Jericho Conversations

Taxing the Casino … and Other Challenges of Stewardship

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Ahead of the next in the series of #JerichoConversations (Friday 17th April at 12.30pm London – see below), Tomorrow’s Company Founder Mark Goyder and I shared thinking yesterday and developed some questions for the expert panel. Mark is the co-author of Entrusted: Stewardship For Responsible Wealth Creation.

On casino capitalism and the tax system

Am I alone, asked Mark, in finding something sick about hedge funds making profits in the billions from listed company travails, while thousands die and millions may or lose their employment?

Patrick Jenkins in Tuesday’s Financial Times suggested it was time for “equity markets to regain their original role as facilitators of capital raising, and decline accordingly as a betting shop for high frequency traders”. As we’re going to need all the tax revenue going, how might we find a form of Transaction Tax that focuses on the gamblers without punishing ordinary investors? And, while we’re at it, why not reduce the tax benefits to any Private Equity shareholders which seek an exit inside of seven years?

On capital markets and R&D

According to a recent Guardian article, investment in finding a new vaccine for possible future viruses is too high risk for the private sector.

We need the pharmaceutical companies but also don’t get a sufficiently long-term view of financial return from them. The article quotes a 2018 Goldman Sachs report which asks “is curing patients a sustainable business model?” … and concludes that it isn’t.

How, questioned Mark, can we shift the mandates and incentives in capital markets so that we get public companies that (profitably) serve the public – especially in pharmaceuticals?

On opportunities to move beyond the sterile debate between public and private ownership

What matters is not whether the ownership is described as public or private. What matters is whether the owners in question are good stewards. Stewardship has been a decades-long passion for Mark Goyder, as evidenced by his most recent book.

So, for example, if the state is now going to rescue any private sector airlines, how do we design the ownership so that citizens not only get money back from future profits, but also get the behaviour that they want? For example, why not set up a stewardship mutual which would have a mandate to hold shares in trust on behalf of citizens to insist on executive pay restraint, rapid progress towards reduced noise and emissions?

On ‘Taking Back Control’ – last year’s mantra

If capitalism is to become more human, and less out of control, why not encourage the channelling of appropriate percentages of individuals’ savings into regional investment funds?

So, a saver in East Anglia could earn a fixed return on a regional bond that funded improved housing or health and social care infrastructure? Of course, a saver’s risk needs to be spread intelligently, but why insist that this means putting all the portfolio into investments with which the saver feels no relationship?

Friday’s #JerichoConversation will be kicked-off by Robert Shrimsley, the FT’s Chief Political Commentator. The expert panel includes: Jane McCormick, Global Head of Tax, KPMG; Lord Mervyn Davies, Chair of Corsair Capital and former Government Minister; and Charles Wookey, CEO, Blueprint for Better Business.

Please share any questions or challenges you may have and, time allowing, we will give voice to them on the day.

Register here

Robert Phillips
Founder, Jericho Chambers
April 15 2020

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