Three Big Ideas #49

Media misrepresentations, tax transparency, and rejuvenating recruitment

Welcome to our fortnightly Three Big Ideas roundup, in which we serve up a curated selection of ideas (and our takes on them) in entrepreneurship, innovation, science and technology, handpicked by the team.

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📰 Philip Salter, Founder

Our latest briefing paper, Out of Focus, is different from most of our reports. Rather than our usual wide-ranging analysis or deep dive into technical policy, we used our latest Quarterly Survey to ask a simple but vital question: What do entrepreneurs think about the UK’s media landscape?

The verdict is clear: founders are dissatisfied. Sixty percent of founders disagree with the idea that journalists are covering the sector well, while only 12% agree. Yet there is also introspection. Founders are critical of their own efforts, with more believing they represent themselves poorly than those who think they get it right.

The data also points to stagnation. Around 40% of respondents have seen no improvement in either the quality or quantity of coverage in recent years. Even more concerning is the misalignment of priorities: 74% of founders feel the media ignores the issues that matter to them most, compared to only 6% who feel the press is focusing on the right topics.

This matters because our mission goes beyond policy – we also want to shift culture. Championing entrepreneurs in the public debate is a core pillar of our work. This drive for cultural change is why we are calling for initiatives such as a modern successor to the Great Exhibition of 1851 and a new order of chivalry to elevate the status of British innovators.

To be clear, we are not suggesting any interventions are required to our relatively free press. Nor are we ignoring the shift to digital – we know that 75% of young adults rely on social media for news. Yet, the reality remains that the country’s decision-makers still rely on mainstream media to form their views.

As a former journalist, I know the pressures of the job. This is not a critique of the trade, but a challenge to everyone across the ecosystem. We need to think more entrepreneurially about how we tell the story of British business, both to the influential elite and the wider public.

In our small way, we are taking practical steps to fix this. We have launched an interview series here on Network Effects to highlight leadership voices, and created a free WhatsApp Community where we share occasional media opportunities to help democratise access to the press.

🪟 Eamonn Ives, Research Director

Anyone who’s visited Washington, DC will know vehicle licence plates are emblazoned with the words “End Taxation Without Representation.” A new law passed by President Trump – the IRS MATH Act – takes the principle a step further. It compels America’s tax agency to explain precisely what it is changing on a return when it believes a taxpayer has made an error, and grants individuals 60 days to challenge any decisions before they’re made final.

The logic is straightforward, but the consequences could be profound. Most obviously, taxpayers should over time learn how to file returns more accurately – helping to shrink the tax gap, and also allowing the IRS to spend more time rooting out genuine tax evasion rather than punishing innocent mistakes. Further, if it helps to build trust with taxpayers, we might see more people decide to file by themselves, without shelling out on expensive accountants for peace of mind. Finally, someone who takes a more cynical view of the IRS may also think that by requiring them to categorically prove a mistake, it will reduce the likelihood of ‘over-taxation’.

HM Revenue and Customs should take inspiration. To its credit, earlier this year it consulted on its approach to dispute resolution. A large portion of the consultation focused on ‘Revenue Correction Notices’ (RCNs), which allow HMRC to amend a taxpayer’s return where it has reason to believe an error has been made. When considering responses to the consultation, HMRC acknowledged that “[a]lmost all respondents supported the idea that there should be a requirement for HMRC to provide an explanation for a revenue correction,” and that “[m]any respondents considered providing clear explanations should already be standard practice and expressed concern that HMRC’s explanations in revenue correction notices are often vague and inadequate.” They should heed this feedback, and accelerate reforms to increase transparency accordingly.

So much commentary on taxation understandably centres on headline rates, thresholds and allowances. But we shouldn’t lose sight of the administrative mechanics involved in actually paying what’s owed. Changes that make that process more straightforward should be championed. Of course, reducing overall tax complexity must be the priority, but greater clarity should be a close second. An end to taxation without explanation would be a nice reprieve to Britain’s beleaguered businesses.

📝 Mann Virdee, Senior Researcher

Last month, I read with interest that 995 people had applied for a single public affairs role at the London School of Economics.

Was this perhaps a particularly desirable role, a sign of a tough job market, or might AI have a role to play by making it easier to write cover letters? I suspect it’s a combination of all three.

Then, last week, I came across Andrew Orlowski’s op-ed. In this article, Andrew argues that generative AI is primarily a tool to fabricate, used by those pretending to be something they are not. I think that’s a little harsh and overly simplistic. But there may be more than a grain of truth in his conclusion: AI disproportionately rewards the lazy and dishonest, and that those who decline to use it are punished.

In support of his argument, Andrew cites a recent economics paper which focuses on how AI disrupts markets that have traditionally relied on writing as a signal of quality, and specifically the impact of applicants using AI to produce cover letters. The paper finds that:

“employers are less able to identify high-ability workers, causing the market to become significantly less meritocratic.”

As a result, employers hired fewer high-quality candidates and more low-quality candidates.

Now back to that job at the LSE. The hiring manager for that role would disagree with that paper. He claims that generative AI is actually a hindrance to applicants because it provides bland and easy-to-spot responses. He added that the LSE does not use AI to filter applications, and that each response is read by a recruiting panel member.

That’s all well and good for a large institution, but what does it mean for entrepreneurs?

It’s time to question the way we go about assessing applicants’ suitability for a role. For entrepreneurs in small teams, recruiting a good candidate can be the difference between success and failure. They don’t have the time to read through 995 applications. The real takeaway for entrepreneurs is that they are not recruiting to find the best writer, but the best problem solver. It’s more productive to test and filter applicants on how they would approach a problem rather than assess them on how well they write a cover letter.

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