... In your New Year
message, you call upon your party to ‘offer constructive and positive ideas
to help keep people in work’. Here are some suggestions:
1 Despite the mantra
that we must get the banks lending to small
businesses again, what small businesses really need is to switch from fixed
costs to variable costs.
There’s not much a government can, or should, do in this
regard. But expecting businesses to pay taxes before they’ve made any money is
a prescription for bankruptcy. It is the work of lunatics (the sort of business
illiterates that fill government and the civil service) to levy, or allow to be
levied, any charge or tax that is not directly proportional to consumption or
rates for example. These should be replaced by a profits tax, with perhaps
charges imposed for services provided directly to the businesses concerned by their
local authorities, such as rubbish collection. These charges should be no more
than would otherwise be incurred in a competitive open market.
2 Any form of payroll tax that is
charged to the employer is nuts. If you wish to create and sustain jobs the
last thing you should be doing is taxing them! These costs should be borne by
the employee or not at all.
The only occasion when an employer based payroll tax could
be justified is when labour shortages are causing undesirable wage inflation.
Even then they should be targeted and temporary – the Exchequer should not be
allowed to get hooked on this cash stream.
3 The credit crunch
is now being followed by the much-predicted-by-us
jobs crunch. There’s no getting away from the fact that employee and family
friendly policies have exacted a terrible toll on the jobs market. When you rob
Peter to pay Paul you can rely on Paul’s vote. And that’s all populist politicians
are concerned with, so Paul gets pandered to. Under modern western democracies
Peter doesn’t get a vote, so he votes with his feet and doesn’t employ people.
If you want to protect jobs, even go one better and create
jobs, you need to provide an environment that is conducive to this. It will be
unpopular and will require political courage. And because so much of the burden
by the EU you’ll have to take them on too. But the price for failure is
generations of high unemployment and an underperforming economy.
The economy simply can’t afford these luxuries now. Businesses
certainly can’t but if society wants them, it should pay for them – not wallow
in the delusion that because some else shoulders the burden that they’re cost and
implication free. Businesses should be compensated both for the administrative burden
of complying with these regulations and for the loss of profits that arise when
managers are not permitted to manage as they see fit.
4 There needs to be
a culture change – possibly the hardest challenge of all to implement. Slowly
the drip-drip effect has throttled innovation and enterprise and rewarded the administrator
and bureaucrat. Running a business today simply does not provide the thrill, excitement
and fulfilment that it once used did. Instead, the beleaguered business owner
spends his time administering the politically correct and health & safety dictates
of others rather than driving his business forward.
The people who enjoy running businesses today are administrators
and functionaries. Unfortunately, they tend to be rather unenterprising sorts.
Whereas what the
economy needs, as everyone in their heart of hearts knows, is more flourishing
Finally, if any proof is needed, reflect on this: 20-30
years ago we and many, many people we know would, at our stage in life, be
running businesses employing up to 50 people or more. Indeed, one of us had a
payroll of 60 not so long ago ... but that was in a more benign, employer
friendly environment. You might like to ponder why we, the people who could so
easily deliver the economy from this recession cum depression, choose not to do
so. The answer lies in incentive, and it’s not just financial.