As the FT notes this morning:
Deloitte’s UK partners will receive an average payout of about £1m after the accounting firm’s profits rebounded from a pandemic slump last year, helped by the sale of its restructuring division.
They note two other issues. The first is that this is the highest profit for at least a decade.
The second is that by May 2020 the firm had been awarded 26 contracts worth up to £278.7m for Covid related work, much of which was in rather basic track and tracing work in the early stages of the pandemic. Might there be a coincidence between that sum and record profits? The chance seems quite high.
But whatever the cause (and profits from sale of the former Deloitte restructuring division have helped, I acknowledge) there is a real issue to address, which is that this is excessive profit. The partners in Deloitte are extracting rewards above what would be an open market rate because audit and other regulation provides them with the opportunity to do so. They pay tax at 45% plus small national insurance contributions on that, resulting in them having effective tax rates lower than many of their staff who will be repaying graduate loans. And that does not make sense.
Not only might we need a tax on excess profits in Covid contracts, we need a more progressive tax system as well.
And we need to end the monstrosity of student loans.
All of which must be matched by changes in tax for the least well off, and enhanced benefits.
Decades of failed tax policy are coming home to roost now. Amongst the many issues needing the be addressed are these. I wish I could imagine Rachel Reeves being the person to tackle them.