At least one member of the ‘great and the good’ seems to think that enterprise is important:
Britain will become a 21st century theme park, unless more is done to create an enterprise culture, a business leader has warned.
George Cox, head of the Institute of Directors, warned the UK was at risk of being reduced to “selling…souvenirs”.A “can do” mentality must be instilled in young people to benefit business, Mr Cox added.
The comments came ahead of a key government conference on the issue, to be held in London on Monday.
Mr Cox welcomed the talks involving businessmen and women and politicians aimed at boosting enterprise.
Since it is unlikely that an invitation to this event is going to be extended to any members of the Samizdata Team, I expect that the politicians concerned are not going to hear the one thing that they should be told: that the way to ‘boost’ enterprise is to unboost themselves.
If youngsters are being deterred from starting their own businesses then they are hardly to be blamed. Who wants to have to spend most of their time, effort and intellectual energy steering a path through a vast forest of regulations, directives and laws only to watch the taxman take a big, wet, juicy bite out of the little profit you have managed to earn. And, to top it all off, you then switch on the TV or open the morning newspaper only to be told that you are ‘the enemy of the people’.
Contrast this with going for a job in the public sector which will give you a guaranteed income, a job for life and the steadfast loyalty and service of the political classes.
It’s a no-brainer. Life is too short.
Ironic, is it not, that Mr Cox and other business leaders worried about the apparent decline in enterprise are taking their concerns to the very people who are responsible for suppressing it? He will get nowhere.
What he may get for his trouble (apart from a round of champagne cocktails and a plate of canâpes) is a set of ‘Enterprise Regulations’. Mock not, that is very possibly going to be the only tangible outcome and there is no shortage of people either within government or elsewhere who will earnestly see that as a solution.
Mr Cox is to be applauded for at least raising the question. The answer will prove very elusive. How on earth does anybody expect a ‘can do’ spirit to flourish in a political and cultural ethos of ‘should not do’?
How on earth does anybody expect a ‘can do’ spirit to flourish in a political and cultural ethos of ‘should not do’?
When government finally realizes they’re not only killing “enterprise”, they’re also killing taxes, they may, just may start to wise up, and trim the excess regulations. You cannot get taxes on income not earned. You cannot tax a losing proposition. There are only so many Tandoori restuarants and fish-n-chip shops that can exist in England. Unless there’s a strong base of manufacturing, agriculture, transportation, energy, and maintenance, there won’t be enough of a profit to tax. You may end up with the Queen having to hock the crown jewels just to pay for basic services.
Unfortunately, while this is totally common sense for many economists and quite a few businessmen, it may as well be a Mayan translation from an original in Tibetan as far as the government types are concerned. At least the problem is still managable on this side of the pond, but not for much longer, I’m afraid. Just let one more professional politician get elected, and the last straw will be heedlessly tossed on the backs of business, and the entire house of cards will collapse.
That argument to persuade governments sucks in too many ways. Not only is it evil (cos it’s MY MONEY DAMMIT), but it also misses the real game. Ayn Rand had it right: (paraphrasing) “there’s no buch of mud-grubbing serfs so downtrodden, that a politician can’t steal a grain of rice from each, and accumulate those grains into gilded palaces”. Politicians don’t care about the total tax take, they care about “what’s in it for me”.
That is so depressing. Are you telling me that the traditional French disease is spreading out to Britain so badly?
Could it be that, eventually, the only thing the settlers of Frog valley won is a bit of time before the Communistron squashes them?
Hmmm… (stepping aside and looking west toward the setting sun)
Now come on guys,
If people want theme parks, who are we to say otherwise? You know, once the robots have been programmed properly, we will all be drifting around the world looking for something to do. I kid you not, I think a good theme park might actually be the next step in the evolutionary path. And it’s not even sad, really.
If youngsters are being deterred from starting their own businesses then they are hardly to be blamed.
Just a personal perspective, for what it’s worth.
I’m nearly 27; I write software. On more than a few occasions I’ve seen an opportunity to help people out using my skills. For example, I know people who own shops who would benefit from an e-commerce web site; or I could have expanded some software I’ve written and sold it commercially.
The trouble is, as soon as I start charging for my services I have to become an accountant, or hire one. And do tax returns. And pay tax. And God knows what else. It’s just not worth it for some ad hoc contracts thay may or may not grow into a larger business.
The worst part is, I’m not even sure what I *can* do without getting someone else’s permission.
So yes, young(ish) people are being deterred from starting their own businesses.
What’s wrong with selling souvenirs? No economic activity is ‘better’ than any other, and if in a free market Britain can earn a decent living selling souvenirs to tourists then why shouldn’t it? I note that GDP growth has not been negative now for 12 years, so obvoiusly we’re doing ok.
Great posting from David (again),
This useless quasi-socialist Government, run by leftover student radicals from ’60s have managed to kill any incentives for wealth creation for generations to come. The decline will be gradual though, with old high-earning wealth creating industries relocating and being replaced by unproductive public sector services. Unfortunately things have to get a whole lot worse before they can get better.
“Who wants to have to spend most of their time, effort and intellectual energy steering a path through a vast forest of regulations, directives and laws …”
Contrast this with my personal experiance of starting a one-person company here in the U.S. (formed as an LLC, or Limited Liability Company).
1. fax one-page form to state agency (plus $400 charge) and receive it back the same day, with stamped approval and official articles of orginzation. (30 minutes task time, 1 day of procedural time)
2. apply for federal tax id number online and receive it back instantly – no cost (5 minutes task time, 5 minutes procedural time)
3. shop for appropriate business insurance required for the type of work. (1 day task time, 1 day procedural time, done concurrently with step one)
In total, it took 3 steps and one day to set up the business.
I’d like to hear some more specific steps and procedures that a [person would have to go through if they were setting up a company in the UK. What would the process be like if a person wanted to set up, say, a one man shop to do public relations and marketing? Just curious, it sounds difficult.
I’ve set up a company (or more accurately, purchased an off-the-shelf one) for contracting, in the past. Getting it was a matter of moments, one just buys the thing and it’s yours. A few forms to send off, no big deal. The grief comes later, when you have to hire an accountant to do your taxes, or a lawyer to check your compliance with regulations (eg: you have to, having “hired” yourself, pay yourself a minimum wage). Then there’s the arcane differences between various ways of getting money out of the company (dividend, salary, loan, etc). Blech. There are optimal ways to “play the system”, but I refused to learn them, I can’t stand being jerked around like a puppet. So I abandoned and shut down that company.
I now prefer grey-economy contracting: cash in hand, no questions asked.
Interesting. Also add your “grey-market” activties to the list of things that cause reduced revenue for the government as regulations are ratcheted up.
__ “not worth the effort” = less economic development and entrepreneurism, no new taxes to the goernment
__ “grey market” = cash economy with no taxes to the government
What do you mean you purchased a company off the shelf? Was this an existing company that you bought, or are talking about something different?
Ironic, is it not, that Mr Cox and other business leaders worried about the apparent decline in enterprise are taking their concerns to the very people who are responsible for suppressing it? He will get nowhere.
I disagree somewhat. This is precisely what government wants – dependent business. The given enterprise, after having been bludgeoned by regulation and tax, turns itself willingly over to the State to be put on a short leash. Obey and be rewarded like any good dog should. Here in the US it seems that corporate welfare is spiking, and just like handouts to individuals, it makes for a flacid and underdeveloped business enterprise. But all the while, illusions will be fostered that the government ‘cares’ and is willing to put taxpayer money to good use with investing in technical colleges and training of that type, and develop the required drones to fill the hallways of business much of which is taken up with complying with the expanding regulation and taxation. So for businesses, they seem to get somewhere but only are falling further into the arms of government.
I found setting up my own company the easiest thing in the world.
I got David Carr to do it for me.
😉
Joking aside, I run what has got to be one the most low maintenance examples of a limited company in the UK.
Most outgoings are on direct debit and easy to track. Almost all the work is digital. only 2 full-time staffers (the rest freelance) Income based on short to medium term contracts (very little invoicing).
Despite this I am deluged with regulations, information, visits from the tax office, Vat office, Health and safety officers, Uncle Tom Cobbley and all…
I am fast learning to ignore that which can be ignored and to expedite that which cannot. I only wish the grey economy was a feasible option. BTW, Whats the difference between a black economy and a grey one.
Eamon Brennan
Yeah, that’s how it’s done. There are businesses that set up generic companies with generic names (like “valuesave”) and you pay them a few £££ and they sign over the shares to you.
A grey economy is where you’re doing stuff that theoretically could be done legally eg: painting houses, but you do it “off the books”, for cash.
Thanks, Julian. Why is there a market for pre-setup businesses? Is it difficult to do on your own?
Seriously? It sounds like this is systemic to all businesses in the UK, or is there something specific about your business that makes it particularly regulated, etc?
Forgive me if I sound utterly ignorant about entrpreneurial efforts in the UK, it’s just that, well, I’m utterly ignorant about entrpreneurial efforts in the UK.
I’m very curious about what obstacles a person might face. Given my experience with setting up a business here in the U.S. (see the post above) and how easy it was, how might it differ in the UK? What extra steps before, during or after might a person face?
Appreciate the responses.
I believe so, yes. There are various legal documents, you’d need to hire a lawyer to do them, and the whole thing would take time to process. There might be advantages if you’re a business hotshot needing to fine-tune the company, but for a contractor it’s easier to just buy something generic.
It’s not as if there were a need for the company anyway, except as a legal dodge to prevent you being treated as an “employee”. Employees get all sorts of legal engtanglements (aka “entitlements”) and the purpose of hiring contractors is to have an easy come / easy go team of specialists, to complete some specific task. So it’s treated as one company contracting with another. (Except it isn’t, because of this evil tax called IR35 that says you have to pay tax as BOTH a company AND and employee, if you “look like” you’re an employee…)
IR35 is really a nice reward to the big consultancies who gave so much to the Slaver party. They can then compete against there much more nimble competitors.
Loads of “The Project” faithful also used to work for them, and now it’s payback time.
Look up the “career” of Patricia Hewitt to see the links.
In the U.S. there are several types of organizations that prevent what your talking about by having “flow-through” taxation.
In other words, the profits flow directly to the owner, or partners as income (just as if they were receiving them in the form of a paycheck from an employer), so they are not double taxed.
In the US we have S Corps, LLCs, LLPs, etc. Which you choose depends on what business you’re going to have, but they all allow for flow-through of profits.
Are there no organization types in the UK that allow for a flow-through tax provision?
Hijo
I think that we have been unlucky in the sheer amount of agravation coming our way, but we are by no means unique.
Recently I have had so many unpleasant dealings with the Tax office that I am beginning to get paranoid.
As for UK industry in general, I am not well enough informed to comment. All I can do is echo Julian’s comments about having to be come an accountant, bookeeper etc… These days I seem to do far more paperwork than actual work (or at least that is how it seems).
But it could be worse. I know a couple of contractors who have been thoroughy shafted by the IR35 legislation.
Eamon
hijo,
Starting up a company here in the UK is still pretty easy. Much easier and cheaper than in most of Continental Europe.
The problem lies is making it viable in the current tax and regulatory climate. I have a very good friend in the Financial Services business and he recently complained to me that he is often obliged to spend up to 80% of his working week dealing with ‘compliance’ issues.
Madness!
I’ve always thought that England would be the first suburban country. No manufacturing or anything dirty like that, just people living there, many from other countries at their “other place”. The economy would be entirely geared toward services. And, unfortunately, the people would be entirely satisfied with that.