Tax Avoidance and Evasion

Catherine West Excerpts

Tuesday 14th November 2017 Commons Chamber

[The Financial Secretary to the Treasury (Mel Stride)]

I congratulate the right hon. Member for Barking (Dame Margaret Hodge) on securing this important debate. She has been a vigorous campaigner on these issues over many years, and has certainly been very active in the last week; I responded to an urgent question and there was an Adjournment debate in respect of the Isle of Man last week, and now we have this debate as well.

The right hon. Lady said that tax and tax avoidance was one of those matters that should not divide us. I agree, and it seems to me that in the various iterations of this debate that she and I have held across this Dispatch Box there is a great deal on which we can be united rather than divided; I am thinking not least of the shared view across this House—certainly on my side of the House—that aggressive tax avoidance and evasion are utterly wrong. They are wrong for the reasons that the right hon. Lady has given: those who pay their tax fairly should not be penalised by virtue of the fact that some do not pay their tax fairly.

We also know, as the right hon. Lady pointed out, that tax is necessary to fund our vital public services. It is therefore entirely wrong that those who aggressively evade or avoid tax put pressure on our public services—on our NHS, our doctors and our nurses.

[Catherine West (Hornsey and Wood Green) (Lab)]

Under the last Government, the former Prime Minister David Cameron appointed an anti-corruption tsar. Who is the anti-corruption tsar under the current Government?

[Mel Stride]

I will get back to the hon. Lady on that.

We know that tax is important for our public services, and we know, as the right hon. Member for Barking rightly stressed, that it is important that the Government act, and be seen to act, when we come across aggressive tax avoidance and evasion. As my hon. Friends on this side of the House have eloquently pointed out, we have a very strong track record in that respect. We have raised £160 billion in additional revenues as a consequence of clamping down on tax avoidance, evasion and non-compliance since 2010. We have also brought in £2.8 billion by tracking down those who have sought to inappropriately hide their finances in overseas tax jurisdictions. We have brought in £28.9 billion in additional compliance yield in the last 12 months alone, too.

The right hon. Lady is rightly critical of the performance of the last Labour Government; she raised that this afternoon and raised the same point in last week’s Adjournment debate. The tax gap is the difference between what we could potentially bring in by way of tax and what we actually bring in, and it currently stands at 6%, which is a historical low—a world-beating figure. If the average tax gap today was the same as under the last Labour Government, there would be £45 billion less in our Exchequer—£45 billion not there for those vital public services that the right hon. Lady is keen to discuss.

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[Peter Dowd (Bootle) (Lab)]

I will try to take that on board as a suggestion rather than a direction, Mr Speaker. The Minister identified what he thinks should be done, but I will tell him what should be done. In our “Tax Transparency and Enforcement Programme” document, Labour calls for an immediate public inquiry into avoidance, greater scrutiny of MPs, the creation of a specialist tax enforcement unit, and the public filing of large company tax returns and of the tax returns of wealthy individuals earning more than £1 million. We want no public contracts for tax avoiders, the repatriation of contracts parked in tax havens, public contract transparency, a register of beneficial ownership of companies and a register of trusts, and our programme would be enforced by working with the banking sector. We also call for a general anti-avoidance rule in principle, strict minimum standards for crown dependencies and overseas territories, the creation of an offshore companies levy and full country-by-country reporting. All that represents a comprehensive proposal from Labour.

[Catherine West]

Does my hon. Friend agree that there is an army of tax avoidance facilitators that includes, sadly, the four big accountancy firms, which are often based just down the road in the square mile?

[Peter Dowd]

My hon. Friend makes an important point. Transparency is at the heart of all this. I experienced a bizarre situation last week when I was on “Newsnight” with the chairman of the Cayman Islands stock exchange. What an insouciant attitude that man had to tax avoidance. He actually said that there had not been any wrongdoing—maybe not—and called for the journalists to be jailed. That is what he did, and that is the position in which we find ourselves.

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[Nigel Mills (Amber Valley) (Con)]

It is a pleasure to follow the hon. Member for Hackney South and Shoreditch (Meg Hillier), and I join in the congratulations to the right hon. Member for Barking (Dame Margaret Hodge) on her securing this important debate. I absolutely agree with the conclusions she came to, but I probably took a slightly different route to get to them.

I should start, though, by saying that I do not think it is fair to say that over the past 15 years or so, HMRC, the previous Labour Government and the current Conservative Government have not tried to tackle aggressive avoidance. Look at the number of measures that have been introduced, ranging from disclosure rules for artificial schemes through to more recent measures. Look at a Finance Bill and count up how many targeted anti-avoidance rules have now been added. We have been trying everything we possibly can to tackle the most outrageous behaviour. Many of the schemes that 15 years ago used to be possible or, indeed, quite widespread just cannot be done in the UK at all now.

[Catherine West]

Does the hon. Gentleman agree that there is a cultural issue and a whole machinery that enables and facilitates these sorts of arrangements, which the 99% of us have nothing to do with, and that we have to be very aggressive in tackling that 1%?

[Nigel Mills]

I agree with the hon. Lady exactly, but the point I was trying to make was that I do not think that the size of the tax gap is down to a lack of effort or attempts to introduce new rules or measures. The problem is that the avoiders and evaders are perhaps one step ahead and move on to different things. That is why the Panama papers and the Paradise papers show that people are now just going offshore, or finding artificial ways to go offshore, rather than trying to do artificial domestic planning to get around the rules.