrive in a town they can trumpet 300 new jobs and the local media and others miss the fact that these are mostly low paid part-time. And the businesses that close after they arrive will mean the loss of at least as many jobs and the support of all the ancilliary business from solicitors to accountants and from plumbers to architects.
But taking the stated figures, at a reasonable guess a fair number of these workers will be in receipt of tax credits, welfare payments, rent or rate support. For at this level of pay - it is about £7.50 a hour so just about what is called a living wage by Boris Johnson - providing for a spouse and two children must be quite a challenge. It certainly does not constitute wealth generation by their employers and could even be costing taxpayers significantly.
The company concerned had a gross turnover nationally of about £180 million, gross profits of about £40 million and paid £5 million in corporation tax. I don't feel confident that this will balance the books for us taxpayers.
Most people will be aware that in London for example very few key workers like those in health, welfare and emergency services, can afford the housing costs of the capital. To be honest I expect the same is true for too many workers here in Norwich. And it is not just housing, although this is alarmingly exorbitant in the UK, but the costs of commuting too.
My issue with all this is not just that some like Starbucks and Vodaphone dodge paying ta=x for their activity in the UK but that this means they really are hurting us taxpayers. For it is the activity of a business that generates cost within the community. Sure, local rates, VAT, fuel duty and the like cover some of the costs but all those sales mean a lot more is happening in the community at large which someone has to pay for.
I would like to see a turnover tax instead of capital gains. A much lower rate would deliver the same amount of cash but corporations would find it a lot harder to dodge the cost of their activity in the country of operation. And they could then hide their profits anywhere they like.
And every company should be forced to express its workforce in Full-Time Equivalent numbers - then we can really see what is happening to the workers.

How the 'Vikings' are spending our Danegeld...

Recently our regional daily, the EDP ran an article, rightly perhaps, praising the success of a company called Norse. Now this company was set up a few years ago by Norfolk County Ciouncil effectively outsourcing first its property services arm and then hiring the company to outsource - or privatise - a range of other services.
Since then Norse has grown hugely and in our region alone provides services to several other local councils - all part of the great Blair/Cameron plan to reduce the scale of the public sector and duck responsibility for all those difficult social and welfare services.
They EDP praised the fact that the firm was paying a large sum of money to its employees living and working in Norfolk. But the story was a bit short of detail; so I did some digging and wrote the following to the paper, the MD of Norse and the reporter involved. Not appeared yet....

The success of Norse Group is very good news for more reasons than may be apparent from the EDP report (Nov 9: Norse Group pays £82m in salaries etc) since most of this money is actually Norfolk taxpayers money.
Norse was formed, as you report, by the county council and, with its subsidiaries provides a wide range of services for local authorities. The vast majority of the £82m you report has come from Norfolk County, Norwich City and Great Yarmouth Borough in payments for services provided to the community on behalf of those authorities. This is the benign face of privatisation we are told. Indeed Norse Group has seen its income, mostly from similar contracts, climb to £177 million this year, up by about 13% and its gross profit climb to £40m, up 10%.
Clearly it is very much in the interests of Norfolk taxpayers, not to mention city council house tenants and residential care home tenants, that Norse continues to prosper. And in reading their annual reports it is also very clear that they take their community role seriously, under the guidance of a range of county and no doubt other authority councillors on their board.
But the report to which you refer was it seems ordered not so much by the county as the Norse Group, as managing director Mike Britch makes clear in paragraph nine. He is also more precise on the specific benefits that Norse's growth has brought to the county, noting the creation of 56 jobs within Norfolk supported by contracts outside the county.
What is not referred to is that the county has been more than a little concerned at possible mis-understanding of the group's activities, the county's relationship with it and the precise roles and possible conflict faced by their elected members combining board membership with their civic duties. They had a significant risk report done on this in 2011. It would seem to me that this latest report is a further effort to demonstrate that the decision to privatise all this work was a good one, well taken and well managed.
But I did a little sum and found that if £82 million is being paid to all 5,700 staff in Norfolk that means an average wage of just over £14,000 each - well below both the national minimum for a full-time employee and even further behind the living wage which, among others Boris Johnson is so keen on. And the annual report goes to some trouble to make re-assuring noises about their commitment to funding the workers' pensions, which may be in stark contrast to what they might have expected when employed by the county. All companies are being urged to focus more on their role in supporting the public good - something the new Archbishop has already referred to.
But since we taxpayers 'own' this company can we have a bit more information? How many Full Time Equivalents? How many now delivering Norfolk services? How many at foundation and for each contract since? What's the average wage of employees, manager and executives - now and then? What are their pension terms? Where does the profit go? Who are the beneficial shareholders?
Answers to these will help us taxpayers decide whether this has been a good decision, well managed and of benefit to us all.