Tax Avoidance and Evasion

Andrew Mitchell Excerpts

Tuesday 14th November 2017 Commons Chamber

[Mr Andrew Mitchell (Sutton Coldfield) (Con)]

I draw the House’s attention to my entry in the Register of Members’ Financial Interests.

I congratulate the right hon. Member for Barking (Dame Margaret Hodge) on securing this debate. She brings great expertise and authority on these matters, not least from her time on the Public Accounts Committee.

The most important point for the House to focus on this afternoon is that this is absolutely not a party political issue. Although the right hon. Lady raised some criticisms of this Government, she also raised criticisms of the Government of which she was a member. In my judgment, the only plausible criticism that can be made of the current Government is that they need to speed up some of the initiatives they have already implemented. They have not done so in respect of the overseas territories because, obviously, we would rather those havens took action themselves—to be fair, to some extent they have already started to do so.

On the actions taken by the Government, David Cameron and George Osborne led the international effort at the G8 to clamp down on such matters, particularly tax avoidance and evasion. The UK introduced publicly accessible registers of people with significant control, abolished bearer or anonymous shares and, importantly, introduced unexplained wealth orders. The anti-bribery law, work on which first started under John Major in Paris in 1995, was finally introduced in this country by David Cameron in 2011, after 13 years of Labour government.

On this Government’s record, let us be clear that they have been taking action and have raised an immense amount of extra tax as a result. However, the time has come—this is my third debate on this issue—to insist on the same levels of openness and transparency for the overseas territories as we have in this country. The territories gain hugely from their relationship with the United Kingdom and, as the Government made clear in 2012,

“As a matter of constitutional law the UK Parliament has unlimited power to legislate for the Territories.”

[Wes Streeting (Ilford North) (Lab)]

The right hon. Gentleman will know from his considerable expertise on international development that the abuse of such offshore schemes not only harms British taxpayers but disadvantages some of the world’s poorest people. That is why the Government must act to introduce greater transparency in Crown dependencies and overseas territories.

[Mr Mitchell]

I am coming on to precisely that point.

Like many Members, I have been visited by senior Ministers of almost all the overseas territories, and the position of the territories is best summed up by the prayer of St Augustine: “Oh Lord, make me chaste—but not yet.” The territories put two specific arguments. I call the first the Dutch Antilles argument, which is that if the territories have open registers, the hot money will head off to the Dutch Antilles. There is momentum around the world, thanks to David Cameron and George Osborne, to attack such ills and unfairnesses. Havens that embrace an open register will get an advantage from being at the front of opening up to billions of pounds of legitimate business.

The second argument—in a way, this is the one we have to address head-on—is that the territories’ private registers are already available to lawmakers and regulators, such as HMRC. The territories proudly say that they will turn round inquiries from HMRC within a matter of hours, which is good, but it completely misses the point, as the recent release of information shows. Registers must be open to the media, to journalists, to non-governmental organisations and to those who can join up the dots. The regulatory authorities, with the best will in the world, are not in that business. Narrow questions, drawn from regulatory authorities, simply do not begin to suffice.

[Robert Neill]

I refer to my declaration in the Register of Members’ Financial Interests. My right hon. Friend makes a fair point. Does he also accept that it is fair that we should not lump all the overseas territories into one basket? Some are much more compliant than others, Gibraltar being one.

[Mr Mitchell]

My hon. Friend makes a good point. I specifically exclude Gibraltar from what I am saying because it is not an example of what we are talking about.

Time is short. My final point is that the United Kingdom led on the 0.7% target. Around the world, the United Kingdom is looked to for leadership on international development. International development is part of this Parliament’s identity, it is who we are and it is part of global Britain. We have an obligation, not least to our own taxpayers, to champion transparency and openness and to have zero tolerance towards corruption.

When we first came into government in 2010, the Department for International Development led the way with its transparency guarantee. We openly published all expenditure above £500 on the internet. It may be a cliché, but sunlight really is the best disinfectant. That is at the heart of what we are talking about today.

[Jeremy Lefroy (Stafford) (Con)]

I support what my right hon. Friend is saying. Does he agree that the future market for financial services is huge and that jurisdictions with that level of transparency will attract vast amounts of business precisely for that reason?

[Mr Mitchell]

My hon. Friend is absolutely right. The first of my two points was about trying to tackle head-on the counter-arguments that are sometimes made by some territories.

On tackling and having zero tolerance towards corruption, in 2010, when I had responsibility for international development, we targeted funding specifically at the City of London police, which has expertise on pursuing and recovering stolen funds. We should do as much of that as possible.

[Robert Jenrick]

I agree with a great deal of what my right hon. Friend says. Given that the majority of the economy of the British Virgin Islands, in particular, is in financial services and the islands have recently been completely devastated by hurricanes, is now the right time to be imposing on the islanders rather than working with them?

[Mr Mitchell]

My hon. Friend makes a fair point in view of the humanitarian crisis that is afflicting the BVI, which are of course one of the most transparent of these havens. What I hope will be a temporary crisis in the BVI following the hurricane damage should not in any way detract from my argument that, in a defined, perhaps short, period of time, these open registers are essential.

[Angus Brendan MacNeil (Na h-Eileanan an Iar) (SNP)]

Will the right hon. Gentleman correct the record? He said earlier that the UK led on the 0.7% target, but the UK was 40 or 45 years late. The 0.7% target was agreed in 1970, and the UK reached it decades behind the Scandinavians. I do not see that as leadership. Does he want to come back on that?

[Mr Mitchell]

The hon. Gentleman cannot get away with such a narrow, partisan comment. Britain was the first G8 country to stand by its commitment to the poorest people in the world, and we are very proud that it was this Government who did it.

The highly respected Africa Progress Panel, in a recent study on the Democratic Republic of the Congo, made it clear that stolen funds and stolen taxes cost that country £1.5 billion, which is more than it spends on health and education. It is a deep irony that some of the world’s poorest people live on top of some of the richest real estate, as is clear in the DRC. Credible World Bank studies make it clear that the money stolen from the people of Africa through unpaid taxes or concealment dwarfs all the foreign direct investment and international development money that flows into Africa each year.

[Sir Hugo Swire (East Devon) (Con)]

We know a lot of that money ends up not in the overseas territories but in places like Dubai. Does my right hon. Friend agree that we also need to engage with other partners around the world, particularly in places like Dubai, where a lot of this money is to be found?

[Mr Mitchell]

My right hon. Friend makes a good point; the key point on all of this is transparency and openness. Let all these matters be published in the way they are published through the open register in Britain. That is the way in which we make progress.

We look to the Government to advance this agenda, probably in the Finance Bill. We hope that those on the Treasury Bench will hear clearly the will of the House on this matter today and that progress will indeed now be made.

[Several hon. Members rose—]