Ethics – To What Extent

The Coronavirus Job Retention Scheme, launched by the Chancellor in March 2020, was a much-needed lifeline

Ethics – To What Extent

By Stuart Thomson, Managing Director, Johnsons Chartered Accountants

The Coronavirus Job Retention Scheme, launched by the Chancellor in March 2020, was a much-needed lifeline for many small businesses, carrying them through a devastatingly difficult trading period. And yet, some organisations took the decision not to take it. Should they be rewarded for this community-minded step?

Confucius identified ethics as the concept of respect for autonomy, beneficence, non-maleficence, justice and moral values. In the modern world, ethics is identified as a set of moral principles that govern a person’s behaviour or the conducting of an activity. In both cases an ethical stance is determined by the norms of society and often rewarded, as evidenced by consumer support for businesses with high standards of sustainability.

Most of us will have noted the sense of community spirit engendered by the pandemic. This trend was not confined to the social arena, as we also saw it extend to the business world, and treatment of furlough payments is a good case in point. Businesses demonstrated that they had been touched by the community spirit as some businesses chose not to stretch the collective coffers of UK plc and take furlough money, and others like Ikea returned their furlough money.

Some businesses took and kept furlough money, implying that the business needed the furlough money to survive. However clearly for some that was not the case, as the money was subsequently returned. Most businesses that announced they were returning furlough funding are large businesses where society’s perception of their behaviour is important: solicitors, large plcs and international businesses. This laudable behaviour should appear in their Corporate Social Responsibility reports, but I think it should go further. Ethics is often about moral intentions, and moral intentions affect society’s perception of businesses. I believe we need to go beyond perception and reward certain behaviours.

If behaviour around furlough payments is judged by society, then what are the consequences of such judgement? Large businesses who returned furlough money must believe that sales or share value will be enhanced (or at least not detrimentally affected). Returning, or not taking the money was in itself a declaration of a robust business model with the resources needed to survive a downturn – just what investors like to hear. But what about other less visible businesses who did not have the ear of the public as they quietly made community-minded decisions? Should there be any impact? My own view is that this is where government should step up and reward certain behaviours – after all this is how they behave in other areas such as the sugar tax and the justice system.

Those that took the public sector lifeline and accepted furlough money were entirely entitled (in most cases) to do so, but in doing so they indicated that they wished to rely on public support in order to survive. In financial services this comes at a cost, with a small turnover-based fee to the FCA. Those businesses that have returned furlough money have indicated a temporary need for a safety net. Again, everyone is paying for that safety net, and it is not unreasonable for the business to pay for this – like an insurance premium. Finally, there are those that did not take furlough funding and cut or adapted their cloth accordingly, using shareholder value in order to survive unaided. Currently they are not recognised or rewarded, and they are in fact bearing their share of the costs of those who took (and possibly returned) furlough money. Would society see it as equitable that they continue to pay a surcharge when they ran their businesses conservatively and used shareholder value to survive, instead of public funds? Perhaps society would prefer that such surcharges were skewed towards those who benefited?

No doubt the Chancellor of the Exchequer had to rush the implementation of the Coronavirus Job Retention Scheme, and I think he should be applauded for it. There is no doubt that the furlough scheme was very expensive but an important survival tool during an unprecedented global pandemic. However now that the dust has settled and we need to figure out how to pay for it, there should be some recognition of those organisations who managed to do their bit by not taking help. Society needs to find a way of rewarding those businesses that did not rely on public handouts, and this reward should not be limited to large businesses. Governments need to listen to the society which elects them, and adjust behaviour so that perceived reliance on public funds is also subject to a form of social tax.