News and Comment

The public sector’s moral maze

Thursday 6 December 2012

We’re not accusing you of being illegal; we’re accusing you of being immoral”. That’s how Margret Hodge, Chair of the Public Accounts Committee, addressed representatives of Google, Starbucks and Amazon during a parliamentary committee investigating the firms’ tax contributions to HMRC last month.

All three organisations were being questioned on the issue of tax avoidance: a minimization of tax liability obtained through lawful methods. This is quite different to tax evasion: the illegal non-payment or underpayment of tax. And this is really the point.

Rightly or wrongly, central government is deciding not to legislate on certain matters it considers to be fundamentally moral, subjective issues. Some will interpret this as an abrogation of responsibility, others as the preservation of law-abiding businesses’ rights. Another good example of this is The Living Wage, a campaign to encourage employers to pay staff an independently calculated rate of pay, in excess of the National Minimum Wage, which researchers estimate it is necessary to earn to lift low paid workers out of poverty.

There are currently approximately 140 employers who choose to pay their staff The Living Wage; a number, which according to The Living Wage Foundation, has taken some “45,000 families out of working poverty”. But of each of those employers have implemented the scheme on a voluntary basis.

In the absence of central direction, both public and private bodies, particularly those at local level, have been left to use their own judgment on these – and similar other – ethical dilemmas. It has been really pleasing to see many organisations – such as the 140 plus employers choosing to pay The Living Wage – making the decisions that exert the greatest positive influence in their respective localities. What’s more, in many towns and cities, despite cutbacks, the public sector retains its role as the de facto employer and source of contracts for local businesses, wielding an enviable capacity to both affect change locally and influence the media agenda nationally.

Take the Living Wage campaign for instance; some of the largest employers to adopt it have been local authorities like Cardiff, Birmingham and Newcastle whose decisions have generated national column inches. And what about Liverpool City Council’s recent decision to use its procurement process to actively support social enterprises and jobs and skills development for local people? The publically funded BBC has even taken the step to change its employment structure to make it harder for freelance staff to pay lower tax tariffs.

If these issues are moral, then the public sector should take pride in its track record of being an arbiter for good. In the field of disability rights for instance, the public sector paved the way for important legislative developments that shifted the focus away from merely tackling discrimination, to the active promotion of disability equality. This shift was significant, as it acknowledged that ‘good’ isn’t simply about providing redress when a wrong has been done – a process that leaves the structure that produced such a wrong fundamentally unchanged; instead, it involves positively and proactively embracing an aspiration to be better. The disability rights lobby recognised that while legislation can send out important signals of intent, it is also a blunt instrument. Advancing proactive and positive approaches that promote fairness and equality is ultimately far more important

On many occasions the public sector has demonstrated that it understands this lesson better than most. Simply adhering with existing legislation is not always enough. Sometimes organisations have to go farther, not just doing what they are obliged to do, but doing what they believe it is right to do also.