The latest report from the High Pay Centre

It’s got some doozies in it:

In fact, this is wrong in every
particular. In law, managers aren’t
employees of shareholders, who
don’t own the business. Firms are
separate legal entities that own
themselves, employ directors
and executives, and to whom the
latter owe fiduciary duty.

Firms own themselves? Umm, I think that’s one of the things that we actually ban them from doing, isn’t it?

On pages 14 and 15 they make the usual idiot comparison between company turnover and GDP of a country. No, sorry folks, this is flat out wrong. You need to compare corporate profit plus the wage bill to GDP in a country. Both are measures of value add: and you’re idiots to get this wrong.

Ritchie is involved, of course, and he might be sailing a little close to the wind here:

The evidence of capture is, then
quite strong. That evidence
continues when it comes to
the creation of tax policy. Take
as an example, the creation of
the General Anti-Abuse Rule,
passed last year. The panel of
people advising were all from
big business bar me, as one
of the major proponents of the
idea, and a representative from
Save the Children, to reflect civil
engagement on this issue. The
other nine were from big business,
or large firms of lawyers and
accountants, and most support
staff to that panel were seconded
from the Big 4 firms of accountants
or lawyers. We wrote most of the
guidance on that Rule. HMRC did
not. Capture looked very complete
to me.
And what was the outcome? An
anti-abuse rule (not even, I stress,
an anti-avoidance rule) where the
effective permission of a panel of
tax experts drawn from the ranks
of private sector tax specialists
was required before HMRC
could pursue a case. Capture
was complete.

How shtum is he supposed to be here?

6 thoughts on “The latest report from the High Pay Centre”

  1. As more and more people with a business background colonise key civil service posts – each
    Government department is now chaired by a business leader …

    Hmm,

    MoD – PS is John Thompson. Hasn’t worked in the private sector since 1997 and his background is council finance, albeit with time in Eagle Star and E&Y.

    BI&S – where you might expect somebody with a business background? Nope, PS is Martin Donnelly, career CS.

    DfC&LG – PS is Sir Bob Kerslake. Local government then CS.

    DfCM&S – PS is Sue Owen. Before the civil service, she was an academic – researcher then lecturer.

    DfE – PS is Chris Wormald. Career CS.

    Apart from the one I have a personal interest in, I’ve just taken the rest in order from here

    I appreciate I’ve not done them all but as I haven’t found a single “business leader” in the terms the High Pay Centre are using, their research looks remarkably LHTD-ish.

  2. Also,

    In law, managers aren’t employees of shareholders

    Correct, they are employees of the corporate body.

    who don’t own the business.

    As you said, nope. The shareholders are the owners of the business which, indeed, has a separate legal existence. Hence the “limited liability” part of the company. As opposed to, say, a traditional partnership, or the way Lloyds’ names used to be (and may even still be in some cases.)

  3. And, ’cause I’m bored and waiting for a report to check, I did have a look at the others.

    There are two Departments, or equivalent bodies, where the “Chair” has had significant business experience before moving in to a senior civil service post – Stephen Lovegrove at DECC, who was ex-Deutsche Bank and came in via the Shareholder Executive and David Godfrey at UK Export Finance who came in via being an non-Exec there, having worked for a number of financial companies previously. Additionally, Una O’Brien at Health worked in a health charity previously and Michael Chalmers, “Director and Solicitor to the Advocate General” had some experience in commercial litigation.

  4. Yes, talking about “firms” as a synonym for limited liability companies (or corporations if you’re American) does suggest it wasn’t written by a corporate lawyer.

  5. But RM welcomed the GAAR, his appointment to the panel, the guidance he wrote, and said it meant an end to things like old tax cases sanctioning avoidance.
    Where did it all go wrong?

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