Budget Resolutions and Economic Situation — House of Commons, 2015-03-20
Topic: Mixed Topics
John Martin McDonnell (Labour, Centre-left): I wanted to focus on the issue raised by the right hon. Member for Somerton and Frome (Mr Heath) with regard to tax avoidance, but today’s theme is local government, and the right hon. Member for Uxbridge and South Ruislip (Sir John Randall) referred to the London borough of Hillingdon, and that prompts me to make a passing reference to that local authority, which I share with him. I do not recognise his depiction of its Conservative administration. In my constituency, Conservative control of that borough has created, through callousness and incompetence, the worst housing crisis since the second world war, with families living in overcrowded squalor, and hundreds now in bed and breakfasts, shunted around the country just to find a roof over their heads. The cuts in the planning department and the lack of enforcement on beds in sheds and so forth mean that some areas of my constituency are now beginning to look like a shanty town. The council is building on the green belt despite owning brownfield sites. That is because it is selling off those brownfield sites in my constituency in order to subsidise the development of facilities in the right hon. Gentleman’s constituency, and in Ruislip and Northwood as well I also live in a local authority where social services and care services are perilously close to collapse and where staff are working in an environment of bullying and fear. The Conservative councillors who lead the council seem more interested in increasing their allowances than the interests of my constituents. I just make passing reference to the London borough of Hillingdon I shall turn now to the issue I wish to raise: tax evasion and avoidance. The Budget sets the target of raising £3.1 billion through tackling tax evasion and avoidance. The Government have identified a tax gap of £35 billion, which has remained almost static for the past few years, but one of the World Bank auditors has said it is nearer £100 billion, and the tax justice campaign and the Public and Commercial Services union, which represents the tax collectors themselves, has put it at £120 billion. So on the Government’s own figures, at best we are simply going to tackle, if successful, less than 10% of the tax gap, but more realistically less than 3%. That is a dismally low target In yesterday’s HMRC and Treasury document on tax avoidance and evasion, I welcome the statements around strict liability, naming and shaming, the toughening up of penalties and the tackling of serial avoiders, but it has taken five years of lobbying by the Tax Justice Network and others—and I pay tribute to Richard Murphy, Prem Sikka and John Christensen. It has also taken direct action by UK Uncut, media campaigns and public pressure to get the Government to act—in their last week. But it is not action—it is not deeds; it is further consultations. This is an appalling missed opportunity The right hon. Member for Somerton and Frome—who is not in his place, which I understand as it has been a long debate—referred to issues to do with accountancy firms, and I agree with him. The Government’s document of yesterday places heavy reliance on those agencies at paragraph 3.19: "Today, the government also announced it is asking the regulatory bodies who police professional standards to take on a greater lead and responsibility in setting and enforcing clear professional standards around the facilitation and promotion of avoidance to protect the reputation of the tax and accountancy profession and to act for the greater public good." There is a level of either complicity or naivety here. I think this demonstrates corporate capture of this Government and the Treasury by the accountancy firms, finance houses of the City and corporate law firms The Government are now relying on these agencies once again to police themselves. On the corporate lawyers, the Law Society tax committee is populated by corporate lawyers representing firms promoting the tax avoidance schemes. On the accountancy professional bodies, the standards and policy committees comprise the representatives of the firms making billions of pounds from designing, promoting, selling and implementing tax avoidance schemes on an industrial scale, as the Public Accounts Committee said. I refer Members to Prem Sikka’s latest article. He points out that "the Institute of Chartered Accountants in England and Wales was formed in 1880. Here we are in 2015, and not a single accountant or accountancy firm has ever been disciplined by the ICAEW even when the schemes marked by the Big Four firms have been declared to be unlawful by tax tribunal and courts." Then there is the question of who is going to prosecute these firms now that we are going to introduce more criminal legislation against them. Will it be the Serious Fraud Office? Its budget has fallen from £52 million in 2008 to £35 million now. It is hardly equipped to take on these mega-corporations. In fact it is now facing lawsuits for damages from botched investigations—from the Tchenguiz brothers—and is "utterly unfit" to investigate or enforce the legislation the Government are bringing forward The Crown Prosecution Service is "hardly visible" with regard to prosecution of big corporations, and HMRC staffing cuts have denied it the professional expertise needed. I will come back to the staffing cuts.