By: David Racadio
Facebook was the most noticed company in the news this month. Over a fifth of the population (22%) observed that the company is expected to pay millions of pounds more tax in the UK after overhauling its tax structure. The move comes after the social networking giant faced public uproar when it was revealed that it had paid only £4,324 in UK corporation tax in 2014.
Facebook is not the only internet giant to come under attack for its tax arrangements. Last month, Google, which also features amongst the top ten most noticed business stories in March, bowed to public pressure and agreed to pay £130m in back taxes.
The fact that Facebook and Google will be paying more tax in the UK is welcomed by many, but many more are frustrated by the fundamental unfairness of a patchwork of national tax regimes that allows international companies including Starbucks, Amazon and Pfizer to pay lower effective rates of tax than the typical UK tax payer. A recent return filed with the US stock market revealed that Facebook paid taxes of £86m outside of the US despite racking up profits of £2.37bn – equating to an effective rate of tax of just 4%.
While a complete overhaul of international tax legislation is not around the corner, it may not be as far away as some believe. Public disquiet about the tax arrangements of large companies has been simmering for the last few years in the UK, Europe and the US. The Chancellor’s crackdown on multinational tax avoidance in the Budget, the European Commission’s 2016 proposals on corporate tax avoidance, and Hillary Clinton’s plan to reign in Wall Street tax inversion deals with an ‘exit tax’, make it clear that public anger about tax avoidance is beginning to impact on political and policy agendas.
The second most noticed story of March was Sainsbury’s acquisition of Argos owner Home Retail Group, identified by one in five people (19%). The deal marks the next step in the shake-up of the supermarket sector. Argos not only extends Sainsbury’s product profile beyond that of other major supermarkets, it also beefs-up its delivery capability as Argos’s hub and spoke network of 700 stores is able to deliver to most of the country within a day – a feat which even Amazon can’t match.
BHS pops into the consciousness of 15% of the population with the announcement that it has cut a rent deal with landlords to prevent it from going bust. The deal saves thousands of jobs, but the retailer is far from safety. Struggling to match retail fashion competitors across the sector in terms of design, shopping experience and online capability, BHS is further hamstrung by a £571m pension deficit.
The resignation of its Finance Director pushed EDF onto the business pages in the middle of March. The story reaches 13% of the population because EDF is linked to the biggest and riskiest energy infrastructure project in British history, the construction of two new nuclear power plants at Hinkley Point in Somerset.
Though EDF has assured MPs on the energy and climate change committee that the £18bn project will go ahead, the final funding decision lies with EDF’s major shareholder, the French government. It is expected in May, nine years after the project was originally proposed. Whether the deal goes ahead or not, the reputation of the British government is on the line.
In a recent poll Populus asked leading business journalists to identify the best example of a corporate crisis that was handled well by the organisation involved. Merlin’s handling of the Smiler ride incident was described spontaneously as the best example of crisis management. One journalist praised the company saying ‘There was good access, the CEO put his hands up straight away and was very frank with the press. He appeared to be very frank with the families and totally upfront about compensation.’
While every crisis is different, senior business journalists suggest that the key elements of good crisis management are: