DEBATE: Should businesses sign a new ‘social contract’ in exchange for government support?

Should businesses sign a new “social contract” in exchange for government support?

YES, says James Kirkup, director of the Social Market Foundation.

Taxpayers are offering unprecedented support to business during this crisis, and will be paying for it for years to come. To avoid a backlash that harms business and the UK economy afterwards, we need a new social contract with business. 

Going into the crisis, trust in business was faltering. Many voters still remember bailing out the banks in 2008, and don’t feel that the banks ever returned that favour. We need to learn that lesson when the virus crisis eases.  

A new social contract should set clear, widely agreed standards of what good companies do. Those standards go beyond returning cash to shareholders, and cover tax compliance, treatment of workers, and support for communities. This should all be reported clearly, so voters and investors can see the companies that meet high standards and contribute most to the country: they should get more praise. It would also highlight which firms were falling short. 

This new social contract would rebuild trust in business. That’s good for business, and for the country.

NO, says Miles Dean, head of international tax at Andersen Tax UK.

The Social Market Foundation has called for revised standards of good conduct and a new social contract in exchange for state support in a time of crisis. This seems to be a thinly veiled call for even more state intervention, leaving companies powerless to choose their personality and ideology — a socialist utopia with the added bonus of naming and shaming.

The response by businesses has been commendable at a time when the state should have been better prepared for a pandemic such as this. Of course, businesses should do all they can to support their employees but, for many, lockdown will be catastrophic. 

The reality is that companies cannot print their own money like the government can. It is the government’s actions that have placed the country into lockdown. It is the government that should be scrutinised and held to account, not the taxpayer.

Coronavirus is putting our entire social fabric and economy to test. Our focus should be damage limitation rather than revolution. 

Main image credit: Getty