Banks, fines and trust. The fallout from the financial crisis is still around. Roger McCormick (London School of Economics) has started to look at the escalating penalties imposed by regulators. For the five years to end-2012 the ‘conduct costs’ for ten major banks where nearly £150 billion. For the same period to December 2013, this figure rose to £160 billion. It is reasonable to expect a rapid increase to 2014. Bank of America, BNP Paribas, Citigroup, Lloyds Group, Standard Chartered and UBS will assure higher total payments. There is beginning to be acceptance of the link between conduct and culture. Investors and other stakeholders are starting to understand it can be beneficial to have a transparent approach to costs. Banks are lagging behind and do not seem to share experiences, use available intelligence and trends from their own data, or share experiences. Building trust and confidence is now beyond competitive edge.
Taxation is a popular subject. There will be more words as we move towards next year’s general election. Economists, politicians and others will continue complaints that: structures are unsatisfactory, budgetary constrains look complicated, and policy is uncertain. These protests will not make much difference. The government has to raise tax revenues. This is an expensive task. And the cost of doing it this way is unlikely to be much greater than the outlay on a system which would satisfy the demands from professional commentators. The Institute for Fiscal Studies points out what really matters is the capacity to collect taxation, and the current process, despite its faults, brings in large sums of money with acquiescence of the payers. A finance minister to Louis XIV of France said, ‘The art of taxation consists in so plucking the goose as to obtain the largest possible amount of feathers with the smallest volume of hissing.’ We all know that: council tax should be updated and reformed, National Insurance is a tax and ought to be treated as such, environmental taxes are incoherent and deserve attention. Governments are reluctant to risk killing that big bird of taxpayers’ acceptance which lays the golden egg of £600 billion a year. Of course, there are big benefits to be had from a well-designed procedure for taxing us. Government collects £4 of every £10 in the economy. Research shows the serious disadvantages of ignoring the issues. However, do not expect action soon.
Productivity is a mandatory problem for managers. The Office for National Statistics released worrying information in June. Output per hour worked in the UK is now 30% lower than France, Germany and the United States. Back in 1993, Peter Drucker said, ‘ ... the greatest challenge facing employers in the 21st century will be improving the productivity of knowledge workers’. Businesses which buck the current trend in their own performances win an advantage over domestic competitors. They will have recognised that productivity has three inter-related components: the knowledge and skills to perform well (capability), the motivation to do so (engagement) and a conducive context (effective management). This is an urgent problem. There are no quick-fixes.
Do they make things? The Jobs Economist has revealed that there have been dramatic increases over the last three years in the number people in particular jobs. The top ten included : specialists in taxation (up 88%); advertising managers and creative directors (75%); paramedics (62%), debt collectors and credit agents (59%); psychologists (59%); town planners (55%); bakers (54%).
Deliverability. ‘I’ll tell you what happens with impossible promises. You start with far-fetched resolutions. They are then pickled into a rigid dogmas, a code, and you go through the years sticking to that, out-dated, mis-placed, irrelevant to the real needs.’ Neil (now Lord) Kinnock in 1985. Quoted by Michael Taylor.
He ought to know. ‘There are decades when nothing happens and there are weeks when decades happen.’ V I Lenin (1908).