The bosses of five of Britain's biggest companies said that paying the appropriate amount of tax is a moral issue as Centrica's Sam Laidlaw forgoes his bonus at the CBI Annual Conference.
Rebuilding trust, reputation and treating customers like stakeholders were the main subjects for debate as the most senior executives of BAE Systems, Centrica, RBS, Sainsbury and the BBC agreed that paying tax is a moral issue.
Responding to a question from ITV business editor Laura Kuenssberg, Sainsbury’s CEO Justin King said that recent rows over big companies’ records of paying tax conflated two different things: liability for paying business rates and avoiding corporation tax.
Business rate relief was effectively a competitive advantage for those firms who qualify but was not part of the debate over tax avoidance, he added.
On the subject of corporation tax he said: “Some companies elect where they pay tax. My view is very simple; every company should stand up and lay it bare to public scrutiny. Tax is a moral issue.”
Chairman of RBS Sir Philip Hampton ironically said RBS “had filed a lot of tax losses this year so it doesn’t really matter,” but also concurred with Mr King that it was a moral issue.
ITV’s Kuenssberg has had earlier quizzed Centrica’s chief executive Sam Laidlaw on a spate of energy price rises, that had reached three times inflation. She jumped on the opportunity to refer to Sir Philip’s predecessor at RBS, Stephen Hester’s decision to refuse his annual bonus when the bank went through a similar crisis of trust following the financial crisis.
She asked Centrica’s chief executive Sam Laidlaw if he would follow this example. Mr Laidlaw confirmed he had already told the energy utility that he would not be claiming a bonus this year, but could not speak for the rest of the Centrica board on the matter.
Lord Hall immediately agreed that paying tax was a moral matter. He supported Sir Philip Hampton’s earlier comments that code of conduct training at the BBC was being carried out through the organisation, saying the Beeb follows a similar “sheep dip” policy of behavioural standards training that Sir Philip said was in place at RBS for all 120,000 employees.
Sir Richard Olver, chairman of BAE Systems, agreed with the moral sentiment on tax. Earlier he had told the packed audience at the Hilton Metropole, London, that very large complex engineering projects frequently go over budget when requirements change, in response to the recent news that the two Queen Elizabeth II Class aircraft carriers would go a further £600 million over budget, taking the running cost of the project to £6.2bn.
Sir Richard had earlier denied that constant government changing the brief was the main reason for the overrun, which has seen the carrier project nearly double in cost from an original £3.5bn to the £6.5bn today.
He said that he was qualified as an authority on rebuilding trust and reputation management following ” 10-years of frontline service in this role”, referring to damage caused to BAE Systems’ reputation around the Saudi Arabian Typhoon bribery scandal.
Rebuilding trust, he told CBI members, was “fundamentally about culture and not about sectors. It is a hugely challenging job to manage this for 100,000 employees across time zones.”
He added: “If you are starting from ‘reputation ground zero’ you need a fantastic board [of directors], the right values and commitment, you need to ensure that everything in the company is aligned and to measure the right KPIs.” He added “People talk about KPIs [key performance indicators] but it is far easier to measure the inputs than the correct outputs.”