Saturday 24 April 2021
Swiftly following the Greensill scandal, the texts between James Dyson and Boris Johnson have raised further questions about judgement, accountability and transparency in Downing Street, prompting accusations of “sleaze”. But they also shed light on the billionaire engineer’s priorities in the midst of a national crisis
The 1990s, it seems, are having something of a revival. Primal Scream. Friends on TV. And, it turns out, sleaze.
Back in the Nineties, as you’ll remember, politicians smeared each other with accusations of “sleaze” – and, now, thanks to PPE contracts, David Cameron’s lobbying for Greensill and to James Dyson’s texts to Boris Johnson, it seems that, once again, it’s the political season for allegations of corruption in high places.
But surely it isn’t just the conduct of the politicians in these cases that should bother us. It’s the character of the businessmen too. It’s the normalisation of CEO exceptionalism.
I’m James Harding, I’m the editor and co-founder of Tortoise, and in this week’s Editor’s Voicemail, I want to talk about the text exchange between Boris Johnson and James Dyson – the corporate behaviour that it represents, that we’ve come to expect, perhaps even accept.
The texts were brought to light this week by the BBC, but they date back just over a year ago to March 2020.
And no one needs reminding what was happening then. All hell was breaking loose. Italy’s death count was rising daily; the UK knew it was three weeks behind; and there was a visceral fear that the NHS was about to be overrun. It was thought at the time that ventilators were going to be the best hope of keeping hospitalised coronavirus patients alive. And the UK feared that it needed as many as 20,000 more, when every other country was shopping for them too.
Johnson turned to Britain’s businesses. He turned to them to engineer the country out of a life and death problem, and framed as an appeal to British industry to summon its wartime spirit. And at the forefront of what became known as the “Ventilator Challenge” was James Dyson, the inventor of the vacuum cleaner, hair dryer and fans that bear his name, the billionaire engineer who, having backed Brexit, had moved his company’s HQ to Singapore in 2019.
The prime minister is reported to have called Dyson on 13 March and the entrepreneur committed to help build ventilators for the UK. But a couple of days later, Dyson was back in touch. There was a snag. He wanted to be clear that if Dyson’s people abroad helped build the ventilators in the UK, that their tax status and corporate taxpayer status for the company in the UK wouldn’t be affected.
Now, before we get into the texts, here’s the small print. If you’re non-resident in the UK for tax purposes, you don’t pay tax on your worldwide earnings outside the UK. You may pay tax where you’re resident, but that, of course, may be very different from the UK. For example, the top rate of income tax in the UK is 45 per cent; it’s half that in Singapore, at 22 per cent.
And to be clear, Dyson is reported to pay tens of millions of pounds of taxes in the UK each year. Now, I don’t know at what tax rate; and I don’t know what taxes Dyson and his executives pay overall or, in fact, in other jurisdictions. That information is not public. And, from the correspondence that’s been published, Dyson is lobbying the prime minister both about corporate tax treatment as well as that of his overseas employees, so it’s unclear if the ventilator project would have affected him personally, other than corporately.
But the aspect of non-resident tax status that he’s trying to address is this: if you live and work permanently overseas and you seek to be non-resident for tax purposes in the UK, then you are only allowed 90 days back in the UK per year – and only 31 of those can be working days. So, Dyson texts the PM – why? Because he wants to be sure that if those people come back to the UK to work on the ventilators, that those days won’t count. They’ll continue to be non-resident for tax purposes.
“We are ready,” Dyson writes. “But no one seems to want us to proceed. Sadly, James”.
And Johnson responds. “I will fix it tomo! We need you. It looks fantastic”. And, of course, there’s been a hoo-ha about Johnson’s back-channel, slapdash approach to setting tax policy by text message, not to mention the rather plaintive, fawning teenage tone to his message.
But consider what James Dyson writes back to the PM when he still hasn’t got the assurances he wants from the British Treasury.
“Dear Boris, I’m afraid that we need a response to our letter below from Rishi please? [Rishi – aka, Chancellor of the Exchequer, Rishi Sunak]. We really need Rishi to answer the letter we sent (attached) – now. Or to make the position clear. Rishi has fixed the Country Day Count issue but not Work Days. The former is now covered under an ‘Exceptional Circumstances’ umbrella. Work Days are not. So, he has freed up your ability to be in the UK but not to work there – even in support of this National emergency.”
Let’s consider for a minute the implications of this message:
- people in the NHS, social care and in a host of frontline jobs are putting themselves daily in the way of a deadly pathogen; and James Dyson is concerned that his team will be unable to work on the ventilators unless and until their preferential tax treatment is guaranteed.
- second, in the middle of March 2020, as the coronavirus and all its consequences sweep across the UK, Dyson seems to consider the tax treatment of his company and his employees is of sufficient importance to trouble the prime minister personally and repeatedly.
- third, while his priority in March is about guaranteeing non-resident status for his company and his colleagues so they do not to pay the same rates of UK tax as others, Dyson is oblivious to the irony that the pandemic is going to take an unprecedented toll on the British public finances including, potentially, buying ventilators.
- and, finally, for all his insistence over the years that he hasn’t been buying up tens of thousands of acres of UK farmland because of the agricultural relief on inheritance tax and the assertions that his company made that moving to Singapore was not about preferential tax treatment, it’s clear that getting the best possible deal on tax really, really matters to James Dyson. Even in what he calls a “National emergency”.
After the text, Johnson texted back. In what is either a touch irritated or cheerfully can-do tone, he wrote : “James I am first lord of the treasury and you can take it that we are backing you to do what you need”
On 26 March, ahead of other businesses going public on their contributions to the ventilator challenge, Dyson announced that it was building 10,000 ventilators for the UK. It led the news on the BBC. In early April, Sunak confirmed that the tax status of non-residents working on Covid-related projects would not be affected.
In the end, no Dyson ventilators were bought or used. In May, Dyson wrote to his staff that that, “mercifully”, the ventilators they had built in 30 days were not required. He committed to fund the £20m development costs of the ventilators out of his own pocket, a tribute, he said, to the people at Dyson who had worked round the clock on developing them. A week earlier, the Sunday Times had reported that Dyson was No. 1 on its annual rich list with a personal fortune of £16.2 billion.
The Westminster press corps has, of course, piled in on Johnson. In Tony Blair’s day, there was alarm at what was known as sofa government. But these days text message government – decisions and deals struck on WhatsApp and, as we may or may not find out, encrypted over Signal – raises many more questions about judgment, transparency and accountability in Downing Street.
But you have to say, you can sympathise with Johnson in that moment. In the emergency the country was facing last March, I suspect most people would have answered James Dyson’s text just as Boris Johnson did. In short, “whatever it takes, let’s make it happen”.
But here’s the point about CEO exceptionalism, about the norms of the super-rich, the expectations of business and the special treatment that we have come to accept as standard practice. Because I also suspect most people would never dream of texting the prime minister to ask what James Dyson did in March last year.