So Martin Sorrell is set to move WPP back to Britain. This was always part of Osborne’s
Budget plan, as I revealed in my News of
the World column and also mentioned on Coffee House. As I said in the newspaper:
Today, Sorrell will announce that he’ll come back from Ireland if the Budget is made law. Of course it will be made law, governments collapse if they can’t have their budget passed. So he’ll redomicile, as will (perhaps) other multinationals.“The Chancellor has been on bended knee, pursuing Sorrell with energy that would make Berlusconi blush. ‘What do we need to do?’ he asks. Sorrell’s answer is to cut the tax on overseas profits. So Osborne will, hoping to lure back companies who generate most of their cash abroad.”
The wooing of Sorrell has been going on for some time. He wasn’t in Ireland for its low corporation tax: WPP makes about 2 per cent of its profits in Ireland. It’s the overseas profits that matter most. Osborne will tweak the treatment of such profits, hoping more multinationals will declare tax in Britain. This is not quite the same as, say, some carmaker moving here. Where one declares profits is mainly a bureaucratic decision, which may bring with it a few more support staff jobs.
As we say in the leading article of the new Spectator, it is heartening to see Osborne realise that in this globalised marketplace governments must compete for people.
Sorrell embodies the ultra-mobile chief exec, who can headquarter himself anywhere. Britain cannot and should not try to woo companies with corporatist bribes, but lower tax and regulation. So Osborne is again heading in the right direction. All he needs to do is get rid of that soon-to-be-52p tax, and free us from EU regulation, and we might start to win back the high taxpayers who have been steadily heading for the exit in recent years.
Sorrell’s move has also given Osborne a useful line to use in media interviews today, saying that his decision indicates that, under him, companies are coming back to Britain rather than leaving. This is a bit misleading. There’s a large difference between a multinational deciding where to declare its profits, and a job-creating, economy-boosting comapny actually moving to Britain and hiring staff. There’s all too little evidence of the latter.
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