Lean and Mean

Tuesday morning. My wife, Pat, has gone off to work. She works one day a week in the office of a local primary school – the William Booth School, named after the founder of the Salvation Army who set up his first 'mission' yards away from where the school now stands. On her way she will pass over Trent Bridge and the site (now a hair dresser’s, I think) of the first chemist shop owned by Jesse Boot's father, John, where the now multinational business Boot’s started life. The school is also only a mile or so away from another primary school named after Jesse Boot – Jesse Boot Primary – to remind local town folk of the generosity and good deeds of the Boot family.

I thought about this over breakfast while I read the Guardian. Following a report yesterday that there had been a demonstration outside the Boot’s Chemist in Oxford Street, London. There were a number of letters from readers in the Guardian. The London demonstrators were highlighting the fact that Boots, a company born and bred in Nottingham, was reducing its tax burden by registering its office in Switzerland. The police broke up the demonstration by using tear gas – the first time, I understand that this method has been used to break up demonstrators in mainland Britain. This is, perhaps, a worrying sign of things to come as the government and big business continue their divisive 'get rich quick policies' that mean the rich get rich and the poor get poorer. The government’s claim that we are 'all in this together' has an increasingly hollow ring as the gap between the 'haves' and the 'have nots' widens in our society. I fear that there will be more demonstrations – and rightly so.

John Ralfe, the former head of corporate finance at Boots has calculated that, "the UK has lost about £100m a year in tax as a result" of the Boot’s tax loophole accountancy. Other national companies have followed and continue to follow the same route.

Last week, Pat and walked around the magnificent grounds of Nottingham University - one of our nation’s premier universities which has its roots firmly in the funding provided by Jesse Boot a century ago. I reflected on this too when I noticed, on my bookshelf at home my M.Ed thesis which I completed on a part time basis Nottingham University. I had, and have much, to be grateful for to Jesse Boot and his father John Boot. So too, have many people in Nottingham and so too have generations of students from all over the world who have come to this city to study.

James Peacock's philanthropy
still in evidence almost 400 years
 after his gift to the village

And, after breakfast, when Pat had gone to work I walked to the village to get the daily shopping. I passed the old school on the village green and noticed the inscribed stone in the brickwork. I read that this 'free school' had been built on the funding of James Peacock, a seventeenth century resident of the village who made his fortune in London but didn’t forget his roots. He provided an endowment so that the boys of the village could be educated. Even today, the endowment still purchases a dictionary and a Bible for all the 11 year olds leaving the school to go on to their secondary education. The school was, of course, taken over by the local school board with the coming of the great 1870 Education Act, but it was building on a foundation already laid in the village due to the generosity of James Peacock. As I continued my walk I passed near to the James Peacock Infant School - I could hear the children playing in the playground. And thinking about these things I began to wonder what is wrong with our society when multi-national companies are not fulfilling their obligations to the communities in which they grew up and operate and are making a fast buck by relocating to tax havens. They are not suffering – but society is.

I’m so pleased that Jesse Boot did not adopt the same position as his multinational successors. I’m so glad that James Peacock didn’t – doubly so, for I spent my first years of teaching in the school on the green – it paid my mortgage and kept my family. And when my own children went to the school they too benefitted from James Peacock’s community spirit, altruism, generosity and integrity.

I am not naive. Businessmen are in business to make a profit. That, I am, sure was just as true in the eighteenth and nineteenth centuries as it is now. But there are differences. Politicians now call for accountability – for example in schools or in the health service – and yet in the face of what is allegedly the worst recession in living memory they are unable or unwilling to clamp down on this massive tax evasion and make companies like Boot’s 'accountable'. It is the same with the pay and bonuses of bankers. Politicians are unwilling to bring them 'to account'. 'But', I hear Michael Gove say, 'we have many people queuing up to show their philanthropic zeal and fund academies.' Correction, to fund academies in order that they get a place in the House of Lords and thus gain privileged access to those in power. And the circle is squared when the politicians and those in power – Hoon, Blair, Mandelson, Smith et al leave politics for plush jobs in, or consultants to, the boardrooms of the multinationals. No, gone are the days when honest philanthropy was just that – it came with no strings attached. Gone are the days of ethical action. Gone are the days of altruism.

We are a rich country – but could be a little richer if those with the money and the power fulfilled their financial, moral and social responsibilities. If Boot’s and other companies paid their tax and if politicians ensured that they did then the national conscience would be a little easier. The straits would not be quite so dire if the billions of pounds given to the banks had been put directly into the economy to increase purchasing power rather than provide bonuses and bulging balance sheets for the banks.

Sadly, I do not completely blame the bankers or Boot’s or other similar companies. Given a similar situation most of us might have taken the same route – it’s called greed and is a fundamental part of the human condition. No, the blame lies with the inherent integrity and ethics of government and those in power who are unwilling to address the issue – why bite off the hand that feeds you? Our politicians are no longer the honourable people that we expect – they swim with the sharks. It lends a horrible truth to the latest ‘banker’ joke I heard: 'Why don’t sharks attack bankers? Answer: Professional courtesy!' We mock the Italians and Berlusconi – we are no different. Our prime minister, until last weekend, employed a man as his media advisor of undeniably questionable background and sees no reason to distance himself from the highly questionable people on the Oxfordshire Set (see previous blog!). Tony Blair, and even the virtuous Gordon Brown moved regularly in these circles. Peter Mandelson loved it – he had no shame in praising what he called ‘the filthy rich’. Our present government appoints a man to advise on cost cutting, (Philip Green) who gives barrow boys a bad name, a man who openly directs £1.2 billion into his wife’s bank account to save him from paying the due tax. The list is endless – the use by government (and within government) of people who you would never, in your right mind, buy a used car from, people who, in years past, would have been regarded with suspicion and called 'spivs' - is both breathtaking and depressing.

The old Endowed Boys' School
on Ruddington village green.
Thanks to James Peacock

No, we have sunk a long way in these early years of the 21st century. Jesse Boot’s and James Peacock’s altruism (and of others like – Joseph Rowntree or Robert Owen) laid the basis of the society we have today. It allowed people like me to 'make good'. To play a part in that society. To hopefully contribute to the future wealth and well being of that society. What we have in 2011 in our country is a wealthy and political class of mean minded sharp operators – plying their trade just within the boundaries of the law and with two life ambitions – to increase their bank balance and promote their advancement. And they do this with the blessing of those in power – of whatever political persuasion.

Of course, people like Boot, Owen, Rowntree and the like were just as interested in making a profit as the business leaders of today. But they went about it differently – and for a very good reason – they were the owners of their companies. They had a vested interest in its future and its continuing success, it was their company and their life’s work. So, they invested in the work force because they knew that happy, well fed, enthusiastic employees were also productive employees and that meant profits. It also meant, by default, that communities benefitted. In Nottingham, until a few years ago it was accepted that working for Boot’s was a definite 'plus'. Apart from any remuneration, security of job etc. there were perks. One of the most often quoted was that the company would fund night school class attendance for employees – it didn’t matter too much what they were studying, but they were studying. I can remember attending classes on car mechanics and hi-fi where a number of the other participants were funded by Boot’s. Jesse Boot knew that employees who want to improve themselves will also want to improve their work place and their company – and for Jesse Boot that equalled increasing profits for him. Joseph Rowntree and Robert Owen had the same philosophy - and they helped generate the wealth of the nation that we still enjoy today.

But now we have different business leaders. Our companies are not run by the men who own them and built them up. They are run by accountants and 'entrepreneurs' like Philip Green or Stuart Rose whose raison d’être is to make the business 'lean and mean'. To maximise immediate profit rather than ensure long term success. All that matters is the next balance sheet so that share prices will rise, the shareholders and stock market speculators will be happy as they cash in their 'chips' and they, the CEOs and the like will get their next bonus. After a year or so they move on or the company is gobbled up by someone bigger – but everyone is happy if that happens – bonuses all round and further rising share prices. Everyone’s a winner – except the ordinary worker, the local community. And in this culture, philanthropy and altruism have no place. There will be no legacy for future generations from Stuart Rose’s 'M & S' or Philip Green’s 'Top Shop'. It's a kind of quick fix, here today gone tomorrow capitalism and economics where long term development and the greater good has no place.

In his book '23 Things They Don’t tell You About Capitalism' (Chapter 2) Ha-Joon Chang makes this point well. He calls these people who now run businesses 'professional managers' and their incentive is increasingly the maximisation of profits by cutting costs – wages, development, job security measures and the like. In the very short term it works – in the longer term it doesn’t – but by that time the professional manager has moved on with his stock option bonus in his pocket. He had no long term allegiance to the company, its employees, its history, its community. And, of course, neither did its shareholders – they too have moved on. Against this background Boot’s decision to relocate to Switzerland to avoid paying tax makes absolute sense. Who wouldn’t do it? But as a nation we are the poorer. Tax is not paid and the nation and local communities miss out. Companies like Boot’s are indeed very lean and very, very mean.

Jesse Boot and James Peacock were men of Nottingham. We have a third famous son – Robin Hood. He allegedly proudly boasted that he robbed the rich to help the poor – I’m afraid he would have got short shrift in modern Britain. The likes of Philip Green, Michael Gove, David Cameron, Geoff Hoon, Jacqui Smith, Tony Blair, Peter Mandelson, Gordon Brown, George Osborne, Nick Clegg, Vince Cable – the list is endless – would, together with the bankers and the CEOs of companies like Boot’s, like so many latter day Sheriffs of Nottingham,  advise Robin of the error of his ways – 'No, no, no', they would proclaim, 'you’ve got it wrong - it’s rob the poor to help the rich!

And now – it’s mid afternoon. Pat will soon be home from work at William Booth Primary School. It’s just occurred to me that the awful irony of the whole situation is that if the descendents of Jesse Boot’s Trent Bridge Chemist shop, the modern Boot’s, and the CEOs of other tax evading companies, continue to get their way and walk away from their responsibilities towards the exchequer and ultimately the community then we will all be needing the support and ministrations of the descendents of William Booth – the Salvation Army to meet our daily needs for food and succour!