What would you ask business if you had the chance?

I, and I believe many others, agree with malcolm r, and I would add my voice to his. Except that, I remember when building a long-term future by serving customers was considered sound business practice, rather than riding roughshod over customers for short-term highest profits. (Or at least it was in the US, where I lived 30 years ago.) Therefore I don’t see current practices as inevitable, just shortsighted.

Thus I suppose a question could be, What would have to change for businesses to reverse the overarching trend – presumably the only way known to younger CEOs – to value profits to the near-exclusion of customers?

Business customers usually are more professional in their dealings and often generate repeat business so are on more equal terms with the supplier. Individuals are often one-offs, or their business on its own is not important to a supplier.

Thanks Malcolm. You have more experience of this than I have.

I generally had a great experience acting as a business customer/user even over a single item. The only time I get anything like the same standard of service as an ordinary consumer is when dealing with very small companies where I’m on first name terms with those involved.

“Whistleblowers” – a term that sounds a bit derogatory – should be encouraged in all sectors to report, in confidence, bad practice to appropriate authorities. We probably need to establish these independent bodies that can be impartial but with teeth. Then we might begin to clean up the worst of the unsavoury shenanagins that go on.

The revelations about HSBC helping wealthy customers to evade (not just avoid) tax on Swiss deposits have been helped by a “whistleblower”; pity HMRC don’t seem to have taken much notice. Maybe if we encourage an open acceptable culture of whistleblowing, the potential perpetrators of misdemeanours might think twice.

I would be happier with something like ‘inside reporter’, though whatever term we use, it will be synonymous with ‘whistleblower’.

I am fairly comfortable with this where there is a clear public benefit of uncovering a serious problem, as in the case where the Guardian published secret filming of problems in chicken processing companies. If it is an employee trying to get other employees into trouble, that is another matter.

The risk of being exposed is an obvious deterrent, so I agree that encouraging reporting could help avoid serious cases.

I think that there is quite a distinction between inside or undercover reporter compared to a whistleblower. It takes courage to be a whistleblower as there are both morale and teamwork restraints to be overcome. An undercover report is after the story and has no ongoing relationship with other workers.

Currently I have concerns over an organisation where I know that the Directors are behaving badly however I do not wish to damage the reputation of the organisation. It is not easy to decide if the organisation would be best served by the harsh light of publicity to clear the infection or to walk away, or continue to make pleas to get the Directors to heal the situation.

Interesting comments from Francis today on whistleblowers in the NHS, and the bullying and threatening tactics used to deter them. Independent bodies are needed that can accumulate information and treat it in confidence to put a stop to that. If people who commit misdemeanours, are grossly negligent , incompetent or whatever know they may be held to account then perhaps they will think twice about their behaviour.

We also need to take sanctions against such people. It is staggering the people directly involved in the Rotherham child abuse have been given similar positions of authority in other public authorities. What sort of message does that send?

The same sort of culture pervades some businesses.

With the dirt being dished on the Daily Telegraph regarding its HSBC coverage and HSBC’s threat to withdraw its advertising one has to wonder how the CBI can square the circle. That the main owners of our newspapers are tax exiles if not a foreign corporation controlled by Murdoch one has to be thankful that any news reaches us.

P.S. This weeks Private Eye has quite a lot on the Rotherham scandal and the people of interest. Also the plight of whistleblowers including the one abandoned by the BBC and left tp fight alone.

In its annual report, the CBI describes itself as “the UK’s leading business organisation
and speaks on behalf of 190,000 businesses of all sizes and sectors which together employ around 7 million people, about one third of the private sector workforce”. Its income from members subscriptions is just under £20m, so about £100 each, but I expect the subscription is graded by company size.

The figures you quote are the total if you include all the trade bodies that are affiliated to the CBI. Or as Wikipedia says:

“The Confederation of British Industry is a UK business organisation, which in total speaks for 190,000 businesses,[1] made up of around 1500 direct and 188500 indirect members. There are 140 trade associations within the confederation who, alongside those direct members of the CBI, employ 7 million people, about one third of the UK private sector-employed workforce. The National Farmers Union with its 55,000 members is the largest component of the 188,500 indirect members the CBI claims to speak for.”

The fuss last year was really that the CBI became a political body without reference to its members and needed to register to spend up to £150,000 on a campaign. Whatever the rights and wrongs of devolution a non-political entity should abide by its constitution and if it wishes to change follow the correct procedures.

An example of “trust” being thrown away for expediency which is what business is about.

So it might be argued that, in respect of its membership composition, the CBI’s annual report is not telling the whole truth. It apears that it only has around 1640 organisations in paid-up membership. It is a good idea for trade associations to be members of the CBI because it assists them to further their interests in combination with others with similar concerns or objectives, but I question whether this particular kind of pyramid building might be designed to exaggerate the CBI’s mandate – many companies are members of trade associations for specific commercial reasons and to facilitate collective bargaining; to say that all the individual employees of these trade association members are represented by the CBI is akin to how the Labour Party used to regard all the members of its affiliated trade unions as being of one voice under the ‘block vote’ – a practice always criticised by right-wing elements of the body politic.

It was courageous of the CBI to embark on this issue of trust in our businesses. It is at the root of the relationship between people – whether as customers, employees, suppliers, investors or commentators and external parties – and commercial organisations, and at the moment the foundations of that relationship are not exactly rock-solid and certainly require some strengthening. It is probably the case that only the CBI has the leadership and authority to pursue that effectively.

I see from an old Friends of the Earth research document “Hidden Voices” that the biggest group of direct members then was lawyers and consultants. ” The largest single group is consultants
and then lawyers. In total, more than 500 CBI members (well over a quarter) can be classified as business services or consultancies.” page 14

Remarkably then and perhaps even now members were not allowed to know members of the various committees. The report did receive some information from an honest businessmen of two committees memberships.

Insidentally that fuss in Scotland over the CBI and campaigning:
” the Scottish Independence Referendum Act makes clear that this application should be signed by an organisation’s secretary or someone who acts in a similar capacity. Mr Cridland revealed last week the decision to register had been made at an “operational compliance level” and had not been approved by the CBI board.
The CBI took legal advice and on Friday announced it was seeking to have its application declared void. Mr Cridland said the commission’s decision to do so removed any doubts about the political impartiality of the CBI.”

I am beginning to think it is the CBI’s reputation that is being salvaged by mixing with Which?

Maybe the government should publish the names of companies and what %age of their staff need benefit top ups because they’re not being paid enough. Naming and shaming seems the best way to get companies to do the “right” thing.

I support David’s approach if it is clear that tax credits are subsidising low pay rather than low incomes [i.e. due to part-time working].

Which leads me to some other questions “Why do some companies need to be named and shamed before they do the right thing?”. “What is the culture of senior management that they use working practices that run that close to the edge of decency?”

william, many companies are such anonymous bodies that the naming and shaming are pretty meaningless. How many companies are named and shames and carry on just as before? HSBC seems a current example.

The culture I suspect is partly money, partly to be seen by your seniors to be a clever operator, partly to outdo your peers. partly to make your job secure. These are people like many of the rest of us who seem to have a Jeckyl and Hyde syndrome – very nice family people in their spare time but caught up in a corporate culture when they get to their desks. Perhaps as an extreme example, like killing and mistreating people in a war, something they would never contemplate in private life. Just obeying orders and not the guts to follow your conscience?

I think perhaps the idea logically should include the Directors and the Senior Executives. If you think how much exposure J Lo gets or a Kardashian why can we not elevate businessmen to a similar notoriety – sorry I meant fame.

Just around Christmas the French authorities fined several well-known multinationals* about Euro1.2bn for stitching up consumers by fixing prices for various household goods and cosmetics.

Previously in an EU case major firms* colluded on clothes washing liquids. You may all remember the smaller more concentrated liquids being brought in – but despite them being cheaper the major soap firms colluded to prevent any price war and to maintain market share. Even to the extent that the market leader would signal price rises.

Generally firms get charged but I note in Australia they have also charged cartel guilty executives which seems a splendid idea.

The notion of trust I think may work with small firms with a local presence but when you talk of multinationals the concept seems ludicrous.

* Unilever , P &G, Haeckler, L’Oreal , Colgate-Palmolive and more

Beryl, we are becoming still more a nation of shopkeepers than ever. A recent birthday gift was a stainless steel cafetiere from a Sheffield firm (the home of stainless steel) proudly declaring it as “carefully made.in…….China”. A M&S thermal vest made in……China. However a Krups electric milk frother was made in….Germany. If they can do it, why can’t we?
I believe two sectors are keystones of an economy
– manufacturing, keeping our people in employment and profits in the UK, and
– research and development that through our industry and universities provide the innovations for our manufacturers in the future.

What does British Industry need for this to happen?

What Britain needs is industry, which like the Germans, is not in hock to the City of London which sell off our firms to foreign companies.

The German model is family dominated medium sized firms working together with banks who have an interest in the companies. In the UK new firms most of the time have to raise cash from the City who extract as much as they can during a fund-raising.

If you like the Germans appreciate the value of production whilst in the UK it is the manipulation and generation of money that makes their world go around.

I am by nature a conservative and have read widely on City corruption – even before the fixing of LIBOR ; and the German economic miracle. I have sat in meetings trying to arrange an equitable raising of cash for a small company in the City so I am not being fanciful in my analysis.

I would not be surprised if the milk frother was assembled in Germany from components made in China. The reason why so many products sold in Europe are made in China and other countries is largely down to cost. M&S carried on making clothing in the UK longer than other high street retailers. The last thing I bought was a coat made in China. I suspect that we would have to get rid of the minimum wage and stop worrying about health and safety if we wanted to compete with the far east. Fabulous salaries for directors would have to go too.

I believe that the higher education sector has a lot to contribute. We tend to think of home students paying £9k per annum towards the cost of their education as a lot of money but international students pay much higher tuition fees (EU students count as home students). Taught masters courses can be quite lucrative. Like all students, overseas students spend a considerable amount of money during the time at university. Universities make use of many local contractors and suppliers. During the long vacation, empty student accommodation and teaching facilities is often used for conferences and meetings, not only international research meetings but companies doing their own staff development or attending in-service training arranged with the universities. The impact of universities on the local economy is most obvious when they are outside city centres. A considerable amount of science research is funded by UK and overseas companies, and both parties benefit in different ways.

I see universities as our hidden economy and whereas manufacturing in the UK has declined, universities have grown.

A large number of the top UK companies work very closely with universities on research and development projects, on supporting relevant educational programmes and degree courses to develop the next generations of industrial, commercial and managerial talent, and on endowing new buildings, facilities & equipment, and teaching & learning resources. Some very large companies, however, make no mention of any such initiatives or activities in their annual reports; they are happy to recruit graduates and I think there is an opportunity there for the CBI to exhort its major members to get into a two-way relationship with one or more of our higher education establishments for their mutual benefit: it will enhance the company’s competence and access to advanced skills, and it will enhance the university’s reputation as a respected and academically-significant institution. As Wavechange says, there will be many other spin-offs, including vital international ones on which both parties can capitalise. Perhaps in the past companies have been wary of ‘knowledge’ and universities have had an aversion to ‘trade’. This ismay no longer be the case but more could be done.

Historically, many of the UK’s ‘red brick’ universities sprang out of technical institutes or single-trade colleges relevant to the industries and manufactures of their locality, and the founders and benefactors of those establishments were often the leading industrialists and business people of their day. The structure of business has changed out of all recognition but there could surely be a return to some of those alliances that would reinforce the relevance of higher education to the prosperity of business and the value of business support to the academic reach of the universities.

One of the examples of the cooperation between universities and industry, mentioned by John, is government funded via the Biotechnology and Biological Sciences Research Council. BBSRC CASE Studentships support graduates studying for a PhD, working on research projects of benefit to their industrial sponsor and their academic supervisor. In addition to the normal research council grant, the student will receive a contribution from their industrial sponsor and the opportunity to spend some time working in industry, the experience depending very much according to the nature of the joint research project. Typically, the research student and academic supervisor would sign a confidentiality agreement with the company.

Katja,
What companies will be represented at the debate?

AJ – Richard Lloyd and I will be joined on the panel by representatives from E.ON and the Guardian Media Group. We’re expecting lots of other companies from a wide range of industries in the audience who will take part in the debate.

Thanks for keeping in touch Katja. I wish all guest contributors would do the same.

As has been said publicly, there is nothing illegal about having a Swiss bank account and nothing illegal about avoiding tax (have you got an ISA?). What is illegal is not declaring income that is taxable, or constructing schemes that hide your income or assets from tax – tax evasion.

Those who are found to have evaded tax should all be made to repay it to HMRC (us) with significant penalty payments as a civil matter initially – quicker and cheaper than going to court – and they should be named. HSBC members who have connived in constructing tax evasion schemes should be criminally prosecuted, along with those who gained significantly from such schemes. No fines though (these are just business expenses), there need to be custodial sentences and/or bans from practising banking or being the director of a company. This maybe would act as a deterrent to future misdemeanours.

There was an interesting discussion about individuals’ attitudes to tax avoidance earlier this week – You and Yours, Radio 4, available on iPlayer.

The discussion was held on 25th February. When will we get feedback on the points discussed?

I watched part of the select committee on HSBC vs HMRC . HSBC had no effective remorse – blamed it all on Swiss secrecy laws so the only people held responsible were the Swiss managers – not the board members that oversaw them Seems a strange business as regards accountability.

As for HMRC, it would appear they had a reasonable response to the questions asked. Briefly the data given to them by the French came with the restriction (by Treaty) that they could only use it for tax purposes and not disclose it to any other authority. Without that it seems difficult to get the corroborating evidence necessary for more than a few prosecutions as the data was incomplete. It seems HMRC did examine all the data before referring 3 to CPS, of which CPS pursued one, successfully. The French have now relaxed the terms of disclosure and HMRC can now share with other bodies to see if further evidence exists to support evasion, fraud or other criminality. £130 M of tax, interest and fines has so far been recovered.

There are good aspects of capitalism, such as competition between companies, which can result in improved services and lower prices for consumers. Unfortunately we now seem to have a considerable amount of corporate greed and exploitation of existing customers.

I agree entirely with both of your sentences, wavechange. My posting should not be read as anti-capitalist by any means. We are, effectively, being asked what is wrong from a consumer perspective.

Wavechange – Input cartels into your favourite search engine and see how many have been prosecuted this century in Europe. The most recent being in France just before Christmas involving a whole host of well-known multi-nationals dealing in household goods and cosmetics.
Cartels can be incredibly difficult to prove so I would guess more goes on than ever reaches the courts.

Until such time as the Directors of companies face prison terms the defence to everything will be is it is our duty to run the company in the interests of shareholders. That the interest coincides with the Executives pay increases is understood.

The increase in worker safety with the change in the law may very well indicate the benefits of removing Director protection and concentrating their minds:

” A catastrophic accident caused by a toppling crane not only resulted in the tragic and avoidable death of a worker but also criminal liability and a fine of £80,000.00 for a Director of the employer (now in liquidation), evidencing that, when it comes to major breaches of Health and Safety, it’s not possible to hide behind the “corporate veil”.
The accident in 2007 happened when the deceased, Richard Thornton was crushed under a 50-tonne crane because the crane was too far away from the steel column it was lifting. The prosecution of the company and director was on the grounds that :-
the work had not been planned and carried out safely
the crane had not been properly maintained – it’s alarm was not fit for purpose and, crucially, override switches were also faulty. Had such switch been working it would have prevented the lift in the first place due to the overload.”

Dieseltaylor – I looked up cartels when I posted about the historic Phoebus cartel concerning light bulbs. Some large companies have been fined. As you say, cartels can be difficult to prove and we may see only the tip of the iceberg. I now dislike the term ‘reputable company’ and would prefer to use ‘well known company’ because you would be hard pressed to find any large company that has not come in for considerable criticism. I suspect that the consumer would be better served if we had fewer very large companies.

As I understand it there is a subtle difference between a cartel and tacit collusion in that a cartel is a formal agreement between companies to price fix and tacit collusion is an informal agreement when a market leader will fix a price and the others (usually a select few large operators) follow suit when it is more difficult to prove any wrongdoing but nevertheless can stifle competition.

This sums it up beautifully, Rob. I hope that there is a real intention here to improve things, but it is a little hard to believe and appears a bit Polyanna.

While consumer rights have in the past been viewed as something of a liberal/left cause, over the years I have found Which? to be very much within a consumerist framework of “Buy more, buy better, have fun with expensive toys, we just want things a bit clearer and safer”. In other words, to me the magazine and many of its subscribers would appear to be proper conservatives, if not Conservatives. This is not the place for a value judgment on this; I only mention it here to say I am a bit shocked at the strength of anti-big business feeling expressed in this forum, and suggest to Katja that it indicates very serious problems indeed, which should be viewed as a wake-up call.