If the Big Four firms of accountants want to tackle inequality they have to reform themselves first

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There was a letter in the FT on Saturday that irritated me. It said:

Sir, We all must face the uncomfortable truth that in this country, the circumstances you are born into still have a decisive influence on the opportunities available to you in life (“Theresa May’s Social Mobility Commission walks out”, FT.com, December 3). At the heart of the problem is the stark postcode lottery that exists in Britain today. Just this week, a new report from the Joseph Rowntree Foundation tells us a total of 14m people in the UK currently live in relative poverty. That’s more than one in five of the population.

So far so good. It continues:

This is not a new problem. Indeed, many businesses already recognise the importance of taking action on social mobility. But deep rooted economic and societal issues like those we are facing in the UK won’t be resolved overnight. And it is clear that the government cannot fix this alone. As employers, we have a crucial role to play in achieving social mobility in this country once and for all. We understand our responsibility, and we are taking concerted action to address this challenge head on. But we know there is much more to be done.

You may be beginning to sense my concern. The authors continue:

There are reasons to be hopeful. Chief among them, the knowledge that social mobility has never been higher up businesses’ agenda than it is today. Business leaders now understand that they cannot meet the demands of the modern world without employees from a rich variety of social backgrounds. This is the right thing to do, but it is also vital if the UK is to remain competitive on the global stage.

Their concerns tick all the boxes: social mobility; inequality; and diversity are there even if they spoil it somewhat by suggesting a competitive constraint.  So what more might they say? This (after I've deleted some padding):

We must capitalise on this positive momentum and ensure that in 20 years, we are not still operating in a landscape of inequality, having these same difficult conversations. Now is the time to create a fairer society, where it is an individual’s talent, drive and ambition that defines their future, not where they started out. It will take the best efforts of all of us – working together – to ensure future generations of young people have the skills, opportunity and support they deserve.

Who could argue? Well, I can. Because the signatories are:

Melanie Richards Deputy Chair, KPMG

Keith Skeoch and Martin Gilbert Co-Chief Executives, Standard Life Aberdeen

Malcolm Gomersall Diversity and Inclusion Partner, Grant Thornton

Laura Hinton Chief People Officer, PwC

Tim Smith Partner and Co-head of Social Mobility & Ethnicity Group, Berwin Leighton Paisner

Emma Codd Managing Partner for Talent, Deloitte UK

Mandy Love Social Mobility Lead Partner, EY

To put it another way, that's the Big Four accountants, plus friends.

But to be blunt, the Big Four are a massive obstacle to progress. I'd draw attention to my research on them, done with Saila Stausholm. What we found was that the Big Four:

  • Do not publish accounts that let us hold them to account  either nationally (in most cases) or internationally;
  • Do not account for the tax that they pay in many locations;
  • Do operate in all the world's major tax havens, whose sole purpose is to undermine the tax system of democratic countries, increase inequality, and deny the resources required to ensure that redistribution  of income and wealth takes place  both within and between states;
  • Do not admit to the  number of staff of employing many of the places where they are located;
  • Do not  supply any of the reasonable, additional, employment data that might be expected of firms of their size, including gender analysis;
  • Do sell tax services  that many might  describe as tax avoidance.

I am, of course, delighted with these firms wish to tackle inequality. Anyone  who wants to do that pleases me.  But if they are serious  in their intent the letters of this sort have to stop and action has to begin. In my opinion those actions include commitments to:

  1.  Full accountability both nationally and internationally and without exception in every location where these firms trade, and the publication of full country-by-country reporting accounts including information on tax paid, whether by the firm or by its partners  in aggregate in a place;
  2. Disclosing full information on the number of employees that each of these firms has in each location in which it trades, including information on gender balance and the gender pay gap;
  3. Withdraw from all activities in tax havens that might b, in any way,  artificially relocate profits to undermine the tax system of another country;
  4. End association with anything that might look like tax avoidance.

Do this and I will believe their public utterances. Until that happens they are part of the problem and do not come close to being a part of the solution.

I will be happy to publish their reply.