Facing uncertainty by predicting risk reactions
Richard Murphy examines why it is important to accept the current pandemic reality and face the uncertainty head on. In ascertaining omnipresent COVID-19 trends, the situation may be approached as dealing with risk. This, in turn, has reactions that can be predicted.
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You're quite right in assuming the furlough and bank lending will not work for the small business. My son works in a call centre with, normally 85 people. 50 have self isolated but can only claim sickness benefit. The Boss, who is self isolating, has a set up so that the call centre is essential (selling phones for BT). As the employees still have to work the 80% wage guarantee is out of the window. I see this sort of thing being replicated. So my son has to choose between safety and wages. He has rent and two children to support. Not much of a choice considering his only alternative is to leave and apply for universal credit (who have said it will take 6 weeks to process). So, as normal the big boys will make money while others lose out. just as a tangent. yesterday and today I have never seen as many police patrolling the streets, either walking or in cars yet there are 6 winos who, everyday, swig alcohol in public and in the park. Priceless. I could go on but I've got figures to prepare for clients who think the banks are going to give them loads of dosh.
You're quite right in assuming the furlough and bank lending will not work for the small business. My son works in a call centre with, normally 85 people. 50 have self isolated but can only claim sickness benefit. The Boss, who is self isolating, has a set up so that the call centre is essential (selling phones for BT). As the employees still have to work the 80% wage guarantee is out of the window. I see this sort of thing being replicated. So my son has to choose between safety and wages. He has rent and two children to support. Not much of a choice considering his only alternative is to leave and apply for universal credit (who have said it will take 6 weeks to process). So, as normal the big boys will make money while others lose out. just as a tangent. yesterday and today I have never seen as many police patrolling the streets, either walking or in cars yet there are 6 winos who, everyday, swig alcohol in public and in the park. Priceless. I could go on but I've got figures to prepare for clients who think the banks are going to give them loads of dosh.
This is not a very helpful article. A mixture of political diatribe and statements of the obvious.
For example: "Deciding what goods, services, outlets and staff are key to that process, and working out how to phase the returns to normal is critical to survival."
Brilliant, Mr Murphy, brilliant.
If we are to run political articles then please let them be more insightful. And if practical articles then please let them have practical recommendations for those of us at the sharp end.
You may be being unfair on the unhelpfulness of Mr Murphy's article here. As he tells us on his website today;
"I have had coronavirus and am still very tired as a result and am not working normally."
Looking forward to the follow up blog on Planning for the future, Mr Murphy. That's where companies need the help. So many of them will have absolutely no idea how to tackle the "massive amount" you hint at.
It's not clear to me whether you are being sarcastic, so I'll treat your comment as though you are serious. The idea that a part-time lecturer at university (if he still is) should be asked to advise those who have succeeded in business how to plan for the future is absurd. Business is like life, as explained by the Jeff Goldblum character in Jurassic Park: it will find a way. It certainly needs no assistance from clowns.
It's not fair to say that Mr Murphy doesn't have any concrete proposals. He does. On his blog he made these quite clear. Any company which wants government help would have to accept these conditions:
"*Zero-hours contracts must be abolished;
*Trade union rights must be recognised and supported;
*A true living wage must be paid in the future;
*Its gender pay differential must be published, and it must have a policy for reducing it;
*Put its full accounts on public record, whatever its size;
*It may not use any tax avoidance schemes of any sort whatsoever;
*It must never use a tax haven;
*If it is a large company it must publish country-by-country reports;
*No one must be paid more than ten times UK median earnings;
Every large company involved must have a plan for becoming net-zero carbon and must include the cost of that plan in its accounts, and make annual reports about progress on this issue;
*Publish information annually of the type required by the Fair Tax Mark;
*Dividends must be based on group retained earnings;
*No dividends should be permitted if group retained earnings would as a result be less than the last three years (in smaller companies, with five years being required in larger ones) average net profit after tax to encourage balance sheet resilience.
To enforce these conditions it would be reasonable to require that every single company taking advantage of these tax holidays should by legal automatic obligation be deemed to have issued 25.1% of its share capital to the government in exchange for the package that guarantees its survival, which proportion guarantees the government the right to block many shareholder actions in these companies.
An automatic right to appoint a majority of the board of directors in the event that the conditions of the bailout, as noted, are not met should also be implicit in the tax holiday terms."
What of companies that don't accept these terms? Mr Murphy has an answer.
Question - "Just to be clear..,So if a perfectly solvent and productive business in normal time , through no fault of its own and because of a catastrophe of which it has no part to blame, does not agree to your long list of demands you would just let it die and all it’s staff lose their jobs?"
Richard Murphy says:
Why not? If they need help they have a price to society to pay for it"
I, personally, am very pleased that Mr Murphy is many miles away from any position of power.
It's not fair to say that Mr Murphy doesn't have any concrete proposals, he does. On his blog he makes clear that any company which needs government help must agree to the following proposals.
"*Zero-hours contracts must be abolished;
*Trade union rights must be recognised and supported;
*A true living wage must be paid in the future;
*Its gender pay differential must be published, and it must have a policy for reducing it;
*Put its full accounts on public record, whatever its size;
*It may not use any tax avoidance schemes of any sort whatsoever;
*It must never use a tax haven;
*If it is a large company it must publish country-by-country reports;
*No one must be paid more than ten times UK median earnings;
*Every large company involved must have a plan for becoming net-zero carbon and must include the cost of that plan in its accounts, and make annual reports about progress on this issue;
*Publish information annually of the type required by the Fair Tax Mark;
*Dividends must be based on group retained earnings;
*No dividends should be permitted if group retained earnings would as a result be less than the last three years (in smaller companies, with five years being required in larger ones) average net profit after tax to encourage balance sheet resilience.
To enforce these conditions it would be reasonable to require that every single company taking advantage of these tax holidays should by legal automatic obligation be deemed to have issued 25.1% of its share capital to the government in exchange for the package that guarantees its survival, which proportion guarantees the government the right to block many shareholder actions in these companies.
An automatic right to appoint a majority of the board of directors in the event that the conditions of the bailout, as noted, are not met should also be implicit in the tax holiday terms."
What of companies unable to accept these terms? Mr Murphy has an answer
Question "Just to be clear..,So if a perfectly solvent and productive business in normal time , through no fault of its own and because of a catastrophe of which it has no part to blame, does not agree to your long list of demands you would just let it die and all it’s staff lose their jobs?
Richard Murphy says:
Why not?
If they need help they have a price to society to pay for it"
I, personally, am very pleased that Mr Murphy is many miles from any position of power.
Absolutely not satire
The Accountingweb columnist is suggesting that help from the government should be conditional on a company giving up 25.1% of its share capital to the government, being given a list of orders on how to run its business and that an army of government officials will be standing by to be appointed as majority directors of any company that does not obey the rules.
He's quite content that any company that can't accept these impositions would get no help at all and if it went bust, so be it.