Tackling tax demons: Trick and treat at the heart of the City Establishment

On Halloween eve an unique invitation only conference took place in the historic  and just slightly spooky Livery Hall in the City’s historic Guildhall.

For six hours the Westminster Establishment politely occupied the bastion of  the City Establishment to discuss a subject that perhaps capitalism would like to go away – global tax evasion and tax avoidance.

Margaret Hodge;

Margaret Hodge;

Margaret Hodge, chair of the Commons Public Accounts Committee and scourge of tax avoiders Google, Amazon and Starbucks, brought together business chiefs, politicians, tax accountants, civil servants, charities, trade unionists and the odd pesky journo like me from Britain and across the world.

The event was unique because on a grand scale it put people in the same room who would verbally be at each other’s throats and tried to find some common ground to tackle a world-wide scourge.The scourge that is making the elite ever richer and leaving the poor, and increasingly the middle classes,left behind as well as exploiting developing countries.

The result was interesting – both for unpredictable quotes and for disclosure of what is really happening to try to tackle this.

One of the  most memorable quotes came from Justin King, the thoughtful former CEO of Sainsbury’s, who admitted that “If business becomes more unpopular than politicians then we really do have a problem”. He also warned no doubt with declining Tesco in mind – that business rates and corporation tax were both on the way out – as business needed less real estate to function and countries vie with each other to reduce corporation tax.

Another memorable moment was Will Morris, chair of the CBI Tax Committee, backing the Public and Commercial Services Union case that George Osborne was wrong to axe a third of HMRC staff. What next Mark Serwotka , the general secretary, sharing a platform with the CBI?

Or for Prem Sikka, professor of accounting at Essex University, who pointed out, after accountants defended their role, that not one accountant had ever been disciplined by their venerable professional body, dating from the 1880s, for producing an illegal tax avoidance scheme.

The other striking feature of the conference in the  male dominated City was the role played by powerful women on both sides of the argument.

For me the most striking was the speech given by Grace Perez-Navarro, Deputy Director of the OECD Centre for Tax Policy and Administration. She revealed that the OECD were not just talking about it but had secured some 90 plus agreements with tax authorities like the Cayman Islands, Gibraltar among many others to exchange information but not to make it public yet. She is also a firm advocate of forcing companies needing to release country-by-country reporting of profits generated by multinationals.

“Our efforts to increase transparency, combat offshore evasion and counter tax avoidance by multinational enterprises are having an impact on the ground and helping countries to make sure that all taxpayers pay their fair share,” she said.

But there were also outstanding contributions by Irene Ovonji-Odida, ActionAid chair, on what needed to happen in Africa and on the pro business side by Heather Self, of  lawyers Pinsent Mason, the capitalist’s best legal friend and from the floor by Maya Forstator, an independent researcher who has challenged the claims by some of the world’s leading charities like Christian Aid and Action Aid on the effects of multi nationals taking money away from developing countries.

We also learnt some curious irrelevant information  about the cars some of the speakers drive. Richard Murphy, the Tax Justice accountant used the analogy that he drove an 11 year old car to show how out of date international taxation law is only to be trumped by Grace Perez-Navarro who drives around in a 22 year old motor.

There were no instant changes arising from this conference. More important was the fact than in an age of increasing inequality – the issue of tax is certain to remain  high on the agenda and there are active people wanting to deal with issue to make things happen.

Meanwhile as Margaret Hodge wound up the conference with a  damning speech on what more needed to be done, in another part of the Guildhall, another Parliamentary select committee chair, Keith Vaz, was undermining another powerful woman, Fiona Woolf, the current Lord Mayor of London, who has been appointed by Theresa May, the home secretary, to head the child sexual abuse inquiry

The home affairs committee chairman released seven drafts of her letter outlining her links with Leon Brittan,who is likely to be investigated over the disappearance of crucial home office documents,on the issue.showing how she kept changing her story. Today people think she will be under enormous pressure to quit.

 

 

 

 

 

 

 

Reflections on Labour: Two women who could help change Britain

Margaret Hodge; A practical route map for Labour

Margaret Hodge; A practical route map for Labour

The most exciting part of political conferences is not the main conference hall but the fringe. It is here that people are much more likely to speak their mind and real issues are debated – not set piece presentations ( even if Ed Miliband forgot a bit of his!).

Two totally unreported contributions came from two of the more feisty women in the Labour – both with strong views.

Angela Eagle, shadow leader of the Commons, chair of the conference and the national policy forum made a refreshingly off message analysis of present British society and where it is going.

Speaking at a Unite union fringe organised by Class (Centre for Labour and Social Studies)- analysing the rapidly widening gap between the mega elite and the ordinary worker – she actually described the present situation in society as ” immoral”.-pointing out that  top directors now earn 130 times more than their workforce.

She also defended benefit claimants -pointing out that the media campaign labelling or libelling them all as scroungers – had meant ordinary people coming to her Wirral surgery were wrongly put on the defensive just because they were claiming from the state.

Angela Eagle providing Labour with a  moral compass. Pic credit: The Guardian

Angela Eagle providing Labour with a moral compass. Pic credit: The Guardian

She was on a platform where the speakers were firmly of the view that the present economic situation was unsustainable, companies were hoarding money rather than investing and people could only spend by getting more into debt.

It shouldn’t be surprising that you hear such views at a Labour conference, but it is surprising these days to hear such comments from a member of the shadow Cabinet.

The second feisty contribution came from Margaret Hodge, chair of the Commons public accounts committee. She was speaking on a different platform with the Policy Network Here the issue was how Labour could make a difference by accepting the present economic situation and using public money more effectively.

Superficially  you might think the two women were on  different planets but actually they complimented each other.

Margaret Hodge, with enormous experience of investigating Whitehall scandals, tax avoidance and the dodgy behaviour of private companies providing public services, had a practical route map on how Labour could handle this.

Her solution including forcing the companies to become transparent with the way they spend or misspent our money, using public procurement to secure the living wage for all workers, clamping down far more effectively on tax avoidance including collecting the taxes, and looking at radical five-year plans to innovate public services, rather than the Treasury knee jerk reaction top impose cuts with three months notice.

Ed Miliband would be mad if he did not appoint her to head a new unit with oversight of public contracts if he wins the election – she could then insist on implementing this programme rather than report on the messes left behind by the private sector.

He would also be mad not to promote Angela Eagle into a job where she could influence the direction of public spending. Both women  have enormous talents. Angela provides a moral compass, Margaret a practical route map  out of an increasingly unfair society.

 

 

 

Silence of the Whistleblowers

Knives out for A4e whistleblowers? Pic courtesy:snippits-and-slappits.blogspot.com

Today  confidential evidence given to MPs on Parliament’s most powerful committee of MPs by a team of whistleblowers on fraud should have become public.

The whistleblowers-  people once employed by two rapidly growing companies A4e and Working Links which are dominating the government’s welfare to work programme – spent two hours giving dramatic evidence in private to the House of Commons Public Accounts Committee last May.

The result of their information and a frankly complacent performance by Robert Devereux, the patrician permanent secretary, to the Department of Work and Pensions led  to a damning report  by MPs on the ministry’s stewardship of  taxpayers’ money handed over to these profit-making companies.

As reported in Exaro News today ( see http://www.exaronews.com ) Tory and Labour MPs were disgusted at the ministry’s performance.

Margaret Hodge, the Labour MP who chairs the committee, said: “The DWP’s arrangements for overseeing and inspecting its contractors were so weak that vital evidence on potential fraud and improper practice was not picked up.”

Richard Bacon, Conservative MP and deputy chairman of the committee, said: “Encouraging innovation and fresh approaches is important, but so is ensuring value for taxpayers. Providers cannot be allowed to run wild and free with public money.”

Margaret Hodge; Agrred to withold whistleblowers evidence

The evidence came from an appalling internal audit report prepared in 2009 by A4e’s own auditors and leaked to committee on the Exaro website which concluded:” found that more than one quarter of the company’s placements was potentially fraudulent, irregular or unverifiable. The jobs agency even placed one job-seeker at a Liverpool lap-dance club. Last May, Exaro published the auditors’ findings in full. That was under Labour.

But according to  one of the whistleblowers it continued under the Tories. Eddie Hutchinson, former chief auditor of A4e, told the committee in his submission of “systemic” fraud and malpractice at the company.

Hutchinson, worked at A4e from October 2010 until May last year, and at Working Links before that. He described what he saw at both companies as “a multi-billion-pound scandal”. This we only know because of his evidence was leaked to the Daily Telegraph. A4e insist that this eveidence is not true and the new company is now wonderful.

Today we should have had a more rounded picture with new evidence from other whistle blowers. The draft report would have included the minutes of that meeting and with names redacted all the information.

But just days before publication the whistleblowers, according to a top source panicked and asked the chair, Margaret Hodge, to censor all their evidence.

Why? All the whistleblowers were happy to give evidence in public last May but some Tory Mps, Chris Grayling, then the minister for work, and A4e were desperate for the public to know nothing. They stopped the public hearing. Billions of pounds of new contracts were at stake. Now ministers and A4e have got their way.  We are none the wiser. Have the whistleblowers been threatened?  Did they decide they had lied to the committee? Or is there a blacklist in the auditing profession to prevent people who blow the whistle from getting fresh work?

Today is a bad day for transparency and democracy when the most powerful committee in Parliament that holds the government to account cannot publish the facts. The government is making matters worse by changing the law protecting whistleblowers to make it even more unlikely they will risk their careers at the moment.

A4e as well should have been allowed to give evidence to the committee as well as the rather arrogant Mr Devereux. The company could then have put its case and been questioned on its performance. For those interested in the full or should I say half redacted report, it is here (http://bit.ly/PKPO9a ).

Why Margaret Hodge must hold the British Tax Avoidance Corporation to account: Updated

George Entwistle, new director general. Time to tackle tax avoidance? pic courtesy: Metro

On Monday BBC chiefs will appear before Parliament’s most powerful committee, the Commons Public Accounts Committee.

They will be there to answer questions on the vexed question of employing people through personal service companies to avoid paying tax and national insurance at source.

The BBC will be joined be civil servants from Whitehall and local government who have all been exposed of using this device to employ people and avoid paying tax and national insurance at source.

The scandal was first exposed by me on the ExaroNews website (http://www.exaronews.com)  and BBC Newsnight when it was discovered that Ed Lester, the Student Loans chief, had used this device to be paid £182,000 a year.

The furore that followed led Danny Alexander,Chief Secretary to the Treasury, to launch an inquiry which discovered that another 2500 civil servants were using the same device across Whitehall. The review’s findings were also leaked to Exaro and BBC Newsnight.

Less well covered is that the BBC and local government were up to the same thing . Until now both sectors have got away with it. on Monday they can be called to account and should be.

The BBC has enjoyed the protection of Jeremy Hunt, the culture secretary, and as never been required to disclose the full picture.  Indeed the biggest disclosure came from David Mowat, a former member of the public accounts committee, who  found out through a freedom of information request that the BBC employed 3000 people- more than the whole of Whitehall – through personal service companies. And none of these were journalists who are exempt from FOI because they are regarded as ” talent.” So the full  picture is bound to be much,much bigger.

Similarly Eric Pickles, the communities secretary, has not followed through vigorously what is going on in local government.No attempt has been made to probe tax avoidance at the London boroughs of Barnet, Hackney and Hammersmith and Fulham or the blatant disregard for employing people directly on the Isle of Wight.

Monday will be a great opportunity for the terrier instincts of Margaret Hodge, Richard Bacon, Stephen Barclay, Meg Hillier and Fiona Mactaggart to name but a few to ask a few very pointed questions and demand explanations from the BBC and town halls. I hope they will not disappoint and not be put off by Whitehall  sniping about the way they question witnesses.

The BBC after all would not exist if it did not receive licence  fees from taxpayers and even non taxpayers. Its new director general George Entwistle, should make the Corporation becoming more transparent as a priority. Over to you, Margaret.

Since this has appeared a full cast list of people  summoned to appear has been announced. They are:

 Carolyn Downs, Local Government Association, Zarin Patel, Chief Financial Officer, BBC and David Smith, Head of Employment Tax, BBC; Sir Nicholas MacPherson KCB, Permanent Secretary, HM Treasury, Howard Orme, Finance Director, Department of Business, Innovation and Skills, Lin Homer, Chief Executive and Permanent Secretary, HMRC and William Hague, Executive Director, Efficiency and Reform Group, Cabinet Office.

Followers of the story might be interested to know that documents released to me  under Freedom of Information point to Harold Orme being directly connected to the controversial appointment of Ed Lester, head of the Students Loan Company, with the knowledge that he would not have any tax or national insurance directly deducted by the Student Loans Company. This is a good call by the committee.

Exaro  News will have a story up on their website  on Monday evening –  after the committee has met.

Margaret versus the mandarins

Margaret Hodge: Standing Up for MPs' and the public's rights

Watch out for a major speech by Margaret Hodge, chair of the Commons public accounts committee, at Policy Exchange in London this Thursday on the accountability of Whitehall to Parliament.

This is going to be a historic moment for the relationship between MPs and mandarins and I am not expecting the doughty chairman of Parliament’s most powerful committee to pull any punches. I also expect it to ignite a big debate.

 It is also important moment for people who believe that Parliament is just a talking shop. This is because it will show that MPs want action on the way our taxes are spent and even more so on who pays their taxes.

 It is also about the honesty and integrity of Dave Hartnett, the head of the Inland Revenue (HMRC), and his attempt to get away with telling lies to MPs on a deal with one of biggest bankers, Goldman Sachs.

The story of this dispute is published today by Exaro News at http://bit.ly/zHz7pP or on the Exaro News website http:// www.exaronews.com .

 Suffice to say it reveals a massive tussle between Lord O’Donnell, the former Cabinet Secretary and Mrs Hodge over whether civil servants are accountable to MPs or ministers – going to heart of the matter of whether MPs can stand up for us as taxpayers.

 Lord O’Donnell ,who wrote the letter days before he retired ,has accused the Public Accounts Committee of  publicly humiliating a senior law official at the revenue by making him swear on the Bible before giving evidence. He talks of widespread anger in Whitehall and in the legal profession about this.

 But he ignores the reason – that the man’s boss, Dave Hartnett, had misled Parliament over a sweetheart tax deal he negotiated with Goldman Sachs saving them possibly billions in tax. He pretended it was nothing to do with him.

 This is why people should back Margaret Hodge, her committee which includes very equally strong minded MPs like Tories Richard Bacon and Stephen Barclay in standing up for MPs and the public’s rights.

 Thursday will light the blue touch-paper at Policy Exchange. If there are any seats left go and watch and hear. It’s free.