UK: BACKBITE - THE CASE OF THE MISSING ELEVEN.

UK: BACKBITE - THE CASE OF THE MISSING ELEVEN. - The problem with these new management types is that they just don't understand the basis of our financial system,' complained one number-crunching type at a recent number-crunching convention. 'I mean they

by David Morton.
Last Updated: 31 Aug 2010

The problem with these new management types is that they just don't understand the basis of our financial system,' complained one number-crunching type at a recent number-crunching convention. 'I mean they're all very well at all those soft management issues - making the customers like the product, making the employees like producing the product - and all that faff. But I doubt if one in 20 of them could so much as give you a trial balance on the impact of a half-point on base rate, five per cent increase on raw materials, a three-and-a half per cent wage settlement, sluggish demand and no chance of jacking up the prices come fiscal year end.' Now if there's one truth at all in this world it's that there's an unaccountable divide between those who do long division to find out who owes what to whom for the extra poppadum and the king prawns in the Indian restaurant on Friday night and those who have to use their fingers and thumbs to work out what date next Wednesday will be if last Thursday was the 29th.

In the interest of bringing these two parties together in mutual understanding I am dedicating this month's Backbite to a comprehensive explanation of the basis of our fiscal system, which combines both hard numbers and a soft history option full of irrelevant anecdote.

To get to grips with the numbers first of all: it will help if everybody just keeps a mental note of the fact that 365.242199 is just a bit smaller than 365.2425 and a bit more than a bit smaller than 365.25 - but a lot bigger than 354.

Now the first number is the actual number of days that it takes the Earth to move humanity from one midsummer to the next, the second is the number of days Pope Gregory XIII decided to run things by in 1582, the third is the number Julius Caesar decided to calculate things by in 45BC, and the last number is the rough-and-ready number of days that the Romans used to put up with before they realised that if the real year and the calendar year didn't get a bit more in synch they would be having Christmas in the middle of summer, just like the Australians.

Well, by building up the months a bit and inventing the leap year Julius managed to create the 365.25-day year - a mere 11 minutes longer than the actual year.

Nevertheless, over the centuries the minutes added up and by 1582 - call it 1600 times 11 divided by 60 over 24, which is roughly 11-and-a-bit days - it was clear that Christmas was once again heading in the direction of the summer holidays.

So in 1582 Gregory lopped off the 11 days that had found their way into history and refined the leap year system by making centennial years leap only if they were divisible by 400 - thus producing the 365.2425-day year.

Ever wary of excessive European harmonisation, Britain didn't immediately join in with the Gregorian calendar but waited until it judged that the time was right - about 170 years later as it happened. So, in 1752 the day after Wednesday the 2nd September was Thursday the 14th September.

Naturally this led to protests, petitions ('Give Us Back Our 11 Days') and rioting by the lower orders who felt that their lives had been cut shorter than they would otherwise have been.

Just as naturally the people's protests led to nothing - as the Government, like all governments, insisted that people misunderstood the situation. Various convincing experts were produced who explained that it was all just a matter of book-keeping which would have no impact in the real world.

However, as ever, the money men in the City of London were not convinced by the Government's convincing experts - and protested with their purses. They refused to pay their taxes on the day that they had previously paid their taxes - which was the 25th of March (which oddly enough used to be New Year's Day) but added on 11 days which produced the 5th of April.

And, as ever, the Government gave way to the money men in the City of London, doubtless 'having consulted widely before making a sensible concession to valid interests'.

Which is why the fiscal year begins on the 5th of April.

As to the impact of a half-point on base rate, five-per-cent increase on raw materials, a three-and-a half per cent wage settlement, sluggish demand and no chance of jacking up the prices come fiscal year end, I'd always say it's a good reason for increasing the executive bonus, whatever the performance.

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