Labour’s five steps to tackle tax avoidance

David Cameron has failed to bring forward the changes which are needed to bring transparency. Labour would develop a robust and effective corporation tax system.

In tough times it’s more important than ever that everyone plays their part and pays their fair share of tax.

People and businesses who pay their fair share have been shocked by how little tax some companies seem to pay in Britain. Sometimes there are good reasons why, such as because they are investing in research and development. But all too often companies that pay low taxes in Britain are doing so because they can bend the rules to their advantage.

As Ed Miliband says in his interview with today’s Observer, businesses need to act in a responsible way, but the government sets the rules of the game, so they too have a responsibility to act. David Cameron and George Osborne are not just cutting taxes for millionaires, they are also doing far too little to tackle tax avoidance. And they are pushing through deep cuts to HMRC, which risk being a false economy if they make it even harder to enforce the law. 

At the start of the year, we set down a challenge to the government: that they should end the era of tax secrecy. Some companies have not been paying their fair share of tax, hiding behind complex networks of companies and using tax havens to shift their profits out of tax. We said that the government needed to show leadership, bringing forward measures for the G8 that started with the requirement to publish a simple statement for the tax which companies pay in the UK.

But the government has failed to bring forward the changes which are needed to bring transparency. They have also failed to grasp the need to reform of the Corporate Tax system to close the loopholes which are being used by some companies.

This isn’t good enough. David Cameron must deliver real action at the G8 meeting next month, starting with Labour’s five steps to tackle tax avoidance:

i. Labour supports a form of country-by-country reporting. Agreed internationally it would mean large multinational companies should have to publish the key pieces of information which people need to properly assess the amount of tax they pay. This would cover their revenues, profits and taxes in each country that they operate. As well as meaning that multinational companies pay the right level of tax in the UK, this change would be a boost for developing countries. It would stop profits being stripped out from those countries, increasing their tax revenues and reducing their reliance on aid.

ii. Labour would extend the Disclosure of Tax Avoidance Schemes regime, which Labour introduced, to global transactions. The IF campaign have said this would be an effective way of tackling avoidance in developing countries.

iii. Labour would open up tax havens, with requirements to pass on information about money which is hidden behind front companies or trusts. Labour is backing the IF's campaign's calls for the UK to Launch a Convention on Tax Transparency at the G8 to deliver this.

iv. Labour will continue to challenge the government on the impact of their changes to Controlled Foreign Company Rules on the UK and developing countries. Labour has repeatedly tabled amendments in Parliament to introduce a proper assessment of the rules, which have been rejected by the government.

v. Labour also wants to see fundamental reform of the corporate tax system, because the shifting of profits and use of tax havens to avoid tax is also a symptom of a system which is failing to keep up with global economic developments.

That is why Labour is today publishing an update on its review into the full Corporation Tax system. The aim of Labour’s review is to develop a system which is robust and effective in the modern world; supports investment and job creation; deals effectively with the complexities of international business; is fair to all; and is transparent and can be better understood by the public.

Families and businesses who are paying their fair share want to see tax avoidance properly tackled. If David Cameron fails to deliver, then it will fall to the next Labour government to act.

Ed Balls MP is the shadow chancellor and Catherine McKinnell MP is the shadow exchequer secretary to the Treasury

A visitor passes the Google logo on September 26, 2012 at the official opening party of the Google offices in Berlin, Germany. Photograph: Getty Images.

Ed Balls is the shadow chancellor; Catherine McKinnell is the shadow exchequer secretary to the Treasury

Anoosh Chakelian
Show Hide image

“We need an anti-Conservative force”: Nick Clegg wants to work with Labour after the election

On the campaign trail in Sheffield Hallam, the former Deputy Prime Minister talks about how to challenge Brexit and the “Boudicca” Theresa May.

It’s pouring with rain and Nick Clegg has forgotten his coat. “It was so nice this morning,” he groans, looking doubtfully down at his outfit – a navy v-neck, pale shirt, rumpled blue blazer and dark trousers with some dried dirt splattered on the ankles. Yesterday evening, he and his team of activists had decamped to a pub after the rain became too heavy for doorknocking.

We are taking shelter in the Lib Dem campaign office in Sheffield (this interview took place before the Manchester attack). Teetering towers of envelopes and flyers, rubber bands and canvass papers enclose a handful of volunteers sipping tea and eating mini flapjacks. Giant diamond-shaped orange placards – “Liberal Democrats Winning Here” – are stacked against every spare bit of wall.

Clegg has represented Sheffield Hallam, a largely affluent and residential constituency on the west edge of the south Yorkshire city, for 12 years. It has stayed with him throughout his “Cleggmania” popularity as Lib Dem leader in opposition and his difficult days as Deputy Prime Minister in coalition with the Tories. Now he hopes to win it over as a vocal anti-Brexit champion.

After a relentless campaign by the local Labour party in a bid to “decapitate” the Lib Dems in 2015, Clegg’s majority fell from 15,284 to 2,353. He is hoping Labour is unable to further chip away at his support this time round.

“I’m confident but I’m not complacent,” he tells me, nursing a cup of tea as we wait to go canvassing. He believes voters who punished him last time – for going into government with the Conservatives, and breaking his tuition fees pledge – are changing heart.

“I was a target with a great big cross on me,” he says, tracing across himself with his finger. “I personally always think it was this odd cartoon caricature both made of me but also of how people view me... People stop listening to what you have to say – I distinctly was aware at one point when I literally could’ve said ‘Baa Baa Black Sheep’ and it would’ve made no difference. Whereas now, people are very keen to listen again.

“Those who were critical in the past now take a more nuanced view, perhaps, than they did of what I’ve tried to do in politics, and feel I have a role to play in the big debate on Brexit.”

“I was a target with a great big cross on me”

Even when he’s not raging against Brexit, Clegg exudes Proud European. He uses a Norwegian weather app – “they’ve invented something better than the BBC one!” – on his phone (which appears to have failed him today), and keeps stifling yawns because he was up until 2am reading a Hungarian novel called Portraits of a Marriage. “I really recommend it. It’s by Sándor Márai,” he tells me, eagerly spelling out his name. “Of course, I’m reading it in translation.”

Although Sheffield Hallam voted Remain as a constituency (calculated at about 65 per cent), Clegg is still having trouble with his anti-Brexit message among voters. “It’s a very British attitude,” he smiles. “Lots of people who voted Remain sort of say, ‘oh, come on’. The phrase I keep hearing is: ‘We’d better make the best of it.’”

We encounter this attitude when out doorknocking in Lodge Moor, Fullwood, on the rural edge of the constituency. The streets we visit are inhabited by elderly couples and families in detached bungalows with low, steep rooves and immaculate driveways, and rows of whitewashed semi-detached houses.

One father opens the door, as his young son drags an overzealous yellow labrador away from the threshold. He is an occupational therapist and his wife is a teacher. They also have a child with special needs. Although “Brexit’s a bit of a stress”, he says his family’s priorities are education and the NHS. “I haven’t made my mind up who to vote for,” he tells Clegg. “I do know that I won’t be voting Conservative, but I want to vote for an independent.”

“I’m very keen on staying in Europe but I can’t see a way around it,” says a retired man with fine white hair in a scarlet jumper who lives on the road opposite. Clegg counters: “It may all be too late, it may all be hopeless, but I wouldn’t underestimate how public opinion may shift.” The man will vote Lib Dem, but sees battling Brexit as futile.

“Labour’s days as a party of national government have ended”

“The frustrating thing for us, as Lib Dems” – Clegg tells me – “is I would lay a fairly big wager that it will be precisely those people who will then say in a year or two’s time that this Brexit’s an absolute nonsense,” though he does admit it’s “politically tough” for his party to make Brexit central to its campaign.

“It would be much better if you were leader,” the retired man’s wife chips in, pulling on a blue cardigan as she joins them at the doorway. “Tim [Farron] – he’s a nice man, but he’s not quite the same.”

Clegg as an individual gets a lot of love at almost every doorstep. “You should come to Knit and Natter,” beams one woman involved in the local church. “You don’t have to knit – as long as you can natter!”

When I ask whether he feels nostalgic for Cleggmania, Clegg says he does not “hanker after past glories”. He does, however, miss being in government – and compares Theresa May’s current persona with the woman he knew and worked with in cabinet.

“She has been converted from what I found to be a rather conventional, not wildly exceptional politician by the sort of hysterical sycophancy of the Daily Mail and others into this colossal political figure, this sort of Boudicca,” he splutters. “I’m sure she would say this about herself – she has very little peripheral vision. She’s not an innovative politician. She’s not a big picture politician.”

Although Lib Dem leader Tim Farron has ruled out coalition deals with May’s Conservatives and Jeremy Corbyn’s Labour, Clegg urges his party to work with Labour following the election. “The Labour party is still operating under this illusion that it can win an election – it can’t!” he cries. “It’s irrelevant who’s leader. It doesn’t matter whether it’s Jeremy Corbyn or David Miliband – there is no way that the Labour party can beat the Conservatives under this electoral system . . . It’s impossible.”

“I am self-evidently a pluralist – why else would I go into coalition?”

He believes that because the “pendulum of politics” is stuck on the right that “we can’t continue with business-as-usual after 8 June”.

“If we all just carry on talking to ourselves in our own rabbit hutches, all that will happen is we will carry on with this dreary, soulless, almost perpetual one-party domination by the Conservatives,” he warns. “The dam needs to break within the Labour party, and the moment they understand that they can never win again – that their days as a party of national government have ended – can you start thinking about how to mount a proper challenge to Conservative hegemony.”

Clegg clearly wants an active role in future cooperation. “I am self-evidently a pluralist – why else would I go into coalition?” he asks. “I’ll always be happy to play my part in doing what I think is right, which is that we need a proper anti-Conservative force or forces in British politics.”

Labour’s campaign in Sheffield Hallam is not spooking local Lib Dems as much as in 2015, when it was polling ahead of them in the build-up to the election. Concerns about Corbyn’s leadership and Labour’s vote in favour of Article 50 appear to have dented its once surging support here.

“I’m voting Lib Dem,” declares a middle-aged man in big aviator-framed glasses and a silver chain, opening the door and looking distinctly unimpressed. “But not because it’s you.”

“Ah,” grins Clegg.

“I’m voting Lib Dem because I don’t want Labour in. I don’t want anybody in at the moment; I don’t like anybody’s politics,” he rumbles. “But it made me cringe when I heard Corbyn speak. Because he’s got the giant-sized ripe-flavoured carrots out, and people don’t realise they’ve got to pay for them.”

Clegg will be relying on such voters to keep his seat. But even if he doesn’t win, don’t expect him to disappear from political life until the Brexit negotiations have well and truly concluded. “It would be a dereliction of duty to the country to fall in line with the conspiracy of silence on the terms of Brexit both Labour and the Conservatives are trying to smother this election campaign with,” he says. “It’s the question of the day.”

Anoosh Chakelian is senior writer at the New Statesman.

0800 7318496