Once, firms cherished their workers. Now they are seen as disposable

Will Hutton in The Guardian


 

July 1909: a street in Bournville village near Birmingham, a new town founded by chocolate manufacturer and social reformer George Cadbury. Photograph: Topical Press Agency/Getty Images



More than 100 years ago, the Cadbury family built a model town, Bournville, for their workers, away from the overcrowded tenements of central Birmingham. Cadbury’s vast chocolate factory was at the centre of thousands of purpose-built villas, a village green, schools, churches and civic halls.

The message was clear. Cadbury cherished and invested in their workers, expecting commitment and loyalty back, which they got. Sir Adrian Cadbury, now in his 80s, still proudly shows visitors how his Quaker forefathers felt a genuine sense of responsibility to their workers. His family believed in capitalism for a purpose – innovation and human betterment.

Jeff Bezos, founder of Amazon, would regard the Cadbury family as crazed. His relationship with his workforce is entirely transactional: they are to give their heart and soul to Amazon, undertaking to follow Amazon’s “leadership principles”, set on a laminated card given to every employee, and can expect to be summarily sacked if they don’t make the grade. These injunctions are aimed at not only Amazon’s fork-lift truck drivers and packagers but also at its executive workforce.

At first glance, the principles seem unexceptional, exhorting “ Amazonians” to be obsessed with customers, drive for the best and think big. In practice, they mean workers have to be available to Amazon virtually every waking hour, as a devastating article claimed in last week’s New York Times. The workers should attack each other’s ideas in the name of “creative challenge” and buy into the paranoid culture Bezos believes is essential to business success, with their hourly performance fed into computers for Big Brother Bezos to monitor.

Working at Amazon has become synonymous with stress, conflict and tears – or, if you swim rather than sink, a chance to flourish. It is, as one former executive described it, “purposeful Darwinism”: if the majority of the workforce can flourish in such a culture, you have a successful company. Bezos would claim in his defence that he has founded the US’s most valuable retailer that ships two billion items a year. Cadbury ended up being taken over. Better his approach to capitalism than defunct Quakers, except now everyone is expendable. This is the route to success. Or is it?

The nature of firms is changing. The capitalist world of the so-called golden age between 1945 and the first oil crisis in 1974 was defined by Cadbury-type companies. Even if they didn’t build estates in which their workers could live, big companies offered paid holidays, guaranteed pensions related to your final salary, sickness benefit and recognised trade unions. Above all, they offered the chance of a career and personal progression.

This was the domain of the corporation man commuting to a steady job in a steady office in a steady company with their blue-collar counterparts no less secure in a steady factor. It delivered though. If western economies could again grow consistently at 3% or 4%, underpinned by matching growth in productivity, there would be delight all round.

The companies were much more exciting than they looked. They were purposeful – repositories of skills and knowledge, seeking out new markets, applying new technologies with an appetite for growth. In Britain, great companies such as ICI, Glaxo, EMI, Unilever, Thorn, British Aircraft Corporation, Marconi along with Cadbury were centres of growth and innovation.

A critical doctrine at the time was they were held back by trade unions and soft economic policy that encouraged inflation. The proof that inflation was so damaging is scant and beyond the print, coal, rail and motor industries, British trade unions were pretty weak and pliant. What instead held these companies back was the evaporation of the guaranteed markets of empire. Second, a short-term, gentlemanly, disengaged financial system was unable to mobilise resource behind these companies and their greater purpose as imperial markets shrank. That wasn’t widely understood then – and certainly not now. Instead, the economic problem was defined as pampered, unionised workers, a view further entrenched by an avalanche of free-market economics from the US. Worker privileges and rights must cease.

So to the firm of today. The new model firm no longer has workers who are members of the organisation in a relationship of mutual respect and shared mission with committed, long-term owners; rather, the new ownerless corporation with its tourist shareholders employs contractors who have to pay for benefits themselves and can be hired and fired at will.
They are throwaway people, middle-class workers at risk as much as their working-class peers. Unions are not welcome; pension benefits are scaled back; sickness, paternity and maternity benefits are pitched at the regulatory minimum. Last week, the Citizens Advice Bureau said it estimated that 460,000 people nationwide had been defined by employers as self-employed (and thus entitled to no company benefits), even though they worked regularly for one employer, often in office roles. It is the same approach that has delivered 1.4 million zero-hours contracts. All this allegedly is to serve growth. Except over the last 20 years, growth, productivity and innovation in both Britain and America have collapsed. These new firms whose only purpose is short-term profit with contractualised workforces turn out to be poor creators of long-term value. The exceptions, paradoxically, are the great hi-tech companies such as Amazon, Google, Apple and Facebook.

The alchemy of their success is they combine innovative technology, produce at continental scale, invest heavily and commit to a great purpose, usually because of the powerful personal commitment of the founder. Bezos may have constructed a Darwinian work environment but it is all “to be the Earth’s most customer-centric company”. He has invested hugely to achieve that end, but his workplaces, by contrast, seem terrible.

But even Bezos does not want to be depicted as an employer with no moral centre: he urged his employees to read the offending article and refer examples of bad practice to his human resources department.

Ultimately, long-term value creation can’t be done by treating your workforces as cattle. It’s the great debate about today’s capitalism. It would be a triumph if it was taken more seriously in Britain.

You think the government is fighting tax avoidance? Think again

George Osborne has pulled off a stunning confidence trick: he has bamboozled people into thinking he is fighting tax dodgers

• 
• • Richard Brooks
  • The Guardian, Sunday 17 March 2013 21.00 GMT

‘Chancellor George Osborne's new rules – as KPMG makes clear – give “UK-based multinationals an opportunity to significantly reduce their tax rate”.’ Photograph: Carl Court/AFP/Getty Images

Chancellors of the exchequer have never been entirely straight about their tinkering with the tax system. With his penchant for "stealth taxes", Gordon Brown certainly didn't always come clean with the British public. But when it comes to the vexed subject of tax avoidance, his successor George Osborne has taken the deception to a new level and, after three years, pulled off a stunning confidence trick.

"The parties agree that tackling tax avoidance is essential for the new government, and that all efforts will be made to do so," declared the coalition agreement in May 2010. The commitment was a victory for the Lib Dems and for their pre-election shadow chancellor Vince Cable in particular. A year earlier, Cable had responded to the Guardian's Tax Gap series by writing: "Systematic tax avoidance by rich individuals and UK-based companies strikes a particularly ugly note in these straitened times."

Cable's prize was to be a "general anti-avoidance rule", and soon enough one of Britain's leading tax QCs, Graham Aaronson, was dispatched to work up the scheme that Osborne has promised to introduce in this week's budget. But it will be what Aaronson describes as "narrowly focused", and apply only to the "most egregious tax avoidance schemes". For which, read convoluted arrangements involving multiple transactions that circumvent the spirit of the law – of the sort deployed by comedian Jimmy Carr before he saw the light (or the headlights of career death hurtling towards him).

Scheming of this type is, however, a relative minority sport, and is generally defeated by judges increasingly intolerant of tax avoidance anyway. Worse still, the senior tax inspectors' union argues that, by hitting just "egregious" cases, the new law risks "actually facilitating avoidance".

By far the costliest tax avoidance takes the form of the corporate structuring that has repeatedly hit the front pages in the last couple of years, whether through Starbucks' payment of royalties to Amsterdam, Amazon's Luxembourg sales hub or Vodafone's multibillion-pound internal financing arrangements through the same grand duchy. And,as the Lords economic affairs committee pointed out last week: "There is a misconception that Gaar [general anti-abuse rules] will mean the likes of Starbucks and Amazon will be slapped with massive tax bills. This is wrong, and the government need to explain that to the public."

Such corporate manouevrings do not officially constitute tax avoidance even if, on any commonsense view, that is exactly what they are. When a couple of years ago the BBC commissioned a ComRes survey on attitudes to tax avoidance, it defined the practice as "where people or businesses arrange their financial affairs to minimise the amount of tax they pay while remaining within the law". Eighty four percent of people favoured a clampdown on the behaviour, which clearly encompasses multinational's offshore structures.

Yet this is where the great tax trick is played. Outside the official definition of tax avoidance, the offshore schemes of Britain's biggest multinationals have not just escaped any clampdown, they have been rewarded with a rewriting of corporate tax law that makes them more irresistible than ever. Working closely with the companies most affected, in his last two budgets Osborne has relaxed – almost to the point of obsolescence – the so-called controlled foreign companies laws that were introduced by Nigel Lawson in the early 1980s to prevent companies shifting profits into their tax-haven subsidiaries.

From this year offshore financing structures such as Vodafone's, for instance, will be taxed at no more than 5%, while companies' tax-haven branches will be exempt from tax. Incredibly, the British government is subsidising the largest companies to send billions of pounds into the world's tax havens. And in the absence of any opposition from the Labour party – compromised by its own record of offshore tax relaxations and now advised by Vodafone's tax consultant PricewaterhouseCoopers – the new laws have arrived on the statute book unchallenged.

The big four accountancy and tax consulting firms that were hauled before Margaret Hodge's public accounts committee a few weeks ago are probably licking their lips. KPMG touts for business in one of its pamphlets by pointing out: "For every £1m of finance income received in the UK, the finance company regime could save cash tax of £165,000." And even better: "As the new rules have been designed and enacted by the government, this should represent a low-risk tax-saving opportunity." What could be sweeter than state-endorsed tax avoidance?

This surreptitious slashing of corporate tax bills is not something the government is keen to dwell on. Indeed, the rhetoric can be very different. In Davos, David Cameron said that businesses are "setting up ever more complex tax arrangements abroad to squeeze their tax bills right down ... Well, they need to wake up and smell the coffee". Given low corporate tax rates, soon to be 21% and by far the lowest among G8 countries, the PM insists they "should pay that rate of tax rather than avoid it".

But Osborne's new rules – as KPMG makes clear – give "UK based multinationals an opportunity to significantly reduce their tax rate". In other words, using "tax arrangements abroad" the largest multinationals won't pay even the new all-time-low headline tax rates.

Through the "general anti-avoidance rule" and a regular stream of smaller specific anti-avoidance announcements, such as this weekend's move against a national insurance dodge, Osborne will sustain the illusion that tax avoidance is being fought on all fronts, confident that his bamboozled audience will never notice the abject surrender on the most important one of all.

When did being lowly paid become a criminal offence?

Increasingly, corporations and politicians treat the poor with distrust. That's why this week's ruling on workfare was important

• 
• • Zoe Williams
  • The Guardian, Thursday 14 February 2013

‘In the ruling in favour of Cait Reilly and Jamieson Wilson the judges were clear: these people were treated dishonestly.' Illustration by Matt Kenyon

Inside Amazon's flagship factory in Rugeley, Staffordshire, a new way of working is evolving. There is a strong topnote of distrust, evinced by the full-body scanners that workers have to pass, every time they leave, to prove they haven't stolen anything. The profound insecurity built into the employment model is dressed up as discipline – which is to say, Amazon expects huge seasonal fluctuations in the number of people it needs, yet likes to mask their dismissals behind a misdeameanour, so a lot of people get axed for crimes like being ill. There's a lifesized blonde lady made of cardboard at the entrance, with a think bubble coming out of her head that says, "This is the best job I've ever had!" If that detail alone is enough to make your blood run cold, marry it to the testimony of the chairman of nearby Lea Hall Miners Welfare Centre and Social Club: "The feedback we're getting is that it's like being in a slave camp."

Of all the details revealed by the Financial Times, the one that sank my spirits was the electronic tagging – workers have a handheld device directing them to goods. But these devices also measure their productivity in real time. If they lag behind, the machine bugs them. They are issued with constant warnings not to talk to one another or tarry for any reason. A lot of people find it quite stressful. Call them crazy. (Amazon counters: "Like most companies, we have performance expectations for every Amazon employee, and we measure actual performance against those expectations.")

Meanwhile, in Tesco's Donabate distribution centre in Dublin, workers wearing these tags are awarded percentages for their speediness (100% if they perform a task in the time estimated, 200% if they're twice as fast, and so on), but claim they are docked if they take a loo break; afterwards, they find they have to work much faster – to get back up to their 100%. To put it in context, workers routinely scoring 110% are reported to be sweating quite hard for most of the day. So making up your targets is no walk in the park. Tesco insists that their tag is turned off while workers are in the toilet.

Anybody who's ever worked in a very repetitive, menial job will recognise this suspicious atmosphere – the less enjoyable a job is, the more people there are who suspect you of trying to get out of it. That's reasonable, I suppose, though if people were treated less like robots to begin with, they might not need so much surveillance. But the fabled "innovation" of the private sector never seems to be able to extend itself towards making jobs more self-determining and satisfying. Presumably this is because there's always a danger that self-determining, satisfied people might distinguish themselves in some way, might cease to be interchangeable and might want – indeed, deserve – more than the paltry wage they might be being paid.

But there is innovation here, in a new shamelessness. Let's be honest, tagging is what you do to criminals. Criminals often don't mind this, because the alternative for them is prison. The understanding, however, is that there's already been a significant breakdown of respect between the authority and the person before anybody's movements are electronically monitored. It used to be taken as read that you wouldn't do that to a person until you already had good reason to suspect that they wouldn't tell you the truth.

I am reminded here of the Conservative MP Alec Shelbrooke calling for people's benefits to be delivered on a card, rather than cash, for the easier prohibition of the purchase of booze, fags, Sky+ and trips to Tenerife. Again, the government has form with this idea –certain categories of asylum seeker are given their sustenance on a card, with which they are banned from buying condoms and (obscurely) sanitary products.

A friend of mine stood behind an asylum seeker once while she was turned down for the purchase of some crayons. It's not a system I'd want on my conscience, but its development has some deterrence rationale to it: that is, to make conditions so unpleasant that the bogus claimant gives up of his or her own accord. So when did that become OK – to exclude benefit claimants from the mainstream economy, to humiliate them? Does Shelbrooke hope to deter them all from living here? Where does he propose they go?

What I cannot help noticing is a failure of normal human respect for the people at the bottom of the heap – Tuesday's ruling in favour of Cait Reilly and Jamieson Wilson has had its bones picked over for what it does or doesn't say about slavery, and yet the judges were clear: these people were treated dishonestly. They were treated as though, being unemployed, they could be parcelled about at the whim of the secretary of state.

A similar belief pervades the suggestion that those on benefits need to be ritually humiliated every time they go into a shop; or those on low wages, by dint of their low status, need to be monitored like criminals. Across the piece, having a low financial status is now elided, by politicians and by corporations, with being untrustworthy.

They may have different motives; Shelbrooke is hoping to make political capital out of the contempt in which he holds the poor; Tesco and Amazon's contempt is just a byproduct of their drive for profit. But the wellspring doesn't matter; what matters is that this is a frighteningly divisive worldview.

Forget Bermuda, Britain's tax havens are much closer to home

It's easy to point a finger at Amazon and co, but UK-based trusts make it easier than ever for the rich not to pay their share

• 
• • Polly Toynbee
  • The Guardian, Thursday 15 November 2012 21.00 GMT

There are many UK companies that offer trusts 'guaranteed to protect almost all your wealth from inheritance tax'. Photograph: Image Source/Alamy

The hottest ticket this week was a ringside seat for the public accounts committee's roasting of tax-avoiding Starbucks, Google and Amazon. Committee chair Margaret Hodge in full flight gave them a magnificent tongue-lashing, with Tories hot on her heels too, pouring derision on "don't be evil" companies' pretence to make next to no profit as they siphon cash into tax havens. Even the comptroller and auditor general lost his temperand called their evidence "insulting".

These are only opening salvos, as the Germans and French take aim too against companies pretending their profits arise in Bermuda or Luxemburg. John Lewis's managing director is calling on the Treasury to demand tax is paid in the country where profits are made:Amazon made £3.3bn in sales but paid zero UK corporation tax on any of the profits of that income. "They will out-invest and ultimately out-trade us," tax-paying John Lewis protests, unable to compete fairly with tax-shirkers. This should be easy to fix. Vince Cable says he's angry – but HMRC could refuse to accept these companies' accounts.

Everyone can point a shocked finger at foreign giants who bamboozle or intimidate our tax collectors. But the culture of avoidance runs deep. Labour tiptoed round the edge of the tax avoidance industry, chased off by City blusterers who called tougher tax collection a Labour stealth tax. But since the crash, the collapse in tax revenues has created soaring national debt, so the need for the Treasury to collect every penny owed has become more pressing. The culture of getting away with what you can has to give way to a popular understanding that one man's tax dodge is his own community's lost children's centres, libraries and swimming pools. So where does it all begin?

In a sedate Sussex hotel, St James's Place Wealth Management invited a flock of retired people of comfortable means to one of their genteel sales pitches on how to avoid tax. Observing unannounced, I listened to them selling their Rolls Royce anti-tax vehicles and investment funds: one fund was so stellar that it grew in 30 years from £30,000 to £2.7m – and how the room gasped in admiration. Yes, yes, we were all well warned that investments can go down as well as up, but the upside of that £2.7m looked more compelling than any risk. But the real seller for these elderly people concerned ways to avoid "uninvited guests at the sharing out of your estate". Those "uninvited guests" are the rest of the nation's taxpayers.

The atmosphere was impish and jocular, with the taxman as pantomime villain. Shocking stories were told of what befalls the estates of those without cunning advisers. Charles Clore lived abroad to avoid tax, but because he foolishly wanted to be buried "back home", the taxman deemed he was not really resident abroad at all and his whole estate was subject to inheritance tax. Gasps of shock. On screen, up came Prince Philip's whimsical remark that "All money nowadays seems to be produced with a natural homing instinct for the Treasury" – though in his case money makes the reverse journey from the Treasury to his trouser pocket. "Taking the worry out of wealth," was the theme, as one presenter promised: "We can protect your money from the dangers of tax," explaining how to offshore money.

But the big sell is trusts, special ones devised for this company's clients, guaranteed to protect almost all your wealth from inheritance tax. They are right, it can be done easily. Put all moveables and all cash and investments into a discretionary trust, and it passes to your heirs without tax as soon as you die, not even waiting for probate. It counts as a gift so the beneficiaries need pay no tax either. Called a "discretionary trust", as technically St James's are the legal trustees, the discretion in fact remains in all but name with you: the company will do whatever you ask, so you still control the fund and you can still take money from it. But for reasons that defy basic tax fairness, it avoids all inheritance tax. Why?

Even worse, hard-pressed local authorities are denuded by these trusts too. As St James's advisers eagerly pointed out, if you hide away your assets in a trust, it can't be counted when calculating how much you should contribute to your care if you need to go into a residential home. He warned that could be £1,300 a week in fees – more gasps – so why let your council take your money when you can salt it away safely in a trust? Let poorer taxpayers pick up the bill instead.

Richard Murphy, tax campaigner and adviser to the public accounts committee and others, says no one knows how much money passes through these trusts. They are opaque, unregistered and the taxman neither knows if they exist nor what's in them. Far more tax is probably avoided this way than the mere £3bn collected in inheritance tax: only 3.5% of estates pay it – and they may not be the richest. Why any Labour chancellor – or Tory for that matter – lets this dodge persist is a mystery. Inheritance is a neuralgic political topic, ever since the issue panicked Gordon Brown into ducking an election in 2007. But since so few estates pay it, it's hard to see why the 96.5% of ordinary taxpayers who never leave enough to get above the £650,000 couples' inheritance tax allowance would not support ending this loophole for the rich.

Meanwhile, the public accounts committee is summoning back Amazon after this week's "deliberately evasive" display of "outrageous" ignorance by one of their executives: he didn't know who owns their Luxembourg-based holding company that pays a fraction of the UK's tax rate. The return match is not to be missed. Margaret Hodge is calling for complete transparency to stop companies claiming "commercial confidentiality" to hide their accounts. She wants aggressive avoiders to be named and shamed and denied public contracts, and she suggests the public boycott tax avoiders.

On 8 December UK Uncut is protesting against Starbucks, setting up creches, libraries and women's refuges in the coffee shops, as payback for services that might stay open if Starbucks paid fair tax. Is it time the committee looked at how the likes of PricewaterhouseCoopers, KPMG, Accenture and McKinsey devise ever more elaborate tax dodges for their clients, yet with the other hand seize ever fatter contracts from the state they help strip bare of revenues?

Fake book reviews are rife on internet, authors warn

 

Fake book reviews are rife on the internet and readers should be aware of the "fraudulent" practices of some writers, a group of leading British authors warn tonight.

Image 1 of 2

Authors Ian Rankin, Lee Child and Val McDermid were among the 49 writers to condemn the "underhand tactics" of colleagues such as RJ Ellory. Photo: CHRIS WATT/GEOFF PUGH/GETTY IMAGES

By Andrew Hough

9:30PM BST 03 Sep 2012

In a letter sent to The Daily Telegraph, the authors, who have collectively sold millions of novels, “unreservedly” condemned the “abuse” on websites such as Amazon.

_{RJ Ellory admitted to using false names on Amazon to attack rivals (Picture: REX FEATURES)}

The group, including bestselling writers Ian Rankin, Lee Child, Susan Hill,Val McDermid and Helen FitzGerald, said the widespread use of “fake identities” was causing untold damage to the publishing world.

In an outspoken attack on the so-called “sock puppeting” practice, they urged readers and the literary world to help expose colleagues who used the “underhand tactics”.

Their condemnation came after RJ Ellory, the bestselling British crime writer,was exposed for using pseudonyms to pen fake glowing reviews about his “magnificent genius” online while simultaneously criticising his rivals.

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The author of A Quiet Belief in Angels and a Simple Act of Violence, whose real name is Roger Jon Ellory, apologised for his "lapse of judgment".

The 47 year-old, based in Birmingham, West Midlands, admitted he had used fake identities to write about his own work on the Amazon book site, giving himself five star ratings.

Ellory, who went to ground today as he faced a deluge of criticism from fans worldwide – many of whom took to the internet to voice their anger – also gave his rivals bad reviews and low ratings using the same pseudonyms.

The father-of-one, who has won a variety of awards including Crime Novel of the Year 2010, was compelled to apologise after Jeremy Duns, a British spy author now based in Sweden, aired the accusations on Twitter last week.

Another thriller writer, Stephen Leather, has also admitted using different online identities to publicise his work.

_{Authors Ian Rankin, Lee Child and Val McDermid (Pictures: CHRIS WATT/GEOFF PUGH/GETTY IMAGES)}

In their public letter, the group of 49 British writers, including Mark Billinghamand Stuart MacBride – who were targeted by Ellory – said that with the advent of the internet, honest comment had never been more important.

“These days more and more books are bought, sold, and recommended online, and the health of this exciting new ecosystem depends entirely on free and honest conversation among readers,” they wrote.

“But some writers are misusing these new channels in ways that are fraudulent and damaging to publishing at large.

“Few in publishing believe they are unique. It is likely that other authors are pursuing these underhand tactics as well.”

They added: “We … unreservedly condemn this behaviour, and commit never to use such tactics.

“But the only lasting solution is for readers to take possession of the process. The internet belongs to us all.

“Your honest and heartfelt reviews, good or bad, enthusiastic or disapproving, can drown out the phoney voices, and the underhanded tactics will be marginalised to the point of irrelevance.”

_{Mark Billingham was among those authors targeted by Ellory (Picture: GERAINT LEWIS)}

The Crime Writers' Association, whose almost 600 members include Ellory, a former board member, have also condemned the “unfair” practice and confirmed they had launched a review.

Mr Duns, 38, also a signatory, exposed Ellory, whose 10 novels have sold more than a million copies, after being contacted by a fellow concerned author.

“It is very encouraging to see the support from so many people in the literary community at large who have come together to stand up against this sort of thing,” he said tonight.

MacBride said he had received dozens of messages of support from both fans and fellow writers.

He added: " It is hard to know what to pity more – the need to create 'sock-puppets to big up your own work or to use those same 'sock-puppets' to attack other writers."

In 2010 Prof Orlando Figes, a leading academic and award-winning historian, confessed to posting similar reviews on Amazon that praised his own work as "fascinating" and "uplifting" while rubbishing that of his rivals.

Ellory was “unavailable” for comment tonight while his literary agent Euan Thorneycroft declined to answer a series of questions from The Daily Telegraph.

An Amazon spokesman did not respond to requests for comment.

_{Ellory was "unavailable" for further comment (Picture: GETTY IMAGES)}