Tax Avoidance and Multinational Companies

Debate between John McDonnell and Alex Chalk

Wednesday 3rd February 2016 Commons Chamber

[John McDonnell]

I will come to that in my recommendations for the future.

[Alex Chalk (Cheltenham) (Con)]

Under Labour, hedge fund managers were routinely paying a lower rate of tax than their cleaners because Labour was a soft touch on tax. Is not the hon. Gentleman’s argument just political opportunism on stilts?

[John McDonnell]

I am not sure whether the hon. Gentleman was listening. I just answered that point by reference to my critique of the Labour Government. I convened the Tax Justice Network campaign meetings in this building, and I have campaigned for 18 years. The FT assessment is that the measures introduced by the Labour Government will reap 10 times as much as anything introduced by this Government.

Let me press on. Last Monday, to get some answers about the Google deal, I tabled an urgent question to the Chancellor, and I am grateful that Mr Speaker granted the question. Typically, the Chancellor failed to turn up and the Minister was left to defend this “victorious” deal. By that time, No. 10 was furiously distancing itself from the Chancellor. Within 72 hours the Google deal had gone from “a major success” to merely “a step forward”, according to No. 10. I see that this weekend the Business Secretary was describing the deal, with masterly understatement, as “not a glorious moment”.

Yesterday Ruth Davidson, the leader of the Scottish Conservatives, said:

“It doesn’t feel fair. And in our hearts, I think we all know it isn’t fair.”

I agree wholeheartedly.

During the urgent question discussion last Monday the Minister was specifically asked by my hon. Friend the Member for Kingston upon Hull North (Diana Johnson) whether he knew the rate of tax that Google was paying. He said bluntly, “No.” We heard the assertion that the HMRC calculation of back tax was on the basis of tax levied on profits as a result of an assessment of economic activity. That implies very little economic activity in Google UK. That argument wore a bit thin when it was pointed out that Google employs 2,300 staff in the UK on average earnings of £160,000, and is building a new headquarters in addition to the two it already has.