Malcolm Walker Retail Week Columns

A tax on fun is no joke for business

Taxing corporate morale boosting events will not revive the economy.


Probably the best thing about running a private company is being able to take the right decisions for the long term, without having to worry what this will do to profits or your share price in a City obsessed with the next quarterly results.

At Iceland, our biggest single strategic decision has been to focus on looking after our colleagues in the business, ensuring that they are happy and motivated. The logic is that they, in turn, will look after our customers well, and that will drive sales and profits.

We must be doing something right, because this year we were named by the Sunday Times the Best Big Company to Work For in the UK and nearly 95% of our staff tell us that they enjoy working for Iceland and would recommend us as a good employer.

A major component of this stellar rating has been our insistence that there is no conflict whatsoever between doing a great job for our customers and having fun. At Iceland, we believe in fun.

In pursuit of this, we have invested millions over the past seven years in giving our store managers and head office staff the best conferences money can buy: unique, mind-blowing events that bring them back to the business buzzing and hungry for more success.

I truly believe that this has been a key driver of our last seven years of strong profit growth, which in turn has enabled us to pay over £500m in UK tax, National Insurance and duty [see our chart: Iceland’s UK Tax Payments 2006-2012]. Not a bad return from a business that was teetering on the brink of bankruptcy when I came back to it in 2005.

You might think that the Government would be keen to learn from this success. Instead, they seem determined to do their utmost to snuff out the fun in business by taxing as a benefit in kind any corporate event that might be considered enjoyable.

So you are probably all right to fund a team-building exercise involving some oil drums, planks and ropes on a freezing fellside in the Lake District. But God forbid that you offer the survivors a hot meal plus a few drinks while they chew over the experience in the evening, or the taxman will demand his cut.

Yes, I know we all hate bankers, tax exiles and the others whose fancy footwork means that they don’t pay their fair share to the Exchequer. But if the Government actually wants to encourage businesses to grow and lift the economy out of recession, there could hardly be a worse way to go about it than by launching a nit-picking attack on fun.

Particularly when the Olympics and Paralympics have just demonstrated so spectacularly that one thing Britain is really good at is staging world-class events that make people feel good.

The British events industry employs over half a million people and they tell me that it contributes over £36bn a year to the economy. So why would anyone in their right mind want to jeopardise it by insisting that the only way businesses can legitimately communicate with their employees and motivate them to succeed is by ensuring that they have a thoroughly miserable time in the process?

It’s a mean, short-sighted approach that sadly seems to be symptomatic of a wider anti-business agenda in Government. I am not defending perks for fat cats here, but the right of ordinary workers to have a bit of fun. Or, as David Cameron might put it, spreading privilege.

Because why shouldn’t everyone in any organisation enjoy their work as much as those at the very top?

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