The Dyson outrage is a load of hot air
Dyson, an entrepreneur and prominent supporter of Brexit, has run into accusations of hypocrisy and even treachery from MPs on both sides of the green benches. Elsewhere, prominent commentators on the Leave and Remain sides of the Brexit divide have called for his knighthood to be revoked.
In what he claims was a joke, journalist Owen Jones tweeted of Dyson a few days ago – “nice company. Be a shame if someone were to nationalise it.” – a gag that might have landed a bit better were it not for the years Jones spent praising Venezuela’s economically ruinous nationalisation programme.
Given Dyson’s prominence in the referendum campaign, the timing and optics of the decision certainly aren’t ideal for Leavers. At the same time, much of the reaction has been ill-informed and potentially damaging.
As the BBC reports, the appliance maker’s move means that two executives will relocate – although work at Dyson’s base in Wiltshire won’t otherwise be affected, current levels of Research and Development investment will be maintained, and no jobs will be lost. A Dyson spokesman said the company does not intend to move its current UK patents to Singapore, which would mean that corporation tax receipts will largely remain in Britain.
Some have branded the decision an attempt at tax minimisation, yet this also doesn’t stand up to scrutiny. Yes, the move means Dyson could, in future, pay marginally less in corporation tax, with Singapore’s rate sitting at 17% compared to Britain’s 18% (starting next year), but these are modest sums when you consider the broader potential gains.
Last year, more than 90% of Dyson’s sales occurred outside the UK, with 70% of the company’s overall growth concentrated in Asia. The broader global focus of manufacturing has been shifting towards Asia for many years; Dyson has already chosen to base its Electric Car plant in Singapore, largely for proximity to the Chinese market where more than a million of the vehicles were sold last year (more than the combined totals for the USA and Europe). Singapore’s FTA with the EU may be a helpful bonus, but it pales into comparison with the benefits of the wide-reaching agreement Singapore enjoys with China.
In addition, Singapore is a member of the Association of Southeast Asian Nations (ASEAN), a 10-country strong regional grouping which has successfully removed many barriers to capital and worker movement between the member countries. Perhaps the outrage might be justified had Dyson relocated the two executives to Paris or Frankfurt, but in context, the move just looks like sensible business, and a desire to service the world’s faster growing markets. Given the service-based nature of the UK economy compared to Europe, where manufacture is a much bigger priority, the Dyson story arguably looks more worrying for the latter.
Of course, James Dyson’s history with the European Union hasn’t exactly been harmonious. EU cronyism has long punished and stifled Dyson inventions. Until last year, energy levels standards for vacuum cleaners were rigged in favour of traditional bagged devices, since EU rules – unbelievably – stipulated testing in dust-free conditions. Though he eventually overthrew this case in the ECJ after years of hassle and huge expense, Dyson might well wish to avoid similar potential inconveniences. The EU’s current direction of travel towards further regulation and taxation of new innovations, including AI and robotics, does not suggest it will create a pro-competitive environment in the future. These concerns are hardly academic either, given that the current shape of the withdrawal agreement would see Britain aligning heavily with the EU’s regulatory system.
Even putting the rationale for the Singapore move aside, cries of ‘Traitor!’ from leading politicians should concern us all. Over the years, Dyson has created thousands of jobs and contributed millions to the Treasury coffers. The company recently announced an additional £1.5 bn of UK investment, creating 3,000 jobs and tripling its domestic workforce. It is disappointing to hear supposedly pro-business politicians vilifying wealth creators and drivers of innovation. Dyson was knighted for his contributions to engineering – not because he somehow pledged never to expand his company’s overseas operations in the future.
To many of us, Britain’s decision to leave the EU represents an opportunity to forge an outward-looking, global Britain. This should not involve nativist accusations of ‘treachery’ when business people make strategic decisions in keeping with the world economy.
Instead of demonising entrepreneurs, our politicians should consider how to foster a tax and investment regime that entices employers, and a light-touch regulatory approach to encourage competition and innovation. Ideally, we would follow our own Singapore-style policies, reducing taxation and legislation, which have transformed the fortunes of that country. Either way, Dyson’s move to the Far East serves as a warning that obsessing over an economically stagnant EU may be a dead-end.