As Conservatives, we applaud those who make a success of their lives through hard work. We admire those who successfully employ their talents, and we support those who do what is right through kindness and consideration to others. We also understand that for any public services to exist, the private sector first needs to create the profit to pay for them.
Crudely speaking, the public sector spends what the private sector makes; a fact that is increasingly ignored or forgotten. Almost every day, one hears representatives of pressure groups, politicians, journalists and others, many of whom should know better, deriding profit.
The business cat is skinned in many ways by the state, and though the net profit published in accounts is subject to corporation tax, probably a much larger amount has already been extracted from the gross profit.
Many people consider the tax and NI that comes out of a nurse’s salary as being equal to that paid by one of our engineers. The engineer is working for an enterprise that has to make a profit to survive, and his salary comes out of the gross profit generated in making and selling goods at a higher price than the cost of the raw materials, energy and time consumed to produce them. The engineer’s tax contributes to the NHS budget, out of which the nurse is paid her salary from which the tax and NI is deducted. Tax and NI collected from public sector employees should be seen instead as a public spending clawback.
We have all had frustrating issues with private sector organisations like banks, airlines and utilities that can drive us demented with their appalling customer service. However, this should not cause us to forget that for the vast majority of profit making enterprises the customer is king. Companies that fail to keep their customers happy, face the very real danger of going out of business.
To many politicians, ‘profit’ is a dirty word: something to be ashamed of, symptomatic of an ugly money grabbing mindset. Virtue instead it held by charities, other non-profits and the public sector. This is a very distorted view of the real situation, which needs to be countered more robustly. One could correctly respond by pointing out that all of these are simply parasites feeding off the productive part of the economy. We are not helped by our own Government that sends very conflicting messages over the merits of profit generation. For example: windfall taxes do not serve the long term interests of the country. Neither does the war, through tax and regulation, on private landlords, which feeds the mistaken belief that profit is bad.
As a country, our economy has to grow fast if we wish to sustain even current levels of public spending. We therefore have to start encouraging the profit generating sector, and remind its critics that their very existence depends upon its health and continued growth.
To this end I very much hope that you will take a look at The Jobs Foundation recently set up to try and right the balance. Please show your support by joining, for which there is no charge.
It is vital that we correct the perception that just because some large arrogant businesses may behave badly, it does not follow that all business and capitalism itself is also bad. Business must instead be celebrated, entrepreneurs and employers applauded, and the making of profit encouraged. Without it, we will not be able to sustain our current standard of living.
Alastair MacMillan runs White House Products Ltd, a manufacturer, distributor and exporter of hydraulic components to over 100 countries. He is a supporter of the Jobs Foundation.
If you enjoy The New Conservative and would like to support our work, please consider buying us a coffee – it would really help to keep us going. Thank you!
Very well put, and the absolute opposite of what Sunak is imposing on our country. He is now a SOCIALIST. And the infamous Tony Blair has come out from the woodwork to be puppet-master to Kier Starmer. BEWARE BLAIR you would-be Labour voters. The Labour Party is no longer the party for the workers. Westminster needs a clean-out. VOTE REFORM U.K. and reduce the power of the House of Lords.
There has not been a Conservative party in this country since 28/11/1990, when Major and the Eurofascist Wets politically assassinated Margaret Thatcher and effectively closed down the nuclear power program.
Pingback: ‘Profit’ Is Not a Dirty Word - The Truth Report
Mr MacMillan writes a credible and convincing case for responsible private enterprise and profit.
He is quite correct to remind us that economic growth (and stability) is the wellspring of society’s wealth and that, without at least moderate and successful productive business activity, there can ultimately be no funding for our community services and the public sector.
He is also correct to acknowledge, honestly and humbly, the recent severe, often highly-ideologically-politicised, failings of large parts of the commercial sector, mostly big multinational business, is its appalling woke corporate behaviour towards its customers – which is all the more ironic in this ‘ESG’ -obsessed era.
However, he perhaps ought to make the distinction between reasonable and excessive profit. This moral distinction is broadly recognised in the taxation system, where earned and unearned income are usually treated differently.
In a healthy and moral enterprise, any profit beyond that needed to pay directors, shareholders and staff a decent living wage and moderate benefits should be ploughed back into the business.
Where ordinary public perception rightly takes objection is when some directors award themselves telephone-figure salaries and bonuses, typically for poor performance, out of mega-profits, often derived, not from honest endeavour and judicious investment, but from artificial profit rises caused by market values alone; an example being utility company profits created by hugely-increased global market hydrocarbon prices.
In such situations, particularly when the bulk of the populace is suffering from ferociously high living costs, calls for windfall profit taxes are, if not entirely logical in economic terms, perfectly understandable.