Merryn's Blog

Corporations must prepare for interventionist politics

High-revenue but low-tax-paying tech companies could be targeted as the government mollifies voters with interventionist politics, says Merryn Somerset Webb.


I wrote here recentlythat the coming election is to be one of the most important of our lifetimes. Not because of Brexit, but because of the shift I expect it to represent in the social contract.

We know that electorates are demanding more in the way of action of all sorts from their politicians. And we know that, thanks to the insane levels of public debt, very little of that action can consist of spending more money.

Subscribe to MoneyWeek

Become a smarter, better informed investor with MoneyWeek.

That means that we are likely to see an increasing number of policies that are interventionist that purport to improve things for "ordinary" people without troubling the public purse along the way.

So we have suggestions that utility bills should be capped. We have Theresa May planning for her manifesto to include tough rules to prevent "irresponsible bosses" taking whopping pay packets or dividends even as their pension schemes slowly go bust. And we have murmurings about somehow capping executive pay.

Advertisement - Article continues below

It is all part of a general trend that, as we have long pointed out, is going to see a change in the generally supportive environment for large corporations operating in the UK and possibly for the high-revenue but low-tax-paying tech companies in particular.

If you are in any doubt about this, look at yesterday's papers. The Times led with the headline "Social media giants fail to tackle hatred, say MPs". The BBC ran a similar headline but skipped the "say MPs" bit. Yes, the once loved "do no evil" social media kings are suddenly out of favour. Google is accused, in the Select Committee report on the matter, of having "profited from hatred."

Along with Twitter, YouTube and Facebook, Google has failed to tackle terrorism, violence and hatred online. These companies are "among the biggest, richest, and cleverest in the world", and their failure to fulfil their social responsibility to deal with extremism is "a disgrace," "shocking," and "shameful". The state, says The Times "must step in if these internet giants will not face up to their responsibilities to publish responsibly,regulators must make them".

It is hard to disagree with any of this. But it does represent a shift in the way the government looks at social media firms. There are numerous mentions of how rich/profitable/high-revenue the firms are in the report (that they have profited from terror makes the whole thing "more obscene") along with fury that they have allowed state-funded ads (for universities, charities and the like) to appear around terror videos.

May has often said that her government will step in where capitalism isn't working ie where the profit motive gives us bad rather than good results. Can a significantly firmer approach to corporate tax collection from the social media sector or a system of very high fines for offenders be far behind?




How long can the good times roll?

Despite all the doom and gloom that has dominated our headlines for most of 2019, Britain and most of the rest of the developing world is currently en…
19 Dec 2019
Investment strategy

The tech stock bubble continues – but wise investors should look for value elsewhere

As tech stocks continue to soar, real value has been forgotten. It’s fine to hold tech, says Merryn Somerset Webb, but investors should look for value…
9 Sep 2019
Stock markets

Don’t buy into tech company IPOs

Tech firms are listing on the stockmarket in their droves, with their private-equity backers raking in the cash. That’s perfectly sensible. What’s not…
6 May 2019
Share tips

Semiconductors: invest in the future of technology

Semiconductors are a key component of computers. Major growth areas such as artificial intelligence and the “internet of things” will underpin future …
13 Feb 2020

Most Popular

UK Economy

Britain has a new chancellor – get ready for a major spending splurge

The departure of Sajid Javid as chancellor and the appointment of Rishi Sunak marks a change in the style of our politics. John Stepek explains what's…
14 Feb 2020

Money Minute Friday 14 February: The latest from RBS, Britain's state-owned bank

Today's Money Minute previews results from RBS – Britain’s state-owned bank – and from pharma giant AstraZeneca.
14 Feb 2020
Silver and other precious metals

You should all own some silver. Just don’t expect it to make you rich

Silver is cool, beautiful and immensely useful. But for investors it's the most frustrating of metals. Dominic Frisby explains why you should own some…
12 Feb 2020

Is 2020 the year for European small-cap stocks?

SPONSORED CONTENT - Ollie Beckett, manager of the TR European Growth Trust, on why he believes European small-cap stocks are performing well.
12 Feb 2019