Profit is not a dirty word

May 18 2006 by Nic Paton Print This Article

The concept and pursuit of profit is coming under increasing threat in the West, one of Britain's leading industrialists has warned.

Confederation of British Industry president John Sutherland told guests, including Prime Minister Tony Blair, at the organisation's annual dinner that the pursuit of profit by business benefits everyone in society and must not be demonised by special interest groups or governments.

The profits businesses make provided the nation with its livelihood but, Sutherland worried, the concept of profit is becoming increasingly taboo.

The pursuit of profit drove innovation and change and should be used unashamedly by government to raise the standards of public services, he added.

"The very concept of profit is under threat. The word is becoming a taboo – almost an expletive," he told guests.

"But if we abandon the pursuit of profit we destroy not only the motor of business but the engine of every modern, dynamic society.

"Why, then, have Western societies become so uncomfortable about profit – the very foundation of their greatness? Put simply – because special interest groups dominate the debate," Sutherland said.

Why have Western societies become so uncomfortable about profit – the very foundation of their greatness?
He continued: "From a mixture of motives, they have created a false opposition between the pursuit of profit and objectives in our society that we all cherish...including the environment, social justice, public services, protection of the weak and vulnerable, shared values and a sense of community."

The pursuit of profit enabled business to pay the Treasury £125 billion in direct taxes in 2005/6 – the cost of building and equipping 600 general hospitals or 6,000 secondary schools.

Adding the receipts business makes possible from the taxes on income and spending of its employees and shareholders, the Chancellor obtained around £425 billion from the private sector last year, not counting its contribution to the £35 billion he had to borrow.

"So, to paraphrase Monty Python, apart from 23 million jobs, pensions, new schools, more hospitals and better roads, what has business ever done for the country?

"I could also mention the pride, fulfilment, social mobility and the sense of being needed which it offers to people," he said.

"Through profit, competitively earned, businesses can offer better products, lower prices, more jobs, higher wages, higher income or capital growth to investors.

"Through profit, and only through profit, businesses can do more for their local community or for global society.

"The involvement of profitable business is essential for meeting every challenge now facing Britain and the world," he warned.

The Government had encouraged private business into public services but the sector continued to propagate "self-seeking myths" that only it could be trusted to behave ethically and give value to the taxpayer, to care for the poor or the disadvantaged, to understand the needs of public provision."

But, Sunderland said, "from prisons to schools to swimming pools, the private sector has shown that it can procure, design and build, improve services and reduce cost to the taxpayer better than the public sector".

He warned: "There is a simple choice before this country between recognising the importance of profit or stagnation.

"We need to make that choice now. With intensifying global competition, political volatility and rising energy prices, UK business has its work cut out to survive and maintain its existing commitments to its workforces and shareholders and to the Exchequer.

"If Government and special interest groups together continue to treat business with suspicion, and profit as a dirty word, if they continue to pile regulation and pressures on profit-makers, more and more UK businesses will disappear.

"A shrinking working population will pay higher and higher taxes for worse and worse public services. Fewer and fewer people will take any kind of risk or embrace any kind of change. This country has been there before and some of our neighbours are going there now.

"Alternatively, we can recapture our faith in profit, the faith which made us a world economic power. We can apply that faith – and the faith in innovation which goes with it – to every area of our national life, including those from which profit is now artificially excluded.

"With that faith we can achieve living standards for the many of which today even the enlightened few can only dream of," Sutherland concluded.