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.
