Interviewer: So, Steven Crony, you are the newly appointed Minister for the
Knowledge Based Economy. What exactly does that entail?
Crony: Well, John, its all very exciting. We have to encourage the flexible,
knowledge-based workforce, stimulate e-commerce, and take this country
forward into the 20th Century.
Interviewer: Er, 21st Century?
Crony: Is it? How time flies!
Interviewer: Um, and you yourself have considerable experience in the
Crony: Well yes, for many years I worked for ScrambledEggs.com. Until they
suggested I ..., er I mean, I decided to move into politics.
Interviewer: So what exactly is knowledge-based working?
Crony: It's really quite simple. You take on computer whiz-kids straight out
of college and hire them out at, say, 1000 a day.
Interviewer: that would be, ... er ... 200,000 a year?
Crony: 200 K. Right. And you pay them a salary of, say, 25 K. They travel
all over the country, visiting your clients and doing very clever stuff on
those computer thingies. And every month you invoice the client and get a
nice big cheque.
Interviewer: So that's ... er ... 175K profit then?
Crony: No, obviously it's not all profit. There's expenses. Secretaries.
Directors salaries. Directors Cars ...
Interviewer: ... Buildings ...
Crony: Well, you don't need many offices because the staff are all out
working for clients ...
Interviewer: ... Computers ...
Crony: Good God no, the clients have those. But its very expensive to run a
company properly. Big board rooms, shiny oak tables, that kind of thing...
Interviewer: ... I see ...
Crony: ... and then you have to make sure there's some money left to pay out
to the shareholders.
Interviewer: Such as yourself.
Interviewer: Well that sounds great. But surely it can't be that easy. There
is some risk involved?
Crony: Well, the risk is that after a few years, the whiz-kids will wonder
why they are only getting 12.5% of the money they earn. Then they leave, and
set up their own companies. As independent contractors they might charge as
little as, oh, 60,000 to do precisely the same job.
Interviewer: But you're not going to take that lying down?
Crony: Obviously not. As a minister, I won't stand for it. The thing is it's
all about tax avoidance. Once they have set up their own companies, they can
make all the profit. Then they can take the profits as dividends without
paying any National Insurance.
Interviewer: You mean, just like any other businessman who makes a profit?
Crony: Exactly. Just as if they were real entrepreneurs!
Interviewer: Which ... I suppose ... they're not?
Crony: Oh no no. These people aren't entrepreneurs. A real entrepreneur, you
see, borrows stacks of money from a bank, and hires staff to do the work. If
it succeeds, he becomes a millionaire, and makes a large donation to the
Labour Party. If it fails he sacks the staff, and borrows more money, from a
different bank, and starts all over. Whereas these people...
Interviewer: ... the independent contractors ...
Crony: ... the independent contractors, they do the work themselves. And
they expect to be treated as real businesses!
Interviewer: And they pay less tax than if they worked for ScrambledEggs?
Crony: ScrambledEggs Dot Com. Well no, actually they pay more tax. Because
obviously if they worked for us, they wouldn't earn very much, so wouldn't
pay much tax at all. But it's about fairness you see.
Interviewer: But some of these independent contractors say that you are
going to make them pay income tax and National Insurance on the entire fee
they charge to a client, and not allow them any company expenses before tax.
Crony: No that's not true at all. We only want tax on 95% of the fee.They
will be allowed 5% for all their expenses. That's more than generous.
Interviewer: , But, ... let me see if I have got this straight ... a company
like ScrambledEggs dot com would pay PAYE and National Insurance only on
that part of the fee that actually goes to the worker as salary, say 12.5%,
and would pay all its running costs before tax.
Interviewer: So won't the independents end up paying much more tax than the
Crony: Oh, much, much more. But they don't have our overheads. Offices,
Interviewer: ... Shiny oak tables ...
Crony: ... Shiny oak tables ... I think I've made my point. Big companies
like ScrambledEggs.com can't possibly be expected to compete if the
Independents continue to operate under the same tax rules as we do.
Interviewer: And they say that you won't let them pay their training costs
Crony: Training? ... Oh, training! Well honestly, if people are going to be
extravagant they can't expect the tax man to help.
Interviewer: So to recap, the Government is concerned that these independent
contractors are paying less National Insurance than a full time employee?
Crony: Much less.
Interviewer: And they're still getting all the benefits, like sick pay,
maternity pay, unemployment benefit, when they are not paying their fair
Crony: Well no, since they are directors of their own companies, obviously
they don't actually get any of those things. But they should be willing to
contribute for those less fortunate. Its about fairness, you see.
Interviewer: But you can receive dividends from your 3.7% shareholding in
ScrambledEggs.com, and not pay any National Insurance on that?
Crony: Well obviously that's completely different (laughing). I don't do any
work. You see dividends are unearned income. Since I don't do any of the
work, I get the dividends.
Interviewer: Whereas the contractors do the work ...
Crony: So it's quite wrong that they should take dividends.
Interviewer: I see. But, er, well, some might say that it was a Labour Party
principle that workers should be able to profit from their own labour?
Crony: Now there's really no need to bring up that old Bennite nonsense. We
were elected as New Labour and we will govern as New Labour. We are fully
committed to capitalist principles. It's the bosses make the profits, you
see? If the workers start thinking they can do the work by themselves,
without any bosses, and keep all the profits for themselves, where would we
Interviewer: Mr Crony, thank you.
By John Bird and John Fortune